Producing Profits

What separates Shooting Gallery from some other independent movie companies is that no one pretends that commerce plays second banana to art.

Larry Meistrich and Stephen Carlis, former high school classmates who run the Manhattan-based production house, make no bones that they are businessmen, not auteurs. In their view, the most important creative contribution a producer can make is to take care of the investors.

“What money cares about is protection of the money, and what art cares about is protection of the vision,” Meistrich, 31, said. “It’s not impossible to make those things coexist as long as the artist understands that, OK, if it’s $3 million, it’s $3 million--there’s no overage.”

Filmmakers who can live with that rule get an unusual degree of creative freedom, even the right to cut the final version of their films. The approach has helped turn Shooting Gallery into one of the hottest--though not always the best loved--”indie” film houses in the industry with such films as “Sling Blade” and the newly released “I Went Down,” which is drawing raves from critics.

Working a Rolodex full of well-heeled backers--many of them Wall Street professionals--the two mini-moguls have managed to finance more than a dozen $5-million-and-under feature films almost entirely without bank loans. For each new movie, Shooting Gallery creates a separate limited-liability corporation, a structure that confines the profit--or losses--to the investors in that particular film.

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That doesn’t mean Shooting Gallery escapes risk, though, because it generally takes a 30% stake in its films.

The film company isn’t the first venture for Carlis and Meistrich. In college, they sold T-shirts emblazoned with logos such as “Hard Rock Cafe--Johns Hopkins.” Only problem was the restaurant chain didn’t authorize it. The two had to stop when Hard Rock found out.

As little as five years ago, Meistrich called on relatives, friends and friends of friends to scrape together financing in $1,000 and $5,000 increments. Today, Shooting Gallery won’t even accept a $10,000 investment unless it knows the investor is likely to write a six-figure check the next time around.

The all-equity approach means no interest payments and no need for costly completion bonds, guarantees that bankers require as a safety net in case a film goes seriously over budget or misses its timetable.

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Outside investors are guaranteed 130% of their money back before Shooting Gallery, the director, stars or other profit participants see any return on a film. The director and actors are paid modest upfront fees, but Shooting Gallery gets no upfront production fees.

“I’ve seen dozens of proposals to invest in films, and you rarely feel tempted,” said Keith Abell of Greenwich Street Capital Partners, a New York investment firm. “There’s nothing there you can analyze, no track record.”

But Shooting Gallery’s deals, by contrast, are “very comprehensible to people who work on Wall Street, very well-structured,” said Abell, who has taken stakes in several of the company’s films.

Shooting Gallery is best known for “Sling Blade,” the 1996 drama about a killer returning home after spending years in a mental institution. Writer-director-star Billy Bob Thornton earned a screenplay Oscar, while the film netted Shooting Gallery and its investors a monster profit when the film--shot on a $2-million budget--was sold to Walt Disney Co.’s Miramax unit for $10 million.

Thornton, for one, is a believer in Shooting Gallery. The Arkansas native, now co-starring in the big-budget film “Armageddon,” said he found Meistrich refreshingly straightforward and intelligent--especially compared with big-studio executives, whose “ignorance is astounding.”

“Larry said, ‘I don’t pretend to know how to write a screenplay.’ He just kind of trusted me, and all I’d directed at that point was a documentary,” Thornton said.

Screenwriter Richard Guay and his wife, director Nancy Savoca, turned to Shooting Gallery to finance their new movie, “The 24 Hour Woman,” after years of frustration shopping the script around Hollywood.

“My own feeling is it’s a very appealing place for independent filmmakers,” he said of Shooting Gallery. “You are left alone to succeed or fail.”

Now comes “I Went Down,” an Irish-made buddy crime comedy that opened last week in New York to respectable box-office numbers and is now being rolled out nationwide.

“I Went Down” is an important step for Shooting Gallery. It is the company’s first major acquisition--purchased in January at the Sundance Film Festival--and the biggest test to date of its marketing abilities. Under an agreement with Artisan Entertainment (formerly Live Entertainment), Shooting Gallery essentially rents Artisan’s national distribution network and then plans and executes its own marketing campaign.

Thus, when the next “Sling Blade” comes along, Shooting Gallery won’t have to sell it to a Miramax but can distribute the film itself and hang onto a bigger share of the profit.

Still, Artisan, which in its previous incarnation was mostly known as a video firm, has a long way to go before its distribution system rivals Miramax’s. Miramax is widely regarded in Hollywood as the best marketer and distributor of smaller, independent films. The company is credited with getting “Sling Blade” the attention it needed to become a hit.

The distribution deal with Artisan is the latest example of Meistrich’s ongoing effort to assemble a fully integrated, soup-to-nuts studio. That’s not an easy task, and plenty of previous attempts to build a studio, such as the recently defunct Savoy Pictures, have failed.

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Shooting Gallery has plowed its profit back into the purchase of equipment and real estate so that as far as possible, it is not hostage to outside vendors.

To get the most out of its facilities, the company has an array of subsidiaries that supply staff, work space and equipment to filmmakers working on non-Shooting Gallery projects. These include a full-service production company called Gun for Hire, a music supervision and soundtrack unit, a post-production services unit and even a product placement division.

But by far the most ambitious item on Shooting Gallery’s agenda is a plan unveiled in January to convert a cavernous, empty factory complex across the Hudson River in Harrison, N.J., into the biggest studio back lot this side of Burbank, including a 100,000-square-foot sound stage that would rival the world’s largest at England’s Pinewood Studios. The $90-million, 33-acre project would be financed largely through a bond sale.

Meistrich believes that demand for back lot space in New York is so great that the facility will fill up with tenants as soon as it opens its doors. While Hollywood boasts more than 400 sound stages, New York has only about 30, and some of those are committed long-term to television productions.

Others see the same demand, and last week a separate investor group announced a plan to build a $160-million, 700,000-square-foot production facility at the Brooklyn Navy Yard. Investment banker James P. Rutherford of J.P. Morgan & Co., which is advising the Brooklyn project, said the needs are great enough to support both facilities.

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Still, it is tough to compete with Hollywood’s infrastructure, and many such deals have been announced all over the country that never bear fruit.

Even if Shooting Gallery does assemble its financing, it will have to stretch its managerial capabilities to the limit to develop a $90-million studio while continuing to produce its $2-million to $3-million movies.

Meistrich, in an interview one rainy morning at the Harrison site, acknowledged the danger of overreaching.

While creating his business plan for Shooting Gallery, Meistrich said he “really studied what other people had done wrong. Most of the time, as soon as they had some initial success, they just tried to up and up the budget.”

If the New Jersey project fails, some will consider it a well-deserved comeuppance.

Like any hard-charging enterprise, Shooting Gallery has attracted its share of critics, who say that while it coddles its Wall Street backers and big-name talent, it handles less powerful players with bare knuckles.

One who had a bitter run-in with the company is Bob Zelin, whose Manhattan firm services the complex computerized editing and sequencing machines used by filmmakers. Zelin said he billed the company for $1,200 for work, but got a check for $750 three months later.

After more than a year of demanding the money. Zelin got so angry he stormed into the company headquarters, temporarily disabled the editing system and demanded the remaining $450. In a letter he was sent, Shooting Gallery told Zelin that if he wasn’t happy, he could sue, and threatened to have him arrested if he ever set foot in the company offices again.

Shooting Gallery declined to comment on the episode.

One independent director who has worked with Shooting Gallery in a lesser capacity said of the company: “They’re doing some good things, but they accomplish their goals in a fairly brutal way. They really underpay their crews and people.”

Spokesman Craig Bankey said Shooting Gallery has grown to more than 40 employees because it offers good pay as well as opportunities. Of the firm’s reputation for pugnacity, he said: “We’re young and we’re out there and we’re hungry. We want to separate ourselves from the pack, and to do that you have to pursue projects with intelligence and tenacity. We have to be assertive and we are.”

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Indie Film Collection

Films produced or released by Shooting Gallery, a Manhattan-based independent movie house:

Film (Year): Director

Henry Fool (‘98): Hal Hartley

I Went Down (‘98): Paddy Breathnach

The 24 Hour Woman (‘98): Nancy Savoca

Niagara, Niagara (‘98): Bob Gosse

Sling Blade (‘96): Billy Bob Thornton

Illtown (‘96): Nick Gomez

Drunks (‘95): Peter Cohn

Comfortably Numb (‘94): Gavin O’Connor

Handgun (‘93): Whitney Ransick

Laws of Gravity (‘92): Nick Gomez

Source: Shooting Gallery