New Line Cinema Is Still Shopping the ‘Supermarket’

New Line Cinema has come a long way, baby, since its founding 32 years ago by Greenwich Village renegade Robert Shaye and its first release, the reissue of the 1936 film “Reefer Madness,” became a cult classic on college campuses.

Unlike many independent movie companies that blew themselves up in the 1980s by overextending and overspending, New Line has survived by holding down costs, minimizing risk and making movies that don’t depend on big stars and big budgets.

Since its roots as a niche marketer and distributor of such moneymakers as “Teen-Age Mutant Ninja Turtles” and the horror series “Nightmare on Elm Street,” New Line has succeeded in delivering a “supermarket” of modest genre, mid-budget and higher-end hits that, more recently, have included “The Wedding Singer,” “Rush Hour,” “Mortal Kombat” and Jim Carrey’s “The Mask” and “Dumb and Dumber.”

New Line, one of Hollywood’s few bicoastal companies, has retained its creative ingenuity and decision-making independence even after being bought by media mogul Ted Turner in 1994 and merging with entertainment giant Time Warner two years later.

Michael Lynne, Shaye’s New York-based partner and former Columbia Law School classmate, has been the company’s president and chief operating officer since 1990. He was interviewed recently at New Line’s Manhattan headquarters.

Q: New Line has outlasted every other independent film company over the last 30 years. What did you do differently?

A: When Bob started this company, he started it on a shoestring. The company had to be careful to tailor a business plan that could make us successful with what, from other people’s point of view, might be limited resources. And that led to lower-budgeted films targeted to specific audiences . . . that didn’t require big stars.

Q: But when you went with Turner, you started spending much more than you ever had before.

A: The business plan was to expand from a purely niche player providing niche genre product to, in effect, a player that provided a kind of a “supermarket” shelf of product that would have some high-end product, a lot of middle-range product and still some genre niche product. And that’s still our business plan.

Q: How is that different from the studios?

A: The studios are not doing much niche product, and the main thrust of product they do is not the middle-range product--it’s $50 million and above. In 1998, our average production cost was about $29 million; the studio average production cost, I think, was $56 million.

Q: In 1996 you had a bad streak with such expensive flops as “The Island of Dr. Moreau,” “Last Man Standing” and “The Long Kiss Goodnight.”

A: I’ll say it was a bad year. . . . We really didn’t have enough product in development from the previous years that could support the kind of product we wanted to expand into. So we probably jumped too soon on a few of them because it was all we had.

Q: Will you continue to do films at that level?

A: Sure.

Q: Warren Beatty’s “Town and Country” is over $80 million, isn’t it?

A: No. But it’s going to be over $70 million.

Q: We hear there were major production problems.

A: No. We had issues with the script, which we fortunately got fixed, but it took some time. It definitely went over budget.

Q: Will your business continue to be in the supermarket category?

A: Yes. The mix we have now is two or three films over $50 million, and the main thrust of our films [is] between $20 [million] and $50 [million] and some films under $20 [million], even some under $10 [million], mostly Fine Line films, but also some of the niche product like “Friday the 13th” and product like that.

Q: How would you characterize New Line movies?

A: I think we tend to have product that’s original, has some freshness about it and is edgy to some degree, presses the envelope of what’s been done before, that I think feels smart in some way.

Q: Why does it make sense for Time Warner, which owns Warner Bros., to have two huge filmmaking and distribution operations?

A: If what a company like Time Warner wants to do is build the biggest, most significant library in the world, then having more than one entity creating all this different kind of product, with different kinds of audiences attracted to it, is an enormous asset, not a liability, provided those companies are able to work comfortably under the same corporate umbrella. And interestingly, that has happened here, probably against everybody’s expectations.

Early on there was a lot of concern on everyone’s part that this probably wasn’t going to work. The only person who didn’t believe that was Ted Turner, who strongly believed that New Line should stay.

Q: But New Line was put on the sales block in 1996.

A: It was. And Ted went along, not willingly, but he did go along. And it didn’t work out. It was at that moment in time when we hadn’t had a lot of success for several months, and I think it was also to Ted’s [and Time Warner Chairman Gerald Levin’s] credit that they had a very significant number at which they would sell New Line and not less.

Q: What was that?

A: It was about $1 billion, and that number didn’t happen.

Q: Aren’t there times when you’re competing with Warner? Fishing in the same talent pool?

A: It hasn’t come up that much. And, by the way, if we compete with each other, it’s not the worst thing in the world.

Q: Do you rearrange release dates?

A: Absolutely not. We don’t even discuss it with Warner. These films need to stand on their own.

Q: Has it been a problem that Time Warner is trying to cut back its financial commitment to movies?

A: No. We made the decision that New Line could secure its own financing. We went out and created two revolving bank facilities . . . that aggregated about $750 million . . . which funds us for our foreseeable future.

Q: Is New Line a profitable company?

A: Very. We never give figures. But there are people who have guessed. And if you guess at just under $100 million, you’d be guessing right. That’s the profitability level of New Line today.

Q: What’s your forecast for New Line?

A: Bob and I are committed to the company for the foreseeable future, and we have contracts through the end of 2001. Notwithstanding the fact that we had our two most profitable years in the history of the company in 1997 and 1998, we still aren’t satisfied that we’ve delivered the kind of economic success that this company can deliver. We think we can do better than we’ve done.

There are other areas that we continue to look at to see whether we could expand our capabilities. That may include a more aggressive and involved presence in television. I think the second area is music. We’re in the process of finalizing a label deal with Warner for a New Line label. That will include all of our soundtracks. We have a vision of being able to expand [beyond] that.

Q: What about the Internet?

We’re exploring a bunch of things. We currently operate New Line sites for every one of our films, which we create in-house. We have a New Line store, which actually is becoming slowly but surely a significant little aspect of our business. It’s a business that’s now in the millions of dollars.

Q: The movie business is based in L.A. You’re based in New York. Would you move to L.A.?

A: No. We thought about it, but no, we’re not moving to L.A. [The company’s] still got a New York ethic about it.

Q: What does that mean, a New York ethic?

A: Well, it’s probably a little more cynical.

Q: It can’t be more cynical than L.A.

A: Well, I mean . . . cynical of the Hollywood idea, if you will. I think that it’s an alternative point of view. I think when you’re in Los Angeles and when you’re working in our business, you are totally consumed by it. . . . That’s not exactly true in New York. If you’re in the film business in New York, you’re pretty unique. So there is a possibility an idea can grow out of a Hollywood environment if you have people who aren’t involved day-to-day in that environment look at it and say, “That doesn’t make any sense.” That doesn’t get said a lot if everybody is dealing with that environment every day of the year, 24 hours a day, which they do. It gives you a perspective. It’s not always the right perspective, but it’s another perspective. And I think that has turned out to be very healthy for us.

Q: Many executives in the movie industry say the business is in dire straits.

A: I don’t accept the premise. We had the most successful year in our history last year, notwithstanding the crowded marketplace. We had our biggest year overseas ever. We had bigger revenues than we have ever had in our history. The marketplace is growing internationally. The television activities internationally are extraordinary.

Look at it from our point of view, as a content provider, at the explosive growth possibilities of DVD, video on demand, the incredibly competitive situation among the various networks to acquire films. All of these things augur so well for people who are in a position and have the experience and the capability to provide an effective slate of feature films.