Two Producers and a Deal

Tim Bevan and Eric Fellner, whose string of worldwide independent hits have made them the hottest commodity on the British and European film exchange, have struck a deal with Universal Pictures that will finally give them parity with Hollywood’s top movie producers.

Under a long-coming, newly struck deal, the partners in London-based Working Title Films--best known for “Four Weddings and a Funeral,” “Fargo” and “Bean”--for the first time will share in the profits of their movies.

Better yet, where the standard studio deal pays producers a fee and a percentage of gross revenues, sources say the Universal arrangement also includes an incentive formula that could give Bevan and Fellner a big payout at the end of their new five-year contract based on a percentage of profits from all the films they produce.

The deal also empowers the British producers, who work far from the spotlight of Hollywood in London’s Soho district, to green-light movies up to the $15-million-to-$20-million range, sources said.

The Working Title pact, expected to be announced today, is as significant for Universal as for Bevan and Fellner. Since being acquired by Seagram four years ago, the studio has struggled in the movie business and has a credibility problem stemming from a box-office drought and severe management turmoil.

Universal Studios President Ron Meyer said of the arrangement, “They’re enormously prolific and talented guys, and I’m excited to be in business with them.”

Universal hopes to get three to five films a year from the duo, who’ve made their name producing reasonably priced ($15 million to $35 million), upscale and often edgy, quirky movies.

In an interview this week at their trendy Beverly Hills office behind industrial steel doors and cement hallways, Fellner said, “We’re finally being recompensed as proper Hollywood producers would be.”

Fellner, 39, bluntly adds that ever since he and Bevan, 41, have been independent producers, “We haven’t made any money.”

Bevan and Fellner each began their careers in music videos in the early 1980s before becoming movie producers in 1985. Bevan and his former partner Sarah Radclyffe formed Working Title with the release of their first film, Stephen Frears’ “My Beautiful Laundrette.” Fellner, who had his own production company, made his debut with Alex Cox’s “Sid and Nancy.”

Since teaming up in 1991, the partners have essentially worked as salaried employees for PolyGram Filmed Entertainment, which owned 100% of their company. Now Universal, which finalized its acquisition of PolyGram’s film and global music businesses last December, will pay their overhead and finance, market and distribute their films.

After what Fellner referred to as “10 tortuous months,” when the fate of PolyGram’s film assets was up in the air, the partners are relieved to have a new deal in place. Though heavily courted by other Hollywood studios as their June contract termination neared, the producers were inclined to sign with Universal, which owned their development slate and was willing to guarantee them the kind of creative latitude they were used to at PolyGram.

It was also important that Universal agreed to judge them on their slates rather than on individual movies. “Everyone knows only one in 10 films comes through as a super-duper hit,” said Bevan, and even with Working Title’s strong track record, “there are going to be dogs.” The producers have had their share of flops, including “The Borrowers,” “The Hi-Lo Country” and “The Hudsucker Proxy.”

Sources said Universal will invest $150 million a year in Working Title and its overseas distributor PolyGram International (now Universal Pictures International). Three-quarters of that will go to fund Working Title’s annual slate.

Months before Seagram announced it was buying PolyGram last May, Universal Pictures president Chris McGurk had told the Working Title partners how much he would like to work with them. McGurk was familiar with the independent film territory, having engineered Disney’s $70-million purchase of Miramax Films in 1993 when he was a top executive at that studio.

Bevan and Fellner’s new incentive-based arrangement with Universal is similar to one Miramax chiefs Bob and Harvey Weinstein have with Disney.

“If we work hard, we do well,” said Bevan. “It’s like Miramax. It’s going to make us push stuff into production and sharpen our instincts a little bit.”

Bevan and Fellner, who shuttle from London to L.A. for at least three days a month, believe it’s advantageous to live outside Hollywood. “You get lulled into a reactive state being in Hollywood,” Bevan said.

The producers want to be able to continue making critically acclaimed films that can appeal to audiences throughout the world. Their $5-million romantic comedy “Four Weddings and a Funeral” grossed $250 million worldwide; “Bean,” based on the long-running British TV series, cost $15 million and sold $270 million worldwide; the Coen brothers’ quirky comedy “Fargo” cost $7 million and grossed $60 million worldwide; and Tim Robbins’ prison drama “Dead Man Walking” cost $12 million and grossed $100 million worldwide.

Working Title’s most expensive movie ever, “Notting Hill,” a $40-million romantic comedy with Julia Roberts and Hugh Grant, may be one of the summer’s biggest hits.

McGurk’s long interest in Working Title stemmed from his desire for Universal “to have our own European version of Miramax”--a stand-alone business that could produce works complementary to its own and could feed its distribution outlets.

“The model was having a major studio backing up a premier production entity with two film producers/executives who are incredibly passionate about making movies with universal appeal,” said McGurk. “Tim and Eric have a great track record, are extraordinarily good businessmen and are extremely focused on expanding the Working Title brand.”

Working Title films have often fared better overseas than in America. “Four Weddings” and “Bean” claimed most of their theatrical revenues internationally.

What separates Bevan and Fellner from most British producers is that they run a self-contained company with in-house physical production, finance, legal and creative departments.

“In terms of how we operate, we do all the mechanics of getting a film made without having to interface with any large organization. It’s a great freedom, because you can work for the best of the film rather than work for the system,” said Fellner.

Their films will continue to be released overseas through Universal’s international operation, headed by Stewart Till.

The pair’s more expensive, wide-release films, like “Notting Hill,” will be distributed in the U.S. by Universal. U.S. distribution of their more specialized films, like “Fargo” and this year’s best-picture Oscar contender “Elizabeth,” has yet to be solidified. Universal’s two specialty-film distributors, October Films and Gramercy Pictures, are being sold to Barry Diller’s USA Networks.

Sources say Universal is weighing various possibilities, including setting up a new distribution unit.