Firms to Challenge Disney in Family Movies

Fox Filmed Entertainment struck a deal Tuesday with billionaire Philip Anschutz’s movie company to take aim at the biggest name in family entertainment: Walt Disney Co.

News Corp., Fox’s parent, hopes to capitalize on the lucrative family film business and plug a hole in its own lineup by teaming with Walden Media, the producer of the 2005 blockbuster “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe.”

Walden executives said that after working with Disney on several projects, including “Narnia,” they determined that they would be better off with Fox. That’s because Fox lacked what its Burbank rival already had: an established family-oriented brand.

“Disney needed us less than other companies that are striving to get into that area,” said David Weil, chief executive of Anschutz Film Group, Walden’s parent company. “Fox recognized that their needs and our interests overlapped. It was a direction they were already pointing in.”

The deal surprised some in the industry, who figured Disney would be a natural home for Walden. Disney, after all, had a so-called first-look deal that gave the studio dibs on Walden films. That pact expired in 2003. The remaining “Narnia” sequels, “Bridge to Terabithia” and “Prince Caspian,” are slated to be released by Disney in 2007 and 2008, respectively.

The success of “Narnia,” which grossed more than $744 million worldwide, put the 5-year-old Walden on the map. Over the last several months, Walden Media met with four major studios before striking a deal with Fox.

Eleven percent of films released this year have had “G” or “PG” ratings, and they have accounted for 28% of the box office, representing $1.6 billion of the $5.8 billion in tickets sold, according to boxofficemojo.com, an online tracking service.

“Certainly there is a lot of money to be tapped into by appealing to families,” said Brandon Gray, president of boxofficemojo.com. “The ultimate brand on this front is Disney because they have decades of history in that genre.”

Though Fox has had success in animation with such hits as “Ice Age: The Meltdown,” the studio has not developed a big live-action franchise that resonates with younger audiences such as “Harry Potter” or “Pirates of the Caribbean.” The studio is eager to marry its massive distribution machine with Walden’s unconventional grass-roots marketing know-how. Walden typically targets librarians and schoolteachers nationwide to get the word out about upcoming movies.

“This deal will augment what would be the normal channels of marketing with educational outreach and specific audience segments that Walden specializes in,” said Jim Gianopulos, co-chairman of Fox Filmed Entertainment.

Under the venture, the partners plan to release five or six movies a year. Fox has slated three films with franchise potential, beginning in 2007 with “Mr. Magorium’s Emporium,” starring Dustin Hoffman as an eccentric 243-year-old toy-store owner. That will be followed by “The Dark Is Rising,” based on the Susan Cooper series about a boy who learns he is part of a group of warriors that must fight against forces of the “Dark.” The third film is “The City of Ember,” based on Jeanne DuPrau’s novel about two teens who must unravel a mystery to save their city from evil powers.

Fox and Walden began serious discussions two months ago. A year earlier, Fox had released Walden’s “Because of Winn-Dixie.” Based on Kate DiCamillo’s popular children’s book, the film grossed a modest $36 million in domestic box office but cost a little more than $13 million to make. The movie also went on to sell a respectable 3.5 million DVDs.

The partnership also dovetails with the studio’s efforts to reach religious audiences. Fox Faith distributes Christian-themed films such as “The Passion of the Christ” and family home entertainment titles such as “Cheaper by the Dozen.”

Under the joint venture, Walden would distribute its films only through Fox but would remain independent and retain its own production and marketing operation. Terms of the deal were not disclosed, but Fox will co-finance some films, which will vary in budget.

Anschutz, whose other holdings include Los Angeles’ Staples Center, the Kings hockey team and Regal Entertainment, the nation’s largest theater chain, is a friend of Rupert Murdoch, News Corp.’s 75-year-old CEO. Murdoch was an initial investor with Anschutz in Staples Center but sold his stake in 2004.

Walden’s track record has been spotty. Successes including “Holes” and “Because of Winn-Dixie” have been offset by flops such as its most recent release, “Hoot,” and “Around the World in 80 Days,” which cost $110 million and grossed a paltry $72 million worldwide. Walden’s upcoming “How to Eat Fried Worms,” based on Thomas Rockwell’s children’s novel, will be released by New Line Cinema on Aug. 25. In December, Paramount Pictures will release a live-action version of E.B. White’s classic “Charlotte’s Web,” about a spider and her pig friend, Wilbur.

The partnership with Fox also includes a first-look deal with Walden’s sister company Bristol Bay Productions, which produced the Oscar-winning 2004 movie “Ray.”