Make Way for Studio Outsiders on the Red Carpet

It used to be that when Hollywood did business with wealthy investors, they were treated like rubes at a carnival. The studios softened them up by taking them out to dinner with the stars, then slyly stuck them with the dregs of their production slates. After losing their shirts at Hollywood’s roulette table, the chagrined sugar daddies would head for home, their wallets a lot lighter than when they arrived.

But the days of being fleeced by studio shrewdies are fading, as we saw with Tuesday’s announcement of the Academy Award nominations. Aside from “Munich,” none of the five best picture nominees was a film that any major studio jumped at the chance to make. “Brokeback Mountain” was initially in development at Sony Pictures but went nowhere -- it ended up being co-financed by Bill Pohlad, whose family owns the Minnesota Twins.

“Good Night, and Good Luck” was co-financed by Dallas Mavericks owner Mark Cuban and Todd Wagner, who were partners in Broadcast.com, and Jeff Skoll, one of the founders of EBay who now runs Participant Productions. “Crash” was put together by Bob Yari, a real estate entrepreneur who has financed dozens of independent movies in the last few years. “Capote” was co-financed by Infinity Media, an independent Canadian production company.

The films share more than outsider financing. All the best picture nominees had a provocative message, from “Brokeback Mountain’s” agonizing portrait of being gay in 1960s America to “Crash’s” vivid dissection of racial conflict in today’s Los Angeles. To borrow a phrase from Sen. John Edwards’ 2004 stump speech, there are two Hollywoods today, with a growing chasm between them. One Hollywood is made up of giant studio machines that make lavish special-effects franchises designed to lure teenagers to the megaplexes each weekend. The Other Hollywood, the one that reaped the rewards Tuesday, is largely made up of iconoclastic outsiders who want to make movies that have something to say.

Today’s deep-pocketed investors are sharper and more strategic, and, thanks to their willingness to bet on risky projects, they’re beating Hollywood at its own game. Skoll’s Participant Productions, which helped back “Good Night, and Good Luck,” “Syriana,” “North Country” and “Murderball,” ended up with 11 Oscar nominations, more than many of the major studios.

Much of the credit for this influx of outsider influence goes to the talent agencies, in particular Creative Artists Agency, which woke up one day and realized that its most sought-after stars were unhappy about the lousy scripts the studios were sending their way. After spending years scrambling up the movie star ladder, Brad Pitt and George Clooney didn’t want to stand in front of a green screen playing second banana to a special-effects monster. I remember sitting at lunch a couple of years ago with several CAA agents who were shocked at how bare the studio cupboards were when it came to challenging or sophisticated dramas.

Realizing they would have to find the material themselves, a group of top CAA agents, led by Rick Hess, hatched a clever plan that has essentially resulted in an alternative studio system. Seeing that Hollywood had always been a magnet for outside money, they began wooing outside financiers who would enable them to put together movie packages that, although ultimately distributed by the studios, wouldn’t be subject to the dumbing-down development process. Since Hess and CAA are in the game for the long run, they’ve been educating and nurturing this new crop of outside investors, helping steer the best talent and material their way.

What made Tuesday’s Oscar nominations such a watershed was that they showed how creatively bankrupt the studio system has become.

There’s no doubt that studios still have their sweet spot -- they’re great at making “The Dukes of Hazzard” and “Big Momma’s House 2,” McMovies that are a perfect fit in the DVD display at Wal-Mart. But Tuesday’s results showed that outsiders with almost no hands-on experience in the business proved to be better judges of the storytelling craft than an array of studio executives with decades of experience inside the industry.

Conservative critics claim the box-office performance of the more provocative films that turned up on Tuesday’s nominee list is proof that Hollywood is out of touch with mainstream America. When columnist Charles Krauthammer was making sarcastic predictions on Fox News last month, he quipped that “ ‘Brokeback Mountain’ will have been seen by 18 people -- but the right 18 -- and will win the Academy Award.”

Of course, a more likely prediction would be that “Brokeback Mountain,” which cost $14 million, could end up grossing more than $100 million in the U.S. before it leaves theaters.

For nearly four decades, the Oscars have rewarded small movies without marginalizing themselves. In 1969, “Z” and “Midnight Cowboy” were best picture nominees, with “Cowboy” winning. In 1972, the best picture nominees included two tiny films, “Sounder” and “The Emigrants.” In 1979, the nominated films included “Norma Rae” and “Breaking Away,” and in 1983, the nominees featured two more low-budget dramas, “Tender Mercies” and “The Dresser.”

When I asked Sony Pictures Classics co-head Michael Barker, who released “Capote,” about the theory that the Oscars were out of sync with middle America, he snorted: “That’s a bunch of hooey. As far back as the late ‘60s, the academy has always honored these small films. John Cassavetes, who was the ultimate independent, got three Oscar nominations. The only difference [now] is that the studios used to make these little films, but now they’re being made outside the system.”

By nominating artful, provocative pictures, the Oscars are simply doing what innumerable award organizations do all year long: offering their stamp of approval to the films that deserve it. The difference is that an Oscar endorsement is worth millions, which is why film distributors splash full-page ads in the trades every day, hoping to earn a raft of nominations. “Million Dollar Baby,” last year’s best picture winner, was a dark, troubling film that had barely grossed $10 million when the Oscar nominations were announced. It went on to take in $100 million in the U.S., much of that fueled by the attention and prestige an Oscar nomination brings.

Far from being marginalized, the Oscars are simply another example of our new “long tail” culture, in which the era of hit-driven mainstream events is being quietly pushed aside by niche-oriented films, music and TV shows. The success of this year’s crop of socially relevant nominated films simply shows that big is not better. Made for $75 million, “Munich” will struggle to break even. The Other Hollywood best picture nominees, all made for $6.5 million to $14 million, are already profitable, with the prospect of even more success to come.

This alliance of ardent filmmakers and savvy investors is the new Hollywood, its clutch of Oscar nominations serving as a glitzy celebration of its arrival. The old, insular Hollywood largely saw itself relegated to the sidelines Tuesday. With its box-office machine looking rustier each year, the old Hollywood doesn’t look so much different from Ford or GM, an industry increasingly out of step with the times.