Studio report card gives 2008 the grade

Can it be the best of times and the worst of times, all in the same month? If you were running a movie studio, eager to understand what the first 30 or so days of 2009 say about the business at large, you'd be buoyant one day, bitterly depressed the next. The DVD market, which has quietly supplied the biggest pure profits for Hollywood in recent years, is in the doldrums, evidencing little hope of regaining its high-roller status, with Blu-ray looking more and more like a dud while many young consumers experiment with alternative ways of watching movies. On the other hand, in January -- once the dumping ground for new releases -- the theatrical box office was up a remarkable 19% over last year, with moviegoers flocking to see a variety of comedies, thrillers and dramas. It just goes to show that in Hollywood, nobody knows anything. The only thing for sure is that to see where you're going, you have to know where you've been. With that in mind, here's a look at how the major studios performed in 2008.

It's become a tradition at this time of year, first in my column and now in my blog, to grade the major movie studios on their performance over the course of the year. The Studio Report Card started as a way to get a handle on how the business works, but it also serves as a corrective to all those business stories that essentially trumpet how much market share the giant studio conglomerates have without really wrestling with something that matters to us film fanatics: While they were raking in all that cash, did the studios actually make any good movies? That's why I give two grades, one for commerce, one for quality. And trust me, in the quality department, studios rarely get an A.

This year saw even more sweeping consolidation in the movie business. With DreamWorks waiting for a new financing deal, with MGM more of a business strategy than a studio and with New Line Cinema having been absorbed by Warner Bros., there are now essentially six major studios. Trying to figure out their finances is sort of like dissecting one of Congress' bailout bills, since every studio has several ways to finance its slate of films, including deals with outside producers or equity partners. It's enough to make your eyes glaze over. At least when it comes to quality, it's a lot easier to know what movie was loved or loathed. (My box office results, courtesy of Media by Numbers, include grosses through the weekend of Jan. 4.)

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UNIVERSAL

It was hardly a shocker to see the news that Universal is keeping its dynamic duo, Marc Shmuger and David Linde, as studio chairmen through 2013. Universal enjoyed one of its best years in 2008, largely thanks to their steady, capable leadership. But what matters most isn't just the raw numbers but that Universal managed to assemble a slate of pictures that was reminiscent of the fabled days in the business when movie studios aimed for class and quality as well as box-office receipts.

Universal's biggest successes of 2008 offered a good indicator of its strengths. The studio's top-grossing film, "Mamma Mia!," made an astounding $430 million overseas, roughly three times what it did in the U.S., thanks to the continuing strength of the studio's international distribution system. In fact, the studio's top three performers from last year ("Mamma Mia!, "The Mummy: Tomb of the Dragon Emperor" and "Wanted") all did far more business overseas than in America. "Wanted" was an especially gratifying success, since it was a modestly budgeted ($75 million) summer action extravaganza that created a new franchise -- the studio is already at work on a sequel -- while showcasing the studio's risk-taking by putting the film in the hands of Timur Bekmambetov, a Russian filmmaker who is a brilliant visual stylist but was an unknown commodity, having never enjoyed any commercial success outside his native land.

It wasn't a fluke that Universal embraced Bekmambetov. The studio has been aggressively setting up deals with gifted filmmakers in several countries, including China, Brazil and Mexico. Whether it's simply a shrewd way to expand its presence in growing markets or a way to ally itself with top filmmakers, the strategy is a good example of the studio's aspirations to balance quality with commerce.

Universal still had its share of missteps. It bankrolled a pair of utter flops: a costly George Clooney comedy ("Leatherheads") and "The Express," a drama about football star Ernie Davis. But the studio had solid successes with a string of sharply written comedies, notably "Forgetting Sarah Marshall" and "Role Models," which came out of Universal's relationships with producers Judd Apatow and Scott Stuber, respectively. Universal also is in the thick of the Oscar race, thanks to "Frost/Nixon," from another pair of its top producers, Working Title and Imagine Entertainment.

Most important, Universal is that rare modern-day studio that still aspires to make quality films a significant part of its portfolio. "We don't make a simple, single kind of movie," says Shmuger. "The whole goal for us is to come up with a slate that cuts across all genres and makes movies of all shapes and sizes. For us, that's the ideal for a studio to aspire to."

Performance: A-minus

Quality: A-minus

Overall: A-minus

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WARNER BROS.

It was a year of highest highs and lowest lows for the studio that made its numbers so easily in 2008 that it happily pushed back the release of its latest "Harry Potter" cash machine from fall '08 to this July. The biggest payday was obviously "The Dark Knight," which not only showed off Warners' marketing and production prowess, grossing nearly $1 billion around the globe but did well enough with critics to earn one of the highest Rotten Tomatoes review scores of any mainstream release. With Chris Nolan at the helm, "Knight" is perhaps the purest distillation of Warner Bros. Pictures group chief Jeff Robinov's strategy of enhancing the studio's franchises by putting them into the hands of first-class filmmakers.

Of course, the same strategy backfired with "Speed Racer," a potential kids franchise (co-financed with Village Roadshow) that was put in the hands of the once-reliable Wachowski brothers and producer Joel Silver, only to belly-flop at the box office. It made only $43.9 million in the U.S. and only a bit more overseas.

But the lowest point was yet to come, since it was Warners that acquired (through its now-defunct Warner Independent Pictures specialty division) the U.S. rights to "Slumdog Millionaire." After seeing the movie, the studio decided it had no interest in releasing it. (If Fox Searchlight hadn't jumped at the chance to handle the movie here, Warners was considering taking "Slumdog" straight to video.) It's one thing not to see a hit when it's in the script stage, but it's another thing to actually see a great movie and still take a pass. It's a depressing commentary on the current state of today's studio culture that either Warners is run by people who don't know a great movie when they see it or they decided the studio didn't know how to market the year's best movie. Publicly, Warners says its end-of-the-year slate was too crowded to make room for "Slumdog Millionaire." In other words, when push came to shove, Warners was far more eager to release nice, innocuous comedies like "Four Christmases" and "Yes Man" than a cinematic tour de force that is now the leading contender to win the best picture Oscar.

That said, Warners did keep Clint Eastwood in its fold, releasing his critically and commercially potent "Gran Torino" at year's end. Warners also successfully absorbed New Line, providing marketing muscle for a host of its releases, which turned out to be a big plus. In fact, with "Sex and the City," "Four Christmases" and "Journey to the Center of the Earth," New Line delivered three of Warners' six top-grossing films in 2008. Warners also had solid hits with "Get Smart" and "Yes Man," which more than made up for the failure of "Body of Lies," a film that fizzled despite the star presence of Russell Crowe and Leonardo DiCaprio. But Warners is generally a well-run, strategically savvy studio that hires a lot of classy filmmaking talent even if, with the shuttering of Picturehouse and WIP, they've essentially abandoned the specialty film business.

"I think it's fair to argue that if you're an independent filmmaker that you might not want to take a picture to Warners," studio chief Alan Horn acknowledges. "But we do believe in making good, compelling movies. We had a very solid, profitable year overall. I think our production and marketing departments are excellent. We did have our disappointments, which only reminded me of a simple priority: screenplay, screenplay. It all starts with that. After that, anything can happen or, as William Goldman so eloquently put it, no one knows anything."

Performance: A-minus

Quality: B-minus

Overall Score: B-plus

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SONY

It wasn't so long ago that Warner Bros. was known as the home of movie stars. But these days, it's Sony Pictures that is perhaps the most talent-friendly studio in town. It starts at the top. Sony Pictures Co-chairman Amy Pascal works out of Louis B. Mayer's palatial old MGM office on the Sony lot, so perhaps his shrewd instincts about star power have rubbed off on her.

Nowhere is this more evident than in Pascal's cozy relations with Will Smith, Hollywood's top movie star, who has found a happy home at Sony, making personal and commercial films at the studio without sticking it with a costly stinker. It's telling that since 2001, Smith has starred in nine live-action movies -- seven of them at Sony. In 2008, he delivered "Hancock," an action thriller that was the studio's top-grossing film of the year, taking in more than $625 million around the world. Smith also starred in "Seven Pounds," a poorly reviewed drama that will turn a profit, thanks to its relatively modest $65-million price tag.

Sony also had a James Bond film, "Quantum of Solace," a series it shares with MGM. The picture surely proved the staying power of the franchise, since it nearly equaled the global box office of the preceding Bond film, despite being one of the worst Bond movies ever. Sony didn't make many art-house pictures (except for "The Other Boleyn Girl," a Scott Rudin film it co-produced with Focus Features). Once zealous in her pursuit of Oscar glory, Pascal has given up the chase. "I've made movies that I consciously did to win an Oscar and it didn't work," she told me. "If you try too hard, you learn that he's a pretty elusive little guy."

She still makes movies she loves but they're more commercially minded, like the studio's annual Adam Sandler vehicle, this time "You Don't Mess With the Zohan." It was actually the first Sandler movie to make a bit more money overseas than at home, ending up doing more than $200 million around the world. Sandler pictures aren't cheap anymore -- "Zohan's" budget was close to $90 million. But Sony has finally learned to exercise budget discipline, which paid off in 2008. Most of its hits were modestly budgeted comedies and thrillers, including Judd Apatow's "Pineapple Express," the thrillers "21" and "Vantage Point" (from in-house producers Mike De Luca and Neal Moritz, respectively) and the romantic comedy "Made of Honor."

The only flops were outside-financed films that Sony had little if any money in, including the Al Pacino fiasco "88 Minutes" and the low-budget blues biopic "Cadillac Records," financed in part by Sony Music, which was given a relatively perfunctory release despite the presence of pop starlet Beyonce Knowles. Still, Sony's days as a dysfunctional studio seem long gone, with Pascal, Sony Pictures Chairman Michael Lynton and worldwide marketing and distribution chief Jeff Blake providing mature leadership.

The studio has placed its bets on stars and the bets have paid off. "To me, that's the movie business," says Pascal. "You take risks together, you have success together. Whether it's a filmmaker or a movie star, I don't want them to come here and just do one picture. My goal is to have the kind of relationship where they want to keep coming back."

Performance: A-minus

Quality: B-minus

Overall: B-plus

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DISNEY

You have to admit that Disney is a studio that knows exactly what it wants to be -- a family entertainment powerhouse. In fact, Disney is the envy of the industry because it has three potent and instantly recognizable brands: Disney (for safe-as-milk family films), Pixar (for classy, critically beloved animation) and Jerry Bruckheimer (for blockbuster family action and adventure pictures). Even in a year when one leg of the tripod was missing -- Bruckheimer was too busy managing his lucrative TV crime-solving franchises to contribute another "Pirates" or "National Treasure" series installment (though he has more films coming this year) -- Disney kept its family factory chugging, although you could hear the gears grinding more than in years past.

The studio had a variety of hits. Some were totally expected, like "Wall-E," which kept Pixar's winning streak alive, grossing more than $500 million worldwide, an impressive number for a film that played more like a wide-eyed art film than a bread 'n' butter animation picture. But some of the hits were unexpected, most notably "High School Musical 3," which took a popular Disney TV franchise and turned it into a worldwide theatrical phenomenon.

Still, Disney's 2008 showed chinks in its armor, including the sudden collapse of its "Narnia" franchise. But Disney's only bombs were films that someone else financed, notably "Swing Vote" and Spike Lee's "Miracle at St. Anna's." Some of the films that should've been right in the studio's sweet spot, notably "Beverly Hills Chihuahua" (which didn't make it to $100 million) and Adam Sandler's "Bedtime Stories," slightly underperformed. It's not a disaster for a Sandler film to top out at a little above $100 million -- all his films routinely do that much business. But the marriage of Sandler and the Disney brand should have catapulted him higher by pairing Sandler's teen appeal with Disney's family-friendly brand. Instead, it was Fox that swept the holiday film sweepstakes with "Marley & Me," which -- irony of ironies -- was sold exactly like a Disney movie, with a cuddly dog front and center.

Being a studio with Disney's steely discipline is a double-edged sword: It gives Disney a well-defined creative focus, but it also gives the studio a limited creative palate. You always know what you're getting when you see a Disney film. But sometimes moviegoers are eager for an enchanting surprise, the kind of discovery that rarely rolls off the cautiously managed Disney assembly line.

Chairman Dick Cook says he's happy with where the studio is, both creatively and commercially. "We had a very good year," he explains. "When we made mistakes, they weren't costly financial mistakes. And we had an interesting mix of films. With 'Wall-E,' there probably wasn't a better reviewed major studio film all year."

Performance: B-plus

Quality: B-minus

Overall: B

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PARAMOUNT

For years, going back to the days when Peter Guber would have Deepak Chopra stop by to give pep talks to the troops, Sony Pictures was Hollywood's wackiest, most dysfunctional studio. But no more -- all that kooky karma has been shuttled over to the Paramount lot where, as one Hollywood agent put it, "You find it hard to build up relationships at a place where it's hard to know who's coming and who's going." In the last few years, you've needed a scorecard to keep track of who's in and who's out in the executive ranks, with 2008 seeing the arrival of a new Film Group chief, John Lesher; the departures of a head of marketing (Gerry Rich) and a head of publicity (Mike Vollman); and the naming of co-heads of production, Brad Weston and Adam Goodman, who are both capable executives but are viewed with confusion by agents and managers, who often have no clear idea which one to call about projects.

That said, in terms of market share, Paramount had a great 2008, with four of the Top 10 highest-grossing U.S. films, movies that when you tabulate their international grosses, each made more than $500 million, topped by the success of "Indiana Jones and the Kingdom of the Crystal Skull," which did $786 million across the globe. But unlike most studios, which usually own 100% of their "Harry Potter" and "Spider-Man" franchises, Paramount is still more of a creative portfolio business than a production entity.

Faced with a nearly empty cupboard in terms of big-time ongoing series when he took over the studio, Brad Grey is still playing catch-up, with surprisingly impressive results. When Marvel Studios was looking for a distributor, Grey moved quickly, doing a deal that brought Paramount "Iron Man," a hugely successful, well-reviewed summer hit. The studio also distributes product from DreamWorks Animation, which delivered two big hits: "Kung Fu Panda" and "Madagascar: Escape 2 Africa."

But unlike other studios, which reap enormous financial rewards for those kinds of mega-hits, Paramount simply gets a piece of the action because it doesn't own any of them. It gets a 10% distribution fee from Marvel, 8% from DreamWorks Animation and roughly 12% of the gross from "Indiana Jones," a franchise the studio has distributed from its beginnings. Paramount's most profitable wholly owned hit was "Cloverfield," a cool, low-budget scarefest (with no gross players) that ended up doing $170 million worldwide.

Paramount had a few minor flops, like the Iraq war drama "Stop Loss," but only one big bomb, the Mike Myers stinker "The Love Guru," which it co-financed with Spyglass.

The biggest rap against the studio is that four years into Brad Grey's tenure, Paramount still doesn't have a coherent identity. Early on, the big talk was that Grey would reinvigorate Paramount's once-potent specialty brands -- notably MTV Films, Nickelodeon and what became Paramount Vantage. Instead, the labels have withered, with Vantage laying off virtually all of its staff barely three years after its much-ballyhooed relaunch and MTV and Nickelodeon reduced to shadows of their former selves.

Paramount's Vice Chairman Rob Moore argues that Paramount has made impressive progress, noting that the studio was No. 1 in international box office in 2008, a dramatic upswing from a few short years ago. "We have as good a worldwide marketing and distribution system as any other studio," he said.

Performance: B

Quality: B-plus

Overall: B

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20th CENTURY FOX

For several years now, 20th Century Fox has earned the unenviable reputation of being the least talent-friendly studio in town, avoiding strong producers, rarely working with A-list directors and keeping an uncomfortably short leash on the filmmakers who do manage to get projects going on the lot. In the past, Fox Co-Chairman Tom Rothman (who takes the lead on production decisions) had such a good instinct for mass-appeal ideas that the studio could crank out box-office hits with mediocre talent. But in 2008, the chickens came home to roost, with the studio failing for the first time in years to place even one film in the Top 10 highest-grossing films around the world. As a comparison, Paramount released four movies that all easily outperformed "Horton Hears a Who," Fox's top-grossing film of the year.

To make matters worse, Baz Luhrmann's "Australia," the one film that was supposed to appeal to the cognoscenti and the popcorn crowd, failed to do either, staggering to a lackluster $46.9 million in the U.S., barely half what Fox executives had predicted. The studio had a few modest success stories, most notably the thriller "Jumper" (co-produced with Regency), the broad comedy "What Happens in Vegas," the remake of "The Day the Earth Stood Still" (which has done well internationally) and M. Night Shyamalan's "The Happening," which ended up making a tidy profit thanks to its strong overseas performance.

The studio's classiest fare came from Elizabeth Gabler's Fox 2000 unit, which delivered the year-end hit "Marley & Me" (though the studio hedged it bets by sharing the financing with Regency) and the year's first film, the low-budget success "27 Dresses."

Co-chairman Jim Gianopulos acknowledges that the studio got a good punch in the nose last summer, but he defends its filmmaking process. "We believe our business strategies and our studio management are sound," he says. "We had a great streak -- seven years of record profits -- and every streak comes to an end. But we'd call it a disappointment, hardly a tragedy. We expect to be back on top again this year."

Performance: C-plus

Quality: D-plus

Overall: C-minus

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patrick.goldstein@latimes.com

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