NewsWire: Latest Flop Caps a Painful Year at New Line Cinema - latimes.com

Here's an article about New Line Cinema (the studio financing The Lord of the Rings films) and their current financial status (including some particulars about LOTR). I'm sure they're betting on LOTR to buoy their bottom line substantially.

Thanks to our exclusive "man-on-the-'net", Dan M., for the heads up!

Latest Flop Caps a Painful Year at New Line Cinema
Latimes.com - December 1, 2000

If "Little Nicky" is any indicator, New Line Cinema may be about to relive its darkest hour.

The ill-conceived Adam Sandler comedy cost a whopping $80 million to make, more than $35 million to market, and it won't gross more than $45 million in U.S. theaters.

The maverick company with a stellar track record for hitting it big with smaller, relatively inexpensive movies, such as the "Austin Powers" series, is playing the major studio game of paying top dollar for stars, scripts and sets.

And "Little Nicky" is just the first in a series of upcoming big-budget blockbuster bets for New Line, an autonomously run unit of Time Warner.

The last time the house that Freddie Krueger built tried to play the big-studio game was in 1996, two years after the then-29-year-old independent was bought by media mogul Ted Turner. The suddenly brimming company coffers prompted New Line to brazenly rush to make big, risky movies. The result was a string of epic flops, including "The Long Kiss Goodnight," "Last Man Standing" and "The Island of Dr. Moreau."

Time Warner, which had bought Turner's empire, wanted to sell off the company founded by Robert Shaye, unable to justify owning a studio outside of its powerful Warner Bros.

But a return to judicious movie selection put New Line back in the hit business with "Rush Hour" and "The Wedding Singer."

Now there's "Little Nicky," one of four Sandler movies the studio has committed to make. And there's the $90-million Warren Beatty saga "Town & Country" and the equally expensive "Rush Hour 2." New Line's riskiest upcoming project is its "Lord of the Rings" trilogy, which will cost $270 million.

This second round of heavy spending will no doubt be discussed as Shaye and his longtime button-down lieutenant, Michael Lynne, renegotiate their contracts with Time Warner this month.

"I think New Line is already scrutinized closely," said Lynne in a telephone interview from New Line's Manhattan offices. "We have a budget process and will continue to have it."

Within the budget parameters set by their parent company, Lynne and Shaye have always enjoyed a free hand. But Time Warner's pending merger with America Online could change all that. Under the new merger structure, Shaye and Lynne will report directly to Time Warner President Richard Parsons, rather than to their old buddy Turner.

Lynne declared that New Line is on its way to having its second-highest-grossing year in its 33-year history with "Final Destination," "Next Friday," "The Cell," "Love and Basketball" and "Frequency."

But grosses are not profits. The highest-grossing film among them, "The Cell," which cost $45 million, took in just over $60 million. That's nowhere close to New Line's last giant hit, "Austin Powers: The Spy Who Shagged Me," which last year raked in $205 million domestically.

Losses from "Little Nicky" could cancel out any profits when added to the company's other 2000 box-office stinkers--"Bamboozled," "Lost Souls," "Price of Glory" and "Turn It Up."

Asked if New Line's production president, Michael De Luca, might be in a vulnerable position, Lynne said, "Mike De Luca's job is not at issue." Lynne, however, refused to let De Luca be interviewed for this article.

"In this business, you have times when the product works and when it doesn't," said a characteristically understated Lynne. "There's no question that the higher-budget films involve greater risk than the films that are more modestly budgeted. But that's true for everyone."

New Line's riskiest project by far is its forthcoming "Lord of the Rings" trilogy, whose 14-month mega-production of all three films being shot in New Zealand is expected to wrap Dec. 20.

Ignoring the obvious, Lynne said, "We're not in the big-budget business. We're in a lot of different businesses." He said New Line's focus remains genre films costing under $15 million and mainstream movies priced in the $25-million to $50-million range.

This is not 1996 revisited, insisted Lynne.

"There were lots of lessons to learn but, as a general rule, New Line has had its greatest success with pictures in the $30-million to $40-million range that have made a lot of money.

"Certain pictures require a bigger investment and greater risk, but we're careful when we do them."

New Line protects itself by selling foreign rights before production begins, which Lynne claims typically cover 50% to 70% of a film's budget.

On "Lord of the Rings," Lynne says "we have close to $180 million in international guarantees," plus merchandising advances and tax-incentive deals in New Zealand and elsewhere that limits New Line's financial exposure on production "to not more than $20 million a picture."

Lynne says that more than 60% of "Little Nicky's" budget was covered by advances from foreign pre-sales.

"The film didn't work the way we wanted it to, but we're in the Adam Sandler business that began with 'The Wedding Singer' and we're involved in his next three films."

Sandler is one of Hollywood's biggest comedy stars. His last movie, Columbia Pictures' "Big Daddy," grossed $163 million in the U.S. Disney's "The Waterboy" took in $161 million, and "Wedding Singer," his first crossover hit, grossed $80 million.

When Sandler was shopping his pitch for "Little Nicky" as part of a two-picture deal, it's not surprising that New Line, Disney and Columbia were all interested.

New Line, however, stepped up and made the deal, which guaranteed Sandler $20 million against 20% of the gross studio revenues on each picture, plus $3 million to be divvied up between him, the other writers and producers.

The two pictures, the second one a comedy entitled "The Johnson Five," were originally to cost a combined $100 million. Extensive special-effects pushed the "Nicky" budget to $80 million.

New Line not only chose to go forward anyway, but it is also co-financing two other Sandler productions.

"There was no way we could have made it cheaper," Lynne says of "Nicky."

The long-delayed "Town & Country," a straightforward romantic comedy starring Beatty and directed by Peter Chelsom, also wound up costing a lot more than anticipated. Plagued by major script and other production delays, the film's original budget of $55 million has soared to $90 million. After missing numerous release dates, the film is now set to come out March 16.

"Do I think it should have cost less? Yes," Lynne said. "We ran into troubles in production that we did not anticipate. It required some reshooting, particularly to effect the ending. I think we got it right."

New Line also wound up paying through the nose for its sequel to "Rush Hour," which just started shooting with an approved budget of $90 million--nearly triple the cost of the $33-million original.

Because the original was so successful, grossing $260 million worldwide, star Chris Tucker's fee catapulted to $20 million from the $2 million he received on the first film.

"You have to pay talent what sequelization requires," Lynne says.

Fortunately, he won't have to do that for "Little Nicky 2."

* * *


New Line's Big-Money Gambles

"Little Nicky"
A Steven Brill-directed comedy starring Adam Sandler as the youngest son of Satan and a perky angel.
* Cost: $80 million
* Release date: Nov. 10, 2000

"Town & Country"
An ensemble romantic comedy directed by Peter Chelsom, starring Warren Beatty, Diane Keaton, Andie MacDowell, Garry Shandling, Jenna Elfman, Nastassja Kinski and Goldie Hawn.
* Cost: $90 million
* Release date: March 16, 2001

"Rush Hour 2"
Sequel to the 1998 hit buddy/action comedy in which Chris Tucker and Jackie Chan reprise their roles as unlikely detective partners. Brett Ratner again directs.
* Cost: $90 million
* Release date: July 20, 2001

"The Lord of the Rings"
A trilogy of epic live-action movies based on J.R.R. Tolkien's classic mythological adventure tales, directed by Peter Jackson.
* Cost: $270 million
* Release dates: Dec. 19, 2001, December 2002, December 2003

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