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Date Posted: 05:13:16 04/25/04 Sun
Author: Newsweek
Subject: A studio gambles on an epic series
In reply to: By Jeff Giles 's message, "Lure of the Rings" on 05:04:03 04/25/04 Sun

Crossed Swords, Cold Cash

A studio gambles on an epic series
By John Horn

Newsweek Dec. 10, 2001 issue - A lot of show-business people think New Line Cinema is nuts to have committed $450 million to produce, distribute and market three consecutive “Lord of the Rings” movies before the first film even debuts. But the way the “Austin Powers” studio sees things, it would have been far crazier not to make the trilogy.

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Moviemaking is about taking calculated risks. By adding foreign-distribution partners and merchandise alliances, New Line has trimmed its investment dramatically and feels confident about its wager. But the company’s future may already be in jeopardy: some at the studio fear parent AOL Time Warner intends to shut the division down, no matter how well the films perform.

Miramax Films acquired “Ring” rights for writer-director Peter Jackson in 1996, but balked at the $80 million combined price tag to make two movies. When Jackson walked into New Line in July 1998 he was down to his last chance. New Line cochairman Bob Shaye interrupted Jackson’s presentation. “There are three books, right?” “Yes,” Jackson said. “Then why are you only making two movies?” Within weeks, New Line committed to make all three epics—concurrently and on a substantially larger scale. The final tally? A whopping $270 million in f/x-laden production costs and an additional $180 million for marketing. (Recouping the money will take time; 10 percent of the film’s proceeds are split between Jackson and Miramax.)

Where others imagined ruin, New Line saw opportunity. The franchise-dependent studio couldn’t launch an Isaac Asimov movie series, and follow-ups to “Dumb & Dumber” and “The Mask” were stalled. With “Lord of the Rings,” New Line had name-brand recognition and two built-in sequels. Says Shaye: “That comes along once in a moviemaking lifetime.”

To manage costs, actors were hired for one long production. New Line’s Rolf Mittweg insisted that foreign exhibitors wanting the first movie buy rights to all three, sight unseen. “They did that, not knowing anything except that if the first film doesn’t work, the other two won’t work, either,” Mittweg says. When international sales are tallied, says the studio, New Line’s financial risk on each $90 million movie is but $25 million.

Nevertheless, sure things have a way of costing New Line dearly. When last year’s $80 million “Little Nicky” bombed, AOL Time Warner publicly singled out the Adam Sandler comedy for damaging company earnings, even though sister studio Warner Bros. had an equivalent bust with “Red Planet.” It’s such treatment that spurs New Line to show up its doubters with a brassy bid, especially since Warner Bros. packed vaults with “Harry Potter” riches. Even in its worst-case scenarios, New Line won’t contemplate the first film’s tanking. Says cochairman Michael Lynne: “Not working at all is not a contingency we have.” Confident or crazy? We’ll soon find out.

© 2004 Newsweek, Inc.

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