A Battle-Scarred Revolution

Joe Roth suspected eight months ago that his Revolution Studios was in for a rough ride this spring and summer.

In a hurry to make its mark, the young company had committed nearly $350 million to a cluster of movies that included two from filmmakers Ron Shelton and Martin Brest. Each would write, produce and direct his own picture -- and enjoy the prerogative of final cut, depriving Revolution of creative control over their work.

Another film, starring Bruce Willis, was an expensive international military adventure that probably would test the patience of audiences who were getting their share of foreign affairs on CNN.

Roth, by his own account, resolved to get a better grip on the creative process and costs. But it was too late to avoid several high-profile train wrecks. Willis missed badly with “Tears of the Sun,” as did Shelton with “Hollywood Homicide” and Brest with “Gigli.”

“Failure is a very good teacher,” Roth said in an interview Wednesday. “It hurts so badly, you have to sit back and stare at it. It’s humiliating. You want to learn from your mistakes and make it better.”

Luckily for Roth and his studio, Eddie Murphy, who had just come off three flops, hit with “Daddy Day Care,” as did Adam Sandler with “Anger Management.” But the misses have left the 3-year-old movie outfit and its financier-distributor, Sony Pictures Entertainment, in an embarrassing place that takes some of the glow off Roth’s reputation as one of Hollywood’s smartest operators.

The disappointments have pinched Sony, which depends on Revolution for nearly half its film schedule. And they come at an awkward time, as Sony Corp. -- whose studio chief, John Calley, is planning to retire -- reorganizes its management around a governance committee that includes Roth as a key player, even though he holds no executive position in the company.

While stressing that Revolution is soundly profitable and has delivered net gains for Sony and other investors, Roth, 55, said he has learned some hard lessons: to put storytelling first, keep firm control over development and production of his own pictures and to avoid R ratings when they get in the way of the audience, as happened with Jennifer Lopez’s young fans when they were shut out of the R-rated “Gigli.”

Launched in May 2000, Revolution is a partnership among Roth, Sony, News Corp.’s Fox Entertainment unit and Liberty Media Corp.’s Starz-Encore cable group, along with several individuals who help set up the company.

Roth owns about 62% of Revolution, while the individual investors hold stakes in return for a total equity investment of $250 million. Sony Pictures, which owns 7.5%, provides about half the production cost and all the print and advertising money for each Revolution movie.

According to Sony and Revolution, the arrangement has been profitable for all involved -- though Revolution has had the better end of the deal. The Santa Monica-based company will make close to $300 million from its first 17 films, Revolution partner Rob Moore said. Sony, which carries most of the movie costs, will gain in excess of $100 million from that batch, said sources close to Sony.

Six of the movies will end up in the red, Moore said. The loss from “Gigli” is estimated at $35 million. “Hollywood Homicide” will lose about $30 million, and “Tears of the Sun” about $20 million. Beyond that, “Tomcats,” “Punch-Drunk Love” and “Stealing Harvard” have lost about $10 million each.

But the clunkers have been offset by the spectacular success of “XXX,” which has taken in about $275 million at the worldwide box office, as well as “Maid in Manhattan,” “Black Hawk Down,” “Anger Management” and other winners.

“We’re very happy with the arrangement,” said Amy Pascal, head of Sony’s Columbia Pictures unit. “For every ‘Gigli,’ there’s a ‘XXX’ or “Maid in Manhattan.’ ”

Still, the studio’s parent saw profit drop 98% in its fiscal first quarter, in part because films from both Revolution and Columbia have done worse than last year’s blockbusters, which included “Spider-Man” and “Men in Black II.”

Sony’s top U.S. executive, Vice Chairman Howard Stringer, this year named a seven-member committee to supervise the studio, with a special eye on trimming costs. Pascal and Roth serve on the panel, which assumes greater authority as studio chief Calley approaches retirement this fall.

In the past, Stringer has made clear that he has favored Roth as Calley’s successor. In an announcement Wednesday, however, the company confirmed that operations would be overseen by Pascal, along with fellow executives Jeff Blake and Yair Landau.

For the moment, at least, Roth said he is focused on Revolution.

“I love running the company and having the freedom to do other things, like directing movies and producing the Academy Awards,” he said.

In 2004, Revolution will deliver eight pictures, including a moderately budgeted drama titled “Willy” that will be directed by Roth. Ice Cube will star as a Louisiana junior high school custodian who becomes a basketball coach.

The most expensive of those films, a comic book adventure called “Hellboy,” will be budgeted at about $60 million. The average production cost of the slate is expected to be about $40 million, far less than the industry average and well below the $75 million that went into each “Hollywood Homicide,” “Anger Management,” and “Tears of the Sun.”

One of the company’s touchier adjustments will be its new approach to filmmakers. Roth is determined to avoid most “final cut” directors, though he made an exception in bankrolling a western called “The Missing” for Ron Howard, with whom Roth made “Ransom” when he headed Walt Disney Co.’s studio.

“When you do make mistakes, you can make course corrections. Our slate of 2004 represents a complete course correction,” Roth said.

He stressed that next year’s films were largely developed by Revolution, which earlier had gotten up to speed by picking up completed scripts and some projects, including “Black Hawk Down” and “America’s Sweethearts,” that had been cut loose by other studios.

Another difficult issue facing Revolution is whether to continue existing at all.

Roth originally designed the company around distribution contracts that expire in 2006, after making a minimum of 36 films, in which it would own all the underlying copyrights. Because the company rushed to production at a quicker-than-anticipated rate, it now appears on track to fill its slate more than a year early.

Roth said he and his executive partners -- Moore, Tom Sherak and Todd Garner -- agreed over dinner recently to continue with the company.

“We’re very happy with the way things are,” said Roth, who expects to talk with his investors at year’s end about Revolution’s next phase.

“As long as the Sony people are happy, we’d love to roll it over and extend it.”

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Upcoming films

Four films due out this year from Revolution Studios:

Radio: Drama set in a small South Carolina town; featuring Cuba Gooding Jr. and Ed Harris; release date: Nov. 21; budget: $35 million

The Missing: Suspense thriller about a young woman raising her daughters in the wilderness; directed by Ron Howard and produced by Brian Grazer; featuring Tommy Lee Jones and Cate Blanchett; release date: Dec. 10; budget: $65 million

Mona Lisa Smile: Drama set at Wellesley College in 1953; starring Julia Roberts and Kirsten Dunst; release date: Dec. 19; budget: $65 million

Peter Pan: Live-action fantasy of the famous tale; starring Jason Isaacs and Jeremy Sumpter; financed by Revolution Studios, Sony Pictures and Universal Pictures; release date: Dec. 25; budget: $100 million

Sources: Revolution Studios, Times research

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Mixed picture

The top and bottom performers for Revolution Studios:

Hits

*--* Domestic International Budget box office box office Movie (millions) (millions) (millions) XXX $85.0 $141.9 $133.4 Anger Management* $75.0 $133.8 $55.7 Black Hawk Down $75.0 $108.6 $61.3 Daddy Day Care* $60.0 $100.6 $23.1 Maid in Manhattan* $55.0 $93.9 $71.1 America’s Sweethearts $46.0 $93.6 $67.0

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Misses

*--* Domestic International Budget box office box office Movie (millions) (millions) (millions) Gigli** $54.0 $3.8 $0 Hollywood Homicide*** $75.0 $30.0 $0.1 Tears of the Sun $75.0 $43.5 $14.2 Stealing Harvard $25.0 $14.0 $0.3 Tomcats $11.0 $13.6 $9.9 Punch-Drunk Love $29.0 $17.8 $6.8

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*Still in international release.

** Still in domestic release.

*** Still in domestic and international release

Sources: Revolution Studios, Times research