New Line conjures bigger contribution to Warner Bros.’ bottom line

New Line Cinema’s low-budget horror film “Annabelle” couldn’t have come at a better time for parent company Warner Bros.

The prequel to last year’s hit “The Conjuring” opened to $37.1 million at the domestic box office, easily exceeding expectations. “Annabelle” kicks off a busy stretch for New Line, which before year-end will release the potential blockbuster “The Hobbit: The Battle of Five Armies” and the high-profile comedy “Horrible Bosses 2.”

Those films — and “Annabelle,” which narrowly lost out to “Gone Girl” for the weekend’s top spot — could help Warner Bros. make up ground from an uncharacteristically poor summer.

Hollywood’s biggest movie studio was hurt by the release of duds like “Blended” and “Jersey Boys,” among other disappointments. This has dragged down Warner Bros. to third place in domestic box-office share so far this year, an odd spot for a company that’s finished No. 1 or No. 2 in nine of the last 10 years.

Warner Bros. also is taking a hard look at its bottom line: The company is set to embark on a round of layoffs by early November. There is no preordained number of job cuts, but the reductions are expected to be “significant,” affecting all divisions of the Time Warner-owned studio, according to a person at the company who was not authorized to comment publicly.

Enter New Line and its hoped-for hits.

“Warner Bros. has had a bit of an up-and-down year, but certainly New Line’s upcoming films have the potential to do big things at the box office,” said Paul Dergarabedian, senior media analyst at entertainment data firm Rentrak. “This puts an even brighter spotlight on New Line.”

And New Line, whose films have been marketed and distributed by Warner Bros. since 2008, isn’t shying from the bright lights. In fact, New Line is set to become a bigger part of the studio’s moviemaking equation.

The company, which became part of Time Warner in 1996, is gearing up to soon put out as many as eight films per year. That’s double the output of some recent years. (This year, New Line will release six films, and it is expected to have five in 2015.)

Warner Bros. Chief Executive Kevin Tsujihara said his company’s increased reliance on New Line was unrelated to the studio’s box-office performance this summer. Instead, Tsujihara said that New Line’s expertise in genres including horror and comedy is a strength that Warner Bros. would like to further exploit.

“New Line is a really important piece of the puzzle for having a really broad and diverse slate,” Tsujihara said in an interview. “‘Annabelle’ is a great example of the grittiness that New Line does so well. They are very scrappy, and they made a film that quite frankly wouldn’t have happened at Warner Bros.”

Indeed, horror has long been part of New Line’s strategy: The company is behind the lucrative “Final Destination” and “A Nightmare on Elm Street” franchises.

Toby Emmerich, New Line’s president and chief operating officer, said that moderately budgeted films — including horror pictures, comedies and films that appeal to women — have long been a sweet spot. Those are the sort of movies that can seem out of fashion these days as major studios are increasingly betting on big-budget tent-pole films that can cost upward of $200 million to produce.

“We offer, by nature of who we are, a counterbalance and a diversification for Warner Bros.,” Emmerich said in an interview on the Warner Bros. lot. “With filmmakers like (‘The Hobbit’ director) Peter Jackson, we will still strategically swing a little bit bigger on certain movies, but hopefully not lose focus on the genres we’ve always done well on.”

“The Conjuring” jump-started New Line’s 2013. The company had begun the year with a handful of duds — the March 2013 releases “Jack the Giant Slayer” and “The Incredible Burt Wonderstone.” Then the horror flick, which starred Vera Farmiga and Patrick Wilson, debuted in July 2013 and became a surprise smash over the summer, grossing $318 million worldwide against a budget of $20 million.

Producing a follow-up to the James Wan-directed movie may seem like an easy call. But it was important, Emmerich said, that a prequel be made inexpensively while also retaining the creative underpinnings of last year’s hit.

Although Wan did not return to direct “Annabelle,” he remained aboard as a producer. The movie, which cost $6.7 million to make, was instead directed by “Conjuring” veteran John R. Leonetti, who served as cinematographer on the first film. Having the creative team from “The Conjuring” involved in the prequel ratcheted up expectations for moviegoers, Emmerich said.

“‘The Conjuring’ is a very high bar,” Emmerich said.

“Annabelle” centers on a demonic doll who wreaks supernatural havoc on a married couple. The creepy plaything, named Annabelle, had a small but memorable role in “The Conjuring.”

The film is unlikely to best “The Conjuring” at the box office, but its modest budget means that the project already is profitable. The film’s $37.1-million opening weekend performance handily beat the studio’s expectations of a $20-million bow. (It also has taken in $23.6 million internationally since debuting overseas Thursday.)

The movie narrowly missed out on the top spot at the weekend box office, finishing about $400,000 behind 20th Century Fox’s “Gone Girl,” which had a budget roughly nine times larger. Although “Annabelle” lacks the prestige of the David Fincher-directed drama, it is shaping up to be a major moneymaker.

Low-budget horror pictures may not be flashy, but they help the bottom line, said David Saunders, partner and film agent at talent agency APA.

“There has always been an audience for horror movies, but I am amazed by the number of studios who don’t want to do horror at all,” said Saunders, who represents “Conjuring” director Leonetti. “Some are absolute breakout films, and they are absolute pure profit.”

In a quirk of scheduling, New Line did not release a film during the first six months of this year. It kicked things off in July with “Tammy,” starring Melissa McCarthy. The comedy turned in an opening weekend haul of $21.6 million in the U.S. and Canada and has taken in $97.8 million worldwide. (The film has yet to debut in Australia.)

The movie’s opening performance was unfavorably compared to some of McCarthy’s recent hits, including “The Heat,” which debuted to $39.1 million. Media reports that labeled “Tammy” a box-office disappointment surprised Emmerich, who said the film’s moderate budget made it “really successful by any economic measure.”

Warner Bros. CEO Tsujihara concurred.

“If ‘Tammy’ was a failure, I’d like to have 24 of them,” he said. “We often look at and judge a film’s success or failure on one metric, which is box office. But correlating box office to profitability is not always an exact science.”

Next up for New Line is “Horrible Bosses 2,” which stars Jason Bateman, Jason Sudeikis and Charlie Day, and is a follow-up to the raunchy 2011 film that grossed $215.8 million worldwide. It opens Nov. 26. Then the final film in “The Hobbit” trilogy premieres Dec. 17. It comes on the heels of last year’s “The Hobbit: The Desolation of Smaug,” with took in $960 million globally.

Among New Line’s five 2015 films are a traditional sequel to “The Conjuring,” the Reese Witherspoon comedy “Don’t Mess With Texas” and the Dwayne Johnson-starring disaster film “San Andreas.” As of now, the company has seven films planned for 2016. After that, Emmerich expects to make six to eight pictures annually.

“It just feels like it is good to have a more diverse portfolio and have more spins of the wheel, because you are going to have hits and misses,” he said.

But first, the company is looking to finish off the year strongly, without any misses. “Not a loser in the bunch — it would be great to have that at least one year,” Emmerich said.

Warner Bros. is hoping for it, too.

Twitter: @DanielNMiller