Why are some of the US studios closing or restructuring their international production and acquisitions departments? John Hazelton reports

These are interesting times in the international divisions of the Hollywood studios. In a series of shake-ups that have claimed the jobs of some well-known international executives, several studios have recently made significant changes in their approaches to international acquisition, production and even distribution.

It began last March, when Warner Bros shut down the international acquisitions unit it had launched just 15 months earlier under former New Line executive Camela Galano.

Warner’s move was followed in June by the closure of Disney’s local-language production unit, Walt Disney Studios International Productions, which under head Jason Reed had scored a hit with Chinese co-production The Magic Gourd but followed it with less successful outings such as Indian project Zokkomon and Disney High School Musical: China.

Also in June, Paramount shut down its Paramount Worldwide Acquisitions Group — a unit whose pick-ups for various territories have included Made In Dagenham, The King’s Speech and Sundance grand jury prize winner Like Crazy — and laid off most of the unit’s staff, including Los Angeles-based group head Matt Brodlie and several executives outside the US.

In what may be a related move, Paramount last month said it will centralise management of its global theatrical distribution operation in Hollywood. Paramount Pictures International (PPI) president Andrew Cripps, to who Brodlie reported, has been asked to relocate from London to Los Angeles.

‘One of the great advantages for us has been the ability to access the News Corp entities deeply embedded in these markets’

Sanford Panitch, Fox International Productions

Neither Paramount nor Disney will discuss their international retrenchments. But Richard Fox, executive vice-president, international at Warner Bros Entertainment, says the closure of Galano’s unit — whose English-language acquisitions for various territories included District 9, Dream House and Conan The Barbarian — was prompted by a dearth of product suitable for acquisition across a number of territories.

“We found out we weren’t doing international acquisitions, we were doing country-specific acquisitions,” says Fox, who also oversees Warner’s long-established and still thriving local-language production operation. In future, Fox adds, acquisitions will be made either by Warner’s country managers in France, Germany, Italy, Spain and the UK or by the studio’s business affairs staff in Los Angeles.

The other studios, meanwhile, have maintained their international production and acquisition structures, or at least made only minor changes in approach.

Sony is still an active buyer of domestic and international rights to English-language projects through its Sony Pictures Worldwide Acquisitions Group, headed by president Steve Bersch. Recent buys have included international rights to Quentin Tarantino’s Django Unchained and a host of territories including Belgium and France on The Adventures Of Tintin: The Secret Of The Unicorn.

The studio’s local-language production operation, overseen out of New York since London-based president Deborah Schindler became a consultant to the division, is now most active in Russia, Germany, Brazil and Asia.

Twentieth Century Fox’s Fox International Productions (FIP) has remained a force in local production with a string of successes including Chinese production Hot Summer Days, Indian hit My Name Is Khan, Korean thriller The Yellow Sea and recent German release What A Man.
FIP’s Los Angeles-based president Sanford Panitch puts the division’s success down in part to a policy of working closely with local partners, some of them pay-TV platforms owned or part-owned by Fox parent News Corp.

“One of the great advantages for us at this company,” says Panitch, “has been the ability to access the News Corp entities that are deeply embedded in these markets, whether it’s a Sky Italia or Sky Deutschland or a Star Asia or Star India.”

Universal recently lost its international production head when London-based Christian Grass stepped down from his post as president of Universal Pictures International productions & acquisitions. The division’s projects have included French hits Heartbreaker and Gainsbourg and multi-territory pick-ups Kick-Ass and Inglourious Basterds.

David Kosse, London-based president of Universal Pictures International, says the decision not to replace Grass does not mark a change in acquisition strategy (the studio recently appointed former Focus Features executive Peter Kujawski as New York-based executive vice-president of worldwide acquisitions).

On the local production side, however, there has been “a subtle shift to be slightly more opportunistic”, Kosse says.

‘We found out we weren’t doing international acquisitions, we were doing country-specific acquisitions’

Richard Fox, Warner Bros Entertainment

The studios’ evolving approaches to international production and acquisition may in part be the result of new ownership or new executive regimes. But they also represent an attempt to adapt to a changing marketplace.

International industry players suggest some of the studios may have expanded into international production and acquisition too quickly, over-reacting to spikes in market shares for local product in volatile territories such as France. Now, with DVD no longer providing a reliable safety net, the studios are pulling back.

The studios’ increasing reliance on globally appealing tentpole films could be another factor. For companies that can take in several billion dollars a year in the international marketplace, returns of $50m or even $100m from international productions and acquisitions may simply not be worth the time and effort.

“That’s a great business for a small company,” suggests former international studio executive Randy Greenberg, now president of entertainment consultancy the Greenberg Group, “but is it the right business for a billion dollar-plus organisation?”

The studios’ restructuring moves may also be designed better to integrate international production and acquisition activities into increasingly global multi-media distribution operations.

The success of Warner’s local-language production and acquisition business — whose recent hits have included German smash Kokowaah and Spanish action comedy Torrente 4 — can be put down in part to the scope of the studio’s international theatrical, video and TV distribution network and the fact that network is also overseen by international production chief Richard Fox.

As Fox puts it, for the studio’s international production operation to work, “we need to use our infrastructure”.

Similar thinking appears to be behind Paramount’s decision to unite not just its domestic and theatrical distribution operations but also its global home entertainment, digital licensing and television licensing activities under a new home-media distribution banner.

The move, the studio said, “will allow us to more effectively take advantage of worldwide opportunities, adjust to the changing marketplace and propel us forward on a unified, global basis”.