The Big Picture

by Ben Fritz

  At his new company, Goodman would have the resources and the freedom to make more movies that he wanted to make. In his case, that meant micro-budget films, a personal passion because he had long believed that originality in the franchise-dominated environment required experimentation at very low cost, so you could afford to throw a lot of cinematic spaghetti against the wall to see what would stick. “We’ll make romantic comedies, we’ll make horror, we’ll make anything the studios aren’t making, really,” he said.

  But Goodman didn’t see Le Vision as a competitor to the major studios; he saw it as a partner. That’s because his new Chinese-backed company lacked one key asset that only Paramount and Universal and their four huge competitors possessed: the infrastructure and resources to market and distribute a movie in all media—theaters, DVDs, digital formats, and television—around the world. Building such a system takes years and hundreds of millions of dollars. Le Vision might get there someday, but for now, Goodman would need to sign deals with major studios to release his films. The exact types of movies that studios weren’t making would actually be back on their slates—just financed and produced by somebody else.

  It was a potentially transformative concept, once you stepped back to think about it. A studio executive could leave the traditional Hollywood system, start his own venture with outside money, and in the process start giving studios exactly the types of movies he couldn’t make while on the inside. For movie fans who wanted more than what the franchise-dominated slates of Universal, Fox, Paramount, Warner Bros., Disney, and Sony contained, this was a big deal. Here was a way for studios to start releasing the kinds of movies they weren’t making anymore. Not in a limited number of theaters and not on digital streaming platforms, but in thousands of theaters, the way “real” movies had come out for decades.

  Of course, one former executive with one Chinese backer wouldn’t make a dent at a time when Hollywood was releasing an Alien sequel, a Pirates of the Caribbean sequel, a Baywatch reboot, a Mummy reboot, and a Wonder Woman superhero adaptation all within a three-week period. But Adam Goodman was in fact not alone. By late 2016, former executives from every major studio were starting their own ventures, with the goal of producing the types of movies that they had been struggling to make on the inside.

  Even Steven Spielberg, who spent much of the 1990s and 2000s trying to build his own studio, called DreamWorks, had given up on that dream. His company, now called Amblin Partners, raised more than $800 million to make movies that would be released by other studios.

  One of the most interesting of these efforts was set up at Sony Pictures, led by a man who had spent nearly his whole career at the side of Amy Pascal.

  Company Man

  After twenty-seven years working his way up the corporate ladder at Sony Pictures, Doug Belgrad made a huge career move—to an office on the other side of a parking lot.

  But though his new digs in the Sidney Poitier Building were just a few hundred feet from where he used to work, in the Irving Thalberg Building, Belgrad’s job was dramatically different. His office was a lot smaller, his volume of incoming phone calls and e-mails had dropped by about 75 percent, and he no longer had a multi-billion-dollar studio budget to help oversee as president of Sony’s motion picture group.

  But now, as the head of his own company, dubbed 2.0 Entertainment, Doug Belgrad has the opportunity to do something new, something that would let him make the kinds of movies that he loved but were difficult to focus on in his old job. It could spark a change in Sony Pictures’ slate in the years to come.

  Belgrad started his career in Columbia Pictures’ executive training program in 1989, after a brief stint following media industry stocks on Wall Street. He seemed fated to build a career on the business side of Hollywood, analyzing earnings on spreadsheets, but he decided that was not all he wanted. So in 1992, he became a junior executive in the studio’s production division, where he started to work his way up. He built his career by forging relationships in the 1990s with the hot young stars Adam Sandler and Will Smith and by working on some of their early films for the studio, such as Big Daddy and Men in Black.

  In 2003 he ascended to Sony Pictures’ top ranks, first as president of production, then president of Columbia, and finally president of the motion picture group. But whatever his title, Belgrad essentially had two primary responsibilities. One was helping to pick and make the studio’s movies. He read scripts, talked to talent, visited sets, and oversaw editing—all the key jobs of a production chief.

  Belgrad was close to Sandler, and later Kevin James, and played a key role in some of their dumbest but most lucrative comedies, such as Paul Blart: Mall Cop. He also helped launch a successful R-rated comedy business for Sony that included Zombieland and This Is the End. Having grown up with dreams of working in TV news, he took a particular interest in real-life dramas such as Moneyball, The Social Network, and Captain Phillips.

  Belgrad’s second role was less official but, to many people in the studio, more important. They called him the consigliere, the chief of staff, or the therapist-in-chief. What they meant was that he was Amy Pascal’s closest aide and confidant, the person who managed anything he could—agents, budgets, her late-night anxiety attacks—to make her life easier. “I think of myself like the executive officer on a naval ship for her,” he said of his relationship with his boss. “I make sure she spends her time and energy on the right things and keep stuff away from her that she shouldn’t be bothered with.”

  Because of his years working in development and production, Belgrad and Pascal spoke the same language. But he was uniquely valuable to her because he was also fluent in finance, budgets, and the bottom line, a lingo Pascal spoke haltingly and reluctantly at best. That combination is why she had pulled him up through Sony’s ranks. “I owe my entire career to you,” Belgrad told Pascal in 2014.

  As Pascal’s closest aide and a steady yin to her manic yang, Belgrad was often the recipient of her trademark e-mails freaking out about the latest script problem, conflict with Lynton, or the overall state of the studio’s slate. A big part of his job was absorbing the tension and helping his boss refocus.

  “I know you want to win more than anyone I’ve ever come across,” he wrote to her one night at 12:25 a.m. “I will leave you tonight with this particular platitude that, believe it or not, has been very helpful for me lately. If trying hard doesn’t yield the results, then try easy.”

  “I will try easy,” she wrote back. “You are my bestest pal.”

  The bestest pals were separated, though, when Pascal was fired in early 2015. Some thought Belgrad had a shot at succeeding her, but when Lynton selected Tom Rothman instead, the speculation shifted as to how long it would be until Belgrad left Sony.

  He had, in fact, been contemplating an exit since renewing his contract in 2014. Sony was in the midst of a multi-year rut in its motion picture business at the same time that the industry was shrinking and focusing on big branded films above all else. Though he didn’t wear the stress on his sleeve like Pascal, the job was becoming less rewarding for Belgrad too.

  He had grown up in an entrepreneurial family, with a father and grandfather who ran a furniture-manufacturing business in suburban Chicago, and had visions of being his own boss. This dream had been long delayed as he ascended the studio ladder. Always the loyal corporate soldier, he helped Rothman make his transition into Pascal’s job for more than a year, staying through the critical, and ultimately unsuccessful, release of the Melissa McCarthy–led Ghostbusters reboot in the summer of 2016.

  A New Start to Do the Old Thing

  At the end of that year, sitting in an office in the only corner of the second floor of the Poitier Building not taken up by Will Smith’s Overbrook Entertainment, Belgrad talked about his plans to make mid-budget movies when they were decidedly out of fashion in the industry. “The pressures on executives at studios more than ever are to think of movies as brands,” he reflected, his salt-and-pepper beard complement
ing the gapped teeth, glasses, and closely cropped thinning hair, which have long made him easily recognizable in Hollywood. “They’re fun things to play with, but the creative opportunities are not what they once were. If you’re interested in a broad spectrum of movies, it makes sense to do your own thing.”

  At the time we spoke, Belgrad was in the process of raising $250 million from investors. His plan was to leverage that money into about twenty movies over the next five years. Most would be co-financed and released by Sony, though his deal allowed him to take projects to other studios if his former employer passed.

  Most of Belgrad’s movies would cost between $30 million and $60 million, he said, the exact range that studios are largely abandoning in favor of big-budget “events” and ultra-low-budget horror films and comedies. They would be thrillers, comedies, dramas, and family films—genres that he knew well and that most studios, including Sony, had cut back on severely.

  Among his first projects was a live-action version of the children’s story Peter Rabbit, with digitally created animals, which had long been in development at Sony but moved to a greenlight with Belgrad’s money. He was also developing a vigilante movie he described as “a female-driven Taken,” a real-life story of a man who made three attempts to summit Mount Everest before Sir Edmund Hillary, and a film about a military contractor that he described as “halfway between Zero Dark Thirty and The Social Network.” None of these were revolutionary, but they were certainly the type of films that were falling out of style—like CDs or, if he was lucky, vinyl records in the age of Spotify. They were not movies for everybody, like Spider-Man and Star Wars, but if well made, they would certainly be for somebody.

  Belgrad didn’t know anything about film economics that Michael Lynton or Bob Iger didn’t, and he wasn’t arrogant enough to think he could simply make better movies on a more consistent basis than other producers. But as an experienced insider, Doug Belgrad saw the holes in the studio system.

  On one side of the equation were Sony and the other studios that would release his films. All of them, except perhaps Disney, he argued, still wanted original mid-budget movies. Their worldwide distribution and marketing systems, in fact, were built to handle around twenty movies per year, but they would be lucky to come up with a half dozen legitimate franchise tentpoles in any given year. The fewer films that movie studios released, the more free time their employees had and the easier it would be for them to release movies on behalf of other companies, for a fee.

  In addition, Sony and its competitors all had “output” deals with television and digital networks like HBO or Netflix around the world, which promised to pay several million dollars for the rights to air or stream any movie the studio released. Most of those agreements included up to about twenty-five pictures per year.

  But studios weren’t using all those slots anymore because they didn’t want to devote time and resources to identify and develop mid-budget movies and then take the complete financial risk to make them, particularly because profits from even successful smaller films were so paltry compared to what could be earned by the big brands. It was the exact problem Amy Pascal had faced with Steve Jobs, repeated over and over again. The economics of the movie business consistently pushed studios like Sony to make one $200 million reboot rather than four original $50 million films.

  For Belgrad, it was an opportunity. He could make mid-budget movies and take advantage of studio executives’ free time and the open slots in their television “output” deals. Belgrad’s new company would handle all of the up-front work and shoulder half the risk itself. So he would develop his female-vigilante script until it was polished enough to be produced, hire a star and director, and then present Sony with a ready-to-go movie, for which half of the modest budget was already covered.

  The profits from a hit would be quite small for Sony, but the risk was low too, particularly because the studio could collect a fee off the top to cover its distribution and marketing expenses. Most important, such a deal would allow Tom Rothman and his team to spend most of their time where it belonged in the year 2016: on the next Spider-Man and Bad Boys and Men in Black and Jumanji movies.

  All Belgrad needed, meanwhile, was a few hits. Four or five of them, to be exact, among the twenty-something movies he planned to produce, would make his business a success if the rest ranged from break-even to total flop. The key was keeping his overhead low. Studios were built for an age of abundant profits and annual slates of more than twenty, or even more than thirty films, which is why they had thousands of employees around the globe. As is true for any large corporation, downsizing had been painful and slow, and most studios were still struggling to get to the right size, particularly as the ground kept shifting beneath them with the rise of digital distribution, the ascendancy of television, and changes in consumer behavior.

  Belgrad planned to employ no more than a dozen people at his company, including a few creative executives to help him develop and make the movies, along with business and legal staff. “The studio appetite hasn’t really changed, but their focus has shifted tremendously,” he observed. “There’s an opportunity to complement the movies they care about most with the ones they still need that won’t move the needle on a major corporation’s ledger but could be hugely meaningful to a small supplier.”

  Whether it’s a hit or a flop, Belgrad’s vigilante movie is unlikely to merit even a raised eyebrow at the headquarters of the $36 billion Sony Corporation in Tokyo. But it could be a big deal for a company with a dozen employees and total investments of just $250 million. The financial incentives for Belgrad, in other words, are the inverse of those of the major studios. The risk of movies costing more than $100 million to make is too high for him, but the benefits of modest $35 million hits are actually meaningful.

  The unanswered question is whether audiences still care about the type of films he wants to make.

  Belgrad knows that in an age of high-quality TV, certain types of films are very risky, particularly true-life stories with a political bent, which Belgrad happens to love. One example is a book he optioned while at Sony, by the journalist Glenn Greenwald, about the cyber-surveillance whistleblower Edward Snowden. But he knows those films are absolutely the most challenging at the box office now. Steve Jobs was a flop for Universal, and the movie DreamWorks made about WikiLeaks, The Fifth Estate, was a total disaster, grossing just $3 million domestically.

  “I like those movies but I’ve got to be careful,” Belgrad admitted.

  Satellites

  Nonetheless, his company is premised on the belief that people still want to see mid-budget thrillers and dramas and comedies and family films. Studios may not have much reason to produce them anymore, but “satellite companies” like Belgrad’s do, and he wants to pump them through the studio system. His goal is to produce the kind of mid-budget hits that still pop up on the box-office charts, like Sully and Bad Moms and Sausage Party, all of which made solid if not mind-blowing profits in 2016.

  But 2016 was also a year in which the top five films vacuumed up a massive 22 percent of total ticket sales in the United States and Canada for the second year in a row. Audiences, particularly overseas, still love their franchises above everything else. And for every Sully or Bad Moms, there are innumerable mid-budget movies that disappear from multiplexes without a trace, unable to puncture the overloaded pop-culture zeitgeist at a time when almost nobody heads to the theater without already knowing what buzzed-about film they want to see.

  After a quarter-century in Hollywood, Belgrad isn’t blind to the challenges. He knows that for his or Goodman’s or anyone else’s studio “satellite” to succeed, it needs ambitions that go beyond the big screen. Belgrad called his company 2.0 Entertainment because he now sees himself as a “content executive” who develops scripts or ideas and then figures out which platform they are suited to. So though his background is in film, and big-screen releases will be a core part of his business, he also expects to be making television shows
, such as a legal procedural set in ancient Rome. In fact, if his new company ever got the chance to adapt Greenwald’s book, which he bought at Sony, Belgrad would not make it a feature film. He now thinks it would work better as a limited series on cable or a streaming service.

  “I think the scarce resource is curation, understanding the marketplace opportunity and filling it for the right price, whether it’s on TV or digital or in features,” he said near the end of our conversation.

  Doug Belgrad was for years widely regarded as one of the smartest studio executives in Hollywood, and with good reason. He knows the financial challenges of the movie business better than almost anyone. But his career peak was in the first decade of the 2000s, which means that what he knows and loves most of all are mid-budget star vehicles, the dramas and comedies that drove Sony’s success back then. They were the reason he ran production at a major studio.

  If his new company succeeds by making those types of films in the years to come, it could mark a mini-revolution. It would mean that the tastes and talents of Belgrad and so many other former studio executives launching similar ventures are still relevant despite the massive changes in the studio system. And it would mean that audiences really are still hungry for a broader set of movie options than what Disney and Sony and Warner are feeding them.

  15

  The Last Picture Show?

  Michael Lynton had never really managed to fit into Hollywood, but by 2017, he was the longest-serving CEO of a major studio. Finally, in January of that year, he announced that he was leaving the company he had led since 2004 to focus on his other job: chairman of the board of Snapchat, which that March went public at a valuation of $24 billion.