Fox Searchlight is flush with Oscar nods. But will it face change following Disney sale? - Los Angeles Times
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Fox Searchlight is flush with Oscar nods. But will it face change following Disney sale?

Fox Searchlight co-presidents Nancy Utley and Stephen Gilula at Fox Searchlight headquarters in Los Angeles. The specialty film label dominated the Oscar nominations this year with "The Shape of Water" and "Three Billboards Outside Ebbing, Missouri."
(Genaro Molina / Los Angeles Times)
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On the hard-fought road leading to the Academy Awards, few studios have punched above their weight class as consistently as Fox Searchlight Pictures. With three best-picture Oscars in the last 10 years, out of 12 nominations, the specialty film label has outpaced far bigger rivals thanks to a consistently off-beat slate of independent releases that have clicked with audiences and academy voters.

This year, Fox Searchlight easily dominated with 20 nominations, more than any other studio and tying its record from 2015. Driven by “The Shape of Water,” with 13 nods, and “Three Billboards Outside Ebbing, Missouri,” with seven, Fox Searchlight is on an Oscars hot streak. The accolades are expected to help both films turn a profit — no small accomplishment at a time when traditional indie distributors are being squeezed by streaming competitors.

Since it was founded in 1994 — at a time when Miramax ruled the American indie business — Fox Searchlight has operated with a remarkable degree of autonomy as part of the larger Fox entertainment empire. But with Walt Disney Co.’s pending acquisition of most of 21st Century Fox, the art house studio now faces the biggest change in its history, one that has some people in the indie business concerned about its fate under new ownership.

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And yet the calm co-captains steering the ship show no signs of fear or panic. Nancy Utley and Stephen Gilula have brought an unpretentious leadership style to Fox Searchlight since being named co-presidents in 2009.

“The signals from Disney, both public and private, have been that they appreciate the movies we make,” Utley said in an interview at her office on the Fox Studios lot. It’s the same office she’s occupied for years, having started at Searchlight in 1999 after a tenure as a marketing executive at 20th Century Fox.

Seated nearby, Gilula said he remains optimistic about the Disney acquisition. “It might be a really good opportunity for us,” he said, citing the streaming services that Disney will launch in two years as well as its possible majority ownership of Hulu. New streaming audiences could give Fox Searchlight releases more exposure, while Disney would benefit from more diversified content to populate its new service, he said.

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Meanwhile, “we’re still hard at work doing what we do,” Gilula said.

Searchlight has an annual release slate that averages eight to 10 movies a year. The typical Searchlight-financed production is a small to mid-budget movie, anywhere from $10 million to around $20 million. The company employs about 100 people, mostly based in Los Angeles and New York.

Although it is believed to account for a relatively small share of 20th Century Fox revenue — executives won’t disclose finances — Searchlight lends cachet to the studio and is an important draw for talent.

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Over the years, Searchlight has mastered the art of the platform release, which involves slowly rolling out a title across screens and gradually building audience awareness, according to Paul Dergarabedian, senior media analyst at ComScore.

“It makes a movie that’s 3 months old like ‘Three Billboards’ seem fresh and new,” he said. “Their track record is almost second to none in terms of the specialty films they release and the way they release them.”

Gilula, who co-founded and headed the Landmark Theatres cinema chain, was named Searchlight’s head of distribution in 2000. Today, he spends much of his time on the distribution and exhibition side of Searchlight, while Utley concentrates on marketing as well as fielding scripts.

Together, they have developed a reputation as hardworking executives who remain attuned to the artistic needs of the filmmakers they champion. In the volatile indie business, where companies come and go with alarming speed, they have created an island of relative stability.

Searchlight reports to Stacey Snider, the head of 20th Century Fox Film, who has green-light authority on films that Searchlight produces, although Utley and Gilula said she has never vetoed a project.

“We’ve had very, very stable, unwavering support from senior management,” Gilula said. “It allows us to focus on the work. When you’re able to focus on the movies and the marketplace as opposed to looking over your shoulder, that really helps.”

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The management stability at Searchlight has come in part from orderly transitions of power. The division was first headed by Tom Rothman, who helped to develop the label and is now chairman of Sony’s Motion Picture Group. Searchlight was later headed by Peter Rice, who now serves as president of 21st Century Fox.

The planned Disney acquisition marks the latest shift and has caused anxiety among some who have worked closely with Searchlight. When “The Shape of Water” won best picture at the Critics’ Choice Awards, producer J. Miles Dale made an impassioned plea to Disney Chief Executive Bob Iger.

“I don’t know if Bob Iger is out there or not,” Dale said at the ceremony. “I don’t know what’s going to happen with this Disney thing. But I urge you not to mess this up.”

Iger has voiced support for Searchlight and other Fox movie businesses, saying during a reporters’ call shortly after the acquisition was announced in December that “we like being in the business of making quality movies. We fully intend to stay in those businesses.”

Disney owned Miramax for years and granted the Weinstein brothers wide creative latitude with the exception of NC-17 movies. But Disney executives clashed repeatedly with the volatile Weinsteins. Disney parted ways with the brothers in 2005 and ultimately sold Miramax five years later. The brothers’ successor company has been teetering following a barrage of sexual harassment and assault claims against Harvey Weinstein.

The signals from Disney, both public and private, have been that they appreciate the movies we make.

— Nancy Utley, co-president of Fox Searchlight

For now, Fox Searchlight is focusing on its two Oscar front-runners, both of which are expanding their theatrical footprints following the nominations. “Shape,” which has never played at more than 1,000 screens, is expanding to more than 1,800. “Three Billboards” reached about 1,600 screens in early December and has declined since then, but will expand again to around 1,400 screens.

“It’s great for any of our films to get such a great level of recognition, but the fact that these are home-grown productions that we’ve been involved with for a long time makes it extra special,” Utley said.

Historically, about half of Fox Searchlight’s pictures have been acquisitions of finished or near-completed projects from festivals such as Sundance and Toronto. The other half have been movies that Searchlight has financed or co-financed.

The company is planning to increase the number of home-grown productions. “The acquisitions market has been difficult with players such as Amazon and Netflix coming in with unlimited pocketbooks,” Utley said. “The other part is that getting involved earlier allows us to have a little more of an imprint on the final product.”

Fox Searchlight financed the $19.5 million “The Shape of Water,” joining the project in the pre-script phase after visiting director Guillermo del Toro at his home and seeing an early maquette of the movie’s supernatural aquaman. It also owns worldwide distribution rights on the film, which has so far grossed $31 million in limited domestic release.

The company is a co-financer on “Three Billboards,” with Britain’s Film4, and also owns worldwide rights. Its involvement on the Martin McDonagh-directed drama, which is estimated to have cost around $12 million, originated through producer Graham Broadbent, who worked with Searchlight on “The Best Exotic Marigold Hotel” and its sequel.

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“Three Billboards” has grossed $33 million domestically. Searchlight’s biggest hits to date remain “Juno” and the Oscar-winning “Slumdog Millionaire,” which each took in more than $140 million domestically. The company said such crossover smashes are rare and that it considers a film that grosses over $40 million domestically to be a home run.

Fox Searchlight is also preparing for the March release of “Isle of Dogs,” the latest movie from Wes Anderson. The co-production with Indian Paintbrush is Anderson’s highly anticipated follow-up to “The Grand Budapest Hotel,” which Searchlight released in 2014 and became the director’s highest-grossing movie.

A commitment to auteur filmmakers has long been a part of Fox Searchlight’s business. The company released Steve McQueen’s “Shame” in 2011, but the NC-17 drama had a mediocre box office performance. But Searchlight stuck with the British director and two years later released his “12 Years a Slave,” which won the Oscar for best picture.

Searchlight’s main competition has been Focus Features, the prestige film division of Universal, which this year racked up an impressive 14 nominations for “Phantom Thread” and “Darkest Hour.” Two former studio-based indie labels — Paramount Vantage and Warner Independent Pictures — are no longer active.

The indie market has become increasingly challenging as small films without recognizable names are having a tougher time luring the public away from their Netflix queues. Some of Searchlight’s recent acquisitions from the Sundance Film Festival have failed to catch on with audiences — including “Birth of a Nation,” “Patti Cake$” and the documentary “Step.”

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Searchlight paid a reported $9.5 million for the rap-drama “Patti Cake$” — the company hasn’t officially confirmed the figure — but the movie, which debuted in August, only grossed a small fraction of that in cinemas. “We allowed ourselves to be driven up in price past the point where it made logical sense,” Utley said.

This year, Searchlight didn’t buy anything at Sundance. Instead, it is betting more on its self-financed productions, which include the new film by the acclaimed Greek filmmaker Yorgos Lanthimos set in the 18th-century court of Britain’s Queen Anne. “The Favourite,” starring Emma Stone and Rachel Weisz, is a co-financing deal with Film4 and producer Ken Kao’s Arcana.

Searchlight is also expanding into new territories. “Three Billboards” will have a limited China release starting in March in partnership with a local distributor. It is the first Fox Searchlight-owned movie to receive a Chinese release.

“We’re hoping this is opening a door for us,” Gilula said.

Despite a rapidly changing industry, Utley and Gilula firmly believe that there’s still a consumer appetite to watch independent movies in cinemas.

“We’ve been at it a long time,” Gilula said. “It’s hard, but we’re still able to attract these great filmmakers who take a chance with us, and we’ll support their vision.”

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