Magazine article Newsweek

Crossed Swords, Cold Cash: A Studio Gambles on an Epic Series

Magazine article Newsweek

Crossed Swords, Cold Cash: A Studio Gambles on an Epic Series

Article excerpt

Byline: John Horn

A lot of show-business people think New Line Cinema is nuts to have committed $450 million to produce, distribute and market three consecutive "Lord of the Rings" movies before the first film even debuts. But the way the "Austin Powers" studio sees things, it would have been far crazier not to make the trilogy.

Moviemaking is about taking calculated risks. By adding foreign-distribution partners and merchandise alliances, New Line has trimmed its investment dramatically and feels confident about its wager. But the company's future may already be in jeopardy: some at the studio fear parent AOL Time Warner intends to shut the division down, no matter how well the films perform.

Miramax Films acquired "Ring" rights for writer-director Peter Jackson in 1996, but balked at the $80 million combined price tag to make two movies. When Jackson walked into New Line in July 1998 he was down to his last chance. New Line cochairman Bob Shaye interrupted Jackson's presentation. "There are three books, right?" "Yes," Jackson said. "Then why are you only making two movies?" Within weeks, New Line committed to make all three epics--concurrently and on a substantially larger scale. The final tally? A whopping $270 million in f/x-laden production costs and an additional $180 million for marketing. (Recouping the money will take time; 10 percent of the film's proceeds are split between Jackson and Miramax.)

Where others imagined ruin, New Line saw opportunity. …

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