More upstart media

Michael Cieply has an article in The New York Times about a new film studio concept:

Doing well is difficult. So is doing good.
In Hollywood, doing both turns out to be more complicated than you might think.
Participant Media, the film industry’s most visible attempt at social entrepreneurship, turned seven this year, without quite sorting out whether a company that trades in movies with a message can earn its way in a business that has been tough even for those who peddle 3-D pandas and such.
The Beaver, Participant’s latest picture, is a flop. A mental health-themed drama with Mel Gibson in the lead, it has taken in less than $1 million at the domestic box office since opening early last month, though it cost about $20 million to make, and was backed by a vigorous effort to build a following among those who treat depression.
Despite accolades— Participant took eleven Oscar nominations in 2006, and films like The Cove and An Inconvenient Truth later became winners— nothing from the company has approached blockbuster status. The biggest ticket-seller among its films— it has produced about thirty— was Charlie Wilson’s War in 2007. A star-packed tale about the unintended consequences of America’s past dealings with Afghanistan, it took in just $66.7 million in domestic theaters.
And Participant’s owner, the eBay co-founder Jeffrey S. Skoll, is still pouring in money. In an interview, Mr. Skoll put the amount he has invested at “hundreds of millions to date, with much more to follow.”
Yet Mr. Skoll last week described his growing enterprise— which also publishes books, produces television programs, has a wide Internet presence through its TakePart social action network, and owns a major stake in Summit Entertainment— as only the beginning of a media empire that he and his partners expect to surpass eBay in terms of impact, if not profit.
“This is the very early stage, as far as I’m concerned,” said Mr. Skoll, who joined Participant’s chief executive, James G. Berk, in a broad discussion of their experience in an industry in which many players share their commitment to social causes, but only rarely have tried to build a business around their views.
Ted Leonsis, with his indie-minded SnagFilms, and Philip Anschutz, with his family-oriented Walden Media, have both made forays into film-related social entrepreneurship. But neither has matched Mr. Skoll’s attempt to penetrate the studio system by financing and producing a broad range of pictures that are intended to set off not just ticket sales, but social and political action campaigns.
In the past, those have aimed to pressure senators into ratifying the New Start arms control treaty (via Countdown to Zero) or to press for reauthorization of the Violence Against Women Act (with North Country).
Mr. Skoll and Mr. Berk spoke in a conference room on the third floor of their new quarters in Beverly Hills. The offices, Mr. Berk said, are made entirely of recycled material— the carpet comes from old tires, but the look is stylish and green. From the second floor, Mr. Skoll operates philanthropies to which he has donated, by his count, about $1.5 billion.
Eventually, Mr. Skoll said, Participant is expected to become self-sustaining, though both expansion and the soft performance of some films have kept it from making a profit to date.
In strictly financial terms, said Mr. Berk— who was previously the chief executive of Gryphon Colleges, Fairfield Communities, and Hard Rock Cafe International— Participant’s film business appears to perform “just above the median” for similar size companies, thanks to a slight edge in home entertainment sales. Those are helped by long, intensive campaigns that urge like-minded activists to rally for years around message films like An Inconvenient Truth, the global warming documentary.
In measuring its success, Mr. Berk added, Participant sometimes resorts to an unusual standard: On losers, the company assesses whether Mr. Skoll could have exerted more impact simply by spending his money philanthropically.
By that measure, Waiting for Superman, about the failures of public education, was a hit, Mr. Berk said. It had just over six million dollars in worldwide ticket sales, but managed to put the issue of teacher competence into what he calls “the pool of worries” for millions who were caught up in a fierce discussion of the film’s premise, that failing children are hindered by union-protected teachers.
Speaking privately to avoid conflict with the company, some filmmakers who have worked with Participant expressed concern about turning off potential viewers who usually are not looking for new worries when buying a ticket. Mr. Berk and Mr. Skoll acknowledged that they had done best with smaller films that garner intense interest from those who share their views. But they continue to believe they can break through to a large audience.
A test will come in August with the release of The Help, a film based on the best-selling novel about racial reconciliation that was made by DreamWorks for release by Disney, with backing from Participant. Another, in October, is Contagion, a pandemic-themed thriller directed by Steven Soderbergh, and set for release by Warner Brothers, with Participant among its producers.
“They’re the first and probably the only place you’ll go if you have a movie that’s about issues, and also entertaining,” said Michael Shamberg, who is a producer of Contagion, and counts Erin Brockovich and World Trade Center among his credits.
On a smaller scale, Participant later this month will join Magnolia Pictures in distributing Page One: Inside The New York Times, a documentary about The Times and some of its media journalists. The film’s aim, according to Mr. Skoll and Mr. Berk, is to provoke discussion about the role of traditional media in a news-gathering process that has been changed by new competition and the Internet age.
(In promoting Page One, some Times employees have made appearances for which expenses were paid by various film festivals, and one promotional trip by a reporter was paid for by Magnolia, which receives a contribution from Participant for social action screenings and panels. Eileen Murphy, a spokeswoman for The New York Times Company, said The Times would reimburse Magnolia for the trip.)
After founding Participant in 2004, said Mr. Skoll, an early lesson was the folly of relying piecemeal on the major studios for film distribution— an arrangement that almost always meant unfavorable terms. In 2007, the company bought a stake in Summit, and remains its second-largest shareholder. It also made an agreement under which Summit would distribute as many as eighteen films for Participant under terms Mr. Skoll finds more favorable.
“It gives us, as a regular studio, a different view” of how movies can be marketed through activist networks, Robert G. Friedman, Summit’s chief executive, said of the arrangement.
Another lesson involved spreading risk. In 2008, Participant formed a joint venture with Imagenation Abu Dhabi, a division of the government-owned Abu Dhabi Media Company, to finance its films. According to Mr. Skoll and Mr. Berk, the Imagenation joint venture is obligated to underwrite its slate, though the Abu Dhabi partner is permitted to remove its name from any film with which it is not comfortable. Through a spokeswoman, Danielle Perissi, executives of Imagenation Abu Dhabi declined to discuss the venture.
Both executives said the reliance on money from a foreign government with extensive oil interests would not affect their own choices; overdependence on oil is a core concern at Participant. But the financing may sometimes complicate a project.
In one instance, Summit joined Participant and Imagenation in buying an option on the rights to a New York Times article from 26 December 2010, about the final hours on the Deepwater Horizon drilling rig in the Gulf of Mexico. According to Mr. Skoll, Mr. Berk and others, a script being written for the producer, Lorenzo DiBonaventura, is expected to focus on the heroism of men on the rig. But any resulting movie, like the rest of Participant’s output, will aim to provoke social or political action. If that were to impede further off-shore exploration here, it might give an advantage to a foreign oil exporter.
“We are not participating in this film in any way, we have only optioned the rights to the story,” Ms. Murphy said of The New York Times’ involvement. She said The Times had the right to withhold its name from the movie if it became uncomfortable with it. Any further involvement by The Times or its employees would have to be approved by the paper’s standards editor, she said.
Ultimately, Mr. Berk said, a Deepwater Horizon film, like most Participant movies, would probably involve a cluster of five or six issues. Those may include oil dependence, climate change, care for the oceans, and, not least of all, he said, “the need for transparency and accountability.”