EXCLUSIVE: Every distributor arriving in Park City today faces challenges, but none comes here with a more intriguing narrative than Fox Searchlight and its long time leaders and stalwart Sundance buyers Stephen Gilula and Nancy Utley. Just as Disney ended 2017 by leaving Hollywood gobsmacked with the announcement it had acquired Fox — with little specificity on how the latter’s robust film operations would be absorbed — Fox Searchlight had begun to assert itself as a front runner in the awards race with not one but two films. The Guillermo del Toro-directed The Shape of Water and the Martin McDonagh-directed Three Billboards Outside Ebbing, Missouri have been gobbling up the early awards and figure to be well represented in the Oscar nominations announced Tuesday. Fans of the indie ecosystem hope that Disney understands that while the grosses of most prestige films pale compared to Marvel superheroes, Pixar, Star Wars spinoffs and live action cartoon fairy tale remakes, there ought to be a place for a company that in recent years steered three films to Best Picture Oscars with Slumdog Millionaire, 12 Years A Slave and Birdman.
Searchlight has experienced Sundance highs (Napoleon Dynamite, Little Miss Sunshine, Beast of the Southern Wild and Brooklyn) and lows (The Birth of a Nation and Patti Cake$), but they have always been formidable risk takers here. As best they can in a transitory phase, they address the future of Searchlight at Disney, the problems facing indie companies as streaming options rise, and the fortuitous timing of a dominant awards season when your company is in play.
DEADLINE: Beyond Disney’s seismic acquisition of Fox and what it means for the future of Fox Searchlight, we are in a moment where you feel the ground shifting beneath you and things are changing right down to whether the future of these films is in theaters, or on streaming platforms. If there is an answer to where all this is headed and whether it will be good for the prestige film game, I just don’t have it.
STEPHEN GILULA: I would agree that I’ve not seen anyone predict with great foresight what’s going to happen. I think we’ll only know in hindsight. I think that there are too many unknown questions, and the questions. The complexity of the question and therefore the complexity of the answer is, it’s not just the business side of it, it’s the audience side of it. Because now we’re all chasing audiences who have become very fickle in what they want to watch, where they want to watch it. I do believe though that there’s a core theatrical feature business that will survive and ultimately will do just fine. What size it will be, how many films a year it will be, is unclear.
DEADLINE: People within the indie ecosystem look at the Disney deal with concern, and they hope this mashed up monolithic studio will prize an established prestige film company within Disney’s blockbuster silo system. That merger could be a year away. How are the two of you feeling as you head into Sundance this year?
UTLEY: We’ve been veering more toward homegrown productions and some of the fruit of that labor has been The Shape of Water and Three Billboards, but also Battle of the Sexes and movies going forward like our Wes Anderson film Isle of Dogs coming in the spring. But we’re certainly open to acquisitions. We’ve had some beautiful acquisitions in the past and we’re going with a completely open mind. We have room in our schedule but we’re not desperate so we’re in the best place we can be in terms of that. We’re not going to allow ourselves to be pushed into paying a price we don’t feel is fair value just because someone else’s business plan allows them to pay that. So we’re going in with the intention of threading the needle and hoping we come back with something we love.
DEADLINE: How did your involvement on Guillermo del Toro’s The Shape of Water start?
UTLEY: Pre-script stage. Guillermo pitched us basically an idea and an image. He had worked on the figure for a couple of years…
GILULA: Of the creature.
UTLEY: Of the creature, on his own dime, with his own artists. He had the idea for the movie and this first look of what the creature would look like, which is not that close to what it ended up looking like in the details but the gist of it was there. We’d wanted to work with Guillermo for a long time, we were excited about him going back to his kind of more personal filmmaking like Pan’s Labyrinth, and just decided to go on that ride with him.
GILULA: We basically committed on an idea. He was very passionate about his idea, and this creature he had been working on, and from that point we put him together with a writer and we developed it and financed it so it is truly homegrown. The interesting opportunity that Searchlight has in this situation is we can be a home for filmmakers who still want to make films for audiences in theaters. And we can do it for the world. When we are rolling out Shape of Water, it just opened number one in Mexico, and Australia and other countries come [this] week. We strategize the whole world and we’ve done that on The Grand Budapest Hotel and Birdman and Black Swan, The Best Exotic Marigold Hotel. We’re the only sort of independent company that directly manages and controls the distribution worldwide. Even in Miramax’s glory days, they and everyone else were selling off territories.
DEADLINE: What about Three Billboards?
GILULA: That was a package that had been developed by Graham Broadbent who produced our Best Exotic Marigold Hotel. He produced Martin McDonagh’s first two films, so he had the script, Martin attached and Fran McDormand attached, and they were trying to put together the financing, working on their old style of territorial sales. They came to us because they had a great experience on Marigold Hotel and asked do you want to consider this? We jumped in and we got very actively involved in the production, but essentially it was their package. Film4 had been involved in helping to finance the development, so we partnered with them. But we were very active in the production, and then we were handling the worldwide distribution because Film4 doesn’t have distribution. It’s working extremely well. We’ve opened in the UK, we’ve opened in Australia. It’s doing really well. Again, we’re able to strategize and execute for the whole world.
DEADLINE: Is it that more advantageous to do it that way than coming to Sundance to compete for a finished film?
UTLEY: There are pluses and minuses. When you’re seeing a finished film the good news is you know what it is. You’re often with an audience that has given you feedback, you’re around press who are tweeting their hearts out, so you have a better idea of what your end product is. But you often don’t have the world which is really hard for us to do financially when we just have North America or US or limited territories. You don’t get to put any sort of stamp on it. And there might be something in the film where you think, oh, if that had only been addressed.
GILULA: So you eliminate the production risk that comes from reading the script to execution. It’s hard to end up making a really good movie. So if you see a film that you really love, you say okay, we know what we have, but we don’t control Europe or Australia. We’ve done that. We only had North America on Slumdog Millionaire, so you have to be open and not locked in.
DEADLINE: Let’s address the elephant in the room. Talking to people for Sundance, the topic that comes up first is, will Disney prize a prestige film company that has won, how many Best Picture Oscars?
UTLEY: Yeah. Three Best Pictures.
GILULA: We’ve won three, and we’ve had 14 Best Picture nominations, 13 under Nancy and my watch. The basic message…you’ve seen [Disney’s] statements, we’ve heard nothing other than the fact that they like the idea of Searchlight. The pending Disney transaction is quite a ways off and is having no effect on what we’re doing. We’re doing what we do every day, working hard on our slate. We have a lot of films in the pipeline that are in post-production, a number of them dated. Isle of Dogs, Super Troopers 2, the Marielle Heller film Can You Ever Forgive Me? We have a new Yorgos Lanthimos film, and a new Keira Knightley film called The Aftermath.
We released 11 films last year, as many as we’ve ever released. We’re looking to release probably eight, which is an ideal number for us, but we’re fully open for business and we’re doing what we do. We have great years, good years and some not so good years, but we are in this as a long term business. But you have to have your eyes open to what’s going on in the world. We have new competitors. We had a period there with Paramount Vantage, with Warner Independent. We’ve always had competitors, but the new competitors are different, and the audience is shifting. So we can’t sit back on our laurels, we’re always looking forward.
UTLEY: But the signals in the Disney investors’ calls, and also things that have been said to Fox specifically seem to indicate one of the things they really want out of this acquisition is access to quality movies like the ones we make.
GILULA: Yeah, original films. We fill a gap in their portfolio of films.
DEADLINE: Have stepped into the part of the business that others are accessing, where some films will be released through a streaming service?
GILULA: Not in any concerted way. We’re open-minded to learn, but we’re so far away from that and we’ve got films in the pipeline and we’re in pre-production on three films. We have great filmmakers who still want to make movies with us and so we’re happy about that. We haven’t had to address that other stuff, yet.
UTLEY: I would say there’s no doubt that it has gotten progressively more challenging to get someone to leave their home and come see an independent film in a movie theater, and we’ve gotten lucky with films like The Shape of Water and Three Billboards that had enough juice around them to make that happens. But it is getting progressively harder so we do have to be open to new ways of conducting business.
DEADLINE: Searchlight made one of last Sundance’s biggest deals with Patti Cake$, this female empowerment movie that everybody loved and numerous distributors bid on. What did Three Billboards or Shape of Water have that Patti Cake$ did not?
UTLEY: It’s a good question. One thing is the level of known talent in the movie, on the film making and the acting sides that get the press to go to it at a festival. We took Patti Cake$ to some festivals we went to, and the screenings just weren’t very well attended by anyone who could help the movie. And then, for some reason, the level of reviews just didn’t…I think it’s a really, really great movie and Geremy Jasper just got nominated for outstanding first time director. But it didn’t get that proclamation of being in the 90% range on Rotten Tomatoes and stuff like that. It didn’t happen. And it is a heartbreak, when it is a really find movie like that one.
GILULA: It goes to the question of the audience shift. The indie movie going audience in general has been a shrinking pool. A lot of those are the people who are avid streamers. The calculus in their minds, the decision making is shifting and being more selective as to what’s a theatrical movie versus a streaming movie. It’s very hard to predict; even having great reviews or a festival acclaim doesn’t necessarily mean it’s going to translate to the ticket sales. So it’s some combination of all of the above. If you look at all the Sundance films last year, there was one super successful film, The Big Sick, and it was a very rapid fallout after that. The other one was Wind River, a very mainstream kind of movie. Both were affiliated with established talents and producers. The true indies are having a really tough time. We had Beasts of the Southern Wild, but you would be hard pressed to go back in time and find a true unknown first time indie that succeeded like that one.
So the whole idea of indie…there’s one thing where it’s independently financed but still has established, recognizable talent and producers versus people who are really out there doing it on their own. It’s a very difficult hurdle.
UTLEY: Patti Cake$ was actually an 83 on Rotten Tomatoes which is pretty darn good.
DEADLINE: So is there a formula when you are sitting in that room, getting excited about the movie you’re watching, wondering if it will make audiences come out to see it in a theater? Because it seems harder for a Beasts of the Southern Wild to not slip through the cracks.
UTLEY: We talked about that for a long time back then, for more than one day because we knew how risky it was. But finally we just decided that if we thought it was that great, somebody else is going to think it’s great.
GILULA: We’ve learned a lot, learned and relearned what we don’t know, and when you have a movie market, there will always be surprises and you always get a lesson. I think that the disappointments haven’t discouraged us. We just realize that the bar is higher.
UTLEY: It also depends what you pay. We didn’t pay for Beasts of the Southern Wild near what we paid for Patti Cake$. The market changed and we allowed ourselves to be inflated up on that movie. We really should have bought that at the Beasts of the Southern Wild price or just said, it’s too rich for us.
GILULA: So the cold reality of today is that with the amount of resources being thrown around, it’s one thing if you’re a theatrical company based on your numbers, versus a streaming company which has a completely different business model. It’s hard to compete head to head. We’re not unwilling to, but we just have to not lose sight of that.
DEADLINE: Everybody talks about discipline, but there is always a deal that makes you go, whoah.
UTLEY: It’s hard to walk away, at least for me, because of the passion level and the desire to work with the people. And also, to be victorious in the hunt. But we have to keep our heads about us.
DEADLINE: I’ve heard that this Sundance might not see the eight-figure deals that happened last time, with Patti Cake$, Mudbound and The Big Sick. Is the feeling this year that the buying crowd is going to be maybe a little more sober, or is it that when you get up there in that thin air and fall in love, all bets are off?
GILULA: We have been so immersed in our current business that I don’t know what the rest of the business is thinking at all. All of us veterans are very, very, very conscious of everything that’s gone on, pro and con. We bought Brooklyn two years ago and that was a fantastic acquisition and we were thrilled with that. So we are very open minded but we’re not foolish and we haven’t lost our minds or forgotten our history. So I don’t know what to expect. I haven’t actually had time to sit and think and handicap, but look, we’re prepared to make a fast decision, we’re prepared to respond, and we’re going in open minded. After we see a movie we’ll sit down and have the hard conversations as we do on all these films whether we buy them or don’t.
DEADLINE: If we contrasted your slate to the one five years ago, is there a smaller reliance on the acquisition of finished films?
GILULA: There’s less reliance because we’ve stepped up our production.
DEADLINE: Is that better business to do it that way?
GILULA: It is because as Nancy says, we control our destiny on those films, we control the world and we have a relationship with the filmmakers from inception. We understand their visions. And sometimes, the thin mountain air and the heat of the acquisition marketplace, that process sets a different expectation with the filmmakers you haven’t worked with all the time. The great thing here is, it’s not like we have slots that we need to fill. We’re more fully booked, but if there’s something that’s great we can pick it up. Because of the way we operate, we need fewer of those films, and so it raised the bar for the ones we buy.
DEADLINE: It’s a wide open awards year, but your films are winning the majority of the prizes so far. Have you had a year like this?
GILULA: Not since 2014, when we had both Grand Budapest Hotel and Birdman. And Wild with Reese Witherspoon. We had one year with both Black Swan and 127 Hours, and then that year with The Descendants and The Tree of Life, but three years ago it felt most similar, when Budapest and Birdman were serious contenders. And watching Beasts of the Southern Wild getting nominated in 2012 was also a win. Nancy is incredibly experienced at running these campaigns.
UTLEY: What’s rare here is how close these films are in gross, and how close they were in release dates. They’re like little ponies that keep running next to each other. Luckily, our filmmakers are incredibly collegial with each other as are the casts. They’ve all gotten to know each other from being in a lot of the same rooms at the same time, and it has been very pleasant.
DEADLINE: You mean to say you haven’t gotten the call from one producer griping about that New York Times ad bought for the other film?
UTLEY: We haven’t had any kind of pettiness like that on these movies.
GILULA: I was trying to think of an analogy here and someone suggested that if I was a parent and I had two kids who were both athletes and got into the Olympics in the same event, what would you do? You’d be like the Manning parents if their sons faced off in a big football game. You love your kids, you root for both of them, but you can’t determine who is going to win. We’re in that position, we’re blessed and the feeling is phenomenal.
UTLEY: It’s nice that one hasn’t smashed the other; they both keep trading off getting their days in the sun.
DEADLINE: You have been at this game a long time…
GILULA: Eighteen years together, and Nancy has been at Fox 32 years.
DEADLINE: We’ve spoken about the challenges of this business right now. What are you most encouraged by, heading into this Sundance?
GILULA: I would say the following, that this fall has given all of us reason to feel incredibly encouraged about the theatrical market. I don’t recall a period where so many films, our two films plus Darkest Hour, Lady Bird, I, Tonya, Phantom Thread coming on, Call Me By Your Name…there is so much breadth of movies doing so much business, plus the wider release films like Molly’s Game and The Post. I think that right now we’re in a moment that is defying conventional wisdom, that when the good movies are there, the audience will come. I think this current period is really encouraging.
DEADLINE: Yes, but the pool is shrinking as you’ve said. Shouldn’t there be a collective effort among your fellow prestige distributors to win back the movie going audience?
GILULA: I don’t think there’s a collective effort on the part of the producers and the distributors, but I think there are fascinating efforts led by some exhibitors. I think Landmark still does what it does but the Alamo people have come on really strong promoting movies, doing things to make movie going exciting. They have a particular focus coming out of Austin in specialized film, and they’ve done interesting things with some of our movies, like The Shape of Water, and with NEON’s I, Tonya, and A24’s Disaster Artist. There is innovation going on in social media. It’s still hard, because the sheer volume of content being created and offered to the audiences is just massive.
UTLEY: The other thing that is happening, is that movie going begets movie going. So if people go out to one of these films and they have a great time they’re much more likely to see the other five or six or seven or eight that are out there. You need something to be the catalyst to just start a movement, get people chatting and seeing these movies. This year, for whatever confluence of things happened, there’s a lot to talk about, a lot of movies are interesting and timely, they’re not boring, they’re lively and entertaining and people are coming out.
DEADLINE: When people talk about the rise of these tech company streaming services, they say that Amazon knows exactly your tastes and that their research is really complex. With movie companies, it still feels like you put your film out there, do your marketing campaign, spend on commercials and take your chances. Is there a move on the horizon to more precisely target and have a direct relationship with your audience like Netflix and others do?
UTLEY: There’s definitely an interest we and our competitors have in delving more into big data. Fox has an initiative under Julie Rieger’s group that is doing a lot of that work and we’re able to ride the tail of that and find things out about our consumers that we didn’t know three years ago. Some of the social media agencies are very adept at finding out who responded, who watched what trailer, what else did they do, what else did they buy, and connecting the dots so that we’re not relying so much on intuition, but are adding some really much needed information.
DEADLINE: What lesson came out of that that, after doing this 32 years, surprised you and was useful?
UTLEY: You learn sometimes that your assumptions aren’t correct. We just did some work on Wes Anderson, and who goes to Wes Anderson movies. One of the things we learned is he’s got a really young audience, coming up. So he had an audience that moved along with him over time, but he’s continuing to get 18 to 24-year-olds that are intensely interested. That’s not something I maybe would have guessed.
GILULA: These are people who weren’t first weekend movie goers for Rushmore. They weren’t around to see Rushmore. It’s a whole new generation of fans who’ve discovered him since Moonrise Kingdom. You can learn a lot from social media, but you well know that the world is so much more complex. Newspapers are no longer the central source of information and we have to move with that. I think that the biggest question ultimately is A, can you effectively reach the people who would be interested in a very crowded, noisy market. And B, can you do it more cost efficiently, because the burden for a little company like us is that our marketing costs can exceed our negative costs or our acquisitions costs. Those are huge challenges and hurdles for our business.
DEADLINE: I watched a CBS Sunday Morning piece recently on the hottest toy of the just concluded Christmas season. Its manufacturer said that for the first time, he didn’t advertise on television at all, when in the past you spent a fortune and knew quickly whether you had a hit or a flop. It sounded familiar to any film executive. The fever was built all online, at a fraction of the cost. Is there a lesson here, when you look at the fixed cost of P&A? Do you reach more than one potential movie goer for every ten that watches the commercial?
GILULA: Maybe one out of a hundred on some of these things.
DEADLINE: It does make you wonder about such an inefficient spend at a time you’re trying to rein in costs and indie filmmakers are making these movies for lower budgets, out of necessity. Do you need the commercials to protect your investment, or will social media and the influx of tech companies provide salvation in cutting down those marketing costs?
UTLEY: We’re certainly all getting smarter about it, in how to use the digital piece. We’re watching what other people are doing, not only in our industry but in other industries, where there is less reliance on television and where newspaper ads have gone way, way, way down. All that money is in digital, and over time maybe it can be less in aggregate as we keep getting smarter.