[How long have you been in the business? And what drew you to it?]

I've been in the business about 25 years. ... I was drawn to the business because, as a kid, I grew up in the sort of picture palace of the dark and, always found [movies] to be a transcendent experience, to be able to laugh and to cry and to respond to the ritual of being with a lot of other people and responding to that story. I really wanted to be a part of it -- not in front of the camera, but behind the scenes.

What kinds of things did you do when you first started?

I largely worked inside the studio system most of my adult life. I started out reading scripts. ... All the executives were too busy, so they had to have somebody read the scripts and basically boil them down into a page and sort of respond as to whether or not they should read it or not. So I started out in the story department, actually, at Paramount Pictures. It's a great training ground, because you see everything that comes in. You can actually have a creative response to something, as opposed to sometimes growing up on the floor of the set, where it's a little more difficult sometimes to be able to respond creatively to sort of the bigger picture.

How have things changed over the years?

Well, what has changed dramatically, over the last 20 years is the control of content that the studio held. Twenty years ago in this business, all studios had to have all rights in perpetuity, and financed their pictures completely. ... They're looking now to mitigate their risk. They're looking to bifurcate deals: "You take America, we'll take Europe, somebody else will take Asia." If you look at the financial structures on deals today, there's several different parties involved.

What I think we're headed to is to the very sizeable distribution companies, Fox, Paramount, Disney, holding onto their distribution, but really getting off risk in terms of financing content. It's changed dramatically. ... So studios in large part no longer green-light movies. They facilitate the movies happening and coming together, but it's basically "OPM" -- other people's money. ...

It's a much more open field, where a lot of new parties are actually entering the equation in order to be able to make the movies. They'll ultimately still decide what they'll distribute and what they won't, and they'll still be socially responsible. They won't do graphic violence, they won't do graphic sex; there will be sort of limits to what they will release theatrically. But it's much more a process of a lot more parties involved, including banks -- German funds, in particular, in 2001.

How have the studios morphed over the years?

I think the studios have morphed largely to deal with the ever-changing nature of the audience. ... And the bottom line for the studio is to make money. They won't make art for art's sake, but they'll make art to make money. I think the viewing habits of the audience have changed. ...

The studio will always change to fulfill the needs of the market. John Calley said it really well about six months ago [in an interview I read]. John Calley was chairman of Sony Pictures. He said, "I'm just tired of having to dynamite people out of the houses in order to get them to see movies." The fact of the matter is [that] there are those audiences who still need to leave the house. Who are they? They're teenagers, which is the [largest] audience on a worldwide basis, because they've got to get away from Mom and Dad. There's kids -- they've got do something on Saturday. And there's young adults who, in large part, need to find a cheap place of entertainment in order to be able to go on a date.

The older demographic has really faded from moviemaking. The more sophisticated and edgier material that would appeal to an intelligent adult audience is really now on television, which I think is probably a really good thing. If viewing habits hadn't changed, you may not see "The Sopranos" on HBO or "Sex and the City." But the adult audience is very comfortable seeing a movie on television after six months of a theatrical release. So the content, therefore, has needed to be adjusted for these audiences who need to find entertainment and who need to leave the house. That's why there's so many wonderful projects that really can't get made anymore, because teenagers don't want to see it. The kids who saw "Toy Story" and "Shrek" don't want to see it, and, the young sort of dating audience don't want to see it. So the sort of pictures like "Random Hearts" are really going to be seen in the future on television, and not have a theatrical release.

What are these giant companies to the studios?

There were two historic things that happened over the last 12 years that changed the fact of the business. Actor fees were getting a little out of control. But Columbia made a deal, rightly or wrongly, for Jim Carrey for $20 million for "Cable Guy." That blew the lid off star rates. That changed the business dramatically, because everybody else needed to get to that $20 million dollar range. ...

Secondly, there was a movie at Disney that was not testing well called "Dick Tracy," but Disney had a huge investment on it. It was coming out in June, so they had to really go against this sort of word of mouth and really heavily promote it. So they promoted it significantly higher than any other movie that's ever been. So the marketing cost on that got to a certain level, and everything else had to adjust. So between Jim Carrey and "Dick Tracy," everything went up significantly.

That became a problem for the studios, because they wanted to try to find a way to try to mitigate their risk. So they got involved with other partners that they normally wouldn't -- a German fund splitting up their rights.

There was a great cartoon in The New Yorker about eight years ago, where there were 100 guys sitting around a round table all in suits, all with grey ties, each looking at each other, and said, "Let's green-light this, boys." You know, before, it was one guy; now there's a hundred people around the room. And in order to be able to get those hundred people around the room -- I'm speaking metaphorically -- you need a star. You need a homogenized piece of entertainment, action-adventure, comedy -- something that is not particularly edgy, particularly sophisticated, that everybody can feel comfortable with, that is not making a political statement, that is not making a racial statement -- but is basically just good, fluffy entertainment.

What has that done to guys like you?

Well, we ourselves, we're small, independent. We've made pictures like "Big Night," and "The Opposite of Sex." We have another picture, "Whole Shebang," which Lion's Gate is releasing in the fall; but they're smaller movies. We've largely made pictures for the specialized area. But it's impossible to really make a living, cover your overhead, be able to continue to fund your next year. So what we've done is we've joined forces with a German company, who basically now bankrolls us. And we have a mandate to now move into the big action-adventure area, the teenage comedies, the family event movies in the area of, like, "Toy Story" or "Bug's Life."

We've had to change. We'll continue to work in the specialized area, but we've now needed to grow with the market and provide entertainment for the worldwide market, as opposed to the sort of more art house movies. We're going to keep our hand in that, but we've had to really change.

Do you have any personal feelings about that?

Well, I think the most dramatic thing for me to adjust to is that I've never been a television advocate. I've largely seen television as sort of fodder. But I think television has changed -- significantly for the better -- in the last couple of years. Who would have thought that HBO or Showtime would become, really, the sort of cutting edge of entertainment -- certainly in America? It's readjusted us to look more towards television in order to be able to provide more sort of sophisticated adult entertainment, simply because we can't make that for theatrical anymore. It's been an adjustment but ... if you're going to survive and be prolific and try to make something that's of value, you've got to adjust.

How has the management style of the studios changed?

The culture has changed by virtue of, 20 years ago, you had one guy who would make a decision as to whether or not something would be green-lit. Today, you've got multinational companies coming together to green-light a movie. You have to stay in touch with your e-mail, because your German partner needs to respond on a casting choice or your Japanese partner needs to sign off on the male lead.

It's not just one guy coming in to fund a movie. It's tens or several different corporations coming together. That's changed significantly. Before, you could have a handshake on a deal and say, "We're moving forward on it." Twenty years ago at Paramount, you made a picture commitment with 15 pages of documents. Today, it's probably six yards high. Legal has become a very big force in it. And that's pretty boring, but necessary.

What does all that do to the kinds of films we see?

I think that the kinds of films that we see are becoming more and more homogenized, because you have more and more people involved in the decision-making process. A particular character or a particular scene might offend somebody in Europe. A particular point of view might offend somebody in Japan. And so things are coming a little closer into the middle, the standard being worldwide entertainment.

When I was starting out at Paramount 20 years ago, we never really considered the foreign market, which is now about 60 to 70 percent of the total revenue on any given picture. Twenty years ago, it was probably 10 percent or 15 percent. So anything we got was sort of gravy in that place across the ocean. Today, it's a very, very big part of the profit we turn on a picture.

Where does a $200 million movie make its money?

The biggest sweet spot of a blockbuster movie is in the video window. The cost of manufacturing for a video is very small. Box office performance of a blockbuster movie is going to drive sell-throughs, maybe to 10 million or 12 million units, which is significant. The theatrical on a big blockbuster is largely a loss leader, because you spend so much money, maybe $40 million, in P&A [prints and advertising] just in America. And let's say the picture does a hundred million dollars in North America; half of that will come back to the studio, so you're looking at $50 million dollars; $40 million of that goes to exporting it with publicity and advertising and your television spots. So basically, maybe you've got a few million dollars that comes back into recoupment.

But it's all the other areas that really are the areas where companies are able to survive. Most major companies have output deals with, like, Showtime or HBO or Starz. And those particular windows, what they get is largely based on box office performance. So you could pick up $10 million to $50 million just in cable alone, depending upon the level of box office in your output. Then you've got, on top of that, the extraordinary sweet pie of home video and DVD, which really is the bottom line in terms of recouping and making a profit.

How much room is left for independents?

In the independent world, because you're not necessarily dealing with huge P&A, it's much easier to sort of monitor the spends and to see where you're ultimately going to recoup. Most companies from Sony Classics, the Lion's Gate, are pretty accurate in terms of their reporting structure. ... I think that there's still room in the pie for an independent company on a successful movie to see a profit, particularly since a lot of the independent distributors have fairly strong output deals now with the cablers and in home video.

What keeps you excited?

I'm still that five-year-old kid who really responds to the transcendent nature of movies. I still enjoy seeing a story well told. I still go and see the big movies and the small artistic pictures as well, because there's such variety out there. What also keeps you going is seeing a great movie and, hopefully, with the optimism that you, too, can be part of a great movie.

Any predictions about the future?

The future is really hard to predict because I think people will always respond to the nature of a good story, whether it be on the face of your wristwatch or a screen a hundred feet high. ... I can't really say how things will change from the standpoint of delivery ... But I don't think that people will ever shy away from an emotional communion, whether it be on television or on the big screen with character in action who fulfills a lesson. And I don't think that will ever change.

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