In the latest sign that Hollywood studios are reconsidering the independent movie market, Paramount Pictures announced that its main studio will absorb the marketing, distribution and physical production departments at its specialty label, Paramount Vantage, the Wall Street Journal reports.


The consolidated structure will save the studio "several million dollars a year in overhead," said Rob Moore, vice chairman of Paramount Pictures.


In recent years, Hollywood studios have been quick to establish specialty labels to take advantage of the burgeoning market for independent movies , small, inexpensive films such as "Juno" and "Little Miss Sunshine" that can become profitable if they achieve wide commercial success.


But recently, more films have entered the marketplace, driving up budgets, increasing competition, and causing some studios to pull back from a business that once seemed so lucrative. A flood of nontraditional financing sources, from hedge funds to independent investors, has driven up the number of films released in theaters. "The business has gotten a lot more competitive, with a lot of new buyers and a lot more money in the space, and this is the best new organization for managing the business to an effective margin," said Mr. Moore.


Paramount's move to merge the departments comes about a month after another studio, Time Warner Inc.'s Warner Bros., closed two of its art-house labels, Picturehouse and Warner Independent Pictures; earlier this spring, it absorbed a third specialty label, New Line Cinema, into the main Warner Bros. studio.


While Paramount Vantage has recently been involved in award-winning films, including this year's Oscar-winning "No Country for Old Men" and "There Will Be Blood," for which Daniel Day-Lewis won best actor, the label makes only six to eight pictures a year , too few to sustain its own staff, according to Mr. Moore.

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