NEWLINE/28 inches/LK1st/mark2nd

By FRANK SWERTLOW

Staff Reporter

When it was founded three decades ago, New Line Cinema was a tiny boutique delivering such edgy fare as “Pink Flamingos” and “Reefer Madness.” Later, it became the low-rent home of the blood-curdling Freddy Krueger.

No more. New Line has gone from the trailer park to the penthouse. Last year alone, the studio released a roster of films that garners eight Oscar nominations, including “Wag the Dog,” “Boogie Nights,” “Deconstructing Harry,” and “The Sweet Hereafter.”

And the studio is poised to score yet another success with its long-awaited release, “Pleasantville,” which opened last Friday and is expected to grab its own share of Oscar nominations.

Awards aside, real respect in Tinsel Town only comes at the box office and New Line is delivering in that area as well.

Last month, it was the No. 1 movie studio in Hollywood, thanks to the success of the Jackie Chan-Chris Tucker action comedy, “Rush Hour,” which has pulled in $110 million in domestic grosses. The studio boasted 27.2 percent of the market in September, nearly 12 points higher than its nearest competitor, Twentieth Century Fox not too shabby for a company founded in 1967 as a distributor of art house and specialty films to college campuses.

As of Oct. 19, New Line placed sixth in the studio wars ahead of much larger Hollywood players like Universal Studios Inc. with 8.6 percent of the 1998 market and $448.9 million in grosses. That’s already about 2.5 percent higher than the studio’s market share in 1997, when it grossed $374 million.

“We don’t put all our eggs in one basket,” said the 33-year-old production head, Mike DeLuca. “We cast a wide net in terms of the genre types we make and our budget ranges. We try to be ahead of the curve and don’t copy the formula of the major studios.”

What makes New Line particularly potent is that its films often are made for less money than the $50 million-plus industry average. “Rush Hour,” for example, was made for around $35 million.

“They are smart people with an eye,” said Marion Boucher Soper, an analyst at Bear, Stearns & Co. “They are making the right films and are not spending a lot of money.”

Founded by two Columbia University law school classmates, New Line operates with a lean, business plan consistent with the cost-conscious strategies employed by Ted Turner, the Time Warner Inc. co-chairman who spearheaded the purchase of the studio in 1994 and remains its biggest promoter.

Dave Davis, an analyst at Century City-based Houlihan, Lokey, Howard & Zukin, estimated that New Line’s profit margin is about 10 percent compared to 3 percent for the major studios. “They have an eye for talent and a sense for that the audience wants,” Davis said.

It also has its own way of marketing. Rarely, for example, will a New Line film be plastered on a billboard above Sunset Boulevard. “It’s a good place for selling cigarettes, but it’s not worth the expense for our pictures,” said Mitchell Goldman, president of marketing.

When it comes to television advertising, New Line takes a similar view, shunning the major networks in favor of cable channels like Comedy Central, MTV or TBS, that appeal to young adults and constitute a cheaper and more efficient buy for the studio’s generally edgier films.

Moreover, according to Goldman, the sales department plays a significant role in deciding what films the studio will make. “We never make a film that is not marketable,” he said.

New Line, for example, took a pass on “Beloved,” citing the size of the project’s budget. The film, subsequently made by Disney, opened poorly at the box office.

The studio, instead, has made its name by targeting such niches as young males, blacks, women, and Latinos. More recently, as the spate of Oscar nominations demonstrates, it has been broadening its reach to include artier fare.

DeLuca insists that he simply makes films that he wants to see. “I sift through material and decide what moves me,” he said.

With “Rush Hour,” a film that Disney rejected, De Luca pointed out that Jackie Chan had retained a core audience of hardcore fans. “His formula was played out,” he said. “We needed to re-invent him.”

New Line did that by adding African American comic Chris Tucker to the mix. The result was a new kind of martial-arts comedy, one that appealed to the fans of both stars.

New Line might be flying now, but the mini-studio suffered through a fallow, 18-month period just two years ago, releasing a series of bombs, including “The Long Kiss Goodnight,” “The Island of Dr. Moreau” and “Last Man Standing.”

During that period, it went on the block, but there were no takers. When $750 million in outside financing was finally secured, Time Warner decided to keep the company, a decision that, in retrospect, averting a corporate disaster.

DeLuca’s biggest fear these days is that Time Warner will become intrusive. “It would be a shame if we were meddled with,” DeLuca said. “The industry needs an alternative like New Line.”