Talking about Joe Roth's Revolution

Nervous backers of his studio are hoping its next movie, XXX, will give it some long-awaited blockbuster credibility

By Ron Grover

Xander Cage has tattoos, muscle, and more than a little chutzpah. The lead character in XXX, he's James Bond on steroids, a special agent who parachutes from zooming convertibles, sends his motorcycle crashing through the bad guys, and, of course, gets the girl. But the real question is: Can Xander Cage, played by action star Vin Diesel, muscle Joe Roth and his Revolution Studios into the big time?

True, Roth is already a big name, a one-time movie director who went on to run the Fox studio for Rupert Murdoch and the Disney studio for Michael Eisner. But since late 2000, when he raised a pile of money to start his own film-production company, Hollywood has been waiting for Joe Roth to hit the bull's eye with the kind of blockbuster that made him famous -- films like Armageddon and Ransom, two of the superstar-packed action flicks that Roth green-lighted while calling the shots at Disney.


  Since launching Revolution Studios with his first slate of films in early 2001, Roth has been operating mostly on the outskirts of the blockbuster realm that he once patrolled. Revolution has released seven films since then. A couple have been modest hits, like America's Sweethearts, which stars Julia Roberts and grossed $93 million in late 2001. Revolution even had a $100 million film, Black Hawk Down, which also garnered a couple of Oscar nominations.

Roth has a lot of people hoping he makes it -- rather unusual for cutthroat competitive Hollywood. Of course, these boosters' aren't merely being magnanimous. Some heavy hitters also have a lot riding on XXX, which opens Aug. 9. Back in late 2000, when Roth was putting together Revolution Studios, he sold the idea of an instant studio to some of the biggest names in media land, promising to make six movies a year for the next six years.

Sony contributed $75 million for a 7.5% stake and cut its distribution fees to handle Roth's films. John Malone's Star Encore paid $150 million for a 15% stake and got the pay-TV rights. Rupert Murdoch's Fox TV operation got broadcast and cable-TV rights and a 2.5% piece of the action for $25 million. Those deals put the value of Roth's Revolution Studios at $1 billion even before it had released its first film, making Roth's 60% stake worth a cool $600 million.


  Why was everyone so eager to give Roth money? His pitch was that he could make films for $10 million less than the industry average, which was then running at $50 million per film. And the beauty of the deal was that the fastest-growing expense in releasing movies -- the $30 million or more that it costs to promote a new film -- was being paid by someone else, in this case Sony. But for that kind of money, Sony wants hits. And while no one at Sony is saying anything nasty about Roth and Revolution Studios, they surely would love a blockbuster from him.

XXX could be that hit. Sony has been hawking it for months, hustling ads into the Super Bowl, the NBA Finals, and the MTV Movie Awards. The film seems tailor-made for Diesel, the 35-year-old former bouncer who hit the big time with his starring role in last summer's surprise cheapie blockbuster, The Fast and The Furious.

Roth, famously star-friendly, paid big bucks for Diesel -- $10 million, about four times his Fast and Furious salary. An additional $5 million went to Rob Cohen, the The Fast and the Furious's 51-year old Harvard-educated director.


  Paying big salaries to The Fast and the Furious team means XXX has to be a serious crowd-pleaser for anyone to be crowing at Revolution Studios. And while the box office has been white hot this summer, thanks to such megahits as Spider Man and Star Wars: Episode 2, not everything that has been put out is raking it in. Paramount has a disaster on its hands with the Harrison Ford submarine drama K-19. And XXX will be opening a week after Disney releases its own heavily promoted summer offering, the alien-encounter film Signs, starring Mel Gibson.

So XXX is no slam-dunk. Still, Revolution Studios must like its chances. It has already signed Diesel for a sequel (something the Fast and Furious folks neglected to do), reserving his talents for a generous $20 million.

Ironically, Roth may be less concerned about the movie being a hit than everyone else is. He's assumed to be the lead candidate to take over Sony's film studio when the 72-year old John Calley retires. Sony signed Calley to a new one-year contract late last year, so the studio says it's not concerned about filling the job.


  Roth claims that he's too busy making films to worry about his next job, but insiders say he's also gearing up production to help complete the 36 films by 2006 that he promised his investors. He's well ahead of that schedule, and by the end of Calley's contract, Revolution will have released 33 films.

It sure wouldn't hurt Roth to have a big hit under his belt when contract talks come up. So let's see just how powerful a guy that Xander Cage really is.

Grover is Los Angeles bureau chief for BusinessWeek. Follow his weekly Power Lunch column, only on BusinessWeek Online

Edited by Patricia O'Connell

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