Incorporated: 1998
NAIC: 512110 Motion Picture and Video Production; 512191 Teleproduction and Other Postproduction Services
SIC: 7812 Motion Picture & Video Production; 7819 Services Allied to Motion Pictures
Spyglass Entertainment Group, LLC, is a production, finance, and distribution company competing in the film industry and to a lesser degree in the television industry. Through agreements with major film studios, Spyglass Entertainment helps finance and produce films in exchange for international distribution rights. The company's international distribution partners include Canal Plus for pay television in France, Benelux, Sweden, and Poland; Sogecable S.A. for pay television in Spain; Pony Canyon Inc. for distribution in Japan; and Forum Film Ltd. for distribution in Israel. Spyglass Entertainment has a domestic agreement with Sony's Columbia Pictures. The company has produced nearly 30 films, including The Sixth Sense, Seabiscuit, Bruce Almighty, Memoirs of a Geisha, and Balls of Fury. Spyglass Entertainment is led by co-Chairmen and co-CEOs Roger Birnbaum and Gary Barber.
Origins
The partnership of Roger Birnbaum and Gary Barber, a collaboration embodied in Spyglass Entertainment, proved an ideal combination of talents and personalities, creating an industry leader in the production, finance, and distribution of entertainment content. Each of the founders spent decades working in the entertainment industry before starting Spyglass Entertainment, accumulating the experience they would need to make their joint venture a success. Integral to their business plan was a constant supply of capital. Spyglass Entertainment relied on funding provided from outside investors to sustain its operation, which made the reputations of its founders of paramount importance to the company's financial well-being. In Birnbaum and Barber, institutional investors, banks, and other lenders found two entertainment executives worthy of their business.
Birnbaum's path to Hollywood began in Teaneck, New Jersey. After graduating from Teaneck High School in 1968, he enrolled at the University of Denver, but left a year before graduation. "I just felt that in that age of liberal arts, I had been liberally arted," he said in an interview published in the February 2, 1994, edition of the Record. "It was time to go into the world. I wasn't going to be a doctor, lawyer, or scientist. This was not my calling. So I said 'check please, I have to go.'" Birnbaum took a job as a secretary at A&M Records in California, an entry-level position that served as a launching pad for a rapid rise in the music industry. Within a few short years, he earned promotion to vice-president of A&M Records, a post he also held at Arista Records. In the late 1970s, Birnbaum joined the Robert Stigwood Organization, assisting Stigwood in the production of Saturday Night Fever, a 1977 film that featured music from one of Stigwood's clients, the Bee Gees. At the beginning of the 1980s, Birnbaum met Henry Winkler, one of the stars of the hit television series Happy Days, and the two began producing feature films together through Monument Pictures, which employed Birnbaum as its president. After stints as president at Gruber/Peters Company and as president of production at United Artists, Birnbaum joined Twentieth Century Fox in 1988 as the studio's president of worldwide production. At Fox, he developed films such as Home Alone, Edward Scissorhands, and Mrs. Doubtfire, but perhaps the most significant aspect of Birnbaum's five-year stay was the relationship he cultivated with Fox's chairman, Joe Roth.
Roth left Fox in 1993 to start his own independent production company, Caravan Pictures. Birnbaum joined the company, which was headquartered at Walt Disney Studios in Burbank, California, as a salaried producer. When Roth left the company the following year to become chairman of Disney Studios, Birnbaum took charge of Caravan. During his time at Caravan, Birnbaum was credited with several box-office sensations, including Rush Hour, While You Were Sleeping, and Grosse Pointe Blank. He also groomed a future Spyglass Entertainment executive during his years at Caravan, mentoring Jonathan Glickman's rise from an intern in 1993 to president of the company by 1997.
By the late 1990s, Birnbaum had begun to pine for new challenges in the feature film industry. Specifically, he wanted to start a new company that obtained its development and production financing from outside backers, which would enable him to finance his own projects, a desire shared by another industry executive, Gary Barber. Barber had spent the previous eight years serving as vice-chairman and chief operating officer of Morgan Creek Productions, overseeing the day-to-day operation of all aspects of the company's business, including feature film production and distribution, foreign theatrical, video and television distribution, exhibition and prerecorded music, and music publishing. A skilled negotiator, Barber orchestrated Morgan Creek's domestic distribution agreements with Fox and Warner Bros., as well as the company's numerous foreign deals.
Roth was the link between Birnbaum and Barber. He knew each executive was pursuing the same objective, so he introduced the two. "It just seemed like a really good marriage," he said in an August 24, 1998, interview with Variety. The meeting resulted in the formation of Spyglass Entertainment in 1998, a company that began with a head start. Birnbaum, who shared the titles of chairman and chief executive officer with Barber, essentially merged Caravan into Spyglass Entertainment. Caravan staff, including Jonathan Glickman, became Spyglass Entertainment employees (as well as several executives from Morgan Creek). Spyglass Entertainment also acquired several Caravan development projects, which were set to become Spyglass Entertainment films. For Roth, who could take some credit for Spyglass Entertainment's creation, the birth of the company became an asset for his company, Disney. Spyglass Entertainment signed a five-year, 15-movie agreement with Disney. Under the terms of the deal, Spyglass Entertainment, which anticipated making between three and five films per year, agreed to supply its own overhead, development, and production financing, Disney agreed to contribute a portion of each film's budget in a formula proportionate to its distribution interest. Buena Vista Pictures Distribution, Inc., and Buena Vista International, the film and television distribution companies owned by Disney, were given exclusive distribution rights to Spyglass Entertainment's films. Spyglass Entertainment retained the rights to distribute its films in foreign territories outside Buena Vista's purview.
Spyglass Entertainment's cofinancing, or "split rights," agreement with Disney wed the two companies together, financially, creatively, and physically--Birnbaum and Barber established their offices on Disney's Burbank lot. "The formation of this new partnership with Gary is the perfect transition for me and opens up lots of exciting new possibilities for both our company and for Disney," Birnbaum said in an interview published in the August 24, 1998, issue of Variety. In the same interview, Barber offered his thoughts, directly addressing the agreement with Disney. "This effectively is a way for Disney to get the distribution rights to films without having the full financing responsibility," he said. "It reduces Disney's investment and allows the studio to scale back the number of its in-house releases." Roth concurred, telling Variety, "It's a tough business. The way you attack a tough business is you try to limit your budgets and your marketing and be more selective about your talent deals."
First Commercial Success in 1999
Spyglass Entertainment bolted from the starting gate, recording an enormously successful start to its business life. In 1999, the company produced two films for the Disney affiliate Touchstone Pictures, The Insider and Instinct, but registered its greatest success with The Sixth Sense, produced for another Disney affiliate, Hollywood Pictures. Starring Bruce Willis, The Sixth Sense earned six Academy Award nominations and grossed $661 million worldwide, making it the ninth largest grossing film in history. The box-office success of the film strengthened investors' faith in Birnbaum and Barber. The pair had secured a $200 million revolving credit line from J.P. Morgan Chase and had raised between $300 million and $400 million in funding through equity and debt. The commercial success of The Sixth Sense ensured that the vital supply of capital would continue to flow Spyglass Entertainment's way.
Spyglass Entertainment's first step turned out to be a giant leap, establishing a benchmark of success that Birnbaum and Barber hoped to reach again in the coming years. The company's film credits after its first trio of features included Mission to Mars, Keeping the Faith, and Shanghai Noon, but the most noteworthy events at the turn of the millennium occurred at the corporate level. In December 2001, a merger was announced involving Spyglass Entertainment and Intermedia, a production company owned by Munich, Germany-based Internationalmedia. The deal, valued at nearly $200 million, promised to create an independent company with the resources and drive of a major studio. Spyglass Entertainment was set to become a subsidiary of Intermedia, but the merger was terminated for undisclosed reasons in March 2002. Birnbaum and Barber pressed ahead after the scuttled merger, focusing their attention on what they hoped would be a lucrative film and a lucrative new business line. In mid-2002, Spyglass Entertainment formed Spyglass Entertainment Television, the television production arm of the company. "Television is very important to us," Birnbaum said in an August 7, 2002, interview with Daily Variety. "We're very serious about being in this business. It's a natural outgrowth of our desire to build a company that's involved in all areas of entertainment." At roughly the same time it launched its foray into television, Spyglass Entertainment put up roughly half the budget for Seabiscuit, the adaptation of Laura Hillenbrand's novel about the racehorse. Spyglass Entertainment split its financing responsibilities with Universal Pictures, which handled domestic distribution, and DreamWorks Pictures, which was given the rights to distribute the film in selected foreign markets. For its investment, Spyglass Entertainment was given the rights for nearly all international markets.
Seabiscuit was released in mid-2003, proving to be a commercial and critical success that garnered seven Academy Award nominations, but before the film's release, Spyglass Entertainment and DreamWorks took their collaborative relationship one step further. In December 2002, Spyglass Entertainment announced it was ending its relationship with Disney one year early and forming a new alliance with DreamWorks, a company founded by Steven Spielberg, Jeffrey Katzenberg, and David Geffen. Although the relationship with Disney ended amicably--Spyglass Entertainment and Disney would work frequently together in the coming years--the partnership had begun to lose its value to Birnbaum and Barber. For the previous two years, Disney had been more focused on Disney-branded films and less willing to relinquish any rights to its films. The cofinancing opportunities available to Spyglass Entertainment had diminished as a result. DreamWorks, on the other hand, was willing to cofinance films. The new arrangement forced Spyglass Entertainment to move off Disney's lot and find new accommodations in Westwood, but little else was expected to change. "We still want to make big commercial movies and we're willing to take the risk on a movie where we see breakout potential," Birnbaum declared in the March 3, 2003, issue of Variety.
In 2003 and 2004, Spyglass Entertainment produced five films, registering its greatest commercial success with the May 2003 release of Bruce Almighty. The film, starring Jim Carrey and Jennifer Aniston, grossed $485 million worldwide. The international appeal of the film, as with all other of the company's films, was particularly important to Spyglass Entertainment's financial standing. The company, which relied heavily on the international rights it acquired through cofinancing agreements, had formed alliances with a host of overseas partners, including Canal Plus, Sogecable, Pony Canyon, Lusomundo, and Ster Kinekor. The 2003-04 period also saw Jonathan Glickman assume a more powerful position at the company. In the fall of 2003, he was promoted to president and a made a partner of the business along with Birnbaum and Barber. "Jon has been with us since the inception of Spyglass and has been integral to the successes of the company," Birnbaum said in an October 27, 2003, interview with Daily Variety. "We look forward to expanding his role in all areas of the company including working closely with the marketing, distribution, and international operations groups."
Signing with Columbia Pictures in 2004
Film production in 2005 and 2006 comprised six films, including The Legend of Zorro, Memoirs of a Geisha, and Stay Alive. The films produced during the period were made under the aegis of two new agreements. Spyglass Entertainment's credit line with J.P. Morgan Chase expired in March 2004, but the relationship was renewed with a $250 million, five-year revolving credit facility that shored up the company's financing efforts. Not long before the financing agreement was reached, Spyglass Entertainment cut its ties to DreamWorks and signed a deal with Sony's Columbia Pictures. According to the terms of the agreement, Spyglass provided 55 percent of the budget on Columbia Pictures films in exchange for international distribution rights, the terms under which Memoirs of a Geisha and The Legend of Zorro were produced.
As Spyglass Entertainment neared its tenth anniversary, its success in the film industry was an anomaly. Many cofinancing companies had foundered, notably Mutual Film and Bel-Air, while others of its breed had substantially reduced the number of their cofinancing deals, Alcon, Mandalay, and New Regency being among the ranks of production and finance companies that had scaled back their operations. Spyglass Entertainment enjoyed less success with its efforts in television development and production (its inaugural effort, Miracles, was canceled midseason after its debut in 2004) but the company remained committed to becoming a diversified content producer. On the film side of its business, projects in 2007 included Underdog and Balls of Fury, two of six films that were released during the year. Nearly 20 films were in development by late 2007, ensuring that years ahead would see a stream of films financed and produced by the winning partnership of Birnbaum and Barber.
Principal Divisions
Spyglass Entertainment Television.
Principal Competitors
Holding Pictures Distributions Co., LLC; IFC Companies; Revolution Studios LLC.
Further Reading
Adalian, Josef, "Spyglass Grows Arm: Senior VP Wolpert Tapped to Head TV Unit," Daily Variety, August 7, 2002, p. 3.
"Brave New Startups from Industry Vets," Variety, October 26, 1998, p. M1.
Carver, Benedict, "Spyglass Focuses Rights for Disney," Variety, August 24, 1998, p. 7.
Dawtrey, Adam, "Indie Combo Creates Big League Player," Variety, January 21, 2002, p. 14.
Dunkley, Cathy, "Making Sense of Spyglass Move," Variety, March 3, 2003, p. 13.
------, "Morgan Shows Spyglass the Money," Daily Variety, April 22, 2004, p. 6.
------, "New Prez Will Be a Partner for Spyglass," Daily Variety, October 27, 2003, p. 1.
Fleming, Michael, "Seabiscuit Wager: Spyglass Ponies Up Coin for Ross' Horse Tale," Daily Variety, October 3, 2002, p. 3.
Harris, Dana, "Dream Team Bulks Up: Spyglass Ankles Disney for Prod'n Deal at D'Works," Daily Variety, December 10, 2002, p. 1.
------, "Merging Mavens: Intermedia, Spyglass Prepping Hefty Slate," Daily Variety, January 14, 2002, p. 1.
------, "Spy Game Afoot at Intermedia," Variety, December 24, 2001, p. 5.
LaPorte, Nicole, "Spyglass Eyes Big Year," Variety, May 16, 2005, p. 8.
Lyons, Charles, "Fleming Attracted to Spyglass," Variety, October 11, 1999, p. 20.
Meza, Ed, "Indie Pic Lovebirds Lose Urge to Merge," Daily Variety, March 5, 2002, p. 1.
"Spyglass Entertainment Sets Its Sights on DreamWorks," AsiaPulse News, December 11, 2002, p. 4675.
"Spyglass Entertainment Signed a First-Look Production Deal with DreamWorks Pictures," Screen Finance, December 18, 2002, p. 11.
— Jeffrey L. Covell
