By Indiewire | Indiewire January 5, 2004 at 2:0AM
Cuban and Wagner's Deal for Magnolia Bolsters New "Vertically Integrated" Indie Company
by Eugene Hernandez
With an eye on how new technologies are changing the film business, Mark Cuban and
Todd Wagner have swiftly built an empire that includes the three traditional tenets of
old-Hollywood vertical integration: production, distribution, and exhibition. Along the way
Wagner and Cuban, under their 2929 Entertainment umbrella, have established relationships
with an all-star team of people from the indie film community. The pair, who co-founded and then
sold Broadcast.com for $5.7 billion during the dotcom boom, recently purchased indie distribution
company Magnolia Pictures as the latest asset alongside their acquisition of the Landmark Theaters circuit.
"We want to be known as THE place that directors and producers want to come to have their movies produced
and distributed in the specialty/independent marketplace," Wagner told indieWIRE.
The Magnolia deal, along with other recent pacts, gives Cuban and Wagner a team of executives that
includes some of the leading distributors, exhibitors, and producers in the indie film community.
Last month the pair signed Deutsch Open City's Jason Kliot and Joana Vicente to run
HDNet Films, the new digital film production outfit. Cuban and Wagner, who jointly run 2929
Entertainment, also maintain the separate HDNet television network and purchased Rysher Entertainment in 2001
"Our strategy is vertical integration so that we can control our own destiny," Wagner said.
"We now have the ability to produce a movie ourselves, play it on our cable network HDNet, and
exhibit the same movie in our theaters, Landmark." Continuing he added, "Plus we have the ability
to better control the P&A [print and advertising] and budget sizes of our projects."
"Magnolia Distribution will continue as it was before with Eamonn (Bowles) looking to acquire
more movies at film festivals," Wagner said. "Adding to our existing Rysher library, and handling domestic
distribution on certain movies, as they did with 'Capturing the Friedmans.'"
The management team also remains in place at the 56-site, 196-screen Landmark Theaters circuit
which is run by Paul Richardson and Bert Manzari. The Magnolia acquisition gives
Landmark additional screens, including the Magnolia in Dallas and the Crossroads in Boulder.
Cuban and Wagner are longtime Dallas-based business associates who, after selling Broadcast.com
to Yahoo! in 1999, began investing in entertainment. They have a stake in Lions Gate and owned a
state in Magnolia before the purchase. Cuban also owns the Dallas Mavericks basketball team, while
Wagner also owns the Todd Wagner Foundation.
"We want to enable independent producers through distribution, technology, and creativity to have
their work shine to film audiences across the country," Mark Cuban told indieWIRE last week. "It's
such a wide open industry that is incredibly entrepreneurial. Between HDNet and Landmark Theaters,
we have a unique opportunity to bring some excitement to the table."
Wagner indicated that with Landmark he wants to "aggressively expand in markets like New York
City and Los Angeles." Continuing he added, "We will also be opportunistic in other markets, and
look to strengthen our position." He said that he and Cuban are committed to spending the money
need to renovate and improve the existing theaters and also to create new revenue sources for
Landmark via its FLM Magazine property and also through liquor sales.
A core aspect of Cuban and Wagner's plan is to convert the Landmark chain to a digital cinema
circuit. The key challenge, Cuban says, are the costs to make the switch. He said that they are
currently evaluating the technology options for the conversion, considering how to pursue uncompressed
digital formats. Cuban said that he does not yet have a timeline for the conversion to digital. He
added that he hopes to recoup the cost by charging fees for encoding or duplication. "The cost
would be negligible relative to the cost of film conversion and prints," Wagner said, "And should
allow us to recoup, within 18 months, our costs for implementation."
HDNet Films, which will make as many as 7 high-definition digital movies each year, marks the
next step in digital production for Deutsch Open City's Jason Kliot and Joana Vicente. The duo
founded Blow Up Pictures in the '90s and made such films as Miguel Arteta's "Chuck
and Buck" and Dan Minahan's "Series 7." Kliot told indieWIRE that he and Vicente
are finalizing deals for the first two projects and they hope to be in production early this year.
The HDNet TV network, which launched in 2001, is the first national TV network to broadcast
entirely in high definition. The network just signed a carriage deal with Time Warner Cable and
also has pacts with Charter Communications, DIRECTV, DISH Network, among others, according to Wagner.
In addition to HDNet Films, Cuban and Wagner maintain 2929 Productions, which is making more
traditional Hollywood fare, two to three per year, with budgets in the $5-$30 million range.
The company is currently wrapping up production of "Criminal" with Steven Soderbergh
and George Clooney's Section Eight, and "Godsend," a thriller starring Robert
DeNiro, Greg Kinnear, and Rebecca Romijn-Stamos. Cuban and Wagner executive produced
Rosanna Arquette's "Searching for Debra Winger" and 2929 also produces the new "Star
Search" for television. 2929 holds the syndication right for such TV shows as "Hogan's Heroes,"
"Sex and the City," and "Nash Bridges."
"As far as Todd and my commitment to the indie market, we do this because we love it. Its such a
wide open industry that is incredibly entrepreneurial," Cuban said. "I think the indie business is
in great health and getting better. No matter what happens, there is always room for good product and
there is always going to be a place you want to go see it and feel comfortable."