Anne Thompson reports on the MPAA screener controversy and the surprising court case that followed.

Jack Valenti didn’t know what hit him. “Jesus, what a beating,” he told one old Hollywood friend. “No matter what I do, I’m offending people.” His failed screener ban initiative revealed that the Motion Picture Association of America president’s view of the movie business is based on an old model of the studio system that dates back to the days when it was run by the man who gave him his job: Lew Wasserman.

Hollywood has come a long way since 1967. And it’s come a long way since the Independent Feature Project was founded in 1981. Back then, recalls Sony Pictures Classics’s Tom Bernard, “we couldn’t get the unions to work on our movies, get the theater chains to play them, get name actors to be in them or get the studios involved in them.”

At the first IFP meeting, a group of independent filmmakers came together to address these issues. They handed out lists of distributors’ phone numbers, agreed to negotiate low-budget contracts with the unions, and began convincing actors to bank on new directors and more daring material. There was a time when Island/Alive’s Oscar nominations for Kiss of the Spider Woman and The Trip to Bountiful were big news. Now it is taken for granted that the independents make better movies than the studios. Slowly but surely, the independents have taken hold and become something more than mere marginal players.

The screener ban debacle demonstrates the extent of that shift. Hollywood is now built on a two-tier system. The big studios concentrate on mass-market entertainment, while their “dependents” (a phrase coined by indie distributor Jeff Lipsky), the specialty divisions, focus on lower-budget movies that require more creative risks and careful marketing. But even these companies are unwilling to take all the chances that they might. Although Sony Pictures Classics continues to fly under the studio radar without interference by keeping to the production and acquisition of smaller films, their competitors are all stymied to some degree by their parent companies, most notably Miramax’s Harvey Weinstein, who is passionately negotiating for more autonomy, with or without Disney. (Just making Cold Mountain involved crossing the budget line with his parent studio.) Meanwhile the true independents are still out in the cold raising equity and foreign financing for the projects that the studios and their dependent divisions won’t fund.

Valenti, who plans to step down this year, failed to think through the screener ban’s ramifications or to understand the evolved structure of today’s film industry. He was representing the studio bosses — 20th Century Fox’s Peter Chernin, Warner Brothers’s Barry Meyer, Universal Pictures’s Ron Meyer, Disney’s Robert Iger, MGM’s Alex Yeminidjian, Viacom’s Jonathan Dolgen and Sony’s Howard Stringer — and he assumed that they could simply order their underlings to do their bidding. (So, for that matter, did they.)

But it wasn’t that simple. The Oscar brand drives an enormous economic engine, and marketing this brand is now the mandate of the studio specialty divisions. So, with the exception of Fox Searchlight, Paramount Classics and Warner Independent Pictures, which were truly muzzled by their studios’ antipiracy dictums, the other studio subsidiaries fought hard behind the scenes for the right to do their jobs effectively. Miramax and Sony Pictures Classics were preparing to flout the ban; the French producer and distributor of SPC’s Monsieur Ibrahim, ARP’s Michele Halberstadt, who owned the copyright to the movie, shipped cassettes on her own to the Screen Actors Guild. And Weinstein told National Pubic Radio’s Kim Masters that he was ready to send out cassettes, whether or not that brought down the wrath of Michael Eisner.

Taking the lead in the fight against the ban were the IFP’s West Coast and East Coast directors, Dawn Hudson and Michele Byrd, and producers Jeff Levy-Hinte of Antidote Films and This Is That Corporation’s Ted Hope, who talked tirelessly to journalists and lawyers and eventually filed the David-and-Goliath anticompetitive lawsuit against the MPAA. And won.

This may or may not be the year the studios take back the ground they ceded to the independents in the Oscar wars. If so, though, it is because the independents showed the studios what they should be doing in the first place. The independents are a vital link in the Hollywood food chain. They supply energy, vitality, talent, creativity and excitement. They will not be ignored.