As the Telluride and Toronto Film Festivals begin, a few companies are beginning to showcase their premier releases for the rest of the year.  One of those distributors who is a mainstay at both festivals is Sony Classics.  A mini-major with arguably the best track record critically and financially in the business (although Fox Searchlight might  have a good argument over the past five years), Classics has a number of intriguing titles on the festival circuit that are hitting theaters soon including Woody Allen's "You Will Meet A Tall Dark Stranger," Stephen Frears' "Tamara Drewe" and Charles Ferguson's documentary "Inside Job."  

When I spoke to Classics' co-president and co-founder Tom Bernard last week, one of Classics' up and coming competitors, Roadside Attractions had just acquired the Jim Carrey and Ewan McGregor comedy "I Love Phillip Morris."  The past 12 months, however, have seen the rise and quick fall of Apparition, the dilution of Overture Films by Relativity and huge question marks surrounding the future of Miramax.  To Bernard though, it's nothing new and there is hardly a void in the marketplace. Instead, he insists he could pull out a very long list of every independent distributor still making moves.

"A lot of them are smaller companies, but the fact is 'Girl With a Dragon Tattoo' comes out under a smaller company, the Jarvier Bardem picture ['Biutiful'] that played at Cannes is now going with Roadside," Bernard says. "There are companies out there that are looking for movies. And when companies like those have a hit, the company becomes stronger and the marketplace becomes more competitive."

And, obviously, those companies are filling a need in the market place.  In Bernard's opinion, there are also more theaters to play specialized films than ever before.  In fact, he says distributors who might be complaining about the lack of outlets should realize the "only movies that really aren't playing are movies that can't cut it in the theatrical marketplace."

What has changed, he accurately notes, is "the heyday of 'We'll buy this movie and make our money back on DVD' is gone."

Classics purposely avoided that game as much as possible and would only bid for a film if they thought it could recoup the investment in theaters.  That lead them to lose out on numerous "hot" titles over the years, but typically many of those pictures either barely broke even in ancillaries or are still trying to break even.  For Classics, the results of DVD, Blu-ray and other distribution outlets are pretty much intended as bonus.  

With the home entertainment boom clearly over, the distributors have adjusted to the new financial model. However, I asked Bernard if the independent producers were also up to speed on the new reality.  For years, the standard budget for an indie with well known stars was $10 million and some went significantly higher. That just doesn't seem possible in 2010.

"I don't think you're seeing any more $35 million art movies," Bernard says bluntly. "The twiner movies are very difficult to recoup of they don't' work. So, what you're seeing is more creative financing, but it's a simple formula. You've got to make more what you spend. And if you're going to try and ratchet it up as a specialized release to a 1,500, 1,000 screen release, there's a good chance you're gonna spend more than you make.  And your'e not gonna make it back in the ancillaries."

Classics isn't very press happy about it, but they do develop more pictures in house with partners than many realize.  From "Crouching Tiger, Hidden Dragon" to "Friends with Money" to the upcoming fall release "Tamara Drewe," the studio has taken creative chances, but they hardly "package" like product their bigger studio brothers.

"Great movies happen.  You can't put them in a package like studio fare," Bernard says. "Movies like 'Crouching Tiger, Hidden Dragon' that goes to $130 million happen.  'Little Miss Sunshine' is a Sundance movie that happens.  No one [budgeted] it to be that success.  No one knew it would be that success."

Bernard continues, "'Lives of Others' I think is one of the better films of the last decade and that was a movie we bought in Cannes. We bought it for $100,000 and it got into the market place in a way which was very significant and had a message that made it need to be seen.  That was one we hoped for it and everything worked out.  "Crouching Tiger" is an obvious one .  We invested in the script with Ang Lee and it turned out to be beyond our wildest dreams."

One of Classics' biggest successes this year was the "surprise" Best Foreign Language Oscar winner "The Secret in their Eyes."  But to Barker, its $6.3 million domestic gross wasn't that shocking.

"No, because we won the Oscar and that's a big boost for the film.  We had a good shot to be in the game, but 'Lives of Others' was like that," Bernard notes.  "We've had a lot of movies that have had success -- especially when they are spotlighted in the foreign film Oscar race."

2009 found Classics with yet another traditional Best Picture nominee, "An Education."  And yet, without the new ten nominee selection process, you could argue the critic's favorite would have had a tough time breaking into the top ten.  Bernard, an Academy member, clearly realizes the benefit doubling the contenders means for a picture of "An Education's" stature and goals.  Needless to say, he's happy with the new formula.

"Oh it's tremendous," Bernard says.  "I'm not sure if they had that in mind, but for specialized movies, [but in the past those pictures] have ended up on the outside looking in as the sixth or seventh pick for a ticket to the Oscars.  And that's tremendous because it's putting them on a main stage which is really helpful in integrating movies in the marketplace.  Best Picture means a lot. It's covered around the world."

Lastly, I asked Bernard if he had to recommend one upcoming Classics release, which would it be?

"I like 'Tamara Drewe' quite a bit," Bernard says.

And he's not the only one.

Look for coverage from both the Telluride and Toronto Film Festivals on HitFix and Awards Campaign beginning Friday.  Get the latest scoop and buzz from all the premiere screenings by following @HitFixGregory on Twitter.