By Jia Lynn Yang

(FORTUNE Magazine) – The story of Blockbuster over the past year could be filed somewhere between thriller (Carl Icahn terrifies the board!) and tearjerker (shareholders despair). But while the parent company is stumbling, its little-known in-house movie studio, DEJ Productions, is enjoying a star turn. DEJ was formed six years ago as a way for Blockbuster to bypass the studios when filling its shelves. Dean Wilson, now head of business development, says the idea started on the elevator with CEO John Antioco: "He said, 'Why do we need to go to the studios to buy movies? Why don't we go to the filmmakers?' " And so began DEJ--named after the first initials of Wilson, corporate counsel Ed Stead, and Antioco. With just 15 employees, DEJ has acquired close to 400 movies, mostly at film festivals around the world. The majority of its projects--like the movie Eye See You, starring Sylvester Stallone--go straight to DVD, but recently DEJ has also delivered a string of mainstream hits. It snapped up Charlize Theron's 2003 Oscar vehicle, Monster, as well as this year's Crash, a nervy drama about race. Made for $6.5 million, Crash has grossed more than $50 million at the box office. President Andy Reimer is betting that the firm's next hit will be the Aug. 5 release My Date With Drew, a documentary about one man's quest to win a date with Drew Barrymore. In the ever more brutal movie business, one of DEJ's biggest advantages is Blockbuster's database of every film that's been produced since 1993, crossed with customer data on who watches what and where. If Blockbuster notices that no big action movies are due out in a given month and that Sylvester Stallone still has a hardy following, they'll pounce on an otherwise overlooked film: Even though Sly's movie never hit theaters, people have now shelled out $19 million to rent it. -- Jia Lynn Yang