Posted on 10/19/2008 1:12:14 PM PDT by abb
Film industry forced to change business model
Star value isn't what it used to be.
In defense of movie stars -- yes, Hollywood still needs them. But the opening of the Ridley Scott-directed thriller "Body of Lies" provides a vivid reminder that stars do have the potential to boost any movie ... as long as they don't cost too much.
Suppose Russell Crowe and Leonardo DiCaprio had been paid a third of their going rate, and the movie had cost a third less. Would the pic's $13 million opening frame have been seen as such a disaster?
Hollywood's problem is that once costly stars climb aboard a project, studios tend to ratchet up the scale with stunts and effects. They wind up trying to turn every movie into a tentpole.
Sure, the studios have pots of money to play with. But just like the world economy, the film industry has burgeoned out of control. It's inflated and overblown. It needs to let some air out of the bubble and return to a more reasonable size and scale.
For starters, Hollywood ought to throw everyone out of the $20 million club.
Warner Bros. insists it didn't pay full freight for DiCaprio and Crowe; they share the pic's adjusted backend gross. The CIA actioner, set in Iraq and Jordan, cost more than $100 million, not including worldwide marketing costs. Warners should have thought twice when it couldn't find a partner for the film. But execs thought they had star insurance; the studio could write off as much as $100 million on this picture.
The brutal truth about today's Hollywood is that the majors have been releasing too many films that cost too much money. Disney, notably, has gone the other way. Not only has the studio scaled back its releases, it's refusing to pay backend gross participants on its tentpoles until after the studio recoups its costs.
Paramount, in the wake of its DreamWorks divorce, plans to scale back to 20 films a year.
"What's going on in the economy on a global basis has an impact on every business," says studio chairman Brad Grey. "We're streamlining the company to make it as lean and agile as possible. You can be sure we will deploy our capital in a diligent and prudent fiscal way."
While Grey is still pushing forward with tentpoles like "Star Trek," "G.I. Joe" and "Transformers 2," he says he's "aggressively restricting backend deals," with first-dollar gross capped at 25%.
"It's incumbent upon everyone in the industry to look at our economics," he says.
The entertainment biz may be resistant to economic downturns, but studio owners are not. They're all carrying increasingly expensive debt. Paramount's owner, Viacom chairman Sumner Redstone, was forced to sell National Amusements stock to meet his margin calls. And Warren Buffet bought stock to bolster NBC Universal owner General Electric's fortunes.
This is the perfect time to fix the studios' broken economic model. The studios have to just say "no."
"We're at a crossroads," says producer Mark Johnson. "So much of what we've counted on isn't working. It's not a question of old school vs. new school. It's Lewis and Clark time, the things we're not sure about, that we hang our hat on, like movie stars."
Today's astronomical price inflation basically starts with nervous studio heads overpaying for movie stars.
Twentieth Century Fox was the first studio to top the $1 million payday mark with Elizabeth Taylor on the 1963 mega-flop "Cleopatra," which, with inflation, is still the most expensive movie of all time.
And back in 1988, there was much handwringing when Fox paid $5 million to Bruce Willis (who had made just one film, "Blind Date") to star in "Die Hard."
"This throws the business out of whack," MGM chairman Alan Ladd protested to the New York Times. "Like everybody else in town, I was stunned."
Paying a relative novice like Willis such a sum meant that all the other stars, such as Dustin Hoffman, who had scored $5.5 million for "Tootsie," had to get a boost. Indeed, there was nowhere to go but up during the boom-boom '80s and '90s, as upstart players like Cannon and Savoy paid hefty premiums to land stars such as Sylvester Stallone.
Then in 1996, Columbia Pictures, desperate to nail hot comedian Jim Carrey for "The Cable Guy," paid him $20 million. That meant all the other top stars, from Tom Hanks to Tom Cruise, had to get that sum, too. When Demi Moore landed $12.5 million for 1995's Striptease, the men had to get that much more. When Universal gave away first-dollar gross to Arnold Schwarzenegger on "Twins," it opened another Pandora's box.
After a long list of stars routinely commanded $20 million vs. 20% of the gross, studios even started sharing more of their DVD revenues with certain stars. Eventually, global action heroes like Harrison Ford and Mel Gibson were commanding $25 million, forcing other actor and director salaries up in relation. Even a midrange star like Kurt Russell was earning $15 million.
The movies that had to carry these fees became safer, more formulaic and less interesting, and to make their money back they needed to perform on a global scale. "The bigger the movie stars become," says Johnson, "the more constricting their roles and the scope of their roles."
Sequelitis contributed to boosting star fees. Once stars got paid a higher figure, agents would demand it again.
Studios vied for the stars and used paydays and perks (such as overpaid hair and makeup people, entourages, nannies, and chartered jets) to sweeten the pot. They indulged monstrous behavior and demands.
Finally, after Schwarzenegger collected $25 million to play Mr. Freeze in "Batman & Robin," Intermedia and C-2 paid the muscled star an unprecedented $30 million for "Terminator 3." Schwarzenegger may well be remembered in the record books as the highest-paid star of all time.
Today, new production company MRC, trying to compete with the studios, is offering talent like Sacha Baron Cohen not only a hefty upfront fee but an ownership stake in movies like "Bruno." "They're sharing our revenues," says president Tory Metzger, a former CAA agent. "Our upside is their upside."
But the overdue market correction on star salaries is already trending down. The studios are capping backend grosses at 25%. And they're insisting on recouping costs before delivering gross payouts, and they're putting overage limits even on top directors.
Viacom's Redstone signaled a seismic shift when he angrily ousted Tom Cruise from his Paramount deal after the star made more money than the studio on "Mission: Impossible 3" -- even after Grey had altered the backend formula.
Marvel is hanging tough with deals on its "Iron Man" sequel and was willing to walk away from Terrence Howard's pay demands to play War Machine, casting Don Cheadle instead. Marvel is investing in its characters and properties and isn't playing the studio game.
Lionsgate's Joe Drake ("Juno") is also hoping to eschew business as usual. But when he visited a major agency recently to discuss a slew of new projects, they asked: "Will you pay our clients' full freight?" While he doesn't see wholesale reform, Drake says, by giving talent more creative say in upside success, "there is an opportunity for the talent and the creative side to align their interests with the distributor, without the traditional push-pull relationship."
The studios don't have to play the same old game, either.
Bring costs down and they'll gain more flexibility to make better, more interesting and varied movies. They could lure adults back to theaters and appeal to niche markets without having to play it safe with four-quadrant pics.
If stars and studios want to make different movies, the studios don't have to indulge the stars: Let them go to the indies.
"Everybody's been riding the gravy train and nobody wants to get off," says one agent.
There are other ways to make studio movies on a slimmer scale.
Consider the George Clooney model: "Syriana," "Good Night, and Good Luck," "Michael Clayton" and "Burn After Reading," like the "Ocean's" series, all featured multiple stars working for less than their usual fees.
There's also the Clint Eastwood paradigm: His films are always produced with modest upfront costs.
"Going forward with anything execution-dependent," says one Warners exec, "we will try different formulas. The world has shifted."
Producers describe a distinct industrywide course change since the writers strike. Unfortunately, that often means studios shelling out for top talent while cheaping out on everything else. "Everyone is refusing to pay for anything," says one producer. "With the economy tanking it has gotten worse, with people walking away from deals: 'We're not paying your quote. Take it or leave it.' It's really scary. People who are trying to make a living are not making a living."
Ironically, Carrey, whose asking price has been in the toilet lately, stars in a Warners comedy that may hit the zeitgeist on the nose: In "Yes Man," he plays a negative guy who makes a pact to say yes to everything. Carrey said yes to not getting his usual price in a mainstream comedy. And if the movie hits, he collects -- bigtime.
ping
I prefer America over Hollywood any day.
>If stars and studios want to make different movies, the studios don’t have to indulge the stars: Let them go to the indies.
Mel Gibson was the original maverick when he produced “The Passion” with his own money and literally put his $$$ where his mouth is. Paid off big time. Now he could get drunk and make an ass of himself in Malibu anytime he wants.
Don't those big stars feel guilty for making all that money...they should be willing to "spread the wealth around" and take lesser saleries so that others can make more./sarc
New Ways of Financing Journalism Will be Found, Georgia Journalists Say at NPC Forum
Last update: 1:04 p.m. EDT Oct. 15, 2008
ATLANTA, Oct 15, 2008 /PRNewswire-USNewswire via COMTEX/ — The future of journalism may be in niche products supported less by advertising and more by corporate sponsorships, by interest groups and by public broadcasting-style memberships, leading Georgia journalists said at a National Press Club Centennial Forum here Tuesday.
snip
When they make movies people want to see with stars who have not ticked off 50% of the population with their anti-American, anti-conservatives comments people still go to the movies. Body of Lies likely suffered from having Leo in one of the starting rolls; I don’t think I am the only one who will not pay to see a DiCaprio, Afleck, etc. movie.
It couldn't be that you start out by trashing half the viewers before the movie ever gets off the ground. /s
http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20081017/FREE/810179975/1040
CBS College Sports sacks 30
http://www.tvweek.com/news/2008/10/redstone_may_have_to_sell_more.php
Redstone Holding Company in Debt Talks After Viacom, CBS Fall
http://money.cnn.com/2008/10/17/news/economy/siklos_la.fortune/index.htm?postversion=2008101710
Tense times in Hollywood’s dream factory
The entertainment biz is holding up nicely amid the financial meltdown, but it won’t be immune.
http://www.journalism.co.uk/2/articles/532538.php
Media industry on ‘brink of carnage’, says Guardian digital chief
http://www.nypost.com/seven/10172008/business/advance_is_in_retreat_134021.htm
ADVANCE IS IN RETREAT
‘NO LAYOFF’ SI PAPER SETS 1ST-EVER ROUND OF BUYOUTS
The change from film to digital distribution (digital in theatres that is); will fundamentally change the economics of film making.
The cost of the 2,000 or 3,000 prints required for a “block buster” is over $10 million. That's on top of the film stock used in shooting, and the higher cost of post-production work in film, compared to digital media.
The high cost of distribution leads a studio to spend millions on “A”-list stars, who have a track record of selling tickets. That, in turn, leads to higher marketing costs, etc. etc.
The use of over-paid “A”-listers as voice actors for animated films is particularly extravagant. As the cost of producing animations drops with advances in computer animation & when full digital distribution kicks in — there won't be the perceived “need” to have big name stars on the marquee. The main advantage of the stars in an animation is the promotional work they do — appearing on the talk-show circuit to talk up the movie. When the costs of production and distribution are lowered, the need for such high-profile promotion will drop.
My wife and I have stopped supporting Hollywood by not going to any movies. In the last two years I have not been to a theater more then twice.
I don’t like Hollywood’s views.
The day is coming (and not too far off I predict) when human actors will, to some extent, be replaced by those which are computer generated.
Producers can save a lot of money by not having to pay “movie stars” loads of money, when they can hire a company to “create actors” on a computer and then insert them in a movie.
How will we be able to tell the difference?
/sarc
I haven’t been in years and and not going to change now. I will not support trash.
I don’t know about anyone else, but I won’t go to see movies because of who’s in it, but for the story. I don’t remember enjoying a movie more than “Fargo.” I’d never heard of anyone in it, but it was a good story. OTOH, I will avoid seeing a movie with people like Tim Robbins, Jane Fonda, or Danny Glover in it because I just don’t like them, and paying to see them in a movie is like “hanging out” with them, which I wouldn’t want to do.
I remember Elvis at an interview when some reporterette asked him how he felt about the Viet Nam war, and his response was great: “Ma’am, I’m just an entertainer.” I wish they all had that kind of class.
And they attribute the slump to higher stunt prices and so on, but we all know the BOYCOTT IS WORKING!
WE THE PEOPLE, BABY YOU CAN’T GET ANY STRONER THAN THAT! IT WORKED ON THE IMMIGRATION BILL, IT WORKED WITH THE FINANCIAL CRISIS BILL THEY WANTED TO PASS IN 2 DAYS OR THE WORLD WILL END AND IT WILL WORK ON NOVEMBER 4TH GET OUT AND VOTE PEOPLE!
Actually I think America is hungry for new heroes, like Joe the Plumber, who accidentally stumble into the role. American is sick of the Hollywood fakes.
Oh and Madonna, who is it you are making fun of? Sarah? Well guess what you crotch-worshipping skank - Sarah has managed to stay married to the same guy and raise a family while serving our country in government. Hollywood has no heroes anymore. The sooner all the celebs disappear from the public radar, the better, IMHO.
I still really dig Mel.
“My wife and I have stopped supporting Hollywood by not going to any movies. In the last two years I have not been to a theater more then twice.”
ncfool - as the mom of 4 kids who see every movie out there (after raising money by working for it), I can tell you - based on their reports you haven’t missed a damned thing.
I thought that would happen with animation. It hasn’t yet.
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