The Color of Money

Hollywood craves power and greenbacks, and the two are rarely far from each other

Director Harold Ramis leans back in his chair, his Buddha-like body relaxed but his eyes intent, glancing between the soundstage and the small video screen in front of him.

"Hey! Knock it off!!!" hollers actor Michael Keaton at an empty couch. On the screen you can see what's happening: He's yelling at himself, playing another character, superimposed electronically on the couch.

This is the set of "Multiplicity," a Sony picture that has everything Hollywood loves: star power, a successful director, high-tech wizardry, a simple, catchy premise - a busy man gets cloned to cope with life - and the promise of untold millions at the box office.

Ever since Cecil B. DeMille made the first feature-length film in Hollywood in 1913 ("The Squaw Man"), money and star power have driven the American film industry. It's a high-stakes business where tens of millions of dollars are risked on the ability to spot talent, develop it into a picture, and catch the whims of an unpredictable public.

"Imagine if you built a skyscraper and the day it was finished, you said, 'Aah, no one likes it.' So you tore it down. That's what it's like," says Mr. Ramis, who's written and/or directed such hits as "Ghostbusters" and "Groundhog Day."

As a result, much of Hollywood's glitz and bravado is underscored by a persistent, gnawing anxiety. And that anxiety is growing. The movie business is undergoing another of its many transformations. And as usual, money is the driving force.

Star salaries have shot up, increasing overall costs. Bruce Willis's $5 million salary in 1988 for "Die Hard" shocked the industry. Today, stars like John Travolta and Sylvester Stallone can demand more than $20 million. This summer's spate of media mergers has turned studios like Disney and Warner Bros. into mega-entertainment conglomerates with holdings that range from production houses to television networks to publishing companies.

And international distribution has grown from an easy way to earn extra profits into an economic necessity. In 1994, international box-office revenues actually surpassed the domestic take for the first time.

"The bottom line is that for a company to stay in business today you have to have a worldwide market," says William Baker, president of the Motion Picture Association, which represents the eight major studios. "Your films have to travel."

About 480 movies are made in the United States each year. The major studios account for approximately 160 of them. The average cost of a studio movie is now about $50 million: $34 million to make the movie, pay the actors, director, producers, set designers, cinematographers, etc., and another $16 million to market it.

Of the 160 movies made by the studios, only 15 to 20 percent actually make enough money at the box office to cover their costs, according to Mr. Baker. When you add in revenues from pay-per-view, video rentals, cable sales, the airlines, and hotels, only 33 percent make money.

"So it's those [huge successes like] 'Batman Forever' that really hold up these production studios," Baker says. "While they may be turning out 20 or 30 movies a year, it's a small percentage of those that keeps the whole industry alive."

Critics contend the need to make high-grossing films that will fly in Argentina as well as in Illinois has forced the industry to put a premium on violent action films.

"The executives in the movie industry today are grinding out cat food on a moving belt, that's what it is, cat food," says Frank Peirson, the Academy Award-winning writer of "Cool Hand Luke" (1967) and "Dog Day Afternoon" (1975).

Mr. Peirson contends the bottom-line mentality of today's studios has led to corporate interference on every level of the creative process, which in turn has led to the production of hundreds of mean-spirited, second-rate films.

"There was a time the big corporations were willing to let producers produce and directors direct," he says. "But once they got into it, they couldn't keep their hands off of it. Now, you have the dull hand of businessmen on every lever."

Others in the industry also feel a frustration with the studios' increasingly bureaucratic layers of highly paid executives. Every studio executive knows their next decision could be their last, so, critics charge, they're cautious to a fault.

"If they're spending $100 million, they can't take a risk," says Amy Holden Jones, the writer-director of "Mystic Pizza," "Indecent Proposal," and "Beethoven." "It's much easier to fall back on reliable formulas that have worked in the past - 'Let's do "Die Hard" on a train, "Die Hard" on a ship, "Die Hard" on a bus' - than to search out whole new stories and plots and characters."

But as Ms. Jones and others are acutely aware, the more blockbusters, the more money is available for other types of films. They also look to the independent production houses to provide the creative risk- taking.

But the most successful of those independents, like Miramax and New Line Cinemas, have now been bought by larger studios or other corporations.

"It's not that they want to put you out of business," Peirson says. "They just see a profitable business they want to add to their own."

That kind of basic business instinct has always been key to Hollywood's success. But unless that skill is matched with an instinct for spotting talent, history has shown, it's proved to have deep limitations.

The original movie tycoons, like Paramount's Adolf Zukor, Universal's Carl Laemmle, and MGM's Louis Mayer, were businessmen of immigrant stock who also had some experience with vaudeville.

Most started showing short films in the back of arcades in the early 1900s, and thousands of dollars suddenly rolled in. So they opened small theaters dedicated solely to moving pictures.

Not satisfied with the entertainment quality of the short films that others were making, they set out to create their own independent feature-length films.

But to do so, they first had to outwit the Eastern establishment bankers and businessmen who controlled what came to be known as the "Trust." In 1908, Thomas Edison called together the eight largest motion-picture producers and proposed creating a monopoly with control over all production and distribution of films. Since Edison owned the patents on most movie cameras and projectors, and the businessmen controlled most of the country's movie production, it was easy. Before the year was over, they had a complete monopoly.

But it didn't last. While the Trust had the money and control, it lacked vision and an understanding of entertainment. After four years of warfare with the Jewish immigrant upstarts who became known as the Independents, the Trust was broken and Hollywood was born.

"Hollywood was always a big cash cow, but they were family-owned films," Peirson says. "Harry Cohn [founder of Columbia Pictures] ... made films because he loved movies and he knew movies. He made pictures that made him laugh and cry."

Successful movies still have to move people. That means they need great scripts, talented actors and directors, and executives with the savvy to package the material.

"I think you have to understand that the currency of the business - the dollars and cents - is really the talent," says Robert Dowling, editor in chief and publisher of "The Hollywood Reporter."

And the kind of talent that can crank out blockbusters with international appeal is extremely rare. So, in line with the law of supply and demand, salaries continue to skyrocket, which sends production costs spiraling, and inspires even more caution in the studio executives. While that raises indignation in some, for others it's simply part of Hollywood's economic reality.

"These executives are not stupid people," Ramis says. "Take a script without a star and without a really obvious premise, and they may love it. But they'll say to you, 'I can't make it, it's character-driven, not star-driven.' I think a lot of them are in conflict themselves."

Others in the industry also maintain that you can't make audiences watch a lousy movie. Hollywood must be doing something right, they argue, because it's making money.

But there is also caution in the wind. Some of the latest big-budget, high-action thrillers have been greeted with big yawns. The high level of violence in some movies is raising concern nationwide. And technology again threatens to give Americans an array of other entertainment options.

"[Hollywood] has its cycles," says John Krier, president of Exhibitor Relations, a Los Angeles company that tracks film grosses. "There have been lots of times when people thought the business was ending - before talkies came along, when TV was invented, when video came along. But we've always rebounded. Like a phoenix."

Vanity Fair's

1995 "New Establishment"

The following individuals are listed in the top 10 of what Vanity Fair magazine calls the movers and shakers of the media world as of September 1995.

1. Rupert Murdoch, chairman and CEO, News Corporation

2. Bill Gates, CEO, Microsoft

3. Michael Eisner, chairman and CEO, the Walt Disney Company

4. Sumner Redstone, chairmanViacom

5. John Malone, president and CEO, Tele-Communications

6. Gerald Levin, chairman and CEO, Time Warner

7. Andrew Grove, CEO, Intel

8. Steven Spielberg, co-founder, DreamWorks SKG; founder Amblin Entertainment

9. David Geffen, co-founder DreamWorks SKG

10. Robert Allen, chairman and CEO, AT&T

11. Edgar Bronfman Jr, president and CEO, Seagram Company; acting chairman, MCA

12. Louis Gerstner, CEO, IBM

13. Ted Turner, chairman and president, Turner Broadcasting System

14. Herbert Allen, president and CEO, Allen & Company

15. Michael Ovitz, president, the Walt Disney Company

Who Owns What

The following are movie-related holdings of the top media conglomerates:

Time Warner Inc.: Warner Bros., HBO Pictures, Savoy Pictures

The Seagram Company: Universal Pictures, Cinema International, United International Pictures

Viacom: Paramount Pictures, Cinamerica Theatres, Famous Players theaters in Canada

Turner Broadcasting Systems Inc.: Castle Rock Entertainment, New Line Cinema Corporation (includes Fine Line Features), Turner Pictures Worldwide

Sony Corporation: Columbia Pictures, TriStar Pictures, Sony Pictures Classics, Triumph Releasing, Sony Theatres, Columbia TriStar International Distribution

The News Corporation Ltd.: 20th Century Fox

The Walt Disney Company: Hollywood Pictures, Touchstone Pictures, Walt Disney Pictures, Miramax Film Corporation

- from The 1996 Information Please Entertainment Almanac

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