Hollywood is reveling in a record summer, with sizzlers such as “The Fugitive” and “Jurassic Park,” the second highest-grossing film of all time. Not only is the industry emerging from recession, but, with a new global audience and new delivery systems like cable, studios are churning out more films than at any time since the ’30s. As always, Hollywood will influence hearts and minds at home and abroad. But this Golden Age will be more literally about gold. If you think you’ve seen Hollywood Goes Corporate, wait until you see Hollywood Goes Corporate II, III and VII.
Bankers, marketers and copyright lawyers are already in major supporting roles; soon they’ll get top billing. Studio control is consolidating in the hands of big corporations such as Disney and Sony, which know how to pump the media pipeline. Power win be shared with newcomers: Microsoft’s Bill Gates, who is building a media archive and moving into entertainment software; John Malone of TeleCommunications Inc. (TCI), who owns more cable channels than anyone, and CNN’s Ted Turner, who is reportedly negotiating to buy several independent studios. Moviegoers win be blitzed by ever more ads, guiding them to movies in new outlets, from cable libraries to their desktop computers.
Hollywood has “been big business from the beginning,” says Mark Crispin Miller, media-studies professor at Johns Hopkins University, “but what constituted business in the ’30s and what constitutes business now is different.” Business in prewar Hollywood was lucrative and simple. Big studios pumped out movies and showed them, in theaters, to audiences with few entertainment alternatives. Television ruptured this equation, and for decades, big profit meant Detroit or Pittsburgh, not Hollywood. Then came “Jaws,” ushering in the age of the blockbuster, the sequel and the summer and Christmas movie seasons. The 1980s also marked new interest in foreign markets (where “Rambo” scored big), a new role for technologists such as Steven Spielberg and George Lucas, and the advent of cable. Wall Street’s mergermeisters went west.
As the end of the first movie century approaches, predictable profits get more elusive. The film itself is just the celluloid “software” to feed into the media chain. The software is only one product in the portfolio for a corporation juggling syndication rights, joint ventures and trade tariffs, all while cutting costs. And executives need to pull this off without pausing in the race for market share. Production is up all over town; the lot at Paramount is so frenzied that the studio’s “Beverly Hills Cop 3” had to rent shooting space at rival Universal Studios.
Disney, which hopes to be making 60 movies a year by 1995, up from about 20 this year, set the tone for aggressive management in the 1980s, when Michael Eisner and Jeffrey Katzenberg took over the remains of Walt’s empire. Katzenberg was soon dubbed “the Golden Retriever” for his doggedness, while studio hours grew and expense accounts shrank. Katzenberg has declared his preference for hitting singles and doubles, rather than homers, and the studio has a rep for hiring stars whose popularity–and price–is down. Though Disney hasn’t had a big hit since “Aladdin” last year and its EuroDisney park has lost big money, it can weather a “cold streak [because] they still have good market share, cost control,” says Jessica Reif of Oppenheimer & Co. It can also rely on its library of copyrighted material, its domestic parks and hotels.
For the most part, Disney remains a “software” company. But the other big players focus on that popular buzzword, synergy, or, as Sony spokesman Peter Wilkes apologetically puts it, “the S word.” The idea is to get a piece of every pie in the business. Sony now brings you Mariah Carey on your Sony Walkman, “Wheel of Fortune” on your Trinitron and “Sleepless in Seattle” in its Loews Theaters with Sony sound systems. Industry boundaries are blurring. Time Warner, which has already merged publishing and entertainment, recently joined up with TCI and has held talks with Microsoft. Hollywood insiders expect Turner to define the cutting edge. “He’s the first guy that will have a ‘Cliffhanger’ on TV, and you’ll pay $35 to see it the night it opens,” says one producer.
Meanwhile, every decision made in Los Angeles has to take into account such things as currency fluctuations and trade wars. Story lines are “dumbed down” and made more violent as studios reach for the lowest common denominator worldwide. In Europe, 81 percent of films shown are U. S.-made, giving the industry a $3.5 billion surplus with the EC -and spurring moves to limit imports. The market beyond Europe will grow even faster. U.S. films have taken 40 percent of the Polish market in three years. And Disney has signed a merchandising deal with a New Delhi conglomerate, signaling a new openness in the Indian government. Some films rely on foreign revenues: “Bram Stoker’s Dracula” did $85 million in the United States but $140 million overseas. Foreign revenues already account for 43 percent of Hollywood’s take.
Here and abroad, movie marketing will be more like selling any other product. At an entertainment conference in March, a featured speaker was Charlotte Beers, who made her mark pushing the likes of Happy Cat cat food. Don’t get preoccupied by product, she warned: “People don’t drink the beer, they drink the advertising.” Spending is up. While Hollywood is cutting production costs, now averaging $26 million a film, advertising has jumped to $14 million per picture from $5 million in 10 years.
As finance takes center stage, new “talent” is moving in. Wall Street loves someone like Gary Wilson, who helped sculpt the new Disney, then left to take over Northwest Airlines. Most big studios are run by executives who have never made a movie. The real work of Hollywood, says analyst David Londoner, “is being done by bright, sensible businessmen, not wildeyed guys with [gold] chains.”
But that evolution has some movie mavens in mouming. Even if the Louis B. Mayers were “real vulgarians,” says Johns Hopkins’s Miller, they were moviemakers first and businessmen second. Now that’s turning around. It’s a pretty safe bet that this will mean more money for Hollywood. What it means for the celluloid soul of America is harder to predict.
