TIME: Almanac 1993/TIME Almanac 1993.iso/time/052190/0521208.000

Text File | 1992-08-28 | 8.0 KB | 176 lines

                                                                                BUSINESS, Page 64

Shooting The Works


Lights! Camera! Money! Hollywood is on a spree!

By JOHN GREENWALD -- Reported by Richard Natale/Los Angeles and
Janice C. Simpson/New York


    The script called for blizzard scenes at a major airport.
To film it, the entire cast and crew of this summer's Die Hard
2 embarked on a multimillion-dollar odyssey last December that
led them to normally snowy Denver and northern Michigan. But
relentlessly mild weather in both places forced 20th Century
Fox to abandon its costly snow chase and shoot the sequel to
the 1988 Bruce Willis thriller on a Los Angeles sound stage.
As if that humiliation was not enough, the delays and moving
expenses helped push the film's original $40 million budget to
as high as $60 million.

    While the ornery weather may turn Die Hard 2 into the most
expensive film Hollywood will release this summer, the episode
was merely part of a runaway spending spree that has made
movies more costly -- and risky -- than ever. With an eye
toward lucrative video and foreign revenues, studios are
lavishing breathtaking sums on everything from stars to scripts
to scenery. Hollywood now spends an average of $23.5 million
to produce a major movie, up 40% from 1985. (The Consumer Price
Index rose just 14.5% over the same period.) "Studios just keep
piling on the cost, thinking that they will get it back
somewhere," says Jerome Gold, director of the media and
entertainment division of the Ernst & Young accounting firm.

    The moguls throw their biggest bucks at films released
during the summer months. "Kids can see three pictures in a
week," notes Roger Birnbaum, Fox's president of production.
"There are no school nights." Summer hits accounted for 40% of
the record $5 billion that films raked in at U.S. box offices
last year. Worldwide theatrical, TV and video revenues boosted
that take to more than $10 billion. In hopes of luring even
larger audiences, studios are spending $30 million or more
apiece on as many as a dozen films set for release between late
May and Labor Day.

    The lineup is once again heavy with sequels and action
flicks. Among them: Universal's $40 million Back to the Future
III; Disney's $30 million Dick Tracy, starring Warren Beatty
and Madonna; Warner Bros.' $32 million Gremlins 2; and
Paramount's $45 million Another 48 Hrs. "This is the summer of
the blockbuster," says Sidney Ganis, president of the Paramount
Motion Picture Group. "If one or more of them fail, next summer
there won't be nearly as many rolling."

    The cost of such movies largely reflects the price that
studios pay for the handful of megastars whose presence is
expected to guarantee a hit. The top guns include Tom Cruise,
who reportedly will earn some $9 million for playing a race-car
driver and co-producing Paramount's Days of Thunder. For
reprising his role as Nick Nolte's streetwise sidekick in
Another 48 Hrs., Eddie Murphy will take home at least $8
million, plus a share of the film's revenues. Arnold
Schwarzenegger can count on $10 million for starring in Total
Recall, a $50 million-plus sci-fi picture filmed by Los
Angeles-based Carolco and distributed by Tri-Star.

    In the star-struck world of Hollywood economics, many studio
bosses see a film's big budget as an insurance policy against
failure. "Hollywood is a place full of scared people," says
Alex Ben Block, editor in chief of Show Biz News, a weekly
newsletter. "It's less scary to make a $50 million film than
a $10 million film. For $50 million you can afford big stars
and special effects and know you'll get some money back -- even
if it's only on videocassette sales. With a $10 million film
with no stars, you run the risk of losing it all."

    That spare-no-expense approach can apply to every facet of
moviemaking. Disney has gone about $5 million over budget on
Dick Tracy, in part because the studio decided, five months
after the film had been shot, to upgrade the 57 matte-painting
backdrops that were used to help create a comic-book
appearance. The improved matte work includes twinkling lights
and moving boats and cars. Paramount had to frantically
accelerate the editing of Days of Thunder to get the film ready
for its summer release. The speedup meant that crews had to
work around the clock, piling up mountains of overtime. Die
Hard 2 had the same deadline problem. Says Birnbaum: "The
prints will still be wet, but they'll be in the theaters on
June 22 as promised."

    While filming on location, major stars seem to feel entitled
to almost anything they want. When humorist Art Buchwald won
a suit against Paramount for using his idea as the basis for
the 1988 blockbuster Coming to America, court documents showed
that the studio had treated America star Eddie Murphy very well
indeed. Among other things, Murphy enjoyed the services of a
valet, a physical trainer and a $2,000-a-week chauffeur.

    Studios abide such extravagance because their executives
have visions of global markets that are hungry for Hollywood
films. For every $1 that American films earn in the U.S., they
typically make another 70 cents overseas. "You now have to look
at movies as a worldwide business," says Thomas Pollock,
chairman of Universal Pictures Motion Picture Group. "Where you
get your revenues from has changed radically over the past
several years. Few films make their money back just from
theatrical releases in the U.S."

    But because America remains Hollywood's largest single
market, studios spend prodigiously to promote their films at
home. Marketing expenses can equal the cost of producing a
picture. Says Mara Balsbaugh, an industry analyst for Smith
Barney: "It used to cost $5 million to $6 million to open a
movie. Now it costs $15 million." To make a big splash, a major
film might open on as many as 2,100 screens. The prints alone,
at $2,000 apiece, would cost $4.2 million.

    Surprisingly, Hollywood can usually judge a film's long-term
fate by its performance on its first weekend in the theaters.
On Saturday mornings Hollywood's phone lines buzz with the
sound of moguls offering congratulations or condolences based
on industry polls of Friday-night receipts. With so much money
at stake, this summer's calls could be highly emotional. "There
are a number of films that can do $100 million or more," says
Jeffrey Katzenberg, chairman of Disney Studios. "But you can't
look for another Batman; that's a fool's mission. There will
be triples and home runs, but probably no grand slams."

    Some moviemakers think this summer's crop may include some
disasters. "I can't imagine a more boring lineup of films,"
says one anxious executive. "The costs are out of hand, and the
need for a safety net causes people to make formulas and
sequels. I have this incredible sensation that the industry is
at the top of a deep rapids and that there's going to be a
fatality rate. Anyone who denies that is a fool or a liar."

    Hollywood spending is likely to rise until some box-office
disaster forces studios to retrench once again. When film
legends Charlie Chaplin, Mary Pickford, Douglas Fairbanks and
D.W. Griffith formed United Artists in 1919, a Hollywood wag
famously quipped, "The lunatics have taken charge of the
asylum." Today's top stars are seizing power by demanding --
and getting -- salaries and revenue-sharing deals that may be
pushing the cost of movies to reckless heights.

    But if Hollywood was not deliriously extravagant, would
anyone go to the movies? When this summer is past, the studios
will have to top themselves again for the big Christmas season.
No problem there. Sylvester Stallone reportedly will be paid
$20 million to write and  star in Rocky V, a $40 million MGM/UA
release due in December. The year-end holidays will also bring
to the screen Francis Ford Coppola's Godfather III. The
problem-plagued sequel was originally budgeted at $44 million,
but it could become the first film to top $100 million.