Dweebs steal gleam from Dream Factory

THERE WAS A TIME, not that long ago, when studios were called Dream Factories and Hollywood was all about fantasy and illusion.

It’s a new millennium now, however, and the illusion business has moved elsewhere. Today’s Dream Factories dwell in cyberspace and the mavens of fantasy and illusion suddenly seem to be brokers and investment bankers.

Scan a list of the world’s biggest companies in terms of stock market value and you’ll notice that prosaic companies of the “old economy,” like General Electric or Exxon, no longer sit on top. Perched there instead is something called Cisco Systems, which makes multi-protocol routers for the Internet.

Tim Campbell, a professor of finance at the U. of California, explained in the Los Angeles Times that a company’s value no longer is tied to revenues, but rather to “the public perception of what its future will be.” In short, pizzazz determines price.

Since the stock market has become more “showbiz” than show business itself, great power has been placed in the hands of the image-makers of the “New Economy.” Any vestige of reality has been swept away by what Red Herring, the techie magazine, describes as “Web euphoria.”

“Entertainment is changing and nobody knows what new medium will emerge as television, the Internet, wireless and handheld technologies converge,” says the magazine.

AT THIS CRITICAL MOMENT of change, however, Hollywood is displaying a split personality. Mindful of the fact that the studios stood by like potted plants as TV and video erupted around them, the town is feverishly establishing rapport with the young lions of dweebdom. At the same time, the rhetoric of top studio executives seems trapped in a 1950s mind-set. The “new economy” talks exponential growth; Hollywood talks downsizing. The Internet startups spin images of limitless opportunity. Hollywood is obsessed with hedging its bets. While cyberbiz zealots insist earnings are irrelevant, studios whine about dwindling margins.

Show business people are supposed to be tuned to the zeitgeist, but are they? At a time when the whole country seems eager to gamble, the studios keep apologizing because they’re in a risky business. If Rupert Murdoch really is pondering a bid for General Motors, why does he seem so jittery about the fortunes of his edgy network?

Showmen of Mike Todd’s epoch used to boast about their profligacy. Big budgets to them were part of the “sell.” Moviemakers today lie about their budgets, like children caught with their hands in the cookie jar. Universal seems ebullient because it handed off foreign rights on “Erin Brockovich” to Sony Pictures, even though the movie is a runaway hit.

TO BE SURE, one could argue that Hollywood has a firm hold on reality at a time when others are running amuck. The estimable PaineWebber took full-page ads in major newspapers last week when tech stocks were taking a beating, to sound a note of caution. Couched in the lugubrious parlance of Wall Street, the ads said: “New metrics are being indiscriminately applied today to justify extremely high valuations for companies with no earnings and no well-defined path to ever reaching profitability.”

The firm hastened to add, however, that “the end of a new metric era does not necessarily signal the end of a bull market.”

“Metrics, shmetrics,” Hollywood would do well to reply. The market for movies and TV shows has never been brighter, even though everything is dulled down to the word “content.” Investors may now be hyperventilating about “multi-protocol routers,” but they’ll shortly come to the realization that content is king, after all, and that the prospects for entertainment companies are extraordinary.

Why, therefore, should the dweebs have a monopoly on pizzazz?

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