SO LET’S START OFF THE NEW YEAR by asking the question no one wants to answer.To wit: Why do the major entertainment companies seem to covet the prospect of a strike? Is it just the rhetoric of negotiation, or is there a hidden agenda here? Put this question to the corporate pooh-bahs and you elicit a blank stare. One CEO told me, “I haven’t studied the situation; talk to my people at the studio.” I did. They said, “Talk to the boss.” One CEO was candid enough to admit, “It’s all about intimidation. We try to intimidate the guilds and they try to intimidate us.” This is understandable, but they’re taking the war of nerves to another level. In most negotiations, management doesn’t come out and declare, “We need a strike because business is lousy.” Especially since business isn’t so lousy. Talent demands have sent costs skyrocketing, but Hollywood has always pursued a policy of profligacy. The multinational companies that own Hollywood may disdain the industry’s margins, but let’s get real — they invited themselves to the party, didn’t they? No one ordered Rupert Murdoch or Jean-Marie Messier to start financing movies; it was their lame idea. Nonetheless, if a labor shutdown takes place, the two most dreaded words in town will be “force majeure.” The studios will say “bye-bye” to the remaining talent they have under contract and also to much of their executive staff. The networks will follow suit and so will most of the support businesses. Most talent agencies already have drawn up secret lists of who goes and who stays. Most will go. AND ONCE THESE FAREWELLS are uttered, it’s an open question how many will ultimately be brought back into the fold. Most showbiz companies have come to the conclusion that their overhead is out of control. “A studio does not need to carry an overhead of $250 million to $300 million to create a slate of movies, most of which are packaged and co-financed by outside entities,” acknowledges one studio chief operating officer. The other day I visited one role model for the studio of the future — in a sense, it was a scary encounter. Joe Roth, a canny operator who in the past has headed both Fox and Disney, has started a lean company called Revolution. He’s going to produce and finance some 12 movies over the next two years — perhaps more. They’re hardly your typical low-budget indie efforts; they have major directors, generous budgets and stars like Julia Roberts, Bruce Willis and Adam Sandler. Roth has a staff of 15. He does not work at a studio. He doesn’t carry massive overhead commitments. He does not preside over a development hell; he has a paltry 40 projects in development and insists he will make at least one-quarter of these, versus less than 10% for most studios. The money that supports Revolution does not come from Internet billionaires or wannabe showbiz titans. The backers, by and large, are “end users” from around the world — TV companies and other entities that need a dependable flow of product and are willing to advance the money to secure it. In the U.S., Roth’s films will be released through Sony. Profit participants will be cut in on a generous piece of the action and there aren’t any esoteric cross-collatoralization formulas to intrude upon the split. Roth feels sufficiently secure about his operation that, having set it all in motion, he’s planning to direct a movie for his own company. It’s called “America’s Sweethearts” and it stars Julia Roberts, Catherine Zeta-Jones, John Cusack and Billy Crystal. Robert Downey Jr. was going to have a role, but Hank Azaria will take his place, given the actor’s upcoming court dates. REVOLUTION IS HARDLY IMMUNE to the problems afflicting Hollywood. If its movies don’t work, backers inevitably will get nervous. Though Revolution’s financing partners span the globe, serious problems on the German stock market could put a dent in its structure. Roth is the first to admit that “it’s a dicey business, now and forever.” Dicey, but fascinating. Roth unabashedly loves movies, but thinks there is a more efficient and economical way of creating them. Further, he doesn’t believe you have to shut down an entire industry to get there. It’s one thing to start a Revolution. It’s another to foment a strike.
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