Big B.O. comes at even bigger price

This article was updated at 9:42 p.m.

LAS VEGAS — Jack Valenti’s final state-of-the-industry address on Tuesday came laden with mounting dollar signs.

Production expenditures by Hollywood majors rose 9% to an average $63.8 million last year, and the studios spent another $39 million to market each pic — a remarkable 28% surge in print and advertising costs.

Those film outlays combined to push distribs’ theatrical costs to an average $102.9 million, or 15% higher than just a year earlier, according to a member survey by the Motion Picture Assn. of America.

MPAA topper Valenti, who confirmed plans to ankle his post sometime this year, said spiraling film costs must be brought under control. (The MPAA currently has exec search firm Spencer Stuart reviewing prospective successors. Move follows failed attempts to woo retiring congressman Billy Tauzin to the post.)

“There’s not much more that can be said, except that budget discipline will be a fervid priority among studio executives,” Valenti told ShoWest 2004 attendees at the confab’s official opening session.

Film costs have been rising dramatically in recent years, as studios place more marketing importance — and hence expenditures — on opening weekends in the age of super-capacity megaplexes.

Current trends in biz

Among other industry trends and updates spotlighted in the session:

  • U.S. box office totaled $9.5 billion last year, with 1.57 billion admissions repping a 4% decline from 2002, a modern record year. (Canadian exhibs sold an estimated 140 million additional movie tickets.)

  • U.S. ticket prices rose 4% to $6.03, capping a 20-year spurt of 46%.

  • At the end of 2003, U.S. exhibs operated 35,774 screens in 6,060 theaters, compared with 35,837 screens in 6,145 venues at the end of the previous year.

  • The 50-59 age demo marked the biggest annual increase in moviegoing with a 20% surge, though patrons 16-20 remained the most frequent moviegoers.

  • MPAA members released 198 of a total 473 theatrical titles. Including another 467 direct-to-video films also assigned movie ratings, distribs released 646 R-rated pics in 2003 — up from 539 a year earlier — and six of the top 25 grossers were rated R, compared to just 1 in 2002.

  • Homevid versions of movies were released an average four months and 23 days after theatrical runs.

But competition from the increasingly popular DVD home-entertainment format is just one of many challenges for theater owners, Valenti suggested.

Fierce battling

“The onslaught of competition for the eye and ear of consumers is a lacerating catalog of rivalries and marketplace antagonisms,” said the retiring industry icon, well known for his silver-tongued eloquence and dapper silver-maned podium presence.

When Valenti, 82, told the assembled exhibs and others he was stepping down after nearly four decades, he was greeted with a minute-long standing ovation that left him visibly moved.

“This is an epochal time for me,” he said. “Next year someone else will stand here and address you.”

But Valenti added he will maintain an “umbilical relationship” with the movie industry in some fashion.

“I don’t plan to do a General MacArthur and fade away,” he quipped.

Indeed, one would be hard-pressed to imagine a time when Valenti wouldn’t find some sort of platform for addressing the two most prominent themes of his last several years in office — promoting the movie ratings system and decrying film piracy.

National Assn. of Theater Owners prexy John Fithian — who welcomed Hollywood’s recent return to releasing select films with an NC-17 rating — called the movie ratings system a “crowning achievement” of Valenti’s tenure. And he joined the industry elder statesman in railing against movie piracy and supporting recent legislation initiatives to bolster antipiracy laws at the state and federal levels.

“NATO’s members have made the fight against movie piracy a much bigger priority for our association,” Fithian said. “Working with our studio partners, we aim to educate the public and our own employees about the harm caused by movie theft.”

Pixar exec VP creative John Lassiter, who hosted the morning session, used the opportunity to present a clip and trailer from upcoming Disney/Pixar pic “The Incredibles.”

Also at the event, 20th Century Fox distribution prexy Bruce Snyder presented the ShoWester of the Year award to Gulf States Theaters CEO Teddy Solomon. And Pacific Theaters’ Jerry Forman was honored with a Founder’s award.

Nod to Gibson

Valenti noted he’d seen trends and controversies come and go over his 37 years in the industry. Both he and Fithian applauded Mel Gibson’s controversial religious drama “The Passion of the Christ” as a risky film venture well rewarded.

But when asked by press whether other such films might come along, he seemed to caution any revolutionary reading of the pic’s $300 million domestic success.

“I’m sure there will be some more of these, but keep in mind that faith-based pictures are not something new,” he said, recalling classic religious epics including “The Ten Commandments.”

And Valenti had his own, decidedly whimsical view of his most memorable accomplishment as he heads into the final lap of his entertainment career.

“I survived,” he grinned.

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