While lamenting release glut, majors hike prod'n and marketing budgets

Nobody’s going on a diet in Hollywood.

Despite the pro forma gnashing of teeth over rising costs and the glut of pics at the weekend box office, the major studios are spending more than ever this year — both on film production and on marketing.

“I don’t see anything bringing costs down,” a former studio topper asserts. “Everyone lies about it, just like they lie about their weight.”

Studios don’t reveal feature production spending, but estimates by qualified insiders peg the total spend at the big six — Disney, Fox, Paramount, Sony, Universal and Warner Bros. — at $6 billion this year. Add to that another $3.5 billion in marketing costs.

Paramount, which has carved out a rep as the most budget-conscious studio, is most likely to boost its spending, as Viacom topper Sumner Redstone loosens the purse strings and incoming studio chief Brad Grey goes after star-driven vehicles.

Relying on star power is perceived as the best way to drive hits worldwide and into the increasingly lucrative ancillaries.

But there are risks.

“It’s very difficult to keep the spending down once you put stars in with a backend,” one exec explains. “And if you say no, they’ll stop coming to you. How can you turn down something like Will Ferrell and Nicole Kidman doing ‘Bewitched’?”

Still, not all star vehicles succeed (“Catwoman” with Halle Berry, “Spanglish” with Adam Sandler) — and a few collapse even before they make it out of the gate (“Tru Blue” with Denzel Washington and “Eucalyptus” with Russell Crowe and Nicole Kidman).

There’s also no chance of a reduction in the number of major studio releases, despite the resulting cannibalization of pics going after the same audiences. With MGM, Miramax and Dimension slowing their outputs, it’s likely the majors will boost theirs.

There are key reasons why studios are spending more:

  • Stars are demanding, and getting, top dollar, with $20 million plus 20% first-dollar gross deals becoming more common. And the competition to develop star vehicles is ever fiercer.

  • Tentpoles, often with budgets topping $150 million, are increasingly seen as essential to survive in a crowded marketplace.

  • Saturation release patterns, with openings of 3,500 playdates in high-capacity megaplexes, requirebigger advertising buys. What hopefully offsets these rising costs is the buoyancy of the foreign box office and the DVD after-market.

Moreover, all the studios try on an ad hoc basis to cushion their risk by bringing in co-finance partners or selling off foreign territories.

Official figures from the Motion Picture Assn. of America showed average production costs rose from $39.8 million in 1996 to $63.8 million in 2003; average marketing spend doubled in that period from $19.8 million to $39 million.

New MPAA prexy Dan Glickman is expected to reveal even higher numbers when he announces the 2004 figures March 15 at the ShoWest exhibitors confab in Las Vegas.

The scramble to lock up rising talent and hot scripts has led to eyebrow-raising deals for mid-budget genre movies.

Consider this example: U recently acquired a comedy spec called “The Break-Up” for $2.25 million with $12 million for star Vince Vaughn, who also will produce.

“You find that you’ll pay $20 million for a star on an $80 million movie so your costs go to $100 million, and that seems like a good bet,” one exec notes ruefully. “But you lose sight of the question of whether you should be making that movie in the first place.”

Take the Will Smith vehicle “Hitch,” which has grossed $100 million in its first two weeks: The negative cost was reportedly $90 million, a substantial sum for a romantic comedy with a single A-list star.

Here’s a rundown of the production budgets of the Big Six:

Warner — $1.5 billion

The studio’s first tentpole of the year, “Constantine,” has performed respectably, with $33.6 million in its opening weekend. Next up: Chris Nolan’s “Batman Begins” in June, followed by Tim Burton’s “Charlie and the Chocolate Factory” in July and Mike Newell’s “Harry Potter and the Goblet of Fire” in November.

The fifth “Batman” and the fourth “Harry Potter” are expected to cost near $150 million each.

Sony — $1.2 billion

“Hitch” looks like a winner with domestic B.O. well ahead of the budget after just two weeks. Other key projects near or above the nine-figure level: action sequel “XXX: State of the Union,” “Bewitched,” Rob Cohen-directed “Stealth,” “The Legend of Zorro,” updated remake “Fun With Dick and Jane,” “Memoirs of a Geisha” and the “Jumanji” sequel “Zathura.”

Though it’s not included as part of the studio’s 2005 spend, Sony is going to be handling the MGM release slate, topped by “The Pink Panther” with Steve Martin.

Disney — $1 billion

The Mouse House is expected to spend $300 million for its back-to-back “Pirates of the Caribbean” sequels, with “Pirates 2″ due to be released in November. It’s splitting financing with Phillip Anschutz’s Walden Media on franchise starter “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe.”

Fox — $800 million

Fox, which touts its toughness on costs, will hike the number of pics it’s releasing from last year’s 18 to as many as 25. It’s releasing several films with pricetags near or above $100 million: Ridley Scott’s “Kingdom of Heaven,” the Marvel comicbook adaptation “The Fantastic Four” and New Regency’s romantic thriller “Mr. and Mrs. Smith,” starring Brad Pitt and Angelina Jolie.

Fox will handle distribution for George Lucas on “Star Wars: Episode III — Revenge of the Sith,” but Lucas financed this sixth installment.

Universal — $750 million

U’s biggest bet is on Peter Jackson’s “King Kong.” The studio has pegged the budget at $150 million with Jackson on the hook for overages.

Other big-budget entries include boxing pic “Cinderella Man” with Russell Crowe and Sam Mendes’ Gulf War drama “Jarhead.” Miramax is co-financing “Cinderella Man.”

Paramount — $700 million

Paramount’s been among the most aggressive studios in making acquisitions over the past year, following the “swing for the fences” proclamations by prexy Donald De Line.

Its biggest bets are a pair of co-financed remakes — the $130 million “War of the Worlds” with Tom Cruise and the $90 million “The Longest Yard” with Adam Sandler. It’s also planning a third “Mission: Impossible” pic and wants to co-finance “The Zodiac Killer” with Warner but hasn’t closed the deal with director David Fincher.

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