Hollywood seems to be in the throes of another round of soul-searching, which in Tinseltown terms translates into trying to keep the lid on costs.That’s because the stocks of the six media congloms that run the town have been flat for five years. Not even a bona fide hit — think DreamWorks’ “Madagascar” — or moves to break up these behemoths into more focused businesses — think Viacom or Warners –seem to excite Wall Street. What’s straining the cost side are the same things that have been eating away at profits for decades: spiraling marketing costs, runaway piracy, competition from new technologies. And, lately, ballooning backend payouts to more and more talent. Heretofore these cost-control efforts have generally fizzled, and simultaneously (and not coincidentally?) the top dogs have gotten a bigger piece of the pie and everyone else has been held in check. That’s true on both the exec and the talent sides. But now the studios say they really mean to hold the line on tentpole budgets and those backend payouts. Good luck. It’s hard to imagine any of the megastars willingly accepting a lesser payday than they’re accustomed to — not because they aren’t rich as Croesus but because most have causes they wish to lavish money on (as well entourages to support). I just don’t see the languishing stock price of Viacom or Warners motivating these people to take a pay cut. They also know an ancillary when they see one. Moreover, the biggest stars are global brands, and it can be argued they are part of the intrinsic value of a movie and should be compensated as such. If that argument doesn’t fly, talent agents will fall back on the fickleness of showbiz fortunes: Stars are only as good as their last movie or string of movies, right? So who can blame them for taking the money and running? In any case, I’ll bet Tom Cruise is going to keep writing those checks to Scientology; and given his public proclamations about his love life, I can’t imagine him skimping on a ring. Not that I can pretend to fathom the psychology of the “hyper-rich.” The megastars and the top execs are part of the 0.1% of the American population who now account for 10% of the country’s income, and who pay a disproportionately smaller share of federal taxes. (They can largely thank George W. Bush for the latter.) According to a New York Times analysis of this shift in wealth, “The only tax payers whose share of taxes declined in 2001 or 2002 were those in the top 0.1%.” The studios had better hope that bringing up such stats will make some difference when they sit down with the talent and their reps.
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