Hedge your bets

Slimmer slates emerge from shift in fiscal focus

The “chatter” in and around the entertainment industry is increasingly consumed by techno-talk, but one very basic reality seems to be emerging: The major media companies are significantly reducing their financial commitment to the motion picture sector.

Substantially fewer films will be produced over the next year or two. And a significant portion of the production costs of the reduced slate will be borne by hedge funds and other investment groups.

Talk to the corporate hierarchs and you quickly elicit the thinking behind this pullback: Too many movies have been crammed into a market whose appetite for new product has obviously leveled off.

Sony believes a cutback in production is vital to clear the clutter in the marketplace. Disney is intent on pushing further resources into animation, ESPN and ABC to create new content for newly expanding digital platforms. Warner Bros. wants to focus more on big “event” movies and cut back those discomfiting “middle” films. So it goes across the board.

The economics of the movie industry have always been intensely cyclical. Propellants like the advent of video or the expansion of the international audience cause a sudden spurt in the revenue stream, to be followed by periodic lulls.

“There’s little doubt,” acknowledges one CEO, “that we are now in a lull.”

While the major companies believe this is a time to trim their sails, investor groups ironically are reaching for their checkbooks — witness the major financing deals announced only last week by Sony and Universal.

Hedge funds and other groups seem convinced that promising deals can be made with the studios to help underwrite film slates. The risks, to be sure, are high, plus investors must pay fees to the hedge fund managers and then absorb distribution and overhead fees from the studios.

The fervor of the hedge funds may also work against investor interests in that they may again spur an uptick in production. The majors, nonetheless, seem resolute on preventing this. The time has come, they feel, to tighten their belts. And outside investors clearly are making the belt-tightening a lot less painful.

A host of possibilities

I doubt whether Jon Stewart will solicit my advice about his forthcoming gig as Oscar host — not that I’d know what to tell him. I’d thought Chris Rock was a good choice, but the proceedings seemed to intimidate him, as though the letters “PC” kept flashing across his brain. Clearly, this is a difficult job for stand-up comedians, but since Stewart is always sitting down, he may have a better shot.

Stewart can’t sing, so he shouldn’t try a long Billy Crystal-style number. He isn’t good at machine-gun one-liners, so he shouldn’t be a retro Bob Hope. His best move would be to be himself.

This means offering up his customary “W” clips — Bush explaining why “Birth of a Nation” remains his favorite movie. Perhaps he could persuade Dick Cheney, a good Wyoming boy, to give his review of “Brokeback Mountain.”

Whatever he tries, Stewart would do well to avoid jokes about the length of the Oscar show. His audience knows all that, and it ain’t funny.

Pics that don’t sit well

On the subject of length, the evidence is pretty persuasive that running time, not ratings, seems to be inhibiting filmgoers.

“King Kong” has failed to perform up to expectations because Peter Jackson demanded his three-hour and seven minute cut, and “Munich,” at 2 hours and 44 minutes, has also seemed a daunting challenge to audiences. Terrence Malick took approximately 20 minutes out of “The New World,” but his more disciplined cut didn’t get to the screens until three weeks after the film opened.

Meanwhile, despite the propaganda that an R rating hurts box office, R films have scored well, of late. Thanks to comedies like “Wedding Crashers” and “The 40-Year-Old Virgin,” six R-rated films have broken through the $100 million mark over the last couple of years, and the success of “Brokeback Mountain” suggests a continuation of this trend.

Studios have been fighting fierce battles with filmmakers over ratings (Sony lost its classic fight with Roland Emmerich over “The Patriot” in 2000), but perhaps bigger fights may next occur over running time.

Historically, filmmakers always fall in love with every frame, but now that even neophytes are given final cut, this love affair carries with it serious economic implications.

Hence, an old pro like Malick deserves kudos for returning to the cutting room.

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