Majors renting out space to boost revenue streams
The mantra of cash-strapped congloms is to find new revenue streams. And for many studios, one answer is right in their own backyards.
Hollywood studios have occasionally rented their backlots to outside companies for various events. But as budgets tighten and pressure mounts to squeeze revenue out of every possible asset, the practice has taken on new importance. And the payoff can be big: One site estimates an added $8 million to its bottom line in a good year.
The studios are working to make their sites more attractive to event planners. Paramount just opened a refurbished Stage 3, dressed specifically for events and offered for $125-$150 per person, including food and beverages, said Uschi Wilson, studio’s longtime head of special events.
Next up for Par: On Sundaythe Environmental Media Assn. will rent the studio’s New York Street for its annual awards, a 750-guest shindig sponsored by Toyota and featuring cuisine by eight organic chefs, organic wines and music by the band Ozomatli and Jason Mraz. The latter will be honored along with Richard Branson.
Warner Bros. also welcomes event clients, including philanthropic bashes. “For charities, the Hollywood factor lends a cachet,” said special events head Hillary Harris. “They get a larger draw of guests and make more money.”
Universal uses scheduling software to coordinate between events and production. The studio’s backlot holds up to 2,500 people, often transported on the studio’s signature trams, said events head Krista Boling.
“Production takes precedence over events,” said Fox associate events director Michael Ewans, who expressed the sentiment of most studios. “When we get calls for use of a stage or backlot, even if it’s a big event, we don’t always have the space available.”
Nonetheless, Fox found space in July for the Saban Free Clinic, a 1,500-guest fund-raiser it hosts annually.
At Sony the annual number of events is in the hundreds, per administrative services head Lucienne Hassler. At Warner the number “fluctuates” between 200 and 300 a year, Harris said. And at Paramount the number of events “will hit 200 this year,” Wilson said. She hopes for a bounceback in 2010 to the studio’s higher pre-recession level.
Attendance numbers can rise into the mid-four figures. Last New Year’s Eve, 5,000 people came to Paramount for a concert featuring Katy Perry.
For such events Wilson works with independent promoters who “advertise and handle ticket sales to the public,” she said. “They rent our facility and services. We do the bars, security and parking.”
Studios sometimes rent backlots to units of their corporate rivals. Time Warner’s HBO picked the Par lot for this year’s season premiere parties for “Entourage” and “Curb Your Enthusiasm.”
The studios take pains to make sure events and the core business of production don’t conflict.
“I meet with security and operations every Monday,” Warners’ Harris said. “We present our schedules and work out the logistics.”
Par also synchs things up on Mondays.
“We meet so everyone knows what events is doing,” Wilson said. “I don’t think a production ever had to move because of us, and vice versa. If we have an event that will generate a lot of money, we go to production and work it out.”
“Business is even with last year,” said Universal’s Boling. “I foresee it being relatively steady in 2010.”
At Fox, Ewans said his unit is still a “profit center,” although the number of outside events declined this year.
Business at Warner Bros. is “going really well,” despite having dipped this year, added Harris, who is “writing a lot of business” for the remainder of this year as well as 2010.
Throwing parties on the backlot makes sense since such areas feature iconic outdoor settings designed to be dressed to suit almost any situation. And with the business being knocked around by the recession and the whims of a fickle public, backlots represent fixed costs — plus infrastructure worth hundreds of millions and thousands of workers on the payroll — that need to be covered.
At Warner, Harris collects money from her clients and then distributes it to the various departments that serviced the event, such as lighting or security.
While the studios don’t break out their earnings from facility rentals, they say that events contribute significantly to the bottom line. “We’re profitable,” Par’s Wilson said.