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Pic budgets: truth or dare

OK I’ll admit it: I, too, used to fib about production costs.

Back in the days when I was a zealous young studio functionary, it was not uncommon to inflate movie budgets when talking to exhibitors or to reporters.

At the time, it was possible to make quality films — even with star casting — for $5 million or less. Westerns and costume pictures also were being shot on the cheap in Spain. So if a $5 million movie turned out great, it was cool to boast that it was really a $12 million extravaganza — a practice that persisted into the 1980s.

No one at Paramount, for example, was particularly eager to admit that even “The Godfather” cost a mere $7 million. It was clearly a more extravagant exercise.

Now we’ve come full circle. Embarrassed by soaring production costs and the unpredictability of special effects, almost every studio consistently puts out wildly under-stated numbers. The distortions are so blatant that it’s become an industry joke. And the press goes along with it.

Here’s why the joke’s not funny: The studios are no longer closely held companies. They are units of publicly traded multinational corporations and, as such, should be candid about the cost of doing business. This is especially true during a summer like this when some of the big “event” pictures are yielding uneventful box office results.

Mind you, the studios don’t officially announce these phony budgets. But if a journalist prods a studio source, he’ll always elicit a number. And coincidentally, every executive at that particular company quotes the identical figure.

There’s no way an outsider can learn the true cost of a movie, even if he is lucky enough to get hold of the original budget, since that document itself may be a lie. The budget of the infamous “Waterworld” totaled $100 million, but the movie came in at $175 million.

When I was a senior vice president at MGM, the studio chief furtively acquired distribution rights to a movie for a price that struck me as being rather lofty. He defended the deal, saying the price matched the budget of the film, and handed me the budget.

Well, it turned out there were two budgets — the bogus one he gave me and the actual one, which, as I soon discovered, was $4 million lower. The net result: A tidy $4 million profit for all the happy parties involved in the deal.

In some classic cases, of course, producers didn’t need to apologize for their “overages” because the monies turned out to be well spent. Dick Zanuck and David Brown were agonized at the time when “Jaws” came in at three times its original budget. Their agony was short-lived when the around-the-block lines started forming.

The reality of the moment, however, is that the numbers have become hallucinatory and the industry might as well concede that fact.

Was it really cool for a Disney PR representative recently to demand a correction in Daily Variety about the budget of “Pirates of the Caribbean?” The newspaper originally put the film’s cost at $150 million. Disney insisted “the budget was $125 million.” My message to Disney: Get real, guys. Who’s kidding whom?

I would say the same to Universal, which proclaimed a $137 million cost for “The Hulk.” I suppose you could call that an accurate number — give or take, say, $50 million.

According to Revolution Pictures, “Hollywood Homicide” came in at $75 million. Joe Roth’s company should be grateful if its gross totaled $75 million.

And who knows what “Bad Boys II” really cost Sony? All we can count on is that the number will be perhaps 30% higher than the studio acknowledges, as was the case with “Charlie’s Angels: Full Throttle.” The same goes for “Master and Commander” at Twentieth Century-Fox — a company which, in past times, tried to be uniquely candid about its mega-pics. Industry gossip put the final cost of “League of Extraordinary Gentlemen” at $140 million. The gossip is screwy, insists Fox – the movie came in at $80 million.

Talk to the actual filmmakers and they’ll tell you that the spiral will continue.

By the summer of ’04 many if not most of the so-called tentpole pictures will be coming in around the $200 million mark, with an additional $75 million earmarked for worldwide prints and advertising. In short, the tentpole mandate imposed by the studios’ corporate parents will be reaching a critical inflationary benchmark.

Sure, there are some major revenue streams to ease the pain. DVDs are jumping off the shelves worldwide. Pay TV revenues are growing. The values accrued by film libraries continue to rise.

But there are also a few danger signs. Audiences are becoming more selective — surely an irritating habit. The parent companies are becoming more sensitive to soaring costs. The greenlight process at studios is growing ever more convoluted.

So why don’t we clear the air a bit in at least one area: Let’s all tell the truth about movie costs.

I’m embarrassed that I used to fib, but at least I inflated numbers, rather than diminishing them.

I don’t know what I would have said had I confronted the actual numbers on “The Hulk.”

I might have turned green.

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