Get ready for the era of $200 million movie writedowns.
So warned News Corp. chief operating officer Peter Chernin, who was speaking on a panel of top entertainment execs at the Milken Institute Global Conference on Wednesday.
Other panelists were Viacom chairman-CEO Sumner Redstone, Sony Pictures CEO Michael Lynton and Activision CEO Robert Kotick.
“There are probably three or four movies coming out in the next six months that had $200 million in negative costs alone and probably another $100 million to market,” Chernin warned. “At least one is going to go down, and you’re going to see a new era of $175 million-$200 million writedowns. It will rock the industry to its foundations.”
Chernin’s warnings about escalating costs stood in contrast to Redstone’s talk of higher budgets for Paramount, which he said has received the greenlight to start spending over $100 million in an effort to attract top projects.
“The creative community wasn’t going to Paramount with movies that cost over $100 million,” Redstone said of the shift. “Now Paramount has hundreds of millions to make the movies they believe in.”
In a later session with reporters, though, Redstone added that star salaries would have to come down and said studios have let A-list actors “walk away with a disproportionate share of the rewards.”
While Redstone encouraged cost-sharing as a possible remedy to escalating budgets, Chernin dismissed the increasingly common practice, calling it “fallacious” as it simply cuts both the upside and downside in half.
Execs also discussed growing concern over indecency, noting that TV companies have all increased broadcast standard budgets and upped their sensitivity training.
Chernin said Fox conducted a seminar over indecency issues for all the company’s top execs, but he expressed skepticism over whether recent increases in citizen complaints to the FCC actually reflect greater anger — or simply greater sophistication on the part of interest groups in getting their views out.
He said Fox conducted its own focus groups and found that children and adults were offended by almost nothing on broadcast or cable TV, save for a domestic abuse scene from “The Sopranos.”
Asked about piracy, all four seemed optimistic that the film and videogame industries had learned enough lessons from the experience of the music biz to avoid large-scale piracy but said price points and windows may continue to adjust as a result.
“Once you’re in the theater, you’re vulnerable to piracy, but if you release the DVD too close to the theatrical release, you have to worry people won’t go to theaters,” Lynton said.