Studios proceed cautiously for 2010

Few stars currently earning their quotes

Last fall, studios were bullish with plans to put 40 or more films in production to fill 2010 and 2011 slates.

The majors might still meet that goal, but it hardly feels like a bull market so far.

Studios are proceeding cautiously as they wait for the SAG dispute to play itself out. And they are using economic hard times to slash talent salaries to the point where, even when the business is back, it won’t nearly be the same as it used to be. They are working through the volume of pre-strike films they put into production in early 2008 and are still in need of product for 2010 and especially 2011.

“Studios are telling us, we need movies, but they want us to proceed with projects without spending money, and without actually pulling the trigger and making commitments,” said one studio-based producer with projects in limbo. “Producers have been wedged into this netherworld where it’s like hurry up and wait.”

An unanticipated aspect of the preparations to line studio slates is the bruising negotiations now associated with every picture, as studios seize on talent salaries and gross participation as items in the budget that are not fixed costs, and where they finally have some leverage.

“Box office has been strong, but many of us feel that studios are using the strike and the economy as an excuse to get into long-desired conversations about gross and final cut,” one agent said. “Talent and their unions opened a Pandora’s box, and it feels (as if) there is a new world order out there. You hope the business will get back to normal, but we fear this may be the norm.”

Unless you’re Will Smith, Johnny Depp or a handful of others, nobody is earning their quote right now, said dealmakers. Stories of tough negotiations are widespread: Disney asked Nicolas Cage to cut his price on the next “National Treasure” sequel, and that same studio cut loose a third “Chronicles of Narnia” film.

Then there is comeback kid Mickey Rourke, who is poised to follow his Golden Globe-winning performance in “The Wrestler” with an offer to play the main villain in “Iron Man 2” — but at a lowball opening offer of $250,000 from Marvel; Marvel’s tactics have already prompted Samuel L. Jackson to swear off playing Nick Fury because of a similarly low offer.

And the stars of “Twilight,” Robert Pattinson and Kristen Stewart, who are still in talks, will likely cash low-seven-figure upfront paychecks for sequel “New Moon.” They likely won’t, however, be allowed to sink their fangs into first-dollar gross as they hoped. That film’s financier, Summit, hasn’t yet paid first-dollar gross and sells off its foreign territories. One possible compromise is bonuses pegged to box office performance.

Dealmakers said studios that once bought projects that could be bait for movie stars now prefer high concepts that don’t require big stars and directors with their big paychecks. The perfect example is “Twilight,” which became a big hit despite the lack of bankable stars.

“There is no such thing as a quote anymore,” said one agency chief. “You tell them your client’s quote; they smile and say, ‘Here is the offer.’ Even when you agree on a deal, it’s harder to get the trigger pulled, with more signoffs than in the past.”

In every segment of the film community, the current feeling of paralysis brings with it a high level of anxiety. Studio executives, under orders from above, are driving the hardest deals in memory and eviscerating the backend deals of stars and directors (who are also being challenged on final cut). Writers have been cut to a fraction of the quotes they received before the WGA strike.

Those execs, in turn, don’t just worry about strong slates. They are as concerned with margins, and they fret over the possibility that the economic downturn will force New York and other locations to reconsider government-mandated discounts to shoot films there. State budgets, after all, are being cut to austerity levels.

Agents, who urged clients to be patient until studios ramped back up their production machines, now have to go back and explain why those clients are getting haircuts on every deal. Already, several veterans have moved to other agencies; that list includes thesps Anthony Hopkins, William Hurt, Kurt Russell, Jessica Lange and Antonio Banderas; directors such as David O. Russell; and writers including Jose Rivera.

Lit agents who last year attributed lowball writer offers to studio bitterness over the 100-day writers strike now feel that discounts are permanent. Writers who once got $500,000 for a script and a set of revisions now receive $300,000 for a draft, with no guarantee they’ll be asked back for a second pass. The spec script, pitch and book markets have been sluggish.

Even a spirited bidding battle like last week’s auction for Isaac Asimov’s “Foundation” trilogy resulted in only a mid-six-figure upfront against low seven figures. That property would have drawn a sure-fire seven-figure upfront payday a few years ago considering that directors Roland Emmerich and Alex Proyas were attached to bids.

Producers are feeling just as antsy, as they struggle to pull pictures together for the studios that fund their first-look deals, afraid their pacts will be the next to get cut.

“Business models and budgets are changing, and agencies have had to face the fact that studios are no longer doing the deals they once were willing to make with artists,” one studio production chief said.

That is not to say that all the news is gloomy as Hollywood digs back in.

Movies are still being put together, sometimes collegially. Fox, for example, sewed up deals with Steve Carell, Tina Fey and director Shawn Levy to team on “Date Night,” a comedy made possible when WB deferred to the wishes of Carell (who berthed his film production company at the studio). Lingering bitterness with Fox over “Watchmen” didn’t drive WB to be spiteful.

Disney’s snub hasn’t ended Walden Media’s quest to mount a third “Narnia” installment. Fox has first crack at the series, but every other major studio is waiting for a shot at co-financing the movie if Fox doesn’t.

The film will also be at least $50 million cheaper than the $200 million “Prince Caspian,” even factoring in a move to Australia from Baja to avoid being in the crosshairs of the drug-related violence that has beset Mexico.

Studios are also pointing to the Jim Carrey deal on the Warner Bros. comedy “Yes Man” as evidence that risk-sharing deals can pay off.

Many were skeptical when Carrey gave up his usual upfront salary to become an equity investor in the film and deferred his backend salary until breakeven. Despite the severe weather that hampered the opening weekend gross of “Yes Man,” Carrey got paid his upfront salary within the film’s first week by WB brass grateful for the aggressive way he promoted it.

He had the incentive to hustle, because the better the film did, the more he earns. “Yes Man” is expected to gross $200 million worldwide. By forgoing his usual salary that brought a $75 million comedy down to $53 million, Carrey become a 33% investor.

His gross position on the backend is applied to the usual pot of DVD revenues that stars access. Studios will be pressing big stars to make similar deals that trigger compensation after studios recoup their negative costs — a trend that has been building in the past several years.

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