Newspaper article THE JOURNAL RECORD

Hollywood's Major Movie Studios Learn to Live with Less

Newspaper article THE JOURNAL RECORD

Hollywood's Major Movie Studios Learn to Live with Less

Article excerpt

HOLLYWOOD (NYT) -- Ten years ago, the stars, and their agents, ruled Hollywood. Duds like Legal Eagles and Family Business were packaged by talent agents for clients like Robert Redford, Dustin Hoffman and Sean Connery, and the studios, without batting an eye, paid lavish sums to make them.

But now the studios are regaining the upper hand, and their main weapon is supply and demand. Under strict orders from their corporate owners to pay more heed to the bottom line, studios are making fewer films, forcing the people who work in the industry to carve up a smaller pie.

Midlevel actors and directors, hungry for jobs, are quietly willing to take pay cuts. And while top stars and directors can still usually write their own tickets -- Steven Spielberg and Tom Hanks earned $40 million each from the success of Saving Private Ryan -- sometimes even the most high-profile projects are dropped altogether if their costs seem unlikely to be recouped. Those who control the big studios -- many of which have been reduced to midsized operating units of giant conglomerates -- devote much of their creative energies to conjuring up new ways to limit the financial risks of filmmaking. The artists may not like it, but the corporate bosses know that is the only way to get predictable earnings in a low-margin business, one in which the flops far outnumber the hits. And that mind-set has stripped the movie business of some of the sex appeal that a decade ago -- in the pre-dot-com era -- made it a mecca for investors the world over. "If you look at the return on capital in the film industry, it has to be in the midsingle digits, which is probably no better than a Treasury bill," said David J. Londoner, a media analyst for Schroder & Co. He estimated that overall profits from the major film studios would drop about 20 percent this year. "The television divisions make money, the film library makes money, but current releases lose money," Londoner said. "It's worse than it has been for the past couple of years." The Hollywood sky, of course, is hardly falling. Producers, executives and talent agents still earn huge sums. …

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