The Mismanagement of Hollywood

03.4.2005 | Jonathan Leaf | Film | 1 Comment
Mismanagement is the norm in business. A famous example is Xerox, which invented the personal computer and the graphical user interface, but developed neither and today is on the brink of insolvency.

What’s interesting and unusual is when an entire industry is being mismanaged. Such is the case right now with the movie studios.

The most glaring example of their stupidity is their failure to revive the old practice of putting young acting and directing talent under contract. In the 1930’s all the studios forced their new players to sign seven-year contracts. If performers created a response in audiences, the studios would then pour money into promoting them and feature them in bigger pictures. These “contract players” allowed the studios to save money, to control their “talent” and to keep charge of the script development process, insuring a better quality of story was shot.

This system began to fade in the 1950s with the rise of television. The studios were in financial trouble, compounded by a 1948 consent decree in which they lost their theater-chains and with them their once-complete power over which films were shown. More and more acting and directing talent was coming from TV, and, broke as they were, the movie studios saw little reason to invest heavily in questionable new “talent” that might well prove to be of less interest to audiences than the new performers that TV was developing, such as actor James Garner and director  Sidney Lumet. Marlon Brando was the first major actor brought to Hollywood who was not forced to sign a seven-year contract, but others like Charlton Heston would soon follow him.

However, if putting young actors in major roles without signing them to long-term contracts once made financial sense, it no longer does. Several film studios also own TV networks. Viacom (CBS and UPN) controls Paramount Pictures. Disney owns ABC. Warner Brothers owns the WB. And Fox owns Fox. Each of these companies has multiple uses for actors and directors and multiple distribution channels. If a company like Walt Disney-ABC were to sign a young actor like James Franco, they could still plug him into a TV show even if he were not to emerge as a film star and save millions in the -process. Moreover, the studios once again have theater-chains under their direct ownership and control, and a number of them also possess cable networks that allow them to re-sell their properties through pay-cable channels and pay-per-view. Does it continue to make sense to allow young performers to control their level of pay and their choice of projects from their first hit movie onwards?

Is it really sensible that movies are being made with complete unknowns who discover after their film’s success that they are now as powerful as the studio that made their films and turned them into stars? Was it really reasonable that an unheard of little boy named Macaulay Culkin, who was in no position to refuse onerous terms relating to a sequel before “Home Alone” was made, was able to demand tens of millions and the making of other feature films before he would agree to make “Home Alone 2”?

One of the few film executives who appears to have grasped the ridiculousness of this is Miramax co-founder Harvey Weinstein. His decision to demand that directors like John Madden and Rob Marshall and actors like Matt Damon sign multi-picture contracts saved Miramax millions and forced other studios to give Miramax portions of the gross of films it hadn’t even developed for use of this mini-major’s talent. And slowly the rest of Hollywood is starting to catch on. But the key word here is slowly.

Hollywood isn't stupid, or being mismanaged. See Ed Epstein:
03.4.2005 | z

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