Peter Bart and Mike Fleming Jr. worked together for two decades at Daily Variety. In this weekly column, two old friends get together and grind their axes, mostly on the movie business.
FLEMING: Why does it seem like every week in Hollywood starts with such tumultuous twists and turns? Sure, Scott Stuber is now steering Netflix’s movie moves, Jim Gianopulos starts the rebuild of Paramount Pictures, and Sony seems to have its list of candidates to replace Michael Lynton. As some pieces fall in place, trouble abounds elsewhere. The WGA on Friday sent a request for a strike-authorization vote to its members; Chinese investment in Hollywood is ever shaky; the Academy is about to meet over how to avoid the debacle that sent a solid Oscarcast off the cliff (I have heard Oscar gets millions of dollars in free accounting for PricewaterhouseCoopers Oscar plugs, so maybe they got what they paid for). And today starts CinemaCon, with studios and exhibitors gathering in Vegas. Window shrinking hangs heavily over the proceedings as studios try to get theaters to let pics go digital within weeks of release, to be nimble like TV. Pic distributors tell me they wish studios would target inefficient P&A spends and bloated production budgets over collapsing windows. At best, they say, it gives potential moviegoers one more reason not to leave the house, knowing they can wait a shorter time to watch at home. At worst, even a 5% erosion in moviegoing would be calamitous to the future of movies. “Charging $20 after 20 or 30 days to people who’ll pay $4 after 90 days to watch at home isn’t fixing anything,” said a veteran distribution exec. “They’re trying to compete against TV, but if you’re in such a rush to get it to the small screen, why bother making it as a movie? Why not differentiate the moviegoing experience even more, and make better, fewer movies?”
Jim Gianopulos Takes Reins Of Paramount As Chairman & CEO
In the face of all this comes some activity on the dealmaking front that might signal a spike in big-picture packages, especially with a strike at least a possibility. CAA will soon take to the town King Of The Jungle, with new client Johnny Depp attached to play computer virus magnate-turned-accused murderer John McAfee as he takes a Wired magazine writer on a darkly comic Apocalypse Now-like tour at his Belize compound, a trip filled with paranoia, machine guns, sex and murder. Glenn Ficarra & John Requa will direct a script by Scott Alexander and Larry Karaszewski (the pic was originally developed at Warner Bros). Buyers are also reading Bronco Belle, with Natalie Portman attached as a bull rider in a Rocky-esque female empowerment tale as she tries to not allow chauvinists in a male-dominated sport to buck her dreams. Anna Rose Holmer is attached to direct a script by Khurram Longi. Interest is already there for the latter, I’m told.
The market sure heated up last week. Universal won an auction for The Voyage Of Doctor Dolittle with Robert Downey Jr and Stephen Gaghan directing. Word around town was that aside from an event-sized budget over $150 million, Universal – pressed by rivals — agreed to a first-dollar gross payout near 25%, which surprised some given Gaghan has never done a family film. Lionsgate then bought the Seth Rogen-Charlize Theron comedy Flarsky, about a speechwriter (Rogen) hired as an aide for the Secretary of State who was his former babysitter (Theron). He convinces her to trust her moral instincts on a controversial refugee issue. This had numerous bids from distributors wanting to be in business with Rogen and Evan Goldberg’s Point Grey, and Theron. Lionsgate wanted it most. Word is they’ll put up the $50 million budget and P&A. After break even – when Lionsgate gets back its budget outlay, P&A and a distribution fee –- well north of 50 cents on the dollar goes to talent and the producers. Peter, is this just a couple of isolated deals where a studio chief made a big bet, or a sign of more? Netflix and Amazon are getting hungrier, Paramount is about to become a big buyer, upstarts like Annapurna — which raised the Flarsky stakes — Imperative Entertainment, PalmStar Media and others are making plum packages pricier. Then there’s the prospect of a writers strike in May and no sign that studios are hurriedly stockpiling development projects. Are we about to see a boom market for packages?
BART: The intense competition you describe raises a different question. Hollywood’s tentpole fixation may be resting on an obsolete assumption: namely, that the number of ticket buyers overseas will continue to show dramatic growth year to year. Or any growth at all. That, at least, seems one conclusion from data released last week by the MPAA. The numbers revealed that foreign box office receipts actually declined last year while movie audiences increased slightly in the U.S. Is this a major “whoops” for studio strategy? If present trends continue, studio strategists may start focusing again on American ticket buyers rather than obsessing about what’s doing business in China or Brazil. After all, filmgoers in the U.S. between the ages of 18 and 24 bought 10% more tickets last year while that younger demo abroad seemed to be losing interest. As with all data, some esoterica figured in. Foreign revenues were affected by currency fluctuations that only the bean counters can specifically analyze. Box office data in the U.S. also were boosted by a 2.6% increase in ticket prices – when will those numbers stop rising?
FLEMING: I think the currency fluctuations made it look worse than you indicated abroad, and that global business still drives studio fortunes. What I am wondering is why we seem suddenly to be feeling sorry for the big studios. The ones working well are generating profit – Disney holds an unprecedented seven of the 12 most profitable picture slots in Deadline’s profitability tournament that continues this week. But here you are, depicting a temporary offshore box office plateau as calamitous, and I just read a Wall Street Journal article that basically accused Netflix with destroying Hollywood. There was good stuff in there, but let’s not forget WSJ is owned by Rupert Murdoch, whose Fox sued Netflix for poaching talent. Even though Netflix and Amazon dominated Sundance and certainly have driven up the market for movies and TV series, should we really feel sorry for studios? Agents tell me the streamers have reinvigorated the market, and they love them for it. Sure, your star doesn’t get the zeitgeist cultural awareness of a traditional network or theatrical release without P&A campaigns, but is it really killing Hollywood, or simply giving talent some leverage and studios some competition?
I wonder the same about the woes expressed as China continues to pare back its commitments after bailing on deals that have imperiled some picture-making companies. Why did they not see this coming? Many say that some of these of those deals were buyer’s remorse, with changing government policy used as a convenient excuse. Pan Gongsheng, head of China’s State administration of Foreign Exchange recently questioned deals made for European soccer teams and talent, decrying the flight of capital that held no benefit to the Chinese economy. It was inevitable they might feel the same about Hollywood. China is a communist country, and doesn’t have a capitalistic construct. So if your choice was to enrich the Hollywood ecosystem with risky investments that too often don’t pay off, or, as NYT reported recently, stake an artificial intelligence startup like Neuralia to make military robots more perceptive when the U.S. Air Force didn’t provide enough capital? You could see why the Chinese government might covet them over bets in soccer and movies.
It seems harder to feel sorry for the monolithic movie industry compared, say, to WGA members who routinely feel crushed by studios that replace movie writers after a single draft, and sideline writers of buzzworthy TV series that are being dished out in 13 episodes as opposed to the 22 that kept writers busy most of the year. It has left these writers making scale, writers tell me. That issue is driving the train because there is so much TV volume right now.
BART: Still, the flat-lining of movie attendance worldwide might prompt the majors to rethink production budgets on their superhero blockbusters. The audience is finite, after all; maybe the budgets should be, too. Further, is there a limit to the number of tentpoles that can play to a worldwide audience? And here’s a terrifying concept: Maybe there’s an audience overseas for some serious adult movies. That should shake up studio strategy, to be sure.
FLEMING: If you look closely at the films in the Deadline profitability survey that concludes next Monday, it’s easy to see why the tentpole game is the one studios have to play, even if budgets of $200 million are alarming. The best way for Jim Gianopulos to turn things around at Paramount is to take big swings on global projects like Tom Rothman is doing at Sony. His latest bet, staking 25% of the Skydance film Life, isn’t turning up the big numbers, but only those big swings get you across the billion-dollar gross mark. That is the business studios need to be in.
BART: Unless you strike it big with a low-budget sleeper. Get Out, for example. We all know a genre horror picture costing $4.5 million from a first-time director can’t hurtle toward $150 million – especially with a racial theme. So what happened? “Promos Tap Into Zeitgeist,” says a Variety headline. So was it Universal’s shrewd marketing that made Get Out a hit? I wasn’t aware of the campaign; I paid to see Get Out because friends urged me to. The picture snuck up on me. Then there’s Theory 2: Get Out reflects the genius of Blumhouse. Well Jason Blum’s genre films have stirred a lot of attention (Split, for example), but “microbudget” is Blum-talk for “no one gets paid,” and his company, like most in the low-budget arena, has made some schlock along the way. Theory 3: Jordan Peele is a very talented filmmaker who understands the subtext of “post-racial America.” The movie is not about race, it’s about scares. Racial scares. The question that scared Peele in making this picture was: ”What if white people don’t want to see a movie because they’re afraid of being villain-ized with black people in the crowd?” Well, his film is so entertaining and gripping that his fear was unrealized. Filmgoers are coming in droves; the second-week B.O. had a mere 15% drop-off. All this represents a remarkable achievement for a guy from a Comedy Central sketch series, Key & Peele. “I wish I could pretend to be more humble,” he tells interviewers. So don’t be.
FLEMING: I’ve been watching Peele since he and Keegan-Michael Key were doing MADtv, and when their anthology comedy series eased for Comedy Central the sting of Dave Chappelle’s abrupt exit. Peele is up for some big-budget film jobs now. I’m not sure this is a sign of any trend, because Peele is no overnight success, and I’m not sure Get Out is more than a one-off. He started on MADtv in 2003 and is as much a study in persistence than anything. As for Blum, give him credit for helping Peele find his mojo and M. Night Shyamalan rediscover his, in Split. These are monster micro-budget hits for Universal to go along with the tentpoles.
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