Hollywood Babble On & On #207: A Lose-Lose Situation

In my last post I expressed the fear that SAG might have to eat dirt in this contract in order to buy the time needed solve their problems and go for the next contract from a position of strength. It was mentioned to me that the big media companies are also having their own problems, and mentioned the layoffs occurring at places like CBS-Paramount, NBC-Universal, etc..etc...

That's true, but the problems with the media companies goes beyond the layoffs. You see a lot of companies use a tough economy to justify layoffs, even when they're profitable, because layoffs create ephemeral "savings" so these same profits can beat the blind guesswork forecasts of alleged expert analysts to create an equally ephemeral bump in the company's stock price to justify a positively concrete boost in the CEO's bonus. So they're not really as good a barometer of a company's health as many might think.

However, the more I look at the deal, the more I think that it goes beyond SAG eating dirt, but the AMPTP, or to be more specific, the companies it represents, eating shit in the long term.

The "screw everybody" business model is behind all the problems plaguing movie and TV production these days. Costs are skyrocketing, unions are pissed, investors are pissed, company shareholders are pissed, and politicians are going to start sniffing around any minute to unleash a thousand worlds of hurt upon the whole industry.

The moguls want all the new media revenue for themselves, forgetting how it will only cause the costs of making the content for new media go up and up and up. Ask yourself this question:

Will anyone be willing to take a low upfront fee when they are certain that they will get less than the steam off the CEO's pee as royalties and residuals?

Of course not, those who can will demand more and more, causing costs to go up, and profits in new media to shrink and ultimately disappear.

Right now the studios are going through a contraction in production. They're making fewer movies because things are getting too expensive to make anything that can't break the half-billion dollar mark at the box-office. They're pricing themselves out of business, and the CEOs won't do anything to stop it, because they write their own contracts, making them the only ones who profit, and if they get fired, they get a severance package that could buy Bangladesh.

We're talking about one of the few industries to thrive during the Great Depression, and yet, after decades of unprecedented economic growth the companies are claiming that they are on the brink of total collapse because of a recession.

I think in order to save the industry, the industry must tear itself down, and rebuild from the ground up. Shareholders, who aren't seeing dividends anywhere near the rewards reaped by the CEOs, and film finance investors who aren't seeing profits at all, should join forces with the people who make the shows, and create a new business model. A model where costs are kept within the realms of rationality, where the people who make the industry possible don't get screwed, and where CEOs are paid based on the performance of the company, and not how they can juggle stock prices and analysts.

New media is a golden opportunity to forge a new way of doing business, and hopefully, lay the foundation for a healthy industry. Because if something drastic isn't done, and done quickly, then the whole industry could face ruin.