How do you know someone from Hollywood is lying about money?
Their lips are moving.
LA Times entertainment business correspondent Patrick Goldstein has a blog post up about how everyone lies about how much a film costs to make. Folks have different reasons for lying, studios low-ball the budget to make the movie look more profitable, or less disastrous than it actually was. The studio's rivals try to inflate the numbers to make the film look unprofitable, or to brand the people making it as profligate spenders. Then everyone trades positions when it's time to sort out the profit share, with the studios now high-balling their costs to avoid paying people what they're owed, and their rivals now low-balling to make the first studio look like a shower of bastards, even though they do the exact same thing.
Which shows not just one, but three of the fundamental problems with the way Hollywood operates as a business.
1- Trust. You can't afford it. Winston Churchill used to say that it was easy to predict what Stalin was going to do; just imagine the worst, and that's what he'll do. In a way it's the same with Hollywood, you can pretty much assume that someone's going to screw you, because everyone is out to screw you. In Hollywood there is never a moment when both sides say "Thank you," after a deal, they usually end with "Fuck you," and "Sue you." One of the fundamental rules of economics is that capitalism without coercion or fraud, is designed to enrich both sides of any deal. Sadly, all Hollywood has when it comes to business is coercion or fraud. This creates a "why bother" attitude when it comes to reforming the broken system, and everyone just goes out to grab whatever they can.
2- Simplicity. They don't have it. The scary thought I had when I ponder this phenomenon is that the people in charge may not even know what the budget truly is. Remember, this is a system where those in charge deliberately make things complicated, thinking that as long as they appear as the one person who can understand it, they can stay in power. But it may have become too complicated even for them. It's not that far fetched a thought when they need a team of forensic accountants, a gaggle of tax lawyers, and a sniffer hound named Geetch to figure out how many breakfast bagels an actor can get per day. Remember, the studios are claiming that they can't live up to the contract that ended the Writer's Strike, because the contract they negotiated is too complicated for them to understand.
3- Transparency. You can't see it. This can probably be included with simplicity, but what the hell. You see, the studios are all publicly traded companies, they are not supposed to have any real secrets when it comes to their finances. Yet try to find out anything about their money that's not in one of their press releases, and you'll realize that it's easier to get secrets out of the CIA. Literally, it is easier to get secrets out of the CIA than accurate money data a major studio. And you can't trust those press releases, because one day they'll be bragging about rolling dough, the next claiming that they're bordering on bankruptcy to avoid paying some director their 1% of the gross.
And you can't really claim that these tactics are doing the companies any good. Shareholders, investors, and talent are all getting increasingly discontented with this business model. Costs are skyrocketing, profit margins are really shrinking, and the only people who seem to be profiting are the CEOs and their immediate cronies.
My advice, I think the whole system needs a tear down and a rebuild from the ground up. An entirely new model where they embrace a model where everyone can walk away happy, not just an elite few with corner offices.
Their lips are moving.
LA Times entertainment business correspondent Patrick Goldstein has a blog post up about how everyone lies about how much a film costs to make. Folks have different reasons for lying, studios low-ball the budget to make the movie look more profitable, or less disastrous than it actually was. The studio's rivals try to inflate the numbers to make the film look unprofitable, or to brand the people making it as profligate spenders. Then everyone trades positions when it's time to sort out the profit share, with the studios now high-balling their costs to avoid paying people what they're owed, and their rivals now low-balling to make the first studio look like a shower of bastards, even though they do the exact same thing.
Which shows not just one, but three of the fundamental problems with the way Hollywood operates as a business.
1- Trust. You can't afford it. Winston Churchill used to say that it was easy to predict what Stalin was going to do; just imagine the worst, and that's what he'll do. In a way it's the same with Hollywood, you can pretty much assume that someone's going to screw you, because everyone is out to screw you. In Hollywood there is never a moment when both sides say "Thank you," after a deal, they usually end with "Fuck you," and "Sue you." One of the fundamental rules of economics is that capitalism without coercion or fraud, is designed to enrich both sides of any deal. Sadly, all Hollywood has when it comes to business is coercion or fraud. This creates a "why bother" attitude when it comes to reforming the broken system, and everyone just goes out to grab whatever they can.2- Simplicity. They don't have it. The scary thought I had when I ponder this phenomenon is that the people in charge may not even know what the budget truly is. Remember, this is a system where those in charge deliberately make things complicated, thinking that as long as they appear as the one person who can understand it, they can stay in power. But it may have become too complicated even for them. It's not that far fetched a thought when they need a team of forensic accountants, a gaggle of tax lawyers, and a sniffer hound named Geetch to figure out how many breakfast bagels an actor can get per day. Remember, the studios are claiming that they can't live up to the contract that ended the Writer's Strike, because the contract they negotiated is too complicated for them to understand.
3- Transparency. You can't see it. This can probably be included with simplicity, but what the hell. You see, the studios are all publicly traded companies, they are not supposed to have any real secrets when it comes to their finances. Yet try to find out anything about their money that's not in one of their press releases, and you'll realize that it's easier to get secrets out of the CIA. Literally, it is easier to get secrets out of the CIA than accurate money data a major studio. And you can't trust those press releases, because one day they'll be bragging about rolling dough, the next claiming that they're bordering on bankruptcy to avoid paying some director their 1% of the gross.
And you can't really claim that these tactics are doing the companies any good. Shareholders, investors, and talent are all getting increasingly discontented with this business model. Costs are skyrocketing, profit margins are really shrinking, and the only people who seem to be profiting are the CEOs and their immediate cronies.
My advice, I think the whole system needs a tear down and a rebuild from the ground up. An entirely new model where they embrace a model where everyone can walk away happy, not just an elite few with corner offices.
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