Wednesday, 8 July 2009

Hollywood Babble On & On #320: No Camp Hollywood This Year

According the indefatigable Nikki Finke the annual Camp Allen Big Money Confab is on again this year in Sun Valley, Idaho and that no studio or big media honchos were invited.


Now some folks are saying that it's inevitable, everything's going on the internet, and that for some reason the internet won't need professional quality entertainment content, but I beg to differ.

I think it's the studios' own damn fault that they weren't invited.

This camp is where the uber-rich gather, plot world domination, realize that they
already dominate the world, pat each other on back, have some beer and barbecue, and then talk about where they can put their money to work.

One of those places where their money doesn't work is Hollywood.

Hollywood had it good during the hedge fund/sub-prime boom of the last few years, investors literally had money to burn, and when you're trying to dodge America's convoluted tax system, there's no better place to burn it than in the convoluted money system of Hollywood.

We're talking about a system where a film can make hundreds of millions at the box office, sell hundreds of thousands of DVDs, exponentially beating the costs of making and marketing, and
still lose money.

This is the self-fulfilling idiocy that I've been talking about since I started this blog.

For those unwilling to look in my archives for the definition of that little nugget of unwisdom, I'll restate it here.

A self-fulfilling idiocy is a plan devised to solve a perceived (
but not necessarily real) problem, yet this plan is so stupid, that only a complete idiot cannot see that it will cause even more (and all too real) problems in the future.

It's like a self-fulfilling prophecy, only with more stupid.

Hollywood thought that they had a problem, namely that they weren't making enough money for themselves. So they created their convoluted accounting system that takes what should be a simple business and making it needlessly complicated.

The management tells the shareholders that it's to protect their interests and guard their profits, so the shareholders went along, at first.

Then the idiocy kicked in.

People who had profit participation in individual films started getting screwed out of their fair share, so they started demanding more money up front.

The studios then started spending more on "stars" causing costs to go up. To recoup the costs they started going after the unions. The unions started fighting back, getting more and more money up front, causing costs to rise even more.

All during this time the studio management started hiking their own salaries and perks to levels more befitting an 18th century French monarch than a mid-level business man.

Real profit margins began to shrink, but the investors stood by and let it happen, partially because of the tax write-offs, and partly because of the real money made by the occasional mega-blockbuster.

Costs keep going up, more in tune with the inflation rates of Zimbabwe than the real costs of making movies, and real margins continue to shrink. But they can continue to count on outside investment to keep them going because Wall Street was swimming in cash.

It basically went from being a business to a Ponzi Scheme, where instead of the first investors making the money, it's the management that scores the cash, through their salary and perks.

No one seemed to mind until the Wall Street money train came to a screeching halt. Suddenly investors started demanding actual returns on their investments, and the studios were gobsmacked, because they literally don't know how to do that.

So you get studios finding it hard to find financing, even though box-office numbers are strong, because who wants to toss their money into a black hole?

Which is why Hollywood was left out of Camp Allen, it's about opportunities, not idiocy. If Hollywood wants back in on the whole deal, they better get off their duffs and reform how everything is done in Hollywood, from the top down.

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