New Look

Welcome to the show folks...

I decided to take the plunge and give this old bird a new look and some new features like a "share" button that allows you to post links to this blog by e-mail, twitter, facebook, etc...

Let me know what you think.

Not much to crank about today...

...well, aside from the beastly heat out here on the ranch.

Phew!

Anyway, I'm hoping to have something to write about tomorrow. So check with me then, and until then, feel free talk among yourselves in the comments.

Hollywood Babble On & On #558: Magnificent Bastard Award!

Welcome to the show folks...

Today is a rare event, a time when I have to acknowledge someone's clever maneuvering, and present them with the rarest of honors. Yes it's time for me to present....

Today's Magnificent Bastard shows that sometimes when you're in the middle of a fight you can sing give peace a chance and then use it to sucker punch your opponent.

Today's Magnificent Bastard is...

CARL ICAHN

10 days ago the takeover maven and Lionsgate's management called a truce in their long fight for control of the mini-major, saying that they were going to look into "merger & acquisitions" opportunities together. It was then reported that Lionsgate was looking into merging/acquiring that black hole of debt once called MGM.

Suddenly Lionsgate's share value took a dive, the truce expired and Icahn made a new offer of $6.50 a share. 50¢/share lower than his recent $7.00/share tender offer, and in comparison to the wobbly share price, it looks pretty reasonable. At first Lionsgate tried to sound even handed over this development, but meanwhile they were leaping head-first into a seemingly desperate stock dilution plan, where they trade debt for stock, in order to whittle down Icahn's stake from 37+% of the company to approximately 33%. Now I'm no financial law expert, but I'm pretty sure Icahn's lawyers are currently looking for ways to use it to screw this plan by Lionsgate's management, either through getting it tossed by regulators, or goading other shareholders to sell out before their own holdings get further diluted and ultimately devalued to nothing.

So Carl, you managed to use the egos of Lionsgate's management to drive down the share price, increase discontent among the shareholders who aren't part of the ruling inner circle with share dilution schemes, and set up a situation for you to buy more shares at a lower price, do you have anything to say about being getting this blog's coveted official Magnificent Bastard Award.
Well, since it looks like you're heading for a real battle, all I can say to both sides is to at least try to keep the company in one piece. The film business can't afford to lose a viable competitor.

Hollywood Babble On & On #557: POST #1,000

Welcome to the show folks...

Just as I logged on to write this post I saw that it would be my 1,000th post. So let's mark this ultimately pointless milestone by sending me large amounts of money. Who wants to send me some cash?

*silence*

Fine, be that way.

For my 1,000 post I am looking at two stories of cashing in when you can.

TAKE THE MONEY AND RUN

Ryan Murphy, the co-creator of Fox TV's hit show Glee has inked an extremely lucrative deal to stick with his hit show, and to develop new shows. I won't go into too many details, except to say that he will now sleep in a solid gold house atop a king-sized bed with a mattress stuffed with $100 bills, and pillows stuffed with feathers from birds that went extinct centuries ago that were hand plucked by Rupert Murdoch himself during a time travel expedition. This goes on top of his already lucrative screenwriting work, the latest being the up-scale New Yorker finding themselves by traveling, eating & shagging, epic Eat, Pray, Love.

I say good luck to him, and that he should get as much as he can, while he can.

Why?

Because it can't last.

I laid out some of the possible reasons for Glee to crash and burn when I heard it was renewed for a third season before it even finished its first, and it doesn't involve 18 year old guest stars getting botox.

For those too lazy to click the link, I'll summarize:

1. The fandom and hype around Glee is just too intense. It's like the old Nat King Cole song, it's just running too hot not to cool down. The hotter the show, the faster the chilling, and the colder it gets, sometimes completely freezing everything and everyone involved. Only the most charismatic and talented can survive that sort of hype-storm, and Fox putting the Glee performers in as many Fox related things as they can is not going to help them in the long run. The odds are really good for people to turn it on during season 2, wonder why they got so excited the previous year, and change the channel.

2. The cast is already in their mid-20s and will be hitting their late 20s during season 2. Passing them off as high-schoolers will get tougher. Plus, they should be all graduating at the end of season 2. What then? Do they get a new glee club together? Does the teacher follow them to college? Do they forget graduation and try to go all Head of the Class and try to keep them as high school seniors when they're actually closer to senior citizens?

So I say to Mr. Murphy, get as much as you can while you can. Get as many new shows up and running as fast as possible and hope that they hit it, so that when Glee does crash and burn he has an escape hatch.

OH CANADA!

The CW Network has purchased the sitcom 18 To Life from the Canadian Broadcasting Corporation (CBC), joining CBS's police dramas Flashpoint, The Bridge, (co-produced with CTV) and ABC's Rookie Blue (co-produced with Canada's Global Network).

I was actually surprised to hear that CBC, Canada's tax subsidized 'public broadcaster,' actually went with this deal. Usually when one of their shows attracts considerable foreign interest they cancel it as fast as they can. Apparently the show was originally developed for ABC, but they passed and CBC caught it, and has now joined the other networks in selling their shows over the border.

Personally, I think it's a good thing.

90% of programming watched by Canadians are shows imported from America, with a sprinkling of British shows on our cable networks. Our domestic TV producers are usually geniuses at missing opportunities. Alliance-Atlantis TV, our biggest producer, produced the immense CSI franchise with American mega-producer Jerry Bruckheimer, and what did they do this success? Did they use it to sell their other shows? Did they use that clout to expand and grow into a new market?

No, they pretty much dissolved themselves into a mish-mash of companies incapable of doing much of anything substantial.

That's why I'm rooting for the Canadian shows that sell south of the border, and it's our own damn fault that we didn't catch on and break out of the cable/syndication ghetto into the prime-time network big time long ago.

Why?

1. Shows set in Canada and dealing with Canadian situations aren't all that alien to our American cousins. Our accents are understandable, our institutions are a little different, but not in any insurmountable way.

2. We have an excellent roster of talented performers and comedians who usually end up going to the states anyway, so it's nice for them to stay home and make a living.

3. It's just plain cheaper to make television in Canada. Canadian TV production doesn't have a lot of the baggage piled on it like ones made in California.

The American networks actually need Canadian shows, because they pretty much screwed up their own development systems following the twin false prophets profits of corporate synergy, and reality television. The myth of synergy has alienated a lot of talent, and pretty much cut them off from any access to the network higher ups. Reality shows stopped being the cheap panacea they were originally conceived of being, becoming more and more elaborate and expensive to stand out among the pack. This coupled with the decline in the popularity of reruns as summer viewing has left American networks with a black hole in their schedules.

Unable to develop the new scripted programming that advertisers demanded themselves because of all the walls they erected between them and the talent, the networks needed programming that was easy to sell and already put together. They found that material in Canada.

So good luck, I hope the Canadians do well, they could use it.

Hollywood Babble On & On #556: My Pet Peeve

Welcome to the show folks....

The weather here at the ranch is hot, humid, and just plain crappy. This is making me extremely cranky, so I'm going to do some cranking here so you can derive entertainment from my rage. I have a pet peeve that needs to be addressed, and address it I shall.

It really, really, really annoys me when I see yet another report that a movie version of the failed sitcom Arrested Development is in the works, only to be debunked the next day. Yet at least once a month, someone announces that the movie is on, then retracts, or denies the statement as soon as possible.

Here's a little note to all the website editors who keep reporting these stories, and those who leap on them as some ray of sunshine in their drab empty lives: IT IS NEVER GOING TO HAPPEN.

There, I said it, and I'm going to stick by it, and here's why:

1. The Audience: Had a talented cast, and lots of critical acclaim, but it never had a large audience. By the time they scraped by into a 3rd season, they had lost most of their most ardent fans who knew it wasn't going to last. Unlike Star Trek it did not have a renaissance in syndication, and no company will think it worth the...

2. Cost: Sure Jason Bateman and Michael Cera have had some big screen success, and some failures, but their status, and the show's small audience, no matter how passionate, is going to justify the cost. Hollywood can't make a romantic comedy with no big stars without pissing away $50 million minimum. Is the studio that owns it willing to spend that sort of money adapting a movie from a short-lived, never truly popular show that managed to have an underlying theme of incest in almost every episode and involving almost every character.

3. Time: The show was canceled about two lifetimes ago in Hollywood terms, and exists only as a faint memory among a small audience. Where will the movie pick up? Will it restate the plot-lines? How will it explain the years that have passed since the end of the show? How is the movie going to restate the complicated relationships to the new audience that it needs to in order to justify its existence?

So please stop posting those Arrested Development movie reports, and those who loved the show, refuse to let these people play with your hopes. I liked the show, but like a lot of people, I sort of lost interest during the third season, and drifted away, but I know that a movie isn't the answer to a show that just didn't catch on with the general public. Let the cast and the writers move on to other things, and leave the show in the past. It's over, it's done, let it go.

What do you think of those reports of the Arrested Development movie?

Saturday Silliness Cinema: Jimmy Carr

Welcome to the show folks...

Time for me to take my semi-regular break from ranting and raving about business to have a laugh. Today, Britain's king of the 1 liners Jimmy Carr.

Be warned, his material can be very NSFW and deliberately button pushing, so don't come crying to me if he offends you.

Hollywood Babble On & On #555: Where Does All The Money Go?

Welcome to the show folks...

Today I have a question:

je pressman asked: Also FURIOUS D this film has made over 300 million dollars worldwide, when did a figure like that indicate disappointment or why are the financial hurdles set so damn high?

Once upon a time a worldwide box-office take of $300 million was the signal to start doing the happy dance at studio headquarters because your movie just made a truckload of money. Nowadays not so much. Now there are reasons for this, and it goes beyond simple production costs. That's because production costs are just the beginning, or to be more exact, the middle.

It all starts with...

DEVELOPMENT: This is the stage where pitches are green-lit to become scripts, in the hope that those scripts would someday be green-lit to become movies. Back in the day it wasn't a very expensive process. Usually the producer developing the project had a writer they trusted working on the script, and others only stepped in when the original writer was stumped.

Nowadays it's done differently. A studio buys a property, like a novel, a comic book franchise, an old TV show, or even a board game, then hires anywhere from five to fifty writers to work on their own drafts, then try to piece together something coherent from drafts written by the others and vice versa. These writers are all getting paid to do this, so are the producers overseeing this cluster-fuck, usually far better than the writers. Unless a script that meets the approval of about twenty studio executives, as well as their wives, mistresses, and illegal immigrant housekeepers is found right away, it becomes an extremely expensive process.

But even then it's not over. Directors are hired, so are their own writers, leading to more rewrites, production designs, firings, more hiring, etc. etc.... It all adds up.

An extreme example of script development run amok lies behind the Superman Returns. Producer Jon Peters literally pissed away over a decade of time and $50 million+ of the studio's money before a frame of film was even shot. All development costs, and then some, are then slapped onto the 'negative cost' of the film.

Then you can begin...

PRODUCTION: This is often blamed because it is horrendously expensive to make a movie, and is often the source of many misconceptions. Many think, even I thought this too, was that big budgets were supposed to result in big stars, big sets, and big special effects. Well, that's only partly true. The key thing that a big budget buys a filmmaker is time. Remember, cast and crew are all very well paid professionals. Their time is worth money, a lot of money, and the more time spent making a movie, the more money spent.

Which brings me to salaries, one of the key budget killers. People like actors, directors, writers, producers are referred to as "above the line costs." Many of them are due residuals if the film makes money. However, studio accounting makes the mob running the Central States Teamsters Pension Fund look positively clean, and they know that they're going to get screwed on those residuals. That's why anyone of these "above the line" people with the slightest amount of clout demands as much up front cash as they can get their grubby little hands on. Their agents, who get 10% of that up-front cash, gladly play along.

So you end up with a film like Judd Apatow's Funny People, which has no special effects, no major stunts, big fancy sets, or even a long production time, getting saddled with a production budget of $70 million. Pretty much all star salaries. Toss in big special effects

Now just when you thought it was over, it isn't, because then you have to pay for...

THE RELEASE: It costs money to make movies, it also costs money to get movies into theaters. These costs are called P&A, or Prints & Advertising. The bigger the film, the bigger the P&A costs, because they aren't going spend $100-$200 million on making a movie without spending a commensurate amount, usually the same if not more than the production budget, getting it on as many screens as they could with as much hype as money can buy.

Now you'd think that the studios all being owned by big media conglomerates would help them save money on advertising through the TV channels, newspapers, and other outlets that are owned by the same parent company. Well if you did, you'd be wrong.

If a film released by Warner Bros. wants ad space on Time-Warner owned channels like CNN, or publications like Time or People magazine, it has to pay through the nose for those ads. Often paying more than if they were buying ad-time from a competitor, because they don't have to buy those ads from the competitors, and are thus more prone to the rules of the free market.

Now that you have the ads bought, then come the ticket sales. The theater chains have to take their cut, called the House Nut, which generally leaves the distributor getting about half of the ticket price, an amount called The Rental.

A simple formula for determining the break even point of a film is to take the production budget, double it, and see if the domestic box office meets or exceeds that amount.

Why domestic?

Well, to answer that we need to look at the...

FOREIGN BOX OFFICE: This is because while most studios handle their own domestic distribution, and collect all of their own rentals, foreign distribution is a different kettle of fish. Only a handful of major companies are able to handle releasing films in every territory in the world. A lot of the time they have to license their film to be released by local distributors.

Those local distributors in the other countries then have to collect the rentals from their local theaters, shave off their own cut, and send the rest to the American distributor. So while the studios like to trumpet the foreign markets to make films look successful, they are, in fact, far less successful than they want you to think.

Then it all drops into the bizarre world of....

STUDIO ACCOUNTING: This is a strange world where madness reigns, nightmares are made flesh, and only the bravest auditors dare fear to tread it, and few of them return from these Lovecraftian realms with their sanity intact. Here are some of the more common black holes where the money vanishes:

1. LOANS: The studio borrows money from their parent company to make the film, but that loan comes with an interest and repayment plan that makes Knuckles the neighborhood loan shark look positively sweet-natured. Suddenly tens of millions of dollars vanish just to pay the interest on money loaned from the right hand to the left hand.

2. FOREIGN RELEASE: Remember those foreign distributors I mentioned, well, even the ones owned by the same multinational conglomerate that owns the studio are going to gouge a big cut out of the international release income. It's going to the parent company, but it's not going to the movie.

3. HOME VIDEO/TV: The home video company may have the same name as the movie studio, but it is, in fact, a legally independent company that license the movies from the studios in exchange for about 20% of the profits made on home video. The same trick is also pulled with selling the film to TV, one division licenses the film to another, to sell the film, at a deep discount, to the same channel that made this movie pay so much extra for ad space. So if you have a deal giving you 5% of the home video profits, you are due 5% of the 20% given to the studios by the home video company, and that's only if you're lucky because there's always...

4. STUDIO OVERHEAD: These are supposed to cover the costs of actually running the studio. However the definitions of what constitutes proper studio overhead is amorphous at best. It could include things from executive salaries, office and studio infrastructure expenses, to the new Lamborghini sports-car the CEO's daughter got for her sweet 16 birthday, as well as the party it was presented at.

All of these things eat away at the box office take until there are nothing but losses left. A Harry Potter film with a global box office take of over $900 million has allegedly lost $167 million according to Warner Bros. Pictures.

If you're a big name in Hollywood with a lot of clout, you might be able to get some money out of a picture if you have what's called a "Dollar One Deal." That's where you can get anywhere from 5%-25% of every dollar from every ticket sold from the first one. These deals are rare, reserved only for the most powerful stars. More common are what are called "adjusted gross" deals where stars get a percentage after the film earns an amount past a set amount determined in the contract. Studios love to play around with these, so it's still a struggle to make what many consider their fair share, so most just ask for tens of millions up front as well as these adjusted gross deals.

An urban legend is that the last film to pay net profits to those with shares was the movie Splash, and only because it cost so little to make, made so much, so fast, the then struggling Disney company couldn't hide the money fast enough. Jim Carrey allegedly made money from a "net profit" deal, but from what I've seen it looks more like an adjusted gross deal, with iron-clad target numbers set in concrete.

And that's the story of Hollywood, money, and how they manage to lose lots of money even when they sell lots of tickets.

Hollywood Babble On & On #554: Bruckheimer's Bucks

Welcome to the show folks...

The Wrap has a piece analyzing the box office performance of blockbuster kingpin Jerry Bruckheimer's recent productions. The costs have been creeping up, while the box office take is going down.

His most recent film The Prince of Persia raked in only $89 million domestic, and they're crowing about it making $230 million globally, but that's not all that hot. The film cost $200+ million to make, and Disney probably spent at least that much again for prints and advertising. Add the simple fact collecting the money from foreign distributors and exhibitors is a nightmare that never really gets you every penny you're due, and the film would need to clear a minimum of $400-$500 million just to break even.

Which brings me to the point of this little sermon.

Bruckheimer spends too much.

The secret of his success is that where people just did it, Bruckheimer overdid it. His specialty was producing bigger, if not necessarily better, than everyone else. Big, epic visual spectacles was his stock in trade, and could very well be his downfall.

The problem with Bruckheimer and his movies is that they are built on the premise that spending more money solves every problem. All you need are bigger explosions, bigger special effects, and bigger hype.

But audiences aren't flocking to movies that put spectacle over story in the numbers they used to. It's like the millions who bought the Avatar DVD and then watched it at home without the 3D, mega-screen, ultra-surround sound systems suddenly felt cheated. The sense of wonder created by being bombarded with digitally generated special effects is just plain burnt out. Folks want stories to go with their special effects. Millions even bought tickets to Shyamalan's Last Airbender despite the bad buzz in the hopes that they can get a sequel with a better filmmaker because they loved the story found in the original source material.

My advice to Bruckheimer-

1. Get better stories. Audiences are willing to pay for stories that go beyond excuses for special effects now more than ever. Pair good stories with good story tellers, and Bob's your uncle.

2. Control costs. A film should never have to make $1 billion worldwide just to make a small profit at best, or even still lose money at worst. It just shouldn't.

If Bruckheimer wants to keep his crown as King of the Blockbusters he should follow that advice. Do you readers have any suggestions for him?

My Apologies

Sorry for not having anything new today folks. It's been a busy, and extremely hot day here at the ranch, and the showbiz-biz news hasn't exactly been blowing up my kilt with excitement.

Hopefully something will pop up tomorrow for me to rant and rave about.

Until then feel free to peruse my archives and see just how far I've come since I've started this blog.

Hollywood Babble On & On #553: Miscellaneous Musings

Welcome to the show folks...

I'd like to thank The Incredible Hulk for being my guest blogger earlier today. Though I wish he used the door instead of just smashing his way through my wall. Anyway, it's time for serious business news...

WHO SAID THIS:

“Am I excited about making movies? No. Will we have no alternative but to make a certain level of movies? The answer is yes because a library of this magnitude will require it.”

Stumped?

It was:

RON TUTOR

For those who don't know, he's the billionaire builder who kicked $200 million of his own money into the $650 million purchase price to buy Miramax from Disney.

Which begs the question:

IF YOU'RE NOT EXCITED ABOUT MAKING MOVIES, WHY DID YOU GET INTO THE MOVIE BUSINESS?

I mean the independent film business is the one business actually requires some excitement on the part of the owners. It's a stressful, feast or famine, roller-coaster ride of a business that requires someone to feel some passion for the field. Sometimes it's the only thing that will keep you alive.

I can understand if he's hoping to make money off the deal, but unless he's solely looking to flip the company for a quick profit from another buyer he's going to need some excitement. Otherwise he's going to toss the whole damn thing away in frustration and rage within six months.

COMCAST-NBC GO INDIE?

Hoping to smooth the way for their big merger, cable giant giant Comcast and broadcaster/ TV-movie producer NBC-Universal have signed an agreement with the Independent Film & TV Alliance. Basically if the merger goes through Comcast-NBC will spend $6 million over 4 years on independent productions.

Here is a video comment sent to me by a spokesman for Comcast--

Okay, I'm just being silly again, so let's get serious:

Now that amount is basically pocket change for this deal, and I think they should spend more, and not just because I want to support indie TV producers, it's just good business.

Why?

SYNERGY IS BULLSHIT

During the recently passed age of mega media mergers folks were sold the snake oil that they could do everything in house. The idea was that every aspect of the creation, production, broadcast, and future sales of a TV show could be done within the conglomerate, with lots of remakes, product placements, unicorns, and lots of money, without a penny going to any outsiders.

But there's a problem with that.

It doesn't work.

Corporations in the creative industries of TV, film and publishing have a point where they can only go so far with what they already have. They hit a saturation point where they can go no further, and end up doing really stupid things. Things like remaking Knight Rider and trying to put a 1 hour prime time variety show every weekday to get out of buying out a late night talk show host's massive contract.

They need to go outside the reservation, for fresh blood, and fresh ideas. Fresh ideas that can only be created by the chemistry between two previously unrelated elements.

The proponents of synergy in network TV will tell you that such talk is treason and heresy, because it will deny the network the nice profits from syndicated reruns and DVD sales. How did the networks survive without them for the first 50 years of the industry? Quite well apparently. If they can't then they need to look at their own business model, because that is the real problem, not someone else making money.