by John Steele Gordon
It's an old saying among theater folk
that people are interested in two businesses: their own
business and show business. No business has undergone more
profound change in the last 60 years, as technology and
transformed the economic landscape, than the movies. Edward
Jay Epstein set himself the difficult task of telling this
complex story, and in "The Big Picture: The New
Logic of Money and Power in Hollywood," (Random
pages, $25.95) he has told it very well indeed.
In 1948 the "studio system" was firmly in control
of Hollywood. Actors, directors, and writers under contract
to the major studios were often virtually chattel (although,
to be sure, very well-paid chattel). And the studios owned
most of the movie theaters in the country, dictating which
showed what movies and for how long.
But 1948 saw two developments, one legal and one technical,
that would change everything in less than a generation.
The legal development was a consent
decree that the Justice Department forced the studios to
sign, in which they agreed to sell off their theaters, giving
up their guaranteed market and opening it to independent
The technical development was television. In 1948 there
were only about a million sets in the entire country. But
that year Milton Berle went on the air, demand for television
sets took off, and attendance at movie theaters
began an inexorable decline. In the late 1940s, 90 million
people went to the movie each week; today, although the
country's population has doubled, only around 20 million
The movie business spent most of the 1950s trying both to
compete with television and to strangle it in its crib.
Studio talent was forbidden to work on television production,
and both Hollywood technical facilities, such
as sound stages, and the vast libraries of old films owned
by the studios were off-limits to television networks and
independent stations. Meanwhile, Hollywood cranked out spectaculars
such as "The Ten Commandments" and "Ben
Hur," with wide screens, color, and casts of thousands,
which television could not then match.
It didn't work. In the 55 years between 1948 and 2003, box-office
revenues remained nearly flat, allowing for inflation. Revenues
were $6.9 billion in 1948 (in 2003 dollars) and $7.48 billion
in 2003. Meanwhile production costs rose inexorably as movies
became more elaborate and technically complex. Stars and
directors (increasingly stars in their own right) became
independent contractors and struck hard bargains for their
So Hollywood went broke, right? Not exactly.
In 1948, revenues from the sale of tickets in theaters accounted
for 100% of total revenues. Today they are only 17.9%. It
is a rare movie indeed today that could go into the black
just from ticket sales (and with Hollywood's
very idiosyncratic accounting methods, clearly described
by Mr. Epstein, they never do).
Hollywood, starting with Walt Disney in 1954, made peace
with television and discovered vast new markets thereby.
Pay channels such as HBO now account for
3.36% of revenues, and the networks for another 11.4%. Once
Hollywood figured out that videotapes and then DVDs were
another source of revenue, rather than a threat, these markets
became the tail that wags the dog of the movie business.
In 2003 video revenues were nearly 19% of total revenues,
more than what worldwide ticket sales bring in.
The old studio system, in which a half dozen major companies
dominated the movie business, decayed away decades ago.
It has been replaced with a new
system, in which a half-dozen conglomerates dominate not
only the movie business but also every other form of personal
entertainment. Today six companies, Viacom, Fox, NBC Universal,
Time Warner, Sony, and Disney - what
Mr. Epstein dubs the sexopoly - control not only what is
traditionally thought of as "Hollywood" but television,
radio, and much of publishing as well. Each part of these
empires supplies content and services to the other parts.
The revenue stream of today's Hollywood is huge. In the
last five years no fewer than 10 pictures have grossed more
than a billion dollars worldwide. Many of them will go on
throwing off substantial revenues for years to come,
thanks to DVD sales. Eat your hearts out, Louis B. Mayer
and Samuel Goldwyn.
Meanwhile the major stars make out like bandits. Arnold
Schwarznegger, deemed indispensable to the success of "Terminator
3," took 18 months to negotiate
his contract. He finally got $29.25 million for his services
as an actor over the projected 19 weeks of shooting (nearly
$220,000 a day),as well as $1.5 million to cover such incidentals
as personal trailers, limos, and private
jet transportation to and from locations. In addition, he
would receive 20% of the "adjusted gross receipts"
once the film was in the black on a cash-flow basis; he
also had veto power over who would be the director, his
co-stars, and the script.
Besides the business side of Hollywood, Mr. Epstein thoroughly
covers the technical side. The old days of movies being
shot on soundstages and backlots
are long gone. Today big productions are shot all over the
world simultaneously. In 1997, while Pierce Brosnan played
James Bond in "Tomorrow Never Dies" at the Frogmore
Studios outside of London, stunt doubles were
playing James Bond in scenes being shot in three other places
in England, as well as in Florida and Bermuda. (By the way,
despite what you read in gossip columns, stars never, ever,
do their own stunts. Why? Simple: The insurance policies
indispensable to the financing of a major picture flatly
In the last decade, computer graphics have transformed moviemaking.
In Homer's Iliad Helen's face launched a thousand
ships; in Brad Pitt's "Troy" a computer did it.
And, like Helen's face, computer graphics don't come cheap.
"Terminator 3" spent $19.9 million on computer
graphics. The original "Star Wars," shot at the
very dawn of the computer revolution, listed 143 technicians
in the credits. The most recent sequel, made in 2003, had
All these bits and pieces are put together to create a seamless
whole in postproduction. In the old days, that was the end
of it: The studios printed
posters, selected the theaters where the film would be shown,
and the people came (or didn't). Today, elaborate publicity
campaigns, carefully tailored to each movie, are designed
to generate as big an opening-weekend audience as possible.
Mr. Epstein covers this remarkable transformation with a
sure hand, never lapsing into business-speak or forgetting
that Hollywood legends are more
than just profit centers. As he makes clear in his entertaining
and enlightening book, moviemaking is big business, often
cynical, and always with eyes firmly fixed on the bottom
line. Yet amid the duds and the mindless
action movies so dear to the hearts of teenage boys (a crucial
audience), Hollywood still sometimes make movies of high
entertainment, such as "Titanic." And now and
then it produces an enduring artistic masterpiece, such
as (I predict) "Shakespeare in Love."
It is, perhaps, that miracle that makes show business so