A Titanic Tale
bA Titani

New York Sun Review

Feb 16, 2005

A Titanic Tale
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 globalization
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 House, 416
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 moviemakers.

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 do.

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 indispensable

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 forbid it.)

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 572.

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 endlessly fascinating.
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