Ouch

By now you've all heard of the movie financing bombshell that has just hit Hollywood. Summing it up: there ain't no money out there unless costs are slashed. DVD sales are slumping around the world causing revenue drops that are serious. And it's not just Hollywood, London is almost in drydock due to the drying up of risk capital which doesn't want to invest in sure losers anymore.

Medium- to big-budget movies produced by the U.S. studios in 2006 are set to post pretax losses of $1.9 billion after five years of exploitation (from domestic and international boxoffice, DVD, pay TV, etc.), according to a report from Global Media Intelligence, a new U.S.-based division of U.K.-based media analyst Screen Digest.

Does this mean the end of Hollywood? It means the end of the fancy schmancy financing through limited partnerships and hedge fund subsidization. Limited partners expect to make a profit eventually, and the way things are now there is no "eventually" in sight. The commie movie slate put out by the Hollywood Left all by itself is poised to lose dam near $200 mil while the top of the line stars etc. already pocketed a bundle, a bundle that might be their last big score.

A-list fees, particularly the gross points paid to top actors as well as directors and producers, are a big part of the problem, GMI said. Such costs totaled $3 billion in 2006 -- nearly double that of five years ago. While the studios are in negotiations with writers, actors and directors over fees, salaries are not the main issue -- the cost of producing, casting and advertising movies in the present environment simply exceeds the likely returns.

The London Times is more direct. They say the report blames the stars and their demands.

A reckoning may be looming, however. Research suggests that the demands made by A-list actors have turned the movie business into a loss-making industry at the precise moment that it has mislaid its audience at the box office. A report, Do Movies Make Money?, predicts that the 132 films distributed by the six leading Hollywood studios in 2006 will make a pretax loss of $1.9 billion (£920 million).

Whoopsie. Then the London Times drops this one

GMI believes that several of the biggest box office hits of 2006 made an overall loss or failed to return significant profits to their investors. These include Mission: Impossible III (Bye bye Tom), Superman Returns, Dreamgirls and Miami Vice. Falling DVD sales, increasingly ambitious marketing campaigns and demand for ever more spectacular special effects have all played supporting roles.

The leading culprit, however, is the spiralling costs of “gross participation” deals, which can account for up to $100 million on a single film.

Boo hoo. Nikki Finke, meanwhile, serves the WGA/Huge Movie Star Kool Aid party at her usual spot near the cess pool. Anyone who reads this report knows that business as usual is not in the cards. Why am I picking on Nikki Finke? She's a cunt, that's why. She runs off almost every day about how a movie makes a supposed money on a weekend and I wrote her to tell her how wrong she was and ho much a studio "makes" and the box office "gross" have no correlation. I pointed out to her that "makes" has to do with how the deal is structured and who gets what. Gross is only gross at the box office, how those monies are distributed determines "makes" (profits). She replied calling me a moron and telling me she was blocking her server from my email. So let's get this straight: she--and every other Hollywood "reporter"---knows the business and knows that gross has nothing to do with makes as the above study shows. It is clear that writers, directors, and particularly actors are grabbing a big part of all grosses or nets---and their parasitic agents get at least ten percent of that. How much of the $500 million world wide gross of "Pirates of the Caribbean" actually ended up in Disney's coffers? Nobody knows. So when reading Finke and the rest of the Hollywood liars, keep in mind that box office gross means nothing and they all know it.