Sleepless in Hollywood: Tales From the New Abnormal in the Movie Business

by Lynda Obst

  These are the quantifiers that studios use to rationalize their decisions, to put them on solid-enough financial ground on which to base predictions to their corporate boards.

  “So,” Peter said as I was about to leave, “the most interesting thing is what a few studio heads said to me privately about two years ago.” He stopped to smile. “None of them from Fox, of course.”

  “Of course,” I said. I knew he was about to share something very inside with me.

  “They said to me, ‘We don’t even know how to run a P&L right now.’ ” The look on his face expressed the sheer madness of that statement. “ ‘We don’t know what our P&L looks like because we don’t know what the DVD number is!’ The DVD number used to be half of the entire P&L!”

  “What are the implications of that?”

  He looked at me incredulously, as if to say, Haven’t you run a studio? Then he said very emphatically, “The implications are—you’re seeing the implications—the implications are, those studios are frozen. The big implication is that those studios are—not necessarily inappropriately—terrified to do anything because they don’t know what the numbers look like.”

  Of course they are. They’re frozen, so the gut is frozen, the heart is frozen, and even the bottom-line spreadsheet is frozen. It was like a cold shower in hard numbers. There was none of the extra cash that fueled competitive commerce, gut calls, or real movies, the extra spec script purchase, the pitch culture, the grease that fueled the Old Abnormal: the way things had always been done. We were running on empty, searching for sources of new revenue. The only reliable entry on the P&L was international. That’s where the moolah was coming from, so that’s what decisions would be based on.

  The Great Contraction explains the birth of the New Abnormal, and so many of the cultural changes that came along with it. Technology changes culture. Think of the way the all-embracing texting culture of the Japanese teenager created the first-person text novel (keitai shousetsu). The anonymous romantic accounts of teens written by texters were sent chapter by chapter as apps were being designed in real time to meet the needs of the growing audience. That birthed a genre that spawned “real” books and movies. Our industry reformatted itself with an application called “new revenue streams.” A crucial question of that app was “what stars play in foreign territories,” and the answer was, “whoever had a big hit there before!” Casting was not the only thing that technology changed, nor was the (disappearing) pitch. The big change was what movies get made.

  TENTPOLES AND TADPOLES

  Producers with scripts that don’t fit the studio model are constantly searching for the crevices where money still exists. This leads to lunches and dinners with dubious people and wild-goose chases. I have a producer friend who has met with so many investors, he has a T-shirt that reads THEY CAN’T ALL BE FAKES. There are increasing numbers of rich kids with checkbooks and Russians with pretty wives who want a small part in a movie in exchange for financing the picture. And there are parties who will provide small pieces of “equity”—i.e., $30,000 here, $100,000 there—that can be pieced together by enterprising independent producers. These producers are willing to do the hard work to puzzle these chunks of equity into some kind of budget.

  I spoke recently to the most prolific of tadpole producers, Cassian Elwes. A transatlantic transplant and former William Morris agent, Cassian is a funny, nonstop-action kind of guy who had three movies shooting when I last had drinks with him—two of them in Louisiana, one with a $20 million budget and one with a $4 million budget. Because the big one (of course) needs more money, it flew him here coach, he told me, but the little one was flying him back First Class!

  The big tadpole shooting in Louisiana, The Butler, starred Forest Whitaker and Oprah Winfrey, each making $65,000 dollars up front. It’s a movie Spider-Man producer Laura Ziskin had tried and failed to make at Sony before she died following a long struggle with breast cancer. A true story about the White House butler who served under every president from Eisenhower to Obama, and what it felt like to live to see the first black president. After Laura’s death, Lee Daniels (Precious), the film’s director, enlisted Cassian to help get it made, and he became driven to complete her dream. He raised all the money, and shooting began in the summer of 2012, a year or so after she died. The other movie is a tenth of The Butler’s size. They were puzzled together in the same impossible way that he does so well. By now he has a track record of making money for his investors, so he has an iPhone contact list full of go-to rich kids in town and elsewhere.

  “It’s painful making these movies, because any way that you do it now, you know it’s got to be multiple investors, with at least three people each putting in one million dollars; it’s literally like herding cats trying to get them all to agree on everything. My life is like, ‘Okay, he agreed to this, so you should agree to that.’ And then that investor says, ‘Well, I don’t know.’ And then the other investor says, ‘Well, if he doesn’t do it, I’m not going to do it anymore,’ and finally I get them all on the phone and go, ‘Shut the fuck up, it’s a million dollars!’ ”

  But with so few movies getting made, agents and actors are willing to sign on to a tadpole and get paid less money if the script is really good. This has led to an underground movie community of upstart producers who never had a chance of penetrating the Oz-like doors of now-broke Hollywood anyway. But they are making more movies (without guaranteed distribution) than their more established peers. I met a fabulous girl this year named Tatiana Kelly, who offered me a picture to direct. She had made three movies this year—good little tadpoles—when I had made none. How was that possible? Her big tadpole, made for $6 million, was called The Words (which she did with Cassian and her partner Jim Young) and starred Bradley Cooper, Olivia Wilde, Zoe Saldana, Jeremy Irons and Dennis Quaid. It was about a blocked writer at the peak of his success who discovers the price of stealing another man’s work, and opened at Sundance, where it was picked up by CBS Films and shown in two thousand theaters in 2012. This is the Cinderella model for microbudget producers.

  It’s all about microbudgets, movies being made for around $100,000. I told Tatiana that I wouldn’t know how to make a movie for that price with a gun pointed at my head. But here, technology changed the business again.

  The biggest new thing under the sun is High Definition (HD). For starters, HD digital shooting eliminates film and printing costs, which cuts the costs even before we move on to its substantial other savings.

  Film itself is expensive. There is no film in the camera in digital shooting. Everything is recorded digitally and can be downloaded anywhere—on set, at the studio, at the editing suite or onto the director’s home computer. This makes watching footage and cutting on the fly possible. Additionally, when you shoot in HD, all the costs of printing are eliminated, so the “P” part of “P and A” (Prints and Ads) costs disappears. Historically, every film print had to be copied and shipped to theaters individually. This is costly for a wide release of 100 to 2,500 prints per movie. Soon every movie theater will be fitted for digital, as almost all are now, and when the encoding issues that protect against piracy are solved, the movie will be delivered directly online to digital projectors all around the world. For now they are delivered on coded cassette—still cheaper than film prints. The “A” cost refers to all marketing costs. The reason these two categories are always wed is that together they constitute all the hard costs of a movie independent of production costs. To independent filmmakers, securing Print and Ad money via a distributor is the sine qua non of a movie released properly: No prints, no ads, no one will see it! In general, indies raise production financing first, and then secure distribution, if they hit the festival jackpot.

  Also, in digital HD shooting, postproduction effects become a breeze. Want to change a color? Sunset looks dreary or was shot on a cloudy day? No problem. Find the problematic pixels inside the dreary frames and colorize them on the computer. Do you have a flying stunt? Do it with wir
es and erase the wires by finding the pixels with the wires and erasing them on the computer. This is wildly less expensive than doing the same stunt on film.

  Futzing with something on a film print is very expensive and complicated, but digitally, it can be done by kids on iPhone apps all day long. It’s a whole new scale of innovation for cutting down the costs and speeding up the time of production. That’s not to say every filmmaker is embracing the technology. Some of the best loathe it and believe it does not replicate the texture or experience of film. George Lucas, however, believes that eventually it will be possible to duplicate the texture of film by a “film program” that manipulates the pixels to do so.

  When you shoot in HD, you can cut on set, which some directors love and some hate. Needless to say, this cuts down editing time. Most television dramas shoot in HD now, as the schedules are so tight. With the onset of HD drastically reducing the costs of making independent movies, they can be made on a recently issued credit card, or long-saved Bar Mitzvah money, or by hustling friends or parents. This situation drastically diminishes the power of the “gatekeepers,” creates enormous opportunities for new distributors and opens the door to young talent via YouTube and other Internet outlets. We await filmdom’s Justin Bieber: Just as the savior of the music industry emerged from his home to the world via the Net overnight, our next Scorsese or Fincher is likely to be shooting something unimaginably cool on his or her family’s video camera that will pop up on YouTube and be instantly discovered the same way. It is inevitable.

  We now have thousands upon thousands of tiny movies made on microbudgets, financed with personal credit cards. They are all vying to enter film festivals, and the very best of them will end up competing with studio films at Oscar time. Newbie producers without credits or experience run around like chickens with their heads cut off, getting scripts written for free, tying tiny pieces of promised cash together, trying to keep it all stitched up. Then they go to the big agencies and cast available actors who get paid nothing up front. They take on established producers without trepidation because it doesn’t take a village anymore, just a digital camera. The actors, who secure the financing for these microbudgets (through their international numbers, of course), want to make these movies because studios aren’t making dramas anymore. Or, to the extent that dramas are being made, they are mostly thrillers.

  But with new video and online distribution outlets becoming viable options at the festivals every year, it is less of a feast-or-famine life for the tadpoles. In 2012, a few significant tadpoles broke into theatrical release from VOD purchases at Sundance: Beasts of the Southern Wild, Arbitrage, and Bachelorette—and the first two even went on to Oscar consideration. So VOD deals aren’t the total losers they used to be; they’re possible new routes to stardom, or at least solvency. This is a growing miniverse.

  Increasingly, it is turning into a business of tadpoles, minuscule versions of the dramas studios once made, versus giant-sized tentpoles, made for the world. Of course, for the guys and gals with tentpoles and franchises going, they can’t get out of production! No matter what they have to do—child’s birthday, step-up ceremony at school. But that’s a good problem, as we say.

  There are a few highly sought-after sources from which to pull financing for “one-offs” still out there for producers who want a budget larger than a teapot. A few established financiers are making movies via credit lines established through banks and selling them back to the studios before or after they are made. In bizarre ways (understood only by people with MBAs), the funds get replenished and the investors are repaid, despite the box office outcomes of the pictures. I found one such investor, MRC, during the Great Contraction, and made my first indie with my son; his writing client and best friend, Matthew Robinson; and Ricky Gervais: The Invention of Lying. It was a philosophical comedy, starring Ricky and Jennifer Garner, about a world where there is no such thing as lying until Ricky’s character invents it with enormous consequences. The script was Oly’s client’s; I’d known him since they were at Sarah Lawrence together. I was happy to help them get it made, if I could. Matthew had written it for Ricky, and I was fortuitously on my way to London and got the script to him. He loved it. Then Ricky offered to codirect with Matthew, and we had a movie. Soon after, Oly suggested Louis C.K. as the second lead, and I said, “Who?”2 (This is one reason it’s good to breed early.)

  In the picture business, these sometimes hard-earned, sometimes lucky, moments require alchemy, extreme perseverance and the perfect alignment of stars and timing.

  Some good movie movies were getting made at studios too during the Great Contraction, despite the gloomy P&Ls, and in the face of the crumbling profit margins. Why? Certain individuals (movie stars, primarily) are sneaking them through, at a price, with the right ingredients. But some studio heads are trying to gut them.

  My dear friend Elizabeth Gabler, with whom I made Hope Floats, and the head of Fox 2000—which I call Little Fox—spent almost ten years trying to mount Life of Pi. By the time she had Ang Lee attached, it was the height of the Great Contraction. She had no stars, a movie about a magical tiger and the human spirit, a big budget with lots of special effects and the bigwigs were jumpy. It was expensive and complicated and she adored it. It has just passed the $500 million mark worldwide, the biggest movie in her thirteen successful years there, and won Ang Lee an Oscar. Stacey Snider, the CEO and cochairman of DreamWorks Studios, green-lit The Help with a first-time director—a movie all the prognosticators pooh-poohed because it was a period piece about our racial history and therefore doomed overseas. But it was among the top five most profitable movies of 2012.

  In 2010, Amy Pascal of Sony Pictures broke all “inside Hollywood” rules and green-lit a dicey baseball movie, Brad Pitt’s Moneyball. It was another international no-no, since baseball is known to not perform internationally. But first she oversaw a rewrite, cut the budget and changed directors, all the while keeping Brad Pitt and holding down costs. Stacey and Amy were not afraid of tough calls on these projects. By January 2012, Moneyball had grossed nearly $90 million domestic. The next year Amy green-lit Kathryn Bigelow’s Zero Dark Thirty, even though her Oscar-winning Hurt Locker had made very little money. This is fearless thinking in the tundra of the Contraction.

  Sometimes studios support artists—particularly directors—in patronage roles and put them under contract like in the old studio heyday. (Paramount has a deal like this with Martin Scorsese [The Departed], and Warner Bros. has a working partnership, if not a deal, with Christopher Nolan [Batman, Inception]). I like to think of these as their Medici moments, sustaining an artist at the prime of his or her career. The best studio heads came into this business because they love movies, and for most, this is their favorite part of the job. But they wouldn’t do it if they didn’t hope to ultimately make money out of the situation, so for the right price and for the right talent, they get behind a writer or a director. When these guys hit it out of the park, we all win. I am not remotely religious, but I do engage in a little praying or rain dancing for these movies when they’re released, as we all need them to succeed. When one works, studio alliances are created, like the phenomenally lucrative one Fox has made with Jim Cameron (Avatar, Titanic). This is the bull’s-eye of the business.

  But getting to the bull’s-eye takes massive cojones, plus something ineffable. Faith, of a sort. When Peter Chernin described green-lighting and then living through the production of what was then the most expensive and difficult movie of all time, Titanic, it was enough to give me the bends. I realized how hard these jobs are. Even during the Old Abnormal, when there was some money to throw around, a project like that put him under unrelenting pressure.

  “I lived a life that was two parallel roles,” Peter said. “One was the most satisfying creative experience I’ve ever had. It started the moment Jim Cameron sat on my couch and talked to me, showed me some pictures and discussed this notion of essentially doing Romeo and Juliet on a boat. It was just the two
of us for maybe four and a half hours. He told me all kinds of arcane facts about the Titanic. If you were a woman in First Class, you had a ninety-nine percent chance of survival. If you were a man in steerage, you had a ten percent chance of survival. You had twice as good a chance of survival on one side of the boat as on the other because that first side did a much more efficient job of loading the lifeboats.

  “On my own gut level,” Peter continued, “the movie was fantastic. I remember saying to Jim that first afternoon, ‘The great thing about this movie is we have absolutely no idea if it’s going to work. But I guarantee you that it’s not going to be a middle movie. Because every guy in the world is going to say, “Jim Cameron sinks the Titanic.” And every woman is going to say, “Romeo and Juliet on a doomed ship, fantastic!” Or every woman is going to say, “Some James Cameron boat movie, forget it!” Every guy’s going to say, “Some period love piece, forget it!” And we’re not going to know until we make it! I love it! Let’s go do it.’

  “So we green-lit what I believe at that time was the most expensive movie ever made. Then script, great! Dailies, phenomenal! An hour of cut footage after a few months, phenomenal. Best preview I’ve ever been to.

  “The parallel universe, however, was arguably the worst experience ever. The movie was green-lit at a hundred ten million dollars. It went a hundred fifteen million over budget. Variety used to write this piece called ‘Titanic Watch’ two or three times a week.”

  “The press was very hostile,” I agreed.

  Peter nodded. “I was considered not only the stupidest person in Hollywood—I was considered the stupidest person in the history of Hollywood. It was very much parallel worlds, where publicly, everything about the economics of the movie couldn’t have been worse, but everything we saw privately was wonderful!