Creative Studio Heads Can Be Both Risky and Rewarding

The following article written by Mark Litwak was recently published in the L.A. Daily Journal, the primary legal newspaper for the Los Angeles legal community.

Hollywood suffers from many of the same problems that plague other American industries. Professional managers have taken the reins of control. They are better-educated than their predecessors but often lack their entrepreneurial zeal and willingness to take risks. Entrepreneurs who start businesses often don't have the desire or management skills to run a large organization. Inventors, like Steve Wozniak, may find it more satisfying to tinker in their garages and invent new products than attend board of directors' meetings and manage a large bureaucracy. While these entrepreneurs may function well as lone operators or in small groups, when called upon to supervise large enterprises, their shortcomings can prevent the organization from prospering. So the entrepreneurs stand aside - or are shoved aside -and the managers take over. But the movie and television industry is different from other industries. The commodity being sold is creativity. Movies don't lend themselves to assembly-line manufacturing. It's not like making soap, where once you devise the right formula you can churn out the same product time and again. A consumer who finds a brand of soap he/she likes may stick with it for a long time. He/she doesn't want the tenth bar to be any different from the first. He/she doesn't expect the product to entertain him/her or provide a new experience. But people don't find one movie they like and watch it repeatedly. Moviegoers always want something different. They want to be taken where they haven't been before. They want fresh situations, plots, and characters - not a rehash of last week's hit. Consequently, the movies that do best are often those that are distinctly original. Star Wars was a breakthrough film because of its wonderful special effects, unusual setting, and fresh characters. Moviegoers had never seen anything like it before. Unfortunately, the atmosphere prevalent at many major studios today is not conducive to creative filmmaking because executives are so risk-adverse. United Artists and Universal rejected Star Wars before Alan Ladd Jr. at 20th Century Fox decided to back it. Often filmmakers can't find a single executive willing to gamble on anything that is offbeat or unusual. It took director Oliver Stone ten years to produce Platoon, and then he succeeded only because an independent company provided the financing. Many intelligent, provocative, and innovative movies - like Crouching Tiger, Hidden Dragon; The Crying Game; Roger & Me; Sex, Lies, and Videotape; Hollywood Shuffle; Kiss of the Spider Woman; and Blood Simple - have been made with independent financing. Some of these independently made pictures are enormously profitable, such as The Full Monty and My Big Fat Greek Wedding, and many have received Academy Award nominations for Best Picture. Such critically acclaimed films as Juno, Crash, March of the Penguins, and Little Miss Sunshine were made outside Hollywood. The public is generally unaware of how many of the best movies are only distributed by a major studio. Due to the risk-adverse climate in Hollywood, a common failing of studio movies today is that they are derivative of other movies. Flashdance spawns Footloose; Animal House is reworked into Meatballs and Police Academy. Any movie that is the least bit profitable is the basis for one or more sequels. The studios try to squeeze as much as possible from every successful property they own. Coping With Risk Because of their aversion to risk, the studios have largely withdrawn from producing films in-house. While many maintain production lots, which are rented to anyone needing a soundstage, the studios essentially function as specialized banks, lending money to produce worthy projects and then distributing the finished product. Like banks, they evaluate proposals submitted to them but rarely initiate projects. After borrowing money from large banks or obtaining investment funds, the studios decide which producers to back. The producer and director make the movie, with oversight by the studio concerned about protecting its investment. Once the picture is complete, the studio markets it, creating an advertising campaign and duplicating and distributing prints. Finally, the studio uses its clout to collect receipts from exhibitors. There are some exceptions to this modus operandi. At some independent production entities like Castle Rock Entertainment and Imagine Entertainment, the executives who run the company are more involved in creating product. But most studios are run by dealmakers, not filmmakers. Many executives rise to the top based on their relationships with big-name talent and their dealmaking prowess, not because of their understanding of what makes a good script or their film-making ability. Other problems have arisen because the studios have relinquished much of their creative authority. Increasingly, executives make decisions based on market research, demographic trends, and minimizing financial risks. It has become much more of a lawyer-agent game, with less showmanship, according to producer Martin Ransohoff (Jagged Edge): "Picture-making itself had a better shot under the old moguls. They were basically movie guys. Not conglomerate or bank-endorsed people." The old studio staff producers have been replaced by creative-affairs executives. "They function as staff producers but without the public shame and responsibility that comes from having your name on the picture," says industry analyst A.D. Murphy. "They exercise authority but remain anonymous. And when you have a lot of faceless people who are not out there naked next to their films, you have a lot of copping-out and log-rolling." Large talent agencies such as CAA and William Morris exercise considerable influence in developing and packaging projects. Agents conceive ideas for movies, discover new talent, and decide which writers, directors, and stars shall work together in the packages they create. In the old days, the studios performed these creative tasks. Managing a Creative Enterprise In many ways the atmosphere for creative moviemaking was better during the era of the moguls. More than 50 million Americans went to the theater every week in the days before television. Admissions reached an all-time high of four billion in 1946. Because films cost less and there was no competition from television, videogames, and the like, even mediocre films stood a better chance of making a profit. Since the moguls owned the studios they ran, they were more secure in their positions and could afford to take more risks - if a picture flopped, it might hurt their pocketbook but they wouldn't lose their job. Some studios have belatedly realized the importance of creativity in moviemaking. Burned by expensive star-studded flops based on agency packages, these studios have hired executives who can play a more creative role in filmmaking. In 1984, after Rhinestone (starring Sylvester Stallone and Dolly Parton) bombed, 20th Century Fox fired Alan Hirschfield and Joe Wizan and hired Barry Diller. Diller was head of the much-vaunted Paramount team (Diller/Eisner/Katzenberg/Mancuso) that insisted on developing projects itself rather than accepting agency packages. Disney also lured two other members of that Paramount team, Michael Eisner and Jeff Katzenberg, to replace the more business-oriented Ron Miller. In each of these instances, studios replaced executives with backgrounds in finance and dealmaking with people known for their creative abilities. But creativity can be risky. In 1994, Steven Spielberg, Jeffrey Katzenberg, and David Geffen launched Dreamworks SKG to create an artist-friendly studio. However, by 2006, after flirting with bankruptcy twice, the company was sold to Viacom, losing its independence. Likewise, independent New Line Cinema, founded in 1967, was acquired by Turner Broadcasting System in 1994, which in 1996 merged with Time Warner. The company lost its autonomy in 2008 when Time Warner absorbed it. Daily Journal