Commentary: Dealing with a down market
How will showbiz deal with a recession? We'll seeThere are two niggling questions folks are pondering as the markets continue to be roiled, credit gets harder to come by and corporate belts tighten: How will I or my company be affected, and how can I or my company take advantage of the situation?
Not that anyone wants to say anything beyond the sometime proudly uttered, sometimes resignedly whispered statement that they're being "more proactively responsible" and/or "more rigorously cost-conscious."
Almost all are quick to add that showbiz will resist global recession better than anybody else.
On the individual level, things aren't reassuring.
"Just get me a job, any job," is what agents up and down Wilshire are hearing from their clients as the movie and TV biz continues to contract and pressure even on top salaries grows ever heavier.
"Quotes don't matter anymore -- no one, other than Will Smith, is getting what they've publicly been touted as getting," is how one top agent puts it, naturally not wanting to mention any specific star and certainly not his own clients. Midrange actors, forget it: They're working for half what they took home a few years ago.
Talent agencies probably will flinch as well, with paltry year-end bonuses likely to be used as a stick to prod some folks toward the exit (if there aren't actual layoffs).
On the corporate level, don't even ask about the already fraught publishing biz, where papers up and down the country are reeling. Time just laid off 600 folks; ABC News no longer pays for newspaper subscriptions for its staffers.
The film and TV biz, too, is starting to feel the pinch.
Sony is just the latest conglomerate to utter ouch, as its overall profit plummeted a whopping 72% in the latest quarter; if misery loves company, it should feel right at home with Viacom, NBC Universal parent GE and practically all their other media rivals whose shares have mirrored the wider market's downward trend.
On the currency front, year-over-year comparisons in the media biz also will be painful for a while, with foreign boxoffice revenue -- which now accounts for more than half of major studios' overall theatrical grosses -- likely to be off because of the strengthening dollar.
Ditto revenue accruing to the major studios from foreign TV deals, with most European broadcasters quietly averring that they'll milk extra reruns of their current shows or opt for cheapo reality formats and game shows rather than the umpteenth American series.
But it's not just stock prices or currency fluctuations that tell the story.
Word on the street (and the Street) is that the capital that has funneled into Hollywood in the past decade is slowing to a trickle. France's Societe General has pulled the plug on its showbiz investments, following similar moves by Germany's Deutsche Bank and Natixis. The so-called Melrose Fund, which invested in films on Paramount's slate, also is being scratched.
It doesn't take a brain surgeon to figure that other once-high-riding banks and hedge funds -- Royal Bank of Scotland seems particularly hard hit -- are likely to ease up on entertainment financing, meaning that any newcomers asking for credit lines might not get them. By that measure, DreamWorks' deal with India's Reliance came in just under the wire as such complicated syndicated loans to fund said deals no doubt will become trickier to pull off.
"A lot of smaller pictures, the ones that fill in the nooks and crannies of studio slates or are made independently, may not get off the ground," says one financier, who quickly added that not all of this is bad news -- referring to the fact that the glut in worldwide filmmaking has meant that mining for the little gems has become an exhausting chore.
"At every single film market, the most common refrain is 'business is really slow, there's nothing really good here, but things should improve at Berlin (or Cannes or Venice or Toronto) ...' and round and round the calendar they go," he says.
Meanwhile, well more than 1,000 movies will be available to buyers at the upcoming American Film Market in Santa Monica, and my bet is only the tiniest proportion will get traction. Some say that the field is so overgrown with weeds, as it were, that a fallow period actually would be a good thing.
OK, fine -- less, better content is great. But that's getting no easier.
Hollywood firms and heads of companies big and small are fixated on a single master, Wall Street. Way too much of their time and effort is focused on cost-cutting, jettisoning slow-growth assets and personnel, or poring over the books of other companies they might combine with.
Creative risks? Who has time for that?
As one indie CEO puts it: "I haven't had time to focus on a creative project since August. I'm always on the phone with bankers."
For the foreseeable future, such unlikely projects as a love story set in the slums of Mumbai starring a complete unknown ("Slumdog Millionaire"), a talky two-hander about a disgraced former president from 35 years ago ("Frost/Nixon") or a no-holds-barred portrait of a down-and-out pugilist ("The Wrestler") might not -- in this risk-adverse climate -- get made. That is the shame of it all.