Commentary: Hollywood's economic woes are no match for the nation's

"Wall Street" sequel a reminder of common shaky ground

I can't think of a more intriguing moment for Oliver Stone's "Wall Street: Money Never Sleeps" to hit theaters. The director was asked in May at the Festival de Cannes, where the movie had its world premiere Out of Competition, whether he thought he had missed the boat by waiting so long to make a follow-up and by having it released at the tail end of the financial crisis.

Perhaps it was wishful thinking, but he and producers said they believed the economy would still be uppermost in people's minds and that they'd be attuned to seeing a movie that takes an amusingly critical whack at the financial shenanigans of the past few year. Plus, who wouldn't want to see what the third act is for Gordon Gekko?

Seems they might be right. The Fox pic opens in September.

Just when many of us thought we were coming out of this depressing morass, we're right back in it. Job creation has sputtered, roads and bridges continue to deteriorate, and the housing market shows no signs of catching fire.

When a flight attendant on JetBlue throws a fit, exits off an emergency chute and becomes an instant folk hero, you know the country is primed for a lot more vicarious acting-out of angst over how our lives (and livelihoods) have changed.

Watching the market take another dive and Washington politicos confess that things were, well, bleaker than they previously thought is indeed a scary omen for the country -- though not nearly so much so for Hollywood.

Media stocks stumbled along with everything else last week, but by and large the entertainment business has held up remarkably well through the past 2 1/2 years. Analysts have had to look hard to pick apart and impugn the conglomerates' recent earning reports, at least for what regards film and TV.

Will things continue apace?

It all depends on what part of the entertainment business we're talking about.

A chat with three execs at three different studios about the current state of affairs suggests that while they are attuned to the worrying signs and the plight of consumers, it's not what keeps them awake at night.

Here's why:

Movies of all kinds have performed remarkably well, not just "Avatar" and "Toy Story 3" but heady pics like "Inception," romantic comedies including "Valentine's Day" and "Date Night" and the animated comedy "Despicable Me." OK, there also was "Knight and Day" and "Cats & Dogs: The Revenge of Kitty Galore," but really, there have been surprisingly many hits and healthy grosses foreign and domestic.

On the TV side, overall viewership has shot up during the past two years even if it now is more fragmented among a greater variety of platforms.

As one of the three execs put it: "In short, the old cliche that the entertainment business is counter-recessionary has stood the test. There were some bumps on the advertising side, and that's why those companies with greater exposure to ads saw their stocks suffer more dramatically, but the recovery of the last six months has been remarkable, at least on the national level."

The recently concluded upfront market for TV spots saw noticeable rebounds, and the upcoming scatter market is tracking well so far. Barter on the latest group of syndicated comedies is especially buoyant.

As for holding the line on costs, all three suggested that the conglomerates had done a fairly good job on trimming overhead and development, though not yet "nearly enough" on production costs. (The latter has been a problem since D.W. Griffith made "The Birth of a Nation," so we shouldn't hold our breath on that one.)

Where Hollywood has been noticeably affected by the downturn -- and will continue to be so -- is on the employment front. Here, what has happened is not that dissimilar from the changes in the rest of corporate America.

"We all went through rounds of meaningful layoffs over the last 18 months or two years, but now there's not likely to be a quick replacement of lost jobs," another of the execs says. "Did we indeed have excess? Perhaps so. I would suggest that we are running efficiently now, and I doubt that there will be very much pickup of additional staffers, whether the economy stagnates or not."

That can't be encouraging for the many folks who have lost their jobs, or, as one of the execs points out, for what might be a raft of further redundancies once Comcast gets its mitts on NBC Universal.

Looking further afield, the execs suggested that growth opportunities abroad -- despite currency fluctuations that recently have strengthened the dollar -- were notable and that they expected acquisitions of production companies in Europe and investments in key cable (and more selectively broadcast) networks to quicken. (Warner Bros. recently made a key purchase in the U.K.) The current sour notes from afar are being sounded by Canada and the U.K., whose economies are faltering dramatically, and because they are among the top five foreign territories for U.S. movies and TV shows, they are a concern.

So if the recession that won't go away isn't eating at corporate execs, what is? I expected the stock response "piracy," but instead the answers were more nuanced: It isn't just outright copyright theft, which, to be sure, continues unabated from Spain to China like an uncappable oil spill. Rather, it's the various and ever-evolving methods by which people consume content and who gets what portion of what people pay for it.

Right now, "We're seeing the piece of the pie that we should be getting for our content dwindling with some of these new services or new devices," one of the execs said. "These are the discussions we're having internally that weren't there a decade ago."

From the studios' point of view, the new devices are great, but the question is: "How does a Steve Levitan (and the studio behind him) get paid when someone watches 'Modern Family' on his iPad?"

It's not the economy, stupid, it's the economic model.
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