Sony film CEO slams Web's impact on H'wood

Michael Lynton calls for Web rules; compensation in spotlight

NEW YORK -- Michael Lynton, chairman & CEO of Sony Pictures Entertainment, on Thursday decried what he described as the consistently negative impact of the Internet on the film business.

"I am a guy who hasn't seen any good come out of the Internet," said Lynton, a former CEO of AOL Europe and president of AOL International. "It seems to have done damage to every (part) of the entertainment business."

Lynton made the comments in a Thursday morning conversation about "The Future of Filmmaking," organized by Syracuse University's Newhouse School and led by journalist Ken Auletta. He was joined by actress Anne Hathaway and director and writer Nora Ephron, who slammed Hollywood's obsession with regurgitating successful formulas.

Ephron also called Hollywood "a giant Ponzi scheme" in a provocative reference to the Madoff scandal meant to highlight the current debate over compensation of actors and other industry folks.

Lynton called on Washington to draw up rules that would protect copyrighted material instead of only focusing on expanding the availability of broadband across the U.S.

Citing the Obama administration's current focus on boosting broadband coverage, he said: "Somebody has got to realize that we need some rules."

Otherwise, it is as if the U.S. had built the highway system in the 1950s without speed limits, truck weight limits, and without driver licenses.

Questioned by Auletta if he would like to see rules to protect only movies, Lynton said he would like rules for "all copyrights," including film, books and music.

He did acknowledge that the Web can serve as a promotional tool, but argued that Internet marketing in many cases hasn't created a big enough sense of urgency among potential moviegoers to turn out.

Asked about the need to change actors' and directors' compensation, especially gross participation, Lynton said as "DVD (sales) have become very volatile, the old approach just doesn't work anymore."

But Ephron took issue with the idea that creatives are overpaid and thereby burden the system.

Studios often say they must pay actors, writers and directors too much, but "everyone is overpaid, including the executives," who are less willing to take pay cuts than creatives, she said. Hathaway chimed in that she took less money up-front for "Rachel Getting Married," for example, as she believed in the project.

Auletta also asked about the panelists' biggest worry about the future of Hollywood.

"As the economics of it get tougher and tougher, we tend to get more and more cautious" and refer to previous successes, said Lynton. "And that's a very bad pattern to get into...That would be a pattern that we should resist," he added, although he argued that sequels make sense when they are based on quality fare. He also said he tends to focus more on opportunities than concerns.

Hathaway also said she is looking to make sure industry folks "look at the merit of the film, not necessarily the bottom line."

She mentioned that her representatives on Wednesday told her that one potential movie project won't make money. "That can't be a concern every single time," she said. "People get so hung up on economics."

Ephron argued that "every year we make fewer and fewer good movies, and most are made by independent film companies, not the big studios."

And the good movies aren't that good either, she added, earning some laughs.

Lynton said multiplexing and TV ads for movies have fueled the business' focus on opening-weekend boxoffice performance rather than longevity. "It's just a terrible cycle," he said.

Discussing the film financing difficulties due to the ongoing credit crunch, Lynton said "this is really a crisis," predicting that fewer great movies will be made and indies will particularly hurt.

He also mentioned that industry chatter about the financing challenges has included talk of a studio fund, which would pool contributions from various studios.