Academy, Flush With Funds, Plans Film Museum

The Academy of Motion Picture Arts and Sciences, sitting on a $134-million nest egg, is ready to use some of that wealth to undertake its boldest step in decades: development of a “world-class” motion-picture museum in the Los Angeles area.

The price tag, site and timetable aren’t yet known. But sources say academy governors are aiming for a project that would cost about $200 million and take about seven years to develop.

Although previous efforts have been made here to start film museums, the academy plan would be by far the most ambitious in scope and carry with it the stamp of the world’s most prestigious film organization.

Indeed, academy executives said they wanted the museum to be a “major statement” comparable to such recently built Los Angeles cultural landmarks as the $274-million Walt Disney Concert Hall or even the $1.3-billion J. Paul Getty Museum.

“We’re not going to think small,” Academy President Frank Pierson said.

He added that the academy’s governors envisioned creating not only a major Southern California tourist attraction but a film education center as well.

Funds from the nonprofit organization would be used as seed money to design an enterprise that is expected, in turn, to attract donations and possibly assistance from local government.

The project would mark the biggest expansion of the industry group’s franchise since the 1930s, when it retreated from its early role as an arbiter of artist-studio disputes to focus on the Academy Awards. In those days, the academy relied on dues and donations and held its award shows in hotel ballrooms. One year, it had to go, hat in hand, to studios to come up with extra money for its golden statuettes.

The worldwide broadcast has become so big and rich that the academy at times has seemed an institution in the service of a single annual television show. During the last five years, the academy’s treasure chest has increased tenfold thanks to TV rights and investments.

Those riches probably will continue to rise as TV audiences become more fragmented, making big-event shows such as the Oscars and Super Bowl even more desirable to advertisers.

The ceremony, which academy Executive Director Bruce Davis calls “this crazy thing we do one night a year,” keeps the academy so flush it never has to beg for operating funds.

At most nonprofit organizations, Davis said, “you wake up every day of your life and ask: ‘How are we going to go raise the money we need to get through the next month and the next month?’ We don’t have that.”

In fact, the Oscar telecast has generated so much money in recent years, academy officials have come to face the question: What to do with it all?

Davis provided the answer, disclosing plans to proceed with the museum, during a discussion with The Times. He was joined by Pierson, as well as Controller Andrew Horn, who oversees the group’s finances, and executive administrator Ric Robertson, who supervises a pair of related philanthropic foundations.

The academy’s television deal with Walt Disney Co.’s ABC was renewed in 1998, just after the enormous popularity of “Titanic” pushed the Oscar broadcast to a ratings peak that hasn’t been repeated. The academy’s awards-related revenue immediately jumped 55% to $41 million in 1999. It easily will top $50 million this year thanks to an annual escalation in fees.

Based in Beverly Hills, the academy and its related foundations technically don’t record a profit as would a business enterprise. But the group’s consolidated financial reports and tax returns reflect an organization that would be the envy of most any money-making venture.

For the year ended June 30, 2003, net assets rose by about $14 million, 60% of which came from the awards-show profit. The rest flowed from a growing investment portfolio that has been spread among equity and bond funds -- which will help provide the financial underpinning for the museum project.

As recently as the early 1990s, assets were rising by only about $3 million a year, and the academy’s bankroll was below $10 million, none of it in long-term investments.

Still, like managers of any business, academy executives have been fretting about costs.

Financial statements show that Academy Awards-related expenses climbed 27% to $21.9 million in 2002, as the show moved into the new Kodak Theatre from its recent homes at the Shrine Auditorium and the Dorothy Chandler Pavilion. At the Kodak, logistics involved in closing the busy area around Hollywood Boulevard and Highland Avenue increased security costs to nearly $2 million.

Academy officials have tried to curtail the show’s burgeoning expenses by imposing new budgeting procedures on an event that celebrates grandiosity. “Our production is like the most complicated Broadway show that runs one night,” Davis said.

For the first time, the academy this year also is spending money to advertise its show on TV outlets other than ABC -- a move that appears calculated to offset fears that the network’s in-house promotions are losing effect as its overall viewership has languished in recent years.

The academy advanced the date of this year’s ceremony by a month, to Feb. 29, at least in part to recapture momentum from a proliferation of earlier film televised awards, notably the Golden Globes.

“I wouldn’t say it’s a show that’s eating our lunch, but it’s nibbling at the edges of our lunch,” Davis said.

Such protective measures are clearly meant to strengthen the academy’s hand for new negotiations with ABC and possibly others, if initial talks with parent Walt Disney fail. Though the current contract doesn’t expire until 2008, officials said they expected to begin seeking a new deal much earlier.

Alex Wallau, president of the ABC television network, said that the broadcaster has had “a fantastic relationship with the academy for more than two decades.... And we love the fact that Oscar calls ABC home.”

A new deal would also benefit the ambitions of Davis, 60, former head of a college theater department, whose vision for the academy has widened considerably since he became a staffer in 1981. Davis, a prime advocate for the museum, became the academy’s top administrator in 1990.

Under Davis, the 6,500-member film industry group expanded its Margaret Herrick research library, housed on La Cienega Boulevard in its Fairbanks Center for Motion Picture Study. It is now supported by $42 million of academy assets earmarked as an endowment. Included in the library’s collections are scores of artifacts and posters, from the brooch Vivien Leigh wore in the final scenes of “Gone With the Wind” to more than 20,000 film posters, including some of the earliest used to market movies.

The academy also operates the Pickford Center for Motion Picture Study in a former TV studio on North Vine Street in Hollywood.

One measure of the group’s increasingly aggressive financial posture was the use of $35 million in bonds to help fund the Vine Street project. The bond issue helped boost the academy’s assets to $187.7 million this year.

The academy’s actual worth is probably much higher. The books don’t reflect the market value of the Wilshire Boulevard building in Beverly Hills that has housed the academy since the 1970s -- and which the organization owns outright. Also, assets in its library are considered irreplaceable.

The group’s growing riches helped persuade academy governors -- a generally conservative assortment of film-industry veterans that includes actor Tom Hanks, producer Sidney Ganis and veteran writer/director Pierson -- to form a committee to study the museum project.

Barbara Dixon, vice president and director of the West Coast branch of the bicoastal Museum of Television and Radio, said the project would be good for Los Angeles, even though it would add a potential competitor for scarce funding.

“I think all of us who are part of making our cultural heritage available to the public will welcome a museum dedicated to feature film,” Dixon said. The New York-based television museum’s Beverly Hills facility was opened seven years ago at a cost of more than $20 million.

Said Pierson: “The time has come to make the decision to go ahead and do it before somebody else does it badly. And do it the way the academy should do it, truly representing the film community.”