The Movie Year: Hollywood Loses Its Middle Class : Box office: Blockbusters helped make it a record-setting year, but there was a rash of complete flops, and moderate successes seemed to disappear altogether.

Even with all the good box-office news in 1994--it was the best year ever--there were some hard lessons to be learned, say top executives at the major Hollywood studios and several key independent companies.

The good news was good indeed. Box-office record books are about to be rewritten. About $5.4 billion in ticket sales is expected for the current year ending Jan. 1, toppling the previous best year, 1993, by at least $200 million. Ten films released in 1994 grossed more than $100 million, led by two $300-million grossers, “Forrest Gump” and “The Lion King.”

What’s unique about the year, according to the box-office tracking company Exhibitor Relations, is that eight of those films, including “Gump” and “King,” came out of a single season--summer. Summer accounts for approximately 40% of the year’s moviegoing business.

Additionally, the late-1993 comedy release “Mrs. Doubtfire” took in more than $100 million in the current calendar year, and Steven Spielberg’s Oscar-winning drama “Schindler’s List” made almost all of its $96 million this year too. Moviegoers were fortunate that ticket prices remained relatively stable, at about an average of $4.13. That means there were 1.3 billion admissions--at least 40 million more tickets sold than last year.

“Ticket sales haven’t been that high since 1960,” observes veteran industry analyst Art Murphy of the Hollywood Reporter.

Second-run theaters (so-called “dollar” houses) with lower admissions experienced a renaissance, observes MCA Motion Picture Group chairman Tom Pollock, accounting for as much as 5% to 8% of total ticket sales (up from 3% to 4%). It’s become a way to squeeze some more juice from theatrical engagements (“Maverick” added nearly $10 million to its gross) and makes the price of going out to the movies more competitive with renting a video.

The bad news was also pretty bad. Sony Pictures’ Entertainment took a staggering write-down of $3.2 billion.

There was a herd mentality to the flops as well as the big hits, observes 20th Century Fox president Bill Mechanic. People either attended en masse or stayed away in droves, leaving far less middle ground for the $50-million-or-so grossing films.

“Unfortunately, we worked just as hard on the movies that were successes as those that didn’t work,” bemoans Paramount Pictures movie chairman Sherry Lansing. The red ink was all over such expensive 1994 films as “Wyatt Earp,” “Baby’s Day Out,” “Miracle on 34th Street,” “Mary Shelley’s Frankenstein,” “Love Affair,” “Junior,” “Renaissance Man,” “Beverly Hills Cop III,” “I Love Trouble,” “North” and “The Cowboy Way.”

Other highlights: personal bests

“Forrest Gump” and “The Lion King” are set to join that rarefied group of $300-million-grossing films, a territory occupied by only three other films in history, “E.T.,” “Jurassic Park” and “Star Wars.”

“Gump” was the biggest grosser in Paramount’s 82-year history and is expected to take in $600 million worldwide. Similarly, “Lion King” was Disney’s biggest roar ever and propelled the studio to a $1-billion year, more revenue than any film company has ever generated in a single 12-month period in the United States and Canada.

Worldwide, “King” should end up as the second-largest-grossing film of all time behind last year’s $900-million “Jurassic Park,” says Disney chairman Joe Roth. And when all of “King’s” revenues are in (for video, merchandising, etc.), “King” will be the most profitable movie ever made, Roth adds, even more so than “Jurassic.” And the studio won’t have to split any profits with Steven Spielberg.

What worked, what didn’t

The films that worked this year were those “with freshness and some edge,” says Mechanic. The two heartiest high-concept genres, comedies and action/adventure, didn’t always deliver. “For every ‘Speed’ and ‘Santa Clause,’ there were 10 that didn’t work,” says Mechanic.

Sci-fi had a bit of a comeback with “Stargate” and “Star Trek: Generations.” Film versions of bestsellers by John Grisham (“The Client”), Tom Clancy (“Clear and Present Danger”) and Anne Rice (“Interview With the Vampire”) did very well. So did movies based on material familiar from television: “The Flintstones,” “Maverick” and “The Little Rascals.”

Foreign aid

According to Murphy, more and more movies are doing far better outside the United States. Domestic ticket sales now only account for 20% of a film’s revenues and have been surpassed by foreign sales, which now amount to 30%. When overseas video and TV sales are added, that total comes to 60%. “The Flintstones” was probably Universal’s most profitable movie not because of the $130 million it made in the United States, but due to the additional $228 million it collected overseas. Very close behind was “Schindler’s” with $220 million internationally (atop the $96 million domestic).

Even Sony Pictures Entertainment, which had a year that chairman Mark Canton conceded was “not our best performance,” saw its late-1993 release “Philadelphia” from its TriStar Pictures label bring in $125 million outside the United States for a $200-million total. Columbia’s summer release “Wolf” took in about $140 million worldwide.

Fox’s big profit-makers “Speed” and “Mrs. Doubtfire” each grossed more than $200 million overseas, according to Mechanic. “Speed” did better than $120 million in the United States and “Doubtfire” grossed some $220 million.

And the foreign market is still growing, which is the real reason star salaries are going up, says Murphy. As movies realize more income, agents reassess their stars’ worth. Inflated salaries for the top stars trickle down to every level, says Pollock, ending with screenwriters. And it will continue as long as revenue expands.

Growth curve

At least three upstart independent companies--New Line, Miramax and Gramercy--gave the major studios some healthy competition. Their big hits represented exactly the “freshness” and “edge” factors mentioned by studio heads. New Line’s “Mask,” which cost $20 million and made Jim Carrey a movie star, will reach $275 million around the world, elevating the company to the next plateau, according to chairman Robert Shaye. New Line (which was bought by Ted Turner) was able to secure 2,500 prime theaters at Christmas time for Carrey’s third movie, “Dumb and Dumber.”

It’s a time of year, like summer, dominated by the major studios, and everyone else is usually shut out. Because “Mask” was a big summer hit, theater owners wanted “Dumb” for Christmas, which helped the film toward its $16.4-million debut.

Two other growing companies, Miramax (which is owned by Disney) and the 2-year-old Gramercy Pictures (co-owned by Polygram Pictures and Universal), also flexed their muscles. The former’s “Pulp Fiction” from director Quentin Tarantino will be Miramax’s best performer ever, surpassing “The Crying Game” ($62 million).

“We only spent $8 million to make it, and we have it around the world,” says co-founder Harvey Weinstein, where it will do at least as well as the $70 million projected in the United States.

The sleeper “Four Weddings and a Funeral” grossed $50 million in the United States for Gramercy and $250 million worldwide for parent company Polygram, says Gramercy president Russell Schwartz. It helped hasten the company’s growth. Gramercy will have 15 movies in 1995, a level it hadn’t initially anticipated until 1996.

Comebacks present and future

MGM/UA scored its first hit with the acquisition “Stargate,” though MGM’s first production, “Speechless,” starring Michael Keaton and Geena Davis, had a silent debut. MGM president Mike Marcus and John Calley, head of the newly revived UA, are looking to ’95 to lift them out of the cellar with a new James Bond film, an American remake of “La Cage aux Folles,” the adventure “Cutthroat Island” and the risque “Showgirls.”

Columbia TriStar Motion Picture Group chairman Mark Canton, who says he is “the leader, no longer the cheerleader,” is looking at a clean slate now that Sony has written off its losses. “It’s been a painful growing process the past 18 months,” he says. “We’ve learned a lot.”

With 38 releases, including “First Knight” starring Sean Connery and Richard Gere, “Mary Reilly” starring Julia Roberts and “Jumanji” with Robin Williams, Canton hopes to have a better self-evaluation for his company same time next year.

What cost, profit?

The price of making movies--including star salaries--and selling them, outpaced the 6% growth in box-office gross. And like the weather, studio executives bellyached about the situation, while continuing to do a soft-shoe around it.

With the average studio film costing at least $40 million to make and market, “movies can now gross $50 million and be considered failures,” bemoans one studio chief.

Except for Tom Hanks and Harrison Ford, new faces did better than more established ones in 1994. Jim Carrey, Tim Allen and Keanu Reeves had breakout films. Arnold Schwarzenegger’s “True Lies” cost more than $100 million but was nowhere near as profitable as the $20-million Reeves vehicle “Speed,” in which the real star was a runaway bus. Later in the year, Arnold sank in the comedy “Junior.”

Julia Roberts didn’t pack ‘em in for “I Love Trouble,” nor did Sharon Stone and Richard Gere in “Intersection.” Kevin Costner couldn’t rescue the $60-million “Wyatt Earp,” nor Warren Beatty the $40-million “Love Affair,” both of which Warner Bros. chairman Robert Daly admitted caught the studio in a bind. “Earp” was pre-empted by last Christmas’ surprise hit “Tombstone,” making it seem like a remake.

And it was a year in which remakes (and most sequels) didn’t sell, including “Love Affair.” (On the plus side for Warners were “Client,” “Maverick” and “Vampire”--all $100-million or near grossers.)

But, back to star power.

Regarding the “can’t-miss” cast of the $25-million “House of the Spirits”--Meryl Streep, Glenn Close, Jeremy Irons and Winona Ryder--Miramax’s Weinstein concedes, “I was thinking with my head rather than my gut.” The movie quickly vanished, earning less than $10 million.

“If you make movies with 2s, 3s and 4s in front of them and do nice grosses foreign and have ancillaries (video, cable), you can’t get too badly hurt,” says one studio chief, whose slate for 1995 will supposedly not include any movie costing in excess of $50 million.

Disney’s Roth adds, “If you’re going to spend more than $50 million, you have to be able to go to bed at night knowing that even if it has a modest execution you’re not going to get killed.”

And to bring the argument full circle, the way to achieve a good night’s sleep when you’re spending the big bucks is through star (and star director) power, say most executives. The more things change. . . .