Company Town : Lights, Camera, Money : Hollywood Ups the Ante, Betting Big on Summer Films

There’s a hell of a lot of money riding on this summer’s movies.

While Universal Pictures executives are shivering over whether audiences will flock to the studio’s $175-million futuristic action movie “Waterworld,” rival companies also have a bad case of the jitters over the kind of dollars being spent to produce and market their major big-screen offerings this summer.

One studio head estimates that “the big movies cost 10% to 20% more this year than last, and you can say the same for marketing costs being that much more expensive.”

Twentieth Century Fox Chairman Peter Chernin concurs: “I think you have more big-bet movies this year than last year.” He says he would venture a guess that “the overall production cost of this summer’s slate is more expensive than last year’s, and the $64,000 question is how elastic is the marketplace, will it expand to accommodate all the pictures, and how far?”

Studios typically release their biggest, most expensive films in the summer--roughly between Memorial Day and Labor Day--because that period accounts for about 40% of annual box office revenues. While the season seems to begin earlier and earlier each year--this year “Crimson Tide” kicks off the summer film season May 9--kids don’t go to the movies midweek until school lets out.

Because so many high-profile movies are being released this summer, the studios will be spending that much more in marketing costs, which in the competitive summer season can be as high as $25 million to $30 million per film domestically and double that worldwide.

“Everybody can compete in terms of how much money they’re spending, but the difference in success and no success is more about how that money is spent,” said Michael Rosenberg, head of marketing for director Ron Howard and producer Brian Grazer’s Imagine Films, which made this summer’s space movie “Apollo 13,” starring Oscar winner Tom Hanks.

Typically, the bigger a studio’s investment in a picture, the more marketing dollars it will spend. Because a film’s domestic theatrical release drives it through all other revenue streams, more marketing dollars are usually spent for big action movies, which generally have greater potential overseas than do comedies and dramas.

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If a movie fails to do well in its first weekend in the United States, or drops off considerably in its second weekend, a distributor will greatly reduce its marketing expenditure. With an average of three movies opening every weekend this summer (about 54 releases are planned), the majors can ill afford to throw good money after bad, notes Imagine’s Rosenberg.

At this point, there’s no way to know how the summer of 1995 will size up against 1994’s record-breaking box office take of $2.2 billion--when two movies, “The Lion King” and “Forrest Gump,” each grossed more than $200 million. But many industry experts are skeptical that any records will be broken.

“My contention is we will not equal last summer,” says John Krier, whose company, Exhibitor Relations Co., tracks box office results. “So far, there’s only one picture--’Batman Forever’--that looks to be a $200-million film.” Krier says the sequel is the “unanimous choice” as the summer’s top film among the exhibitors he surveyed nationwide.

Box office analyst Art Murphy of the Hollywood Reporter also cautions that despite three consecutive summers of box office rise, “things don’t go on forever.”

“I’m not saying it can’t happen,” he adds, “but when people depend on audiences responding in record numbers, it often doesn’t happen.”

Despite setting a record overall, last summer’s results were schizophrenic. There were big winners and big losers, without much middle ground. Sure, a record number of movies, led by “The Lion King,” “Forrest Gump” and “True Lies,” grossed more than $100 million a piece. But a number of other expensive pictures, most notably the $60-million-plus “Wyatt Earp,” which logged a paltry $24.6 million, bombed at the box office and bled millions.

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“Earp,” starring box office heavyweight Kevin Costner, wasn’t alone. Despite their built-in hooks, the star-driven “I Love Trouble,” pairing Julia Roberts and Nick Nolte, and the sequels “Beverly Hills Cop 3” and “City Slickers II,” also took baths, as did “Renaissance Man,” “The Shadow,” “The Cowboy Way” and the family movies “North,” “Baby’s Day Out” and “Little Big League.”

But let’s talk summer of ’95.

In addition to “Waterworld”--the most expensive movie ever made--the season’s high-ticket films, each estimated to have cost more than $60 million, include the Warner Bros. sequel “Batman Forever” (June 16), the Fox sequel “Die Hard With a Vengeance” (May 19); Buena Vista’s “Judge Dredd” (June 30); Warner’s “Braveheart” (May 24), and Warner’s sequel “Under Siege 2” (July 14).

And a number of the upcoming season’s movies cost in the $40-million-to-$60-million range, among them Disney’s “Crimson Tide” and its new animated feature, “Pocahontas”; Universal’s “Apollo 13” and “Casper”; Columbia’s “First Knight” and its Castle Rock movie “Forget Paris”; Paramount’s “Congo” and “Indian in the Cupboard”; Warner’s “Bridges of Madison County,” and Fox’s “French Kiss.”

Increasingly, studios are sharing the risk on the bigger-budget movies. Fox and Disney are partnered on Cinergi Productions’ “Die Hard.” (Fox has domestic rights; Disney has foreign rights except for Japan and Italy.) Paramount will distribute “Braveheart” domestically and Fox will release it overseas. Paramount and Columbia have a split-rights deal on “Indian in the Cupboard,” with Paramount here and Columbia abroad.

Nonetheless, the risks are great.

The profit margin on movies is slim today--about 4%. Between spiraling production and marketing costs and gross participation by A-list stars and directors, it is more and more difficult for companies to see their movies land in the black.

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The Hollywood Reporter’s Murphy says a wide-release film has about a 1-in-14 chance to gross more than $100 million within the summer window in the domestic market. In those few cases, the payoff to investors can be huge.

Moviegoing audiences are always unpredictable. Just when you think they’ll flock to your film because it stars one of the biggest box office names in the world, they don’t.

“I am nervous because one never knows what’s going to happen,” says “Braveheart” producer Bruce Davy, who is partnered with Mel Gibson in Icon Productions, which lined up all of the film’s independent financing. Sure, audiences around the globe love Gibson, but are they willing to remain in their seats for nearly three hours to watch the kilt-donned star play a 13th-Century Scot patriot leading an uprising against the king of England?

“We make a film with what we believe are all the right elements,” says Davy, “but the ultimate umpire is the American public.”

Let the summer games begin.

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The Summer Sneaks

* Which movies will sizzle and which will fizzle? On TimesLink, get the scoop on summer releases and predictions on hits. Sign on, “jump” to keyword “Movies,” and select “Coming Attractions.”

Details on Times electronic services, B4

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Pricey Productions

This summer’s big movies cost 10-20% more to make than last year’s, making 1995 the most expensive summer season on record. Here are the most expensive films scheduled for release between Memorial Day and Labor Day:

Cost of production Film ($ millions)* Waterworld 175 Batman Forever 90-100 Die Hard 90 With a Vengeance Judge Dredd 85 Under Siege 2 65-70

* Rough estimates by industry sources.

LAST SUMMER

The Hits

Film ($ millions) The Lion King 262 Forrest Gump 239 True Lies 132

The Flops

Film ($ millions) Wyatt Earp 24 I Love Trouble 29 North 6

HOT BOX OFFICE Summer box office receipts, in billions of dollars:

1994: $2.2

* Figures are for a 16-week period rather than the typical 15-week summer season.

Sources: Exhibitor Relations Co., Industry sources.

Researched by CLAUDIA ELLER and JENNIFER OLDHAM / Los Angeles Times