Big Movie Stars Get Big Salaries, Big Executives Whine--Big Deal

With luck, Hollywood's next self-help group will be Overspenders Anonymous.

Meeting one night a week, studio executives could be steered through a 12-step program to cure the Economics Deficit Syndrome that forces so many of them to sign deals calling for stars, directors and writers to make more money than they should.

Hearing the loud chorus of whining lately about hefty talent salaries, how bad Hollywood economics are and the implication that studios are somehow victims in all of this, one can't help being reminded of sports owners and their "stop us before we spend ourselves into oblivion" grousing about the paychecks they choose to write quarterbacks, forwards and shortstops.

The cost issue has recently become a flash point in Hollywood. For starters, records were shattered last year with the $20-million-a-film benchmark for such male stars as Sylvester Stallone, Jim Carrey, John Travolta and Tom Hanks, as was the $12-million threshold set by female star Demi Moore.

Exacerbating the complaints among

studios are two things: A number of big-star movies flopped miserably, including "Mary Reilly" with Julia Roberts and Stallone's "Judge Dredd." And marketing costs are soaring at the same time marketing messages seem less effective and more fragmented because there are so many movies being released and because TV networks don't control the dial as they once did.

Earlier this week, Motion Picture Assn. of America President Jack Valenti, preaching in his usual fire-and-brimstone style, warned ominously that rising movie costs are a "huge, hairy beast slouching toward our future." Speaking to theater owners in Las Vegas, Valenti reported that the average negative cost of a film has climbed 6% to $36.4 million, and that marketing costs rose nearly 10% last year to $17.7 million. That makes the average cost to make and sell a film more than $54 million.

But all the complaints about how much stars add to the cost of a movie seem to carry with them the absurd implication that the public should feel sorry for millionaires who voluntarily choose to overpay other millionaires.

It also seems to obscure who holds the checkbook. Stars and agents are viewed as greedy for practicing the time-honored American tradition of trying to get the best deal you can. Creative Artists Agency, International Creative Management, William Morris Agency and United Talent Agency aren't exactly the OPEC of celluloid, sending their ministers to meetings to set the price per film they will charge.

"No one can make a studio sign a contract," grumbles one top agent who is tiring of the complaints. He adds that in many cases it's the studios that insist on raising the ante to coax a star who is lukewarm to a project.

Indeed, a fair number of studio executives do blame themselves. One goes so far as to say that he attributes the big star salaries to the fact that big conglomerates own studios now, providing executives with an extra-large safety net against failure because the turkeys don't ripple through companies as they once did.

"The days of 'Cleopatra' and 'Heaven's Gate,' when one bomb could sink a studio, don't exist anymore," he says.

With all of the talk about big salaries, one almost expects a proposal any day now for the kind of salary cap adopted by the National Basketball Assn. to deal with spiraling pay deals. Studios whose salaries exceed a set amount could jettison stars to other projects and studios to bring themselves under the salary cap, just as the Charlotte Hornets and Orlando Magic do now.

Better yet, sell luxury boxes. In sports, the money isn't in ticket sales but in corporate luxury suites. Studios could build them in theaters or, taking a cue from the St. Louis Rams, sell for $800 a year the rights to buy a movie ticket.

The most radical explanation of the phenomenon of big salaries is that there isn't anything wrong with Hollywood's economics at all. It's a hard notion to buy in a town where most people probably don't know the difference between "the invisible hand" of the free market from Oliver Stone's 1981 horror flick, "The Hand."

The theory of the invisible hand here holds that market forces and healthy competition are at work, with studio executives paying the going rate for stars because they are betting they can make a profit when all of the video, film and TV markets are fully exploited, and also add to the asset values of their libraries.

It assumes that first they weigh the risks of being wrong, use big stars as a way to lower the odds of having a dud, and are given the boot when they are wrong too many times--although some probably get it later than others.

It assumes that Savoy Pictures' $20-million deal for Stallone to star in an undefined movie was a poorly thought-out act of desperation, and that companies such as Savoy and Carolco that continually make bad economic bets will eventually fold their tents.

It assumes that Burt Reynolds doesn't command the salary he did in the 1970s, when he was the top box-office star, and that the reason Eddie Murphy is no longer the top-paid male star is that he's had a dearth of hits.

It also assumes that if the market is too crowded with movies, and that the cost of each of those movies is too high, then people like Sumner Redstone who own studios will put the brakes on, that Disney won't release 60 movies a year as it predicted it would several years ago, and that some of the distributors flooding the market, like Savoy, will quit.

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Executive Watch: Viacom Inc. is trying hard to keep Blockbuster Chief Executive Steve Berrard on board, but odds are that he will choose longtime loyalty to former Blockbuster Chairman H. Wayne Huizenga.

Berrard has said he'll decide his future soon. Two things could keep him at Viacom: the prestige of running a company the size of Blockbuster and the fact he has worked much of his life in Huizenga's shadow. But Viacom can't match the kind of money Berrard could make in various entrepreneurial ventures--including a unique used-car operation--with Huizenga.

If Berrard goes, look for Gerald Geddis, Blockbuster president of worldwide operations who runs Blockbuster's day-to-day operations, to be the likely successor.

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