Studios Still Fighting Battle of the Bulging Budget

As tough as those who run Hollywood’s movie studios are, it’s hard to believe how difficult it is for them to just say no to the industry’s top talent and filmmakers when their movies are going to cost too much.

Ask any studio executive about the likelihood of reining in the budget-busting likes of a Jim Cameron or a Jan De Bont or a Renny Harlin, and they’ll look at you like you’re nuts. They’ll tell you those filmmakers are among the handful they can count on to deliver the really big hits, most of the time.

“You do it because you want to be in business with these people,” says one studio chief.

While Hollywood’s overindulgence of stars and filmmakers is nothing new, it’s arguably reached new heights now that the movie studios are by and large owned by such deep-pocketed, globally product-hungry multimedia corporations as Time Warner, Disney, News Corp. and Viacom.

“From a macro point of view,” says one senior studio executive, “there’s too much capital chasing a scarce commodity, so it makes it impossible to say no to that scarce commodity.” The source argues that, “It’s not so much our unwillingness to say no as it is their unwillingness to hear it.”

Most studio executives insist they’re putting the breaks on films they consider too expensive.

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Disney recently told writer-director Michael Mann to go back to the drawing boards to lower the $75-million budget of his untitled drama about the tobacco industry by about $15 million if he wanted financing from the studio.

Universal recently told writer-director Phil Alden Robinson he better shave off a significant amount from the proposed $90-million budget of his pet project, “Age of Aquarius,” a love story set against war-torn Sarajevo to star Harrison Ford, or take his movie somewhere else.

And Warner Bros. recently told director Ridley Scott he’d better seriously cut down the budget of his planned $100-million Arnold Schwarzenegger movie, “I Am Legend.”

Have out-of-control production and marketing costs finally forced top executives to end all the crazy overspending?

Probably not. Other than Paramount Pictures’ consistency in saying no to the $100-million-budgeted movie (unless it has a financial partner), such exercises in restraint are still the exception rather than the rule in Hollywood, where overindulgence is an acceptable way of life even in the face of diminishing returns.

Of course, the most recent, glaring example is how director Cameron was allowed to go 100% over budget on “Titanic,” making it Hollywood’s most expensive movie ever at more than $200 million (not counting marketing costs). Despite the huge grosses it’s collecting at the U.S. box office and the many hundreds of millions more sure to pour in from overseas and ancillary sales, the return on investment is tough to justify.

Indeed, the success of the film may make it even more difficult to say no to the next $200-million movie.

Equally perplexing is why studios allow filmmakers to deliver overly long movies, as was the case with Kevin Costner’s “The Postman,” Clint Eastwood’s “Midnight in the Garden of Good and Evil,” and newcomer Paul Thomas Anderson’s “Boogie Nights.”

In some cases studio executives are both in awe of and at the mercy of industry figures with much greater stature than themselves.

“You’re going to tell Steven Spielberg that his movie should be two hours and 13 minutes, not two hours and 34 minutes?” says the head of one studio.

Studio executives said they key is to exercise as much control as possible before an expensive film goes into production, because after the cameras roll, they can forget about it.

“You have a tremendous amount of control until you say ‘yes’ to a movie,” says one studio head.

“I hate to say it,” says Sony Pictures Chairman John Calley. “But once you’re shooting and you’ve made the commitment, you’re aboard and you’re not running the ship. The director is.”

Calley said studio executives need to be “immensely responsible and do all their due diligence going in and make enlightened decisions about what we need to spend.” While productions need to be “managed as carefully as they can be,” he suggested that executives need to “recognize events can happen beyond anyone’s control.”

Another studio chief asks incredulously, “Once a movie goes, what are you supposed to do? Fire Jim Cameron off your movie halfway through shooting?”

During the production of “Titanic,” for which 20th Century Fox was responsible for all the overages (Paramount had capped its investment at $65 million), the running joke in Hollywood was that Fox was working for Cameron, not the other way around. A-list directors like Cameron have every imaginable control built into their contracts, leaving studios little if any recourse when costs skyrocket.

Not so long ago, Universal Pictures found itself in a similar mess when costs soared out of control on “Waterworld,” and the film’s original $100-million budget mushroomed into $175 million or so before the production wrapped.

The pay-or-play deal the studio had cut with the film’s star, Costner (made even before there was a shooting script), failed to stipulate any budget parameters--a mistake that Universal executives would come to regret.

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That experience was likely the impetus for Universal’s later decision not to partner with Fox on “Titanic” when asked. Though the two studios had a successful split-rights arrangement on Cameron’s earlier action film, “True Lies,” sources at Universal say executives were nervous about potential overruns on “Titanic,” particularly given Cameron’s track record for busting budgets.

Universal’s movie chairman, Casey Silver, who considers himself not only a friend but a huge fan of Cameron’s, says, “It’s always hard to say no, but you do it because you believe it’s the right call.”

And, Silver insists, the outcome can be very satisfying.

After much ado, director Mike Nichols agreed to bring down the cost of his political satire “Primary Colors.” Universal will be releasing the movie this spring.

The studio also informed director Terry Gilliam, who had made the box office flop “Brazil” there years earlier, that it would make his new movie, “Fear and Loathing in Las Vegas,” only within a certain price. Both Nichols and Gilliam ultimately agreed to trim their budgets.

Disney Studios Chairman Joe Roth was also successful in getting Mann to adjust the budget of his tobacco industry movie.

But, Roth acknowledges, that’s not always an easy discussion.

“The most difficult part of this job is having the willingness not to be a good guy, particularly with people you admire and have had success with in the past,” says Roth. “It’s not fun to sit in a room with a director or actor who has made hit movies for the studio and to try to contain the appetite of that person based on a piece of material he’s passionate about.”

Roth describes that exchange as “an enraging, embroiling conversation,” but he adds that “the inability and unwillingness to have that conversation is fatal.”