Disney’s Big Bash Makes Big Splash of Irony

As movie premieres and press junkets go, the one Walt Disney Co. plans in Hawaii next month for “Pearl Harbor” might well live in infamy even by Hollywood’s notoriously lavish standards.

About 2,000 guests will be serenaded by an 80-member Hawaiian choir and the Navy’s Sea Chanters group while viewing the film on a giant outdoor screen specially built on the nuclear aircraft carrier John C. Stennis.

The event, at a cost of more than $5 million, comes just as Disney is cutting 4,000 jobs and all the major film studios are preaching austerity as they face possible strikes by writers and actors.

A string of startling compensation packages that were disclosed in recent Securities and Exchange Commission filings have further exacerbated tensions between writers and studios.

One executive, AOL Time Warner Chief Executive Gerald Levin, last year earned $153 million in stock options--an amount considerably higher than the $100 million writers claim they are seeking over three years.

J. Nicholas Counter, the industry’s chief negotiator, said today’s media moguls oversee empires far larger than the entertainment divisions affected by the labor contracts.

“It’s really irrelevant to the discussion. They are getting rewarded for the big major businesses they are running that go far beyond motion pictures and television,” Counter said.

Similarly, Disney officials say the “Pearl Harbor” party is a legitimate business expense and is necessary and even smart marketing for an important studio product.

Hollywood’s long tradition of routinely awarding bonuses and perks to top executives is sending a mixed message as studios work overtime to convince labor guilds and the public that their businesses are suffering.

DreamWorks SKG partner Jeffrey Katzenberg went so far as to warn last month that if the studios cave in on contract demands by movie and TV writers, it will “simply bankrupt them.”

But the writers say they aren’t buying it, and the examples of executive pay are having a galvanizing effect as the guild negotiates for a bigger share of the pie.

“It’s disingenuous and totally hypocritical,” said writer-director John Milius. “The fact is their pay scales are medievally obscene.”

John McLean, the guild’s chief negotiator, said that what writers want from studios “does not equal the cost of just a few executive bonuses.”

Or, as one top executive at a media giant admitted sheepishly, “We are all overpaid, and nobody is as guilty of that as I am.”

And, with a May 2 Writers Guild contract expiration date looming, the lucrative paychecks continue:

Viacom Inc.’s top two executives, billionaire Sumner Redstone and Mel Karmazin, received bonuses of $15 million each along with identical $2-million salaries. The executives who run the parent company of Paramount Pictures also were each granted options for 2 million shares when they finished merging Viacom and CBS, which are valued at $53.8 million each.

News Corp. President Peter Chernin earned $64.6 million-- $11.9 million in salary and bonuses and options valued at $52.7 million. Chairman Rupert Murdoch received $41.8 million--$6.5 million in salary and bonuses with $35.3 million worth of options.

Disney CEO Michael Eisner’s take came to $72.8 million--$12.3 million in salary and bonuses with $60.5 million in gains from exercising stock options. Eisner also separately received options estimated to be worth $37.7 million in the Disney Internet Group, a special stock for Disney’s cyberspace operations that was recently scuttled, with stockholders receiving Disney shares.

“If you believe the industry is going to be imperiled by what you could pay writers, why are [executives] paying [themselves] so much more?” said Bloomberg News columnist Graef Crystal, an executive salary expert and longtime critic of Hollywood pay. “They don’t understand the message they are sending. How can a Gerry Levin or a Michael Eisner deliver a sermon about how everyone has to pull in their belts when they can’t even see their own belts because of their enormous pay guts?”

Charles Holland, co-chair of the writers negotiating committee, says that the recent pay and spending disclosures have resonated with most guild members.

“Basically, the message to us is that we’re not valued as much as some individual,” he said.

But industry chiefs argue that they need to draw the line on what they pay writers and actors with TV audiences fragmenting and movie marketing and production costs soaring.

They also insist that increases they give writers will have to be given to other workers such as actors and directors. In addition, they note that writers aren’t being asked to take a pay cut, but rather want bigger raises than studios are willing to grant.

Disney spokesman John Dreyer said the pay for Eisner reflected performance last year when the economy was strong and the company surprised Wall Street with better-than-expected results. However, Disney’s stock has languished since 1998.

AOL Time Warner spokesman Ed Adler declined to comment specifically on executive pay but referred inquiries about Levin’s compensation to the company’s proxy statement. The proxy noted, for example, that a special $10-million bonus Levin received was for his leadership in merging America Online Inc. with Time Warner Inc.

Still, profligate spending is nothing new for the entertainment industry, in which money and perks flow like Pellegrino even in bad times. Hollywood has always had a split personality when it comes to spending habits. Although the studios periodically launch austerity campaigns--as they are now--breaking free from the industry’s culture of private jets, lavish premieres, perk-laden contracts and budget-busting films is another matter.

Studios and writers are at odds largely about what writers will be paid when their work is rerun on cable TV, in foreign markets and when it is sold on videocassette or DVD. Studios insist writers want a package worth $227 million over three years, or less than $40 million for each major studio. Writers say the number is distorted, and that it’s just under $100 million, less than $20 million for each studio.

Representatives of 11,500 writers resumed talks with major studios Tuesday. Both sides have reported making some progress.

Although unemployment is high among writers and actors, some find themselves in the same leagues as the CEOs. Forbes estimated at $35 million the 1999 income of John Wells, president of the West Coast faction of the Writers Guild of America and executive producer of such hits as “E.R.” and “The West Wing.” The magazine estimated actor Bruce Willis earned $70 million last year.

Studios say writers on average made nearly $204,000 in pay and benefits last year. The guild argued that the studio number is inflated and that the median income of its writers was $84,000.

Hollywood has always been about making a splash, so its unlikely that studios will cut back much on high-profile spending to tout their big films and TV shows.

Studio marketing executives argue that hosting lavish premieres, parties and junkets for films such as “Pearl Harbor”--which opens nationwide May 25 and is expected to be a mega-money earner--generates enormous press exposure here and in foreign markets. That, they claim, helps position such films as “event” movies, which in turn they believe boosts box office.

The May 21 premiere of the Jerry Bruckheimer-produced film, a love story set against the Japanese attack on Pearl Harbor on Dec. 7, 1941, will be viewed on the flight deck of the John C. Stennis anchored in the same waters in which the historic battle took place. Among stars such as the film’s Ben Affleck will be more than 800 military brass and personnel, as well as veterans of that battle.

At a recent news briefing on the labor negotiations, Disney President Robert Iger bristled when asked about studio spending, noting that even the budget for “Pearl Harbor” was trimmed and that the company is watching pennies.

“The fact of the matter is we are looking at everything we do, whether it’s marketing expenses, travel and entertainment,” Iger said. “You name it, we’re looking at it.”

Previous stories about labor issues in Hollywood are available at https://www.latimes.com/hollylabor.