Tinseltown Spins Yarns --Media Take Bait

You might say that Michael Cieply knows the movie business inside and out.

As a reporter, he spent seven years covering Hollywood for the Wall Street Journal and the Los Angeles Times. Then he spent nine years producing movies. Now he’s West Coast editorial director for Inside.com, a Web site that specializes in news about entertainment, the media and technology.

Cieply’s experiences haven’t left him with a very high opinion of the people who run the movie business.

“In some ways, they are fundamentally defective people,” he says. “You can look around Hollywood and decide how to deal with them based on what stage of arrested development they’re in.”

Cieply is only slightly more complimentary toward many of his fellow journalists.

Media coverage of basic business news in Hollywood--”the financial data and dueling moguls stuff”--is “sharper than ever,” he says, “but Hollywood is not so much driven by cold, hard financial calculations as by personal relationships--by hatreds, rivalries, egos, sins and crimes; coverage of that seedy, gothic, sometimes criminal reality of the business has deteriorated massively over the years. . . . Most editors would rather have the quick hit of celebrity profiles and clever pseudo-analyses.”

Cieply is far from alone in his criticism of the way the news media cover Hollywood. There is widespread agreement among journalists and motion picture executives that while basic financial page reporting on the movie business is generally more sophisticated, coverage of the process of movie making, of the culture of Hollywood and of where movies fit into the larger culture of America has become more narrow and superficial.

Investigative reporting, insightful profiles and provocative analyses have largely given way to regular reports on box office grosses and budget overruns, breathless accounts of who’s in, out, up or down at the various movie studios and celebrity profiles that are almost invariably as flattering as they are formulaic.

Reporters these days often “miss the most interesting stories . . . because they’re so busy chasing tidbits . . . and getting so mired in gossip that they don’t have time to do the larger, more important pieces that require a couple of weeks or more of research,” says Lynda Obst, an independent producer whose films include “Sleepless in Seattle” and “Contact.”

Obst says the media have been slow to recognize the impact of new digital technologies on movie making and have all but ignored the role of soundtracks in the success of various movies. With possible strikes by the Writers Guild and Screen Actors Guild looming this year, she also says the news media ought to be writing more about tensions between the two unions--and about tensions among the various studios. Other critics say the news media haven’t written enough about the big increase in recent years in the funding of American movies by German companies or about what makes Hollywood unique or about exactly how studios decide which movies to make.

Some of the shift away from this kind of substantive reportage reflects larger changes in society--a tabloidization and trivialization of most mainstream media in this era of O.J. Simpson begets Princess Di begets Monica Lewinsky. All personality, all scandal, all the time.

Studios Criticize Media’s Obsession

But opening weekend box office reports represent a different kind of trivialization. Motion picture executives say that a movie’s gross seems to have become more important to the media--and, as a result, to their readers, viewers and listeners--than what the movie is about or whether it’s any good. They also say reports on opening weekend grosses become a self-fulfilling prophecy, strongly influencing the ultimate success or failure of movies in the marketplace and--perhaps more important--”shaping what kind of movies are made” in the months and years to come, in the words of Ron Meyer, president and chief operating officer of Universal Studios.

The media’s obsession with opening weekend grosses is as ironic as it may be destructive. Why? Because virtually everyone in Hollywood agrees that most of the numbers the studios report to the media are inaccurate, if not downright dishonest.

“They’re made up--fabricated--every week,” says Anne Thompson, West Coast editor of Premiere magazine.

At best, the opening weekend box office reports are about one-third guesswork; the studios provide the weekend numbers to the news media on Sunday morning--when all they have are Friday and Saturday reports. It’s like reporting the final score of a baseball game after the sixth inning. The studios extrapolate the Sunday figures from the Friday-Saturday figures, based on experience, educated estimates and perhaps a bit of wishful thinking.

“Final” numbers, including Sunday’s receipts, are provided on Monday, but a USA Today study last year showed that Monday numbers for the weekend winners tend to be lower than the original estimates, albeit seldom by a large margin.

There is, ultimately, no way of knowing for sure if the preliminary or final numbers are accurate, though. “You never get the real official number,” says Josh Chetwynd, who wrote the USA Today story.

Reporters say they devote time and space to box office reports because the lines between Hollywood and Wall Street have become increasingly blurred; Hollywood is big business today, with studios being gobbled up by massive multinational conglomerates and the movies requiring bigger budgets and earning bigger grosses. Numbers matter more than ever. But regurgitating numbers provided by the studios is “the laziest reporting that entertainment reporters do,” Chetwynd says. “You just take the numbers they give you and stick them out there.”

Sales figures used to be equally unreliable in the music business; record companies were able to manipulate reports from record stores, much as studio executives can manipulate reports from their exhibitors. But since 1991, music sales charts have been based on a computerized system called SoundScan that logs sales with bar code scanners at record store cash registers. This shift “produced some eye-opening data [and] . . . drastically altered the complexion of the pop charts,” the Los Angeles Times later reported. But there is no such industrywide system or standard for movies.

Two years ago, the Securities and Exchange Commission sent warning letters to at least two studios complaining about inaccurate box office reports and threatening possible disciplinary action if the practices were not halted.

Even if the studios’ opening weekend numbers are accurate, they are still woefully misleading in terms of ultimate revenue and profits. Foreign box office receipts, video, DVD and airline sales and cable and network television deals almost invariably add up to 75% to 80% or more of a studio’s gross revenue on a given movie. Many movies that the news media call flops because they perform poorly at the box office in this country ultimately prove profitable.

But many in Hollywood--industry executives and journalists alike--say the biggest problem with box office grosses is that studios lie about them. (Of course, every studio executive says he never lies; it’s the other studios that lie.)

Many Ways to Manipulate Data

How do they lie? They can exaggerate the number of prints they have in distribution or the number of screens where a movie is showing or the amount of revenue the movie averaged on each screen. Or when box office reports from smaller cities and smaller theaters are slow coming in--as they often are--the studio can just take the per-screen average gross they have for the larger theaters in larger cities, extrapolate those numbers and apply them to the smaller, missing screens--which, in truth, would inevitably yield smaller grosses. Or they can just flat-out lie.

Anita Busch, editor of the Hollywood Reporter, says she remembers one studio executive telling her that whatever figure was reported for his movie’s top competitor that week, “we’re $500,000 higher.”

“When there is a battle for first place, that’s when you can often see the numbers juggled around quite a bit,” says Paul Dergarabedian, president of Exhibitor Relations Co., which collects box office figures from the studios and provides them to the media every week. “Basically, you want to be able to say, ‘We had the No. 1 film in the country.’ ”

The numbers, Dergarabedian cautions, are the studio’s numbers; “they’re their property.” His company is just “a liaison between the studios and the news media and the exhibitors.”

Although studio executives grumble bitterly--and almost unanimously--about the news media’s emphasis on opening weekend grosses, some concede that the studios are at least partially responsible for this problem.

Box office stories are the equivalent of free advertisements for the studios whose movies do well, and these studios eagerly use the box office numbers as “a marketing device, putting them in our ads and calling our movie No. 1,” says Terry Curtin, executive vice president for marketing and publicity at Universal Pictures.

Box office reports used to be the sole province of Hollywood’s two daily trade papers, Daily Variety and the Hollywood Reporter. But that was before the Internet, before “Entertainment Tonight,” “Access Hollywood,” MTV, and E! Entertainment, before Entertainment Weekly, Premiere, and the reborn Vanity Fair. Now it sometimes seems that virtually every magazine but Field and Stream puts movie stars on the cover. Entire magazines, entire Web sites, entire television shows are devoted to entertainment, and they’re all competing for the slightest nugget of news, gossip and rumor. Box office receipts have become a staple of Sunday night television and radio news programs and Monday morning newspapers in cities large and small, all across America.

“The volume of coverage, the need to fill up all that space and all that air time, makes everything news,” says Tom Pollock, former president of Universal Pictures and now an independent producer. “The media want to know everything down to the smallest detail on how much a movie costs and how much it makes and what’s the buzz on the 15 different versions of the script and who’s winning and who’s losing among the studio executives and agents and lawyers and producers.”

Deprives People of Information

This approach not only deprives readers and viewers of meaningful information and insights about the world of movies but opens the way for the overemphasis on budgets and box office receipts--by studio executives as well as the news media.

“Studio executives are all obsessed with the opening weekend box office,” says Patrick Goldstein, a movie reporter and columnist for the Los Angeles Times. “If you can say in the ads that your movie was the No. 1 movie of the week, people will go to it because most people want to see the No. 1 movie; they want to be with a winner, not a loser.

“The media have made the opening weekend gross so important that studios now make movies specifically designed to have those features most likely to guarantee a big opening weekend,” Goldstein says. “If you have an adult movie and a movie for 15-year-old boys both opening the same weekend, the movie for 15-year-old boys will win the battle of the box office every time. . . . They go to more movies and they’re eager to see the movie the first weekend to be able to tell their friends they’ve seen it. Grown-ups can wait.”

The 12-to-24 age group, while accounting for less than 18% of the total population, represents almost 40% of total movie admissions. In today’s box-office-driven environment, that means studio executives are far more likely to give the green light to movies that appeal to this age group--movies with flashy special effects, fast, often violent action, crude humor and simple plots--than to grown-up movies with serious subjects, three-dimensional characters and thoughtful dialogue.

Movies provide a small and diminishing portion of the profits for the multinational, multimedia conglomerates that own most of the studios--companies like Rupert Murdoch’s News Corp. of Australia, which owns Fox; Sony Corp. of Japan, which owns Columbia, and Vivendi of France, which owns Universal. A couple of bad movies can make the red ink flow--a perfect, if painful match for the blood on the floor of the executive suite as yet another studio head is lopped off.

Thus, media coverage of the motion picture industry has changed, in part because the industry has changed.

Most movies used to be released in a few theaters at a time, gradually building momentum and adding other venues as word of mouth spread. But with so many movies released in so many theaters now--the number of screens has doubled in the past decade with the rise of the multiplex and the megaplex--most movies that don’t immediately open in 2,000 or 3,000 theaters can’t possibly produce the big numbers necessary to stay in circulation.

“It’s harmful to smaller movies,” says Dick Cook, chairman of the Walt Disney Motion Pictures Group. “Because they never appear in the top five for any weekend, the perception is that maybe they are not as good.”

A few smaller, independent movies like “Shakespeare in Love,” “The Full Monty” and “Life Is Beautiful” have done very well commercially in recent years, and “Crouching Tiger, Hidden Dragon” replaced the latter last weekend as the all-time foreign language box office champion in the United States. But such movies are the exception--and they unrealistically raise expectations. When the media report that other small movies aren’t doing so well, they’re yanked from the theaters faster than you can say “Miramax.”

Costs of Movies Also Get Attention

The media seem equally obsessed with another set of numbers--what it costs to make a movie, especially when the movie costs much more than it was budgeted for.

In the golden old days of Hollywood, big budgets were not an object of derision. The original movie moguls, many of whom came to this country as poor immigrants, often enjoyed bragging about how much their movies cost--”the most expensive movie ever made, a cast of thousands, years in the making.” To them, a big budget was a badge of honor--proof that they were rich and powerful, that they’d made it in America--and audiences often responded positively, going to expensive, controversial movies if only out of curiosity.

But today’s corporate bosses, with far greater revenue from their other endeavors, want to meet budgets, not wear badges, and audiences--with so many movies and other forms of entertainment and recreation to choose from, and with so many sources of movie gossip and information available--may choose to spend their time and money elsewhere if a particular movie gives off the odor of waste and overindulgence.

Even some journalists say too much attention is paid to movie budgets.

“I’ve discouraged several stories on big budgets and told our critics to review the movies, not the budgets,” says Peter Bart, editor in chief of Variety.

“If a movie is made for $6 million, with big stars who agree to defer their salaries, that’s news,” Bart says. “If a $250-million movie threatens to bankrupt the company, that’s news. Otherwise, no.”

But Bart, like many other journalists, says he has an additional reason for not liking budget stories. Budget estimates are even less accurate--less honest--than box office estimates.

“I can’t trust any of these budget numbers,” Bart says.

Why not?

To begin with, not everyone figures budgets the same way. How does a studio allocate the cost of equipment and salaries for staff that are used on other movies as well? How about other overhead? Or the actual cost, including interest, of a star’s deferred salary?

“In point of fact,” Bart wrote last June, “none of us has the remotest idea what” a studio spends to make any movie.

Moreover, says Brian Grazer, co-chairman of Imagine Films Entertainment, “When a fully, vertically integrated multinational company owns a movie company, it can potentially create a lie. They’re allowed to hide everything. They get to camouflage costs in other divisions--theme parks, music, merchandising. If you want to say you didn’t lose any money, you can make it look like you didn’t lose any money.

“It’s a very complex business now, and that makes it much harder for the media to find anything out and cover this stuff accurately,” Grazer says. “The figures they print are almost always really wrong, way off. Anyone on the real inside of Hollywood, anyone who really makes movies and has made them for a while knows that.”

Even independent companies like Imagine--which made “The Grinch Who Stole Christmas,” “The Nutty Professor” and “Apollo 13”--can manipulate their budget figures.

“Everyone wants their movies to be perceived as profitable,” Grazer says, “so they’ll push the budget numbers down--myself included, if I can get away with it.”

Some studios not only understate their own budgets; they deliberately give reporters overstated estimates of their rivals’ budgets.

Every movie company practices “disinformation and misinformation,” says Joe Roth, head of Revolution Studios.

Roth, like many in Hollywood, is especially critical of the “Company Town Film Profit Report” published in the Los Angeles Times every week. That report provides estimated costs and projected U.S box office receipts for a dozen or so current movies and it categorizes those movies as “Mega-moneymakers” (at least $50 million in expected profits), “Moneymakers” (at least $10 million in expected profits), “Tossups” ($5 million in expected profit or loss) and “Losers” (more than $5 million in expected loss).

The Times’ profit report carries a note that it is “based on projections of total U.S. box office gross from a consensus of industry sources and studio financial models,” and it states that “U.S. returns represent only 20% of a film’s final revenue.”

Even with these caveats in place, Roth calls this report “highly inaccurate . . . a political document.”

Roth acknowledges that “you can tell a lot after the first weekend about how a picture is going to do in domestic box office,” but he says, “Every one of these companies lies about how much the negative cost is, and they lie about what percentage of the gross is out to their participants and they make up what kind of legs the movie is going to have or how it’s going to do in home video and how it’s going to do in foreign [markets].”

Richard Natale, a freelance writer who compiles the weekly box office and profit reports, among other stories, for The Times, recognizes the difficulties of his task.

“Budgets are very slipshod, very hard to get right,” he says, “but I know some people who don’t lie and who will either tell me the truth or wave me off if I’m wrong. My sources are generally involved in the production of the movie and sometimes, when I know the producers themselves, I can get pretty close to the approximate budget. Sometimes it’s just common sense, based on what I know it costs per day to make a film and how many days I know they were filming.”

Natale says he thinks he’s “in the general ballpark about 90% of the time.” But “pretty close to the approximate” and “in the general ballpark about 90% of the time” are not the standards of accuracy that good newspapers generally require, and sometimes Natale is off by tens of millions of dollars on his domestic box-office projections. In May 1999, for example, he projected a domestic box office gross of $350 million for “Phantom Menace”; it ultimately took in $431 million.

Natale usually updates his figures as the weekly box office receipts mount. He initially called last year’s “Space Cowboys” a tossup and subsequently shifted it to the moneymakers category, incrementally adjusting his projected domestic box office receipts from $78 million to $92 million. “Thirteen Days” went in the opposite direction this year, from tossup to loser.

With “Remember the Titans,” Natale first projected a domestic box office gross of $60 million, then escalated week by week to $115 million--almost double his original forecast. Initial projections for “What Women Want” ($125 million) and “Cast Away” ($150 million) also underwent significant revisions--to $180 million and $220 million, respectively. On “Charlie’s Angels,” Natale’s estimates moved in the other direction, starting at $150 million and steadily declining to $125 million.

Weekly Adjustments Don’t Solve Problem

Adjusting projections weekly is a good idea, but when projections--and the impressions they create--can be off by this much, many in Hollywood say the adjustments often amount to trying to put toothpaste back in a tube.

Bill Sing, editor of the Business section of The Times, concedes that projecting film receipts and profits is “an inexact science,” but he says the paper tries to “make it as accurate as possible, and even if some specific numbers may be off, we still give a good idea of which movies are huge moneymakers and which ones are big failures.”

Nevertheless, Dean Baquet, managing editor of The Times, says critics of the Film Profits Report “raise good questions that we need to address.”

In a Daily Variety column last June, Bart said Natale “does the most responsible job possible on what is arguably a mission impossible.” But he raised the larger question: “Why bother?”

Many in Hollywood agree. They say the weekly profit report is emblematic of all that’s wrong with both Hollywood and the media’s coverage of Hollywood--the obsession with budgets and box office, profit and loss.

But they read it. Avidly. It’s like a scorecard. It is a scorecard. And Americans like to keep score, whether on the athletic field, at the polls or--especially in this company town--at the box office.

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Jacci Cenacveira and Vicki Gallay of The Times’ editorial library assisted with the research on this series.

About This Series

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Today: Increased journalistic competition and changes in the movie business have resulted in Hollywood coverage dominated by stories on box-office grosses and budget overruns--often based on unreliable numbers--and on which studio executive is in, out, up or down. *

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Part 2: In Hollywood, lying is a way of life. There’s a natural cultural clash between a movie industry based on creating fantasy and the journalistic institutions that seek to report reality.

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Part 3: The battle between Daily Variety and the Hollywood Reporter is unique among American newspaper wars, and it’s growing more intense.

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Part 4: The Times is Hollywood’s major hometown paper. How well does it cover the city’s (and the world’s) most glamorous industry?

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Studio Revenue Stream Changes

Movie studios, which once relied primarily on the domestic box office for their revenue, increasingly bring in most of their revenue from other sources, among them video sales and foreign audiences.

*According to SCREEN DIGEST, the video market was virtually nonexistent in 1980.

Sources: International Motion Picture & Video Almanac, Variety & other trade publications

Compiled by JOHN TYRRELL / Los Angeles Times

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Tossup? Or Moneymaker?

Projected domestic box-office receipts based on opening-weekend performances can sometimes be off by tens of millions of dollars. Below are excerpts from the Los Angeles Times’ weekly Company Town Film Profit Report feature.