Untruths and Consequences

What was it that Claude Rains said in “Casablanca”? He was shocked, shocked to find gambling going on at Rick’s. Well, lots of people are shocked, shocked to find that Hollywood studios lie when marketing their movies.

But two recent controversies at Sony Pictures Entertainment have cast a harsh spotlight on an issue that has plagued the entertainment industry almost from its inception--ethics.

In one incident, Sony admitted that its advertising department had created a fake film critic named David Manning to hype four of its recent films. Then, barely a week after suspending two advertising executives in connection with that scandal, Sony acknowledged that its marketing department also had created fake fans, using two studio employees to provide testimonials praising the Revolutionary War epic “The Patriot” last summer.

Whether it’s a studio constructing a phony fan Web site for a movie, or overestimating weekend grosses to get one up on the competition, or shrugging off an incident in which a top production executive was caught having oral sex in public at a party, the film business often seems a cesspool of bad comportment.

Add to these highly publicized incidents all the accusations that routinely fly back and forth whenever talent agencies steal A-list clients from other agencies or when the latest hit movie results in a lawsuit accusing some studio of ripping off someone else’s idea, and the extent of the ethics swamp becomes readily apparent.

But the Sony marketing controversies and some other recent ethics-related scandals have given Hollywood pause to reflect on how it conducts business.

Last fall, the seven big Hollywood studios were tongue-lashed by an angry Congress after the Federal Trade Commission issued a stinging report giving detailed evidence of how the studios were aggressively marketing R-rated movies to underage children.

Then, earlier this year, two editors and a reporter at the Hollywood Reporter quit because their own publication had initially refused to publish a story detailing allegations that its longtime party columnist, George Christy, was suspected of receiving phony screen credits from a producer so he could improperly qualify for health and pension benefits from the Screen Actors Guild. The publisher later suspended Christy’s column, and Christy said he was voluntarily taking a brief leave of absence.

While other segments of American industry, like Wall Street, where the nation’s largest securities firms recently announced they are setting up ethical guidelines for analysts, and even Congress have been forced to come to grips with ethics in recent years (remember House Speaker Newt Gingrich’s book deal?), the FTC probe put Hollywood on notice that it would have to finally clean up its act.

One reason for the new moralism seeping into Tinseltown, say some Hollywood observers, is that studios today are owned by faceless, risk-averse multinational corporations that take great pains to protect their brand names. Night after night of hearing on CNN or MSNBC about a fake movie critic just isn’t good for business.

“I think the climate is changing in Hollywood because of more mergers and more corporate responsibility,” said Chris Donahue, executive director of Humanitas, which annually bestows awards on films and television programs that portray the dignity of all human beings.

Veteran entertainment attorney Eric Weissmann said if there is a difference between today and the way it used to be, it is that corporate mergers have created a game of musical chairs in the executive suites so that studio bosses keep changing.

“One reason a handshake worked in the past is if you are doing business with somebody for 20 years, you better be straight and he better be straight,” Weissmann said, “but now you do business with somebody and he’s gone tomorrow.”

The twin scandals at Sony have been the talk of the town from lunches at the Grill to post-premiere parties.

When hundreds of Hollywood marketing folks recently gathered at the Wilshire Ebell Theatre in Los Angeles for their annual awards show celebrating the best in studio marketing campaigns, the theater and post-event party were abuzz with chatter about the David Manning scandal at Sony.

Ironically, the evening’s top award was handed out by comedian Rob Schneider, whose film “The Animal” Manning had praised in a newspaper ad. Schneider brought the house down when he suggested some of his own blurbs for the film, like: “The greatest movie ever made!” “The ‘Ben-Hur’ of comedies!” And, “I laughed so hard, I killed eight people!”

Schneider then joked that he was sending the two suspended Sony advertising employees on a two-week cruise. “On their ticket, it says they’re going to Puerto Vallarta when, in reality, they are actually going to be contestants on ‘Survivor 3--The Animal Edition’ on insect-infested Borneo!”

A marketing head at one studio said the FTC probe and the Sony scandal have “shoved people back in line.”

“There is a set of rules,” the executive said. “What you do and don’t do are sort of understood. Most people have a voice inside them saying making up people is wrong.”

In an industry powered by greed, box office, manipulation of public opinion and the art of the deal, it often seems that ethics fall way down the list of priorities. Common perception holds that when you match the words “Hollywood” and “ethics,” you create an oxymoron, but those who have maintained long careers in the industry say Hollywood is more ethical than the stereotypes of the town might hold.

In the old Hollywood, deals were often sealed with handshakes because the town was relatively small and the moguls who green-lighted films often remained on the job for years. Although the new studio chiefs are not as freewheeling as the moguls of an earlier era, personal relationships are still important in doing business, filmmakers say.

“A lot of business is done without paper, without contracts,” said “Pleasantville” director Gary Ross. “In Hollywood, a person’s word is honored a lot more than in many other businesses. Confidences are shared and held, ironically, more than they are in many other businesses.”

Ross noted that in Silicon Valley, for instance, deals are so secretive that the parties are required to sign nondisclosure agreements. “That is never done in Hollywood,” Ross said. “Your ethical reputation here is more important. If you are seen as an abject liar or untrustworthy ... it becomes very hard to do business.”

Producer Brian Grazer, whose films include “Apollo 13” and “Dr. Seuss’ How the Grinch Stole Christmas,” said, “Handshakes and a person’s word are still fundamentally the most important thing” when doing business in Hollywood.

Grazer said that while the manner of doing business is the same, the manner in which people interact is different today. “From the time I started 25 years ago, I found the guys at the top, the rough-and-tough power brokers, would rough you up face-to-face,” Grazer said. “Whereas now, there’s that backslapping thing that goes on, then you could find a dagger in the back.”

In the 1970s, late super-agent and Columbia Pictures President David Begelman became a symbol of Hollywood corruption in an embezzlement scandal that became the basis of David McClintick’s 1982 bestseller, “Indecent Exposure.”

The flamboyant Begelman, who committed suicide in 1995, was at the pinnacle of his power in 1977, when it came to light that he had forged $40,000 worth of checks, including one for $10,000 made out to actor Cliff Robertson, one for $25,000 to Ma Maison restaurateur Pierre Groleau and one for $5,000 to director Martin Ritt.

A decade later, in a case that focused attention on the murky world of studio financing, humorist Art Buchwald and his partner, producer Alain Bernheim, sued Paramount Pictures, claiming the studio failed to give them credit for the original story of Eddie Murphy’s hit movie “Coming to America.” A judge later determined that the film was based on Buchwald’s treatment and that the studio’s net profit formula was essentially unfair. He awarded $150,000 to Buchwald and $750,000 to Bernheim.

Today’s new wave of ethics-related scandals may pale in comparison to Begelman’s misdeeds, but some believe that the FTC probe, the unfolding Christy saga and the bizarre tales emanating from Sony have caused Hollywood to turn another corner. At the very least, they serve as a warning to a new generation that there are still ethical lines in the sand. With the growing corporate climate and studios operating under the watchful gaze of a suspicious press, the rules of the game are changing.

Hollywood chronicler Neal Gabler recalls that Clark Gable once built a new bathroom and paid for other remodeling jobs at the home of newspaper columnist Louella Parsons, all to curry favor with the powerful gossip columnist.

“Back in the old days, a person like Louella Parsons was literally on the payroll of the studios,” Gabler said. “If she wanted to exercise her independence, she could be a terrible nemesis, but they would lavish her with gifts, throw her parties and give her access. It was the same thing with [rival gossip columnist] Hedda Hopper. Walter Winchell even had an office on the 20th Century Fox lot long after he was appearing in their films.”

In some ways, Gabler said, Christy is a throwback to that earlier era.

“Christy is someone who bridges the old culture,” Gabler said. “He is at the tail end of the Hedda Hopper culture and the beginning of the new one. He really got trapped. This way of doing business is endemic to Hollywood and this new ethical, watchdog mentality is not endemic to Hollywood. I think Christy was victimized by it.”

Gabler said that the phony critic controversy at Sony had to cause “some bafflement and some bemusement” around Hollywood because, suddenly, the kind of moral principles and high-mindedness that swirl through the corridors of Congress are being applied to the movie industry.

When Sony issued 30-day suspensions to two of its advertising executives over the incident, Gabler noted, people outside Hollywood probably said to themselves, “Boy, they got off light. A month’s suspension for this transgression is nothing.”

“In the context of Hollywood, however, they didn’t do anything,” Gabler said. “They were just trying to publicize the picture.”

Sony may have hoped the suspensions ended the issue, but barely a week later Daily Variety reported another eyebrow-raising incident involving the studio’s marketing department. In that incident, the studio used two employees in a montage of man-on-the-street interviews waxing enthusiastic about “The Patriot.” In the TV spot, one employee calls the movie a “perfect date movie!” as her ostensible date silently looks on with a faint smile.

A Sony marketing official later defended the use of studio employees in the commercial, saying that the use of actors, real people or employees as spokespeople is not unique to the entertainment business. But rival studio marketing executives said they never heard of employees being used in testimonial ads.

Then last week, Variety reported that Fox Searchlight tried to pass off one of its advertising staffers as a “man-on-the-street” moviegoer in TV ads for its 1998 release “Waking Ned Devine.” In the spot, a Fox Searchlight vice president of creative marketing cheerfully posed with her “date” and jubilantly proclaimed the film “hysterical!”

Jack Valenti, who heads the Motion Picture Assn. of America, contends that when it comes to ethics-related scandals, Hollywood is “no worse than Wall Street, the Congress, banking, insurance, academia, or any other section of this free and loving land.”

What is different, he argued, is that whenever a scandal does surface in Hollywood, it is pounced upon by the news media and given worldwide attention.

“We don’t know what’s going on in academia, we don’t know what’s going on Wall Street, or in the medical profession or in the [legal profession], but everybody knows what’s going on in Hollywood because everyone is interested in Hollywood.”

Chris Pula, former marketing chief at Warner Bros., said that because movies cost vast sums to produce, marketing departments are naturally on edge when films are released.

“If I had to deliver a $135-million movie in one or two weeks with a cast of a thousand bumpkins then I too would probably be on edge,” Pula said.

“I do believe we live in a day and age when you can bring down a movie in the production stage through gossip and innuendo through this bully pulpit called the Web,” Pula added. “You can ruin a movie before it’s wrapped.”

But it isn’t only Hollywood that has ethical lapses. As the Christy story has shown, the media have also come in for its share of lumps.

Meanwhile, there’s Connecticut-based radio personality Jeff Craig, whose film reviews are heard on a nationally syndicated program called “Sixty Second Preview.” Craig’s reviews are often printed in newspaper movie ads, but sources close to Craig acknowledge that he has a staff of critics who regularly supply him with reviews that he reads over the air under his name. Craig failed to respond to repeated requests for an interview.

Michael Josephson, founder and president of the Joseph & Edna Josephson Institute of Ethics in Marina del Rey, believes Hollywood only wounds itself with its diminished expectations of ethical behavior.

“I don’t know why it is, but I think there is a suspension of the normal rules of morality [in the entertainment industry],” he said. A fake critic here, a George Christy there may be little instances, Josephson said, but they are nonetheless “distressing, disgusting and unsurprising.”

Although recent events have compelled Hollywood to pay more attention to ethics, Gabler doubts the town can change all that much.

“Nobody is ever going to tame Hollywood,” Gabler said. “You tame Hollywood, you kill it. Every generation complains about Hollywood becoming more routinized ....You’re talking about a way of doing business. The rules almost never hold no matter what you try to do. Even guys who come in and try to take over the industry like Rupert Murdoch and Sumner Redstone are of the old [entrepreneurial] school. They aren’t like most modern business executives.

“Hollywood may be the anachronism--an old, old way of doing business that no one does anymore.”