Valenti Sees Healthy Film Industry

Major movie studios spent significantly less on making movies last year, but used more of the shrinking budget for marketing their films, according to Jack Valenti, president of the Motion Picture Assn. of America. Meanwhile, he noted, movie ticket sales soared to the highest total in more than 40 years.

Valenti said studios spent an average of $78.71 million making and marketing a major film in 2001, 4% less than in 2000. Production expenses averaged $47.7 million, a 13% decrease from 2000 and the most significant cutback in the last 20 years. Valenti attributed the cost cutting to one of the industry’s “periodic fits of cost control” as well as “all sorts of financial innovations.” The production of many movies, he said, have been delayed because they could not stick to their budgets.

Valenti presented his annual address on the movie industry’s financial health Tuesday to the nation’s theater owners at ShoWest, the annual gathering of about 3,000 exhibitors, studio representatives and concession vendors here. Despite a worldwide recession and dire predictions about post-Sept. 11 moviegoing, the movie industry continued to thrive, Valenti’s figures showed.

Intense and increasingly expensive advertising and marketing campaigns were in part responsible for another record-breaking year of box-office receipts and ticket sales, Valenti said. He said the studios spent an average of $31.01 million on marketing a film in 2001, $3.7 million more than the previous year. Raking in $8.41 billion in box-office receipts, 2001 was the “greatest box-office year in film history,” he said.

Good marketing cannot help a poor film, he said, but it can get people in to the first weekend to sample the film, Valenti said. After that, advertising and word of mouth bring in more people.

Theater owners have been hurt by short-running films--exhibitors get the smallest percentage of the gross in the first week of release, with the percentages increasing as the film continues to play. In particular, the exhibitors are not thrilled with the growing trend of advertising campaigns that focus on opening weekend, said John Fithian, president of the National Assn. of Theatre Owners, a trend that was especially apparent last summer when there was a new box-office champion practically every week.

“There is a bizarre tendency for everybody to be focused on the opening weekend. The numbers come out on Sunday night, and everybody is reaching for their Palm Pilot [to see what they are],” Fithian said. He conceded theater owners are also partly responsible for short-running films by having overbuilt new theaters in recent years, with the subsequent increasing demand for new blockbuster films every week. While the number of screens is thinning out now, he said, “We would like to see things change on both sides so movies have legs.”

The theater owners, who rely on sales of candy, soda and popcorn for much of their profits, were interested more in admissions figures than box-office receipts. Those also continued a decade-long rise, reaching 1.5 billion ticket sales, the largest number since 1959, he said. Sales also rose in Japan, the U.K. Germany and France.

The positive figures came as a surprise, Fithian said. After terrorists attacked on Sept. 11, it was widely thought that Americans would turn away from movie theaters, and as Valenti said, “stay home to nurse their raw and abused nerve edges.” Instead, Valenti said, “Going to the movies is the American remedy for the anxieties of daily life.”

Valenti also applauded the entertainment community for its response to the tragedy of Sept. 11. Hollywood’s war efforts include sending cassettes and DVDs to American troops overseas, supporting movie stars who traveled to the war area to be with the troops, producing TV and radio messages to encourage the soldiers and airing TV and radio messages “affirming the nation’s determination.”

In other remarks, Valenti noted the industry had been commended by the Federal Trade Commission for progress on its efforts to ensure that studios weren’t marketing adult-themed movies to minors. He said the MPAA has improved its voluntary system by inserting in newspaper ads and on the Internet “reasons for the rating.” The reasons are also posted on https://www.filmratings.com.

Theater owners are also now making progress in showing appropriately themed trailers, geared to the main attraction, Fithian said. However, he said theater owners still need to improve their efforts at checking IDs at the box office.