Movie math that adds up to marketing

There was a time when nobody but the topmost studio executives and nerdy number crunchers in back offices knew -- or cared -- about a movie’s opening-weekend grosses. Today, it is an American pastime.

When Arthur D. Murphy, the dean of box office reporting, died Monday, he left a legacy that has exploded far beyond anything he anticipated or wanted.

He was the first to analyze and research studio box office grosses when he worked as a writer for the entertainment trade newspaper Variety. Based on extensive calculation, Murphy created economic indicators and began writing the monthly Variety Box Office Index as a measure of film performance.

But not unlike Dr. Frankenstein’s creation, Murphy’s meticulous analysis of hard numbers has mutated into a wild-horse-race story. More than a source of reliable information, box office grosses are now used as a marketing tool for studios to pump up their movies.

“I think Art would have said he was proud of what he did and it’s too bad that the unwashed masses have corrupted it,” said Phil Barlow, former head of distribution for Disney, who knew Murphy for decades.

A movie’s first weekend today is seen as fueling the domestic box office, the international market and the movie’s ancillary life on TV and in home video formats. The premiere weekend is also often key to determining whether a movie can be launched into a franchise -- not only with sequels, but also with video games, toys and other merchandise.

However, on average, domestic box office accounts for about 40% of the theatrical pie, while the international market brings in the rest. In addition, domestic theatrical box office fuels ancillary markets such as home video, which now accounts for the majority of movie revenue.”When Art was doing it, domestic was the bigger piece of the pie,” said Tom Sherak, a partner at Revolution Studios, who knew Murphy well. “This country is still the engine that drives the box office. International is very important now, but publicity-wise, when you read about something here, good or bad, it has more of an effect than if you read that it did well in the U.K. or France.”

Still, many including Sherak now argue that box office reporting has become a mutant form of what Murphy practiced.

“The public has this association to a winner and so if it’s No. 1, it also becomes a sales tool,” said Bruce Snyder, head of domestic distribution for 20th Century Fox.

The nature of box office reporting, as Murphy had done it, began to change in 1989 with the release of “Batman,” which grossed a then-unprecedented $40 million during its June opening weekend. Variety published a story based on Sunday estimates, and periodically through what turned out to be a record summer for the industry.

But reporting box office based on Sunday estimates did not become a habit until March 30, 1990.

Former Variety reporter Joseph McBride, who had been mentored by Murphy, was watching the surprising Friday and Saturday business of “Teenage Mutant Ninja Turtles.”

“I saw an amazingly long line of kids and parents on Saturday,” he said. “I had reviewed it and was sure that it would be a hit. I called Murf because I knew he would have figures. He said it was an amazing $25-million opening weekend, roughly, and that is what it turned out to be. It doesn’t sound like a lot now, but back then it was a big opening. So I thought, ‘This is news.’ ”

McBride’s story ran on Monday with a banner headline trumpeting the surprise hit. As a result, New Line received several hundred media inquiries that day.

McBride remembers thinking that if he pushed the studios to give him estimates on Sunday, it would deter inflation of official numbers on Monday.

“Everybody in the business knew how films were doing on Friday, so why wait until Tuesday?” said McBride, who has since written several biographies, including one of director Frank Capra.

“It was harder for them to pad the figures on Monday if the estimates had already been reported and if they were really accurate. I felt part of my job was to keep them honest.”

But many studio executives thought reporting the figures on Sunday for publication Monday was simply a bad idea.

“At first I refused,” said Phil Barlow, who was then Disney’s head of distribution. “But then we decided that it was a fait accompli....

“The runs were now coming in wider and wider and we were having a more difficult time getting accurate numbers. We were going to have to totally estimate Sunday numbers. Our concern was accuracy, because we had an absolute mandate from the corporation to be accurate with our grosses.”

Added Sherak: “I was given no choice. We had to do it.”

Murphy also thought it was a bad idea.

“He thought it was jumping the gun,” McBride said. “And in retrospect, I have to say I wonder if this was a good idea. [It] kind of started a monster.”

The problem is that the numbers a studio reports on Sunday mornings are only estimates. The studios take their Friday and Saturday figures, plug in a formula for Sunday and report that as their weekend estimate.

“I think doing the numbers on Sunday morning is insane,” said Snyder, a veteran of the distribution side of the industry. “There is too much guesswork.” Added Sherak, referring to some news media, “They are reporting estimates like they are the real thing.”

Reporting numbers on Sunday also increased the heated competition among studios.

“Immediately disputes started among the different companies,” Barlow said. “People started understanding that those grosses would be on the Sunday-night news. Then the wire services were picking it up and then The Times. Now it became a situation where, for too many companies, the temptation was quite significant to fudge a little bit, and then there was the perfect excuse because these were estimates.”

It wasn’t always this way.

Dan Fellman, head of distribution at Warner Bros., who started in the business in 1964, recalls when the numbers were the private domain of studio bosses and accountants. Before cell phones, computers or hordes of reporters covering entertainment, there was no urgency to reporting the weekend box office.

“Back then, we had these guys sitting in a back room -- wearing green shades and rubber fingertips,” Fellman recalled. “They were human calculators who would put all the grosses in and tally them into one big number. [Then they would] make copies and bring them to the executives themselves and drop it on your desk by noon” Monday.

Now entire companies and Web sites are dedicated to compiling grosses ranging from Nielsen EDI to Exhibitor Relations to boxofficemojo.com, boxofficeguru.com and boxofficeprophets.com. Although it may appear these companies are independent entities, they are not.

All receive the numbers from the studios. Some are even paid by the studios to collect the data.

“The whole thing has become standardized and people report the estimates as if they are hard figures. They don’t even bother reporting the actual figures,” lamented McBride, now an assistant professor at San Francisco State’s cinema school.

The Times publishes a Monday story based on Sunday estimates, then on Tuesday publishes a chart of the actual figures for the weekend. Significant discrepancies are pointed out in text.

The obsession with the box office has also hurt smaller, adult movies which may not make into the weekend’s top five.

“Murf pointed this out to me: All the public cares about are the top five films. And so what happens is a herd effect that people feel they should only go to the biggies and the movies at the top of the list,” McBride said.

“He argued with me for a few months. He didn’t like it at all.” But now, McBride conceded, “the cat’s out of the bag.”