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What a self-serving and utterly insincere post, regardless of how you try to spin it.

Not sure how it serves me at all, Grady... please educate me.

Well, if only MCN was in the business of hiring interns willing to work for free (with references and industry experience no less)...

There is not a single person working with MCN who doesn't deserve more money or would not be making more money in the journalistic economy of a decade ago... even five years ago. We try to do the right thing. But the opportunity to take advantage of others - and the deperation to find a solution to a serious problem for trained professionals - is growing.

I don't know why Grady thinks so little of me, but it is overwhelming and I am trying to figure out what it means. To "report" on it as though I was not standing right in the middle of it would be dishonest and insincere.

Dave, I think the main issue I have is that your posts frequently have a "me, me, me!" tinge to them, even if you don't realize it. Your website gets more hits than Variety.com, you did this or that video thing first, people will copy your Sundance chart (which, clearly, no one did), etc.

You do the same thing in this article, mentioning what you do for your writers, etc. Yes, I realize that this is YOUR blog and website, but, man, sometimes it's just over-bearing.

Grady, I'm seriously wondering if you are an idiot.

"You do the same thing in this article, mentioning what you do for your writers, etc."

In the industry related post which discusses how various sites deal with decreasing revenues. This isn't about Davind blowing his own pipe or pimping his staff. It's an insight about how one guy deals with the situation. And I, for one, see nothing self-serving about it. I actually found it to be a welcome glimpse at an inner going-ons of a website that has survived more than one major awards season.

It's not like Harry Knowles turning every news story about about a story about himself. If you don't understand the difference than what are you doing here?

Did you miss the rather pointed jab at Nikki Finke too or do I have to point you to it?

David makes pointed jabs at Nikki Finke at any chance he gets (as well he should, by the way!).

I make pointed jabs at Crazy Nikki about one time for every thirty in which they are called for.

I'm not going to defend "me me me" as it seems that you will take that as more self-interest.

And watch for those Festival Sales Charts to start cropping up elsewhere... I wonder whether you will apologize here, publicly, behind your pseudonym, when they do.

If festival sales charts start popping up, David, you should be taking blame, not credit.

David, if Festival Sales charts with odds start showing up elsewhere that have clearly ripped you off, then, sure, I'll apologize on here. (And, yes, I'll continue to use my pseudonym, unfortunately...)

This is kind of a half step away but it's about WB and something that was hinted at previously. I'm gonna ask in the broadest terms to illicit the widest answer, (and hopefully not come across looking like a complete moron) but how do you have a billion dollar film and still have to cut 10% of your workforce?

I know Time Warner stock is down but how could they not have made quarterly earnings? What were the positions? I read something about outsourcing.

What's next for them? Other studios?

Triple Option, I actually asked a friend of mine who has produced movies in the past how the studios are suffering when people are still going to the movies.

The main answer seems to be that overhead/upfront costs are going up on new projects.

I was thinking the SAME thing, Triple Op...and came to the same conclusion Luke just mentioned. It was in response to Scott Mednelson's piece in the Film Threat blog on the cheapening of "Iron Man 2."

But what I said there and will ask here is....why aren't studios getting creative about structuring deals with stars? Like....offer a miniscule backend profit deal or a cut of merchandising?? Rather than go the cheaper route with these huge movies (replacing Howard with Cheadle, hiring half-assed directors for big properties, etc) why not find better ways to make sure people are getting paid?

DP the chart was fun once I realised there was more detail. But it also proved that nearly all the first predictions were kind of simplistic and ultimately redundant. Your initial lineup failed to mention any of the actual hot sellers.

Jeffrey Boam's Doctor,

Just clarifying ... our initial chart, which went up 1/16 (http://moviecitynews.com/festivals/sundance_2009/090116saleschart.html) pegged Brooklyn's Finest, Spread, and The Winning Season, all of which sold during the fest, in the top five.

Guys... you don't seem to pay too much attention to the financial analysis that goes on here week after week, month after month, year after year.

WB owns HALF of TDK... the movie cost, with P&A, about $350 million. Theatrical rentals are about $550 million. WB skims $100 million off the top for distribution and advertising. So that's $100 million split two ways with Legendary.

DVD and ancillaries are maybe another $300 million in profit.

So WB walks away with $300 million from a billion dollar movie (though the distribution does have fixed costs)... very roughly indeed.

Great.

Body of Lies and Speed Racer eat half of that. Shuting down NL and Picturehouse costs the other half. The rest of the year's schedule is borderline profitable (most of the green coming from leftover NL films).

One billion dollar movie does not assure a studio in the pink. Harry Potter protects from dark times. And when you are as otherwise small as NL was, Rings can make everything look great. Until it stops. And a few years later, you are out of business.

Paramount's big year was even less attractive on the balance sheet.

Grosses are as irrelevant to the bottom line as ticket sales. All the income in the world doesn't help if you are spending more than you are taking in.

DVD revenues were eaten by the agents and lawyers of the world... but then the DVD revenue started dropping and the studios were/are still paying out as though that money was still there. And that is why the movie business is spiralling right now. When the correction is settled in, there will be stability again. But with due respect to the many who don't deserve this pain, the studios got massively fat and overly generous and all the math is working against them, big time. And it's not anything that was unforseeable. But greed wears big, fat blinders.

Heat: you have explained the above about three times now. If the SMART folks are not getting it, and my DUMB ass gets the hint. Well... huh... you see how that works.

Nevertheless; the amount of computing power continues to get greater and greater throughout the years. One of these days these overly expensive movies should hopefully cost less thanks to that computer power. Heck. Do not even get me started on the whole ad budgets for these movies. Everyone is broke. There has to be a better way to sell these movies, when everyone is broke.

David Poland ranted: All the income in the world doesn't help if you are spending more than you are taking in.

Yes, believe it or not, I understood this concept when I stopped chewing my crayons long enough to sit up and type the question. Apart from the theatrical rental split and Legendary Picture split, both of which I got, I didn’t know where WB was supposedly hemorrhaging. And more so than in any other up and down year in the life of a corporation.

I guess the respectable question I should’ve asked was how do you have a financial model that even a billion $ baby can’t help you for the short haul? I don’t see how cuts weren’t made long ago. Why haven’t the studios manned up to the agents and lawyers instead of just the writers and actors? Who’s most responsible for things being as torqued as they are? What area is most in need of restructuring?

Thing is, Trip, is that all the studios - Disney the least - are in need of a reconsideration at every level. The infrastructure grew in all areas in the Late VHS/DVD Era and has been excessive for a long time.

The hard part is that when companies feel forced into this instead of really thinking about it, they make cuts that are too deep or misguided in many of the details.

Also, the punchline is that the most expensive elements in the studios are NOT what is being fixed by these job cuts. The cost of buying TV for marketing is about one :30 spot on American Idol to every 5 (or more) mid-range salaries being cut. The cost of production, aside from the star salaries, which are more controllable by doing back end deals, is way out of control, driven by fear and ego, making many should-have-been-profitable movies into losers.

But these elements will be the last to be really addressed because the people on top fear losing the control they thing that those expenditures bring and don't give a rat's ass about the infrastructure of the studios... though they should.

This is also the way things roll with the talent unions.

And the media cuts.

It is all shockingly similar in all these arenas.

David, here's my question,

What would it mean for WB, if TDK didn't defy expectations and was a profitable $650 million dollar (or even less) movie. That's almost 2 times as much as Batman Begins made and would have been seen as success, even compared to Iron Man and the like.

Forgetting the movie's ultimate performance, was that movie a safe gamble for them?

My point is, I don't think there's a studio out there that can afford to expect one movie to outweigh their half or more of their slate (especially if no early signs pointed that it would be a particularly profitable film in the first place).

There's no such thing as a loss leader in this industry so every big budget film is usually something someone somewhere believed would make its money back. That's why Speed Racer hurt. That's why Hellboy 2 was an anomoly and rare demonstration of balls in Hollywood.

But what of TDK?

If The Dark Knight was "just" double the movie that Batman Begins was, it would have been modestly profitable and WB would have had a bad year by most standards.

As I have written before, take away TDK and WB's "super" year looks almost exactly like Fox's "disastrous" year.

Iron Man was another case where the value to Paramount was not nearly what it is perceived to be. $60 million of pure profit is great. But if that’s all your studio made on a $600 million worldwide gross, it’s literally one Love Guru away from being erased.

But more interesting, even Marvel, which made most of the profit on that film, is not all hearts and roses. They took in about $260 million on the theatrical release... which is just about breakeven, given the production cost and P&A costs. So they made, say, $125 million in profit on post-theatrical. Great. And on The Incredible Hulk, they were around $150 million in the hole after worldwide theatrical and probably loss about $50 million in the end. So between two films grossing about $850 million worldwide, the profit for the primary risk taker (about a $500 million investment) was probably around $75 million, all in.

Movies cost too much. Marketing costs too much.

WB did $230 million worldwide on Get Smart. That should have been an absolute cash cow. But with a production cost that is said by everyone (except WB) to have crept over $100, the film will barely make it into the black.

Of the top 20 movies last year, the most profitable films to the distributing studio were likely Mamma Mia! #1, TDK #2, Twilight #3, Sex & The City #4, and High School Musical 3 or Wanted #5.

What do 5 of those 6 films (TDK the exception) have in common? Less than $80 million in production costs.

Truth is, only 3 or 4 or 5 of the Top 30 films (worldwide gross) actually lost money last year. But with DVD still sliding, the same group might have a few more casualties if released this year. But with so much splitting on these films, the amount of profit on the big hits is less for the studios – or non-existent in the 4 films in the Top 20 that are distribution-only deals – than in the “good old days.” As a result, there is less profit to absorb the bigger-than-ever losses on the films that die.

Margins for this business have not been, in the last 20 years, better than 20% on investment in the best years. Nowadays, a great year is 12% on investment. And a bad year can legitimately be a red ink year for a studio.

Obviously, all of these numbers are rough. There may well be an anomaly on a particular film that I don’t know about… something like the licensing cash cow on Cars last year. And I am not taking into account the record sales for HSM3 this year.

But it’s tougher out there than it has been.

When New Line released Return of the King and grossed $1.1 billion worldwide, it had 11 other movies that year and not one of them cost as much as $50m to produce. Warner Bros, after sucking in NL, released 19 this year and 10 of them cost more than $50 million to produce and at least 3, besides TDK, cost over $100 million to produce.

And let’s not fail to point out… New Line, which had that gross and the non-rings frugality just five years ago, is now out of business.

And this year, left to their own devices, they would have spent just over $300 million in production and generated just over $1 billion worldwide in theatrical alone. With P&A, that still would have been profitable only because of post-theatrical, but it would likely have been hundreds of millions.

I've asked this before, but are DVD sales sliding or is it DVD sales growth that's sliding?

DVD sales are sliding. DVD sales of movies have been sliding for 3 years now, with TV series sales keeping DVD sales growth overall going up.

The hump of DVD sales growth pretty much ended last Christmas (2007).

Well now I'm even more confused. Sales growth would have had to peak before sales would have started to slide (i.e. 'the hump' would have been more than 3 years ago) or have my math skills degenerated that much?

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