Hard times for Hollywood, just not at the box office

While the rest of the country has endured job losses and pay cuts, Hollywood box office has soared.

Many in the industry will proudly tell you, “The movie business is recession-proof.” And if you measured by box office alone, that might be true.

But Hollywood is cutting corners like everybody else.

For one, media conglomerate ownership of the big studios has meant countless layoffs in recent months—if Sony electronics sales are down, someone over at Sony Pictures could get the boot. The Wall Street hedge funds that once watered the Hollywood well with hundreds-of-millions in financing have all but dried up. And once flush studios such as Steven Spielberg’s DreamWorks are teetering on the brink (even after he was swindled by Bernie Madoff, Mr. Spielberg forked over as much as $13 million to keep DreamWorks afloat). So while Hollywood-in-recession appears unchanged—we’re still going to the movies, and every agent in town still drives a Mercedes Benz—there is quiet talk of Obama-style regime change among the industry’s elite. Or at the very least, some serious restructuring in the way Hollywood does business.

From the New York Times:

After riding two decades of almost nonstop growth from the cable and video revolutions, a new generation of Hollywood power players is finally being forced to test its mettle.

These executives — consummate insiders who enlisted when young and worked their way up — now find themselves pushing 50 just as some brutal problems are pushing back: a collapse in DVD sales, a credit crisis that has curtailed financing for new movies, a group of corporate owners determined to pull more profits from studios to compensate for hard-hit publishing and broadcast television divisions.

“These folks were born from a place where they knew no failure — all they could ever see was up, both for the business and their careers,” said Peter Guber, a former chairman of Sony Pictures who is now a producer and industry elder statesman. “Now they must confront the unsettling truth that failure is close at hand and that it’s on their backs to make sure that doesn’t happen.” 

Inevitably, the sudden shift has set off soul-searching among the loose network of allies and adversaries who must rewire the industry in the short span before a next Hollywoodgeneration comes along to replace them. They are tightening belts, lowering expectations and becoming occasionally more cutthroat, but also grappling with some unusually philosophic thoughts about a business for which they now have to fight.

“People are living in fear, and sometimes it manifests itself in bad behavior,” said Mr. Shmuger, 50, who started in the business during college as a freelance copywriter for movie posters, and who spoke recently of the general climate, not of a specific incident.

“Darwinian” is one word Patrick Whitesell, a partner at the Endeavor talent agency, uses to describe the current landscape, while Chris Silbermann, president of International Creative Management, calls it “disorganized.” Both agreed that people who were formerly able to succeed by clinging to mediocrity suddenly find themselves without cover.

“Everybody has to dig deeper than they ever have,” said Mr. Whitesell, who came up in television and now represents such stars as Christian Bale and Shia LaBeouf. “That means more creative deal-making, more complete understanding of the economics of the industry, more hard-edged business decisions.”

Mr. Silbermann said: “The only way to survive is to get beyond the knee-jerk resistance to change. What’s scary is that a lot of people in the movie business aren’t admitting that to themselves yet.”

My favorite part of the story is when the Times notes how many hotshots refused to talk to them. I’m continually baffled by the fact that people in Hollywood are press shy. I really hope my editors see this so they know I’m not making it up when I say, “Nobody will talk to me!”

A number of executives and agents declined to be interviewed for this article, citing concerns about competitors or corporate overseers. Among those who preferred not to speak were Richard Lovett, 48, and Bryan Lourd, 49, both of whom are managing partners at the Creative Artists Agency; Rob Moore, 46, the vice chairman of the Viacom-owned Paramount under Brad Grey, who turns 52 this year; and Jeffrey Robinov, the 50-year-old president of the Warner Brothers Pictures Group, which is owned by Time Warner.