Studio Wars

Hollywood, as if caught in a self-reflective time warp, staged a massive retromaneuver in 1986: While on screen the crew of the U.S.S. Enterprise was leaving its heart in 20th Century San Francisco and Peggy Sue was once again losing hers at the high school prom, the movie industry was taking its own detour back to the future. Even Top Gun, the top-grossing movie of the year, with $172,000,000 in its flight plan, played like a high-tech remake of the 1927 silent film Wings, the first Oscar-winning best movie.

But if, at times, everything old seemed new again, there were limits, and it was Atlanta media hypester Ted Turner who stepped beyond the pale when he decreed that 100 classic black-and-white films--from Yankee Doodle Dandy through The Maltese Falcon and Casablanca--would be tarted up via colorization for broadcast on his Turner Broadcasting System. The computerized color coding immediately stirred up Hollywood's most emotional protest in years. Jimmy Stewart, at (concluded on overleaf) a press conference sponsored by the American Film Institute, begged that his 1946 Christmas classic It's a Wonderful Life be seen "the way [director] Frank Capra and [cinematographer] Joe Walker wanted it to be seen."

Steven Spielberg protested, "You can't remake a movie simply by giving it a new paint job, but you can easily destroy one."

And, most eloquently, that lion in winter John Huston reared up from his wheelchair to lament, "It is as though ... our children have been sold into white slavery. They've been brutalized. These poor little creatures have had their teeth knocked out, have been given black eyes, bloody noses. Now they've peroxided their hair."

Turner was unmoved. "The last time I checked, I owned the films that we're in the process of colorizing," he snarled. "I can do whatever I want with them."

In truth, the cause was already lost, for the color of money prevails. Even as the storm raged, the other studios--convinced that their black-and-white libraries would earn more if they could be shown on TV in color--were quietly signing on with the peroxide merchants.

If Turner held the spotlight of criticism, it was not only because he had been first to wield the colorizer's brush. Hollywood had been forced to stand by helplessly as, earlier in the year, he had systematically hacked up Metro-Goldwyn-Mayer, once the grande dame of the studio system, and ridden off into the sunset with the studio's valuable film library in his hip pocket.

Although the sentimentalists lamented MGM's dismemberment, the remaining studio heads were too preoccupied with keeping their own bodies intact to pay much notice. As the shell-shocked MGM/UA sank to the bottom of the list in terms of studio share of 1986 film rentals, Paramount Pictures--enjoying a wealth of hits such as Top Gun, Star Trek IV and the Australian import "Crocodile" Dundee--vaulted to the top, commanding 22 percent of the market. Paramount's victory was all the sweeter given the fact that two years earlier, its successful executive team had splintered: Paramount chairman Barry Diller, breaking with his corporate bosses at Gulf+Western, left to head 20th Century Fox; while the studio's president, Michael Eisner, departed for Disney. Diller's successor, Frank Mancuso, who had come up through the sales ranks, was regarded skeptically, but he confounded his critics by aggressively staging Paramount's blitz. By comparison, Diller has failed to rework his old magic at Fox, where his energies were diverted toward launching the much-ballyhooed "fourth network," the Fox Broadcasting Company. Eisner again summoned his Paramount power to miraculously re-energize Disney, reversing decades of dormancy to jolt the studio into third position on the strength of tough-talking, sexy hits such as Down and Out in Beverly Hills, Ruthless People and The Color of Money. Caught in the squeeze, the normally reliable Warner Bros. dropped from its commanding 1985 share of 18 percent to a second-place 12 percent, just two percentage points above Disney's total.

Meanwhile, the old guard at the remaining studios was in retreat. At Universal Pictures, Frank Price, a proponent of high-gloss, big-budget movies such as Out of Africa, resigned after a disastrous summer: The $38,000,000 Legal Eagles lost its day in court, and the $34,500,000 Howard the Duck executed an inglorious swan dive. At Columbia Pictures, Guy McElwaine, an agent turned studio head, also departed after a series of expensive failures. And industry sources reported that when United Artists'Jerry Weintraub tried to bring his buddy McElwaine aboard, he, too, was shown the door.

The grounding of such Hollywood highfliers reverberated through town, but nowhere did it register more strongly than at the leading talent shop, Creative Artists Agency, where packaging expensive movies is a way of life. They also had trouble with their own clients. Angered that she had been forced into Legal Eagles by her agents, Debra Winger simply walked out on C.A.A.

Similarly, a new regime at Columbia is striking fear into the hearts of the blockbuster deal makers. When the studio's corporate overlords at Coca-Cola chose iconoclastic British producer David Puttnam to succeed McElwaine, the agents groaned audibly, for Puttnam immediately announced his intention to break with profligate business-as-usual practices. Calling astronomical star salaries "crazy," Puttnam vowed to usher in a new era of creative film making coupled with fiscal restraint. Joked one competing studio head, "No one knows what they're doing right now--except for David Puttnam, who's talking as if he knows what everybody should be doing."

After a slow start, the year's box-office revenues rallied and climbed to 3.83 billion dollars, by Variety's count--marking Hollywood's best year since 1984's record-breaking tally of 4.03 billion dollars. But the real news was that revenues from both sales and rentals of video cassettes climbed to an astounding 7.2 billion dollars. Industry lobbyist Jack Valenti continued to complain that the studios themselves were not enjoying a big enough piece of the pie; but elsewhere in Hollywood, producers learned to stop worrying and love the video cassette, since that expanding market was attracting new investors to the game. With the average cost of a studio feature costing about $17,000,000--and another $7,000,000 required for promotion and advertising for each major release--the studios themselves proceeded cautiously, initiating 161 productions. But the burgeoning ranks of independent competitors, taking advantage of the available investment cash, more than compensated as a total of 515 English-language movies went before the cameras, a 56 percent increase over 1985.

It's worth noting that the newly energized independents--now in heated competition with the majors--claimed an impressive 12 percent of the total film rentals in 1986. Even the Oscars gave the indies a boost: Little Island Pictures walked off with two of the top trophies in 1986--William Hurt's best-actor Oscar for Kiss of the Spider Woman and Geraldine Page's best-actress Oscar for The Trip to Bountiful.

The strength of independent production, as dramatized by Oliver Stone's Platoon, suggests a developing marriage of convenience. Stone fought long and hard to mount Platoon, but no Hollywood studio would touch it. Finally, England's Hemdale Films advanced the bulk of the modest $5,600,000 needed to begin filming in the Philippines, with Orion Pictures chipping in the rest and then going on to underwrite a studio release. In effect, Platoon is a studio film that grew out of an independent production. The majors aren't willing to take the risk of developing "difficult" material--the indies can do that more cheaply and efficiently. But they don't have access to the powerful distribution channels controlled by the studios, so they arrange to have their big friends escort their small films into the market place.

This link won't dissolve soon: The studios' domination of the distribution channels is tightening. As increased film production triggered an upswing in theater construction, the studios--though barred from owning theaters directly--were all scrambling in 1986 to buy shares in theater chains. MCA-Universal, for example, joined forces with Cineplex Odeon; Gulf+Western bought up Mann Theaters; Tri-Star Pictures eyed the United Artists circuit and the Loews chain. This, along with the increased focus on video-cassette sales and TV rights, underscores a new reality out in studio-land: Making movies is only half of what Hollywood is about; fully exploiting movies once they are made is now the name of the game.

If that game is being played with an increasing air of frenzy, it's because the competition is more intense than ever, as newcomers such as Cannon and De Laurentiis follow Tri-Star's example and simply incorporate as major studios and start throwing money around. The stakes are high, and heads will roll, or swell, depending on how it all pans out. But that, as they say in Hollywood, is showbiz.