It has been more than 70 years since the failed vaudeville performer Walter Winchell invented modern celebrity journalism with his movie gossip column in the
New York Evening Graphic. And yet, for those working on the studio lots of Los Angeles today, Winchell’s motto has probably never rung quite so true: “Hollywood is where they shoot too many pictures . . . and not enough actors.”
We can only imagine how delighted Winchell would have been with Tuesday’s announcement by Sumner Redstone — the 83-year-old chairman of Viacom, which counts Hollywood’s Paramount Pictures among its subsidiaries — that he was putting a metaphorical gun to the head of the most famous actor on the planet: Tom Cruise.
Redstone, who was a code-breaker for the Americans during the Second World War, and once suffered burns to 50 per cent of his body in a Boston hotel fire, was clearly not intimidated by Cruise, in spite of the actor’s status as the fourth most bankable star in history (his films have made a total of $2.7 billion — £1.4 billion — in American box-office ticket sales alone) and as an Operating Thetan Seven in the Church of Scientology. “As much as we like him personally,” deadpanned the Viacom boss, “we thought it was wrong to renew his deal. His recent conduct has not been acceptable to Paramount.”
Paramount’s dumping of Cruise didn’t come as a surprise to everyone. According to Hollywood insiders, a celebrity apocalypse of this magnitude has been a long time coming — and would have happened even if Cruise hadn’t used Oprah Winfrey’s sofa as a trampoline, lost his temper during an interview about Brooke Shields’s medication, or fathered the baby of Katie Holmes. Directors, producers and screenwriters alike say that actors have become so grotesquely overpaid in relation to the profitability of modern films that something radical had to be done to change the balance of power. How, they ask, could Cruise expect to keep his Paramount retainer of up to $10 million a year — to cover “overheads” such as office rent, jet fuel and salaries for his most trusted aides — at a time when studios can barely cover their marketing bills? (In sharp contrast to Cruise’s production deal with Paramount, Brad Pitt’s company, Plan B, reportedly gets “only” $2 million a year from the same studio, with a $500,000 “discretionary fund” to develop ideas. Cruise’s discretionary fund was about 12 times that size.)
The bad feeling between studios and actors has been building all summer, as panic over invisible profit margins continues to take hold. In June, Paramount halted the production of Believe It or Not, a Jim Carrey project with a budget of $150 million. Then came a leaked memo from Morgan Creek Productions to Lindsay Lohan, the hard-partying actress who was starring in a film called Georgia Rule. “To date, your actions have been discourteous, irresponsible and unprofessional,” said the missive. “ . . . you have acted like a spoilt child.” Days later, Walt Disney cancelled a Mel Gibson TV miniseries after a transcript of the actor’s drunken rant against Jews was published online.
In a business not exactly known for its moral bravery, these have been remarkable developments (“Industry Flirtation With Honesty Puts Stars On Alert” read yesterday’s headline in the Los Angeles Times). As if all this wasn’t bad enough for actors’ reputations, dozens of movie budgets were recently leaked to the Smoking Gun website. One of the 80-page spreadsheets disclosed that Bruce Willis had received $20 million to star in M. Night Shyamalan’s Unbreakable and a $1.5 million package of on-set “extras” including masseuse, mobile gym, trainer, bodyguard and private jet charters.
Meanwhile, the blockbuster movies of 2006 have drawn audiences to the cinema like biological weapons draw commuters to the Tube. From Tom Cruise’s underwelming Mission: Impossible III to Samuel L. Jackson’s Snakes on a Plane (not to mention the virtually star-free Superman Returns and The Poseidon Adventure) business is terrifyingly slow.
And so, from the patio of The Ivy in West Hollywood to the balcony of Barney in Beverly Hills, there is talk of only one thing: the Death of the Movie Star. The theory is this: Hollywood has reached the end of the era that began with Arnold Schwarzenegger, Julia Roberts and Bruce Willis. The public is more fickle; a big star doesn’t mean a big hit any more. Perhaps Cruise was the final living example of a species that is now — thanks to Redstone and Paramount — extinct.
To prove this theory, I called the Malibu home of an A-List Hollywood director, who — by chance — happened to be firing an actor from a project because of excessive salary demands (the director did not want to be named). He told me: “This summer has been a great shock to everyone. Movies are becoming a bad business to be in. It’s no secret in Hollywood that Superman Returns needs to make $600 million, maybe $700 million, to break even. That’s not a good business. The problem is that we have this schizophrenia over megastars. Are they artists — or do they want to own the studio? On the one hand, they want to be treated like a person to be worshipped, so that the studio is endlessly handing out money for their every whim and extravagance. On the other hand, they want to walk away with an enormous profit share without having to do anything to keep their own costs down. The people I’m most worried about are the agents: they’re the ones who have to tell their clients, ‘You can’t get that deal any more’.”
The problem is not so much actors’ fees — although these can still reach $20 million — but so-called “first-dollar” revenue sharing agreements. Cruise was the undisputed king of the first-dollar agreement, hence his spectacular $70 million payday for Mission: Impossible II. Put simply, it means the actor takes his or her cut from the gross box-office receipts of a film, before the studio deducts any of its overheads. In Cruise’ s case, his Paramount deal gave him a box-office share of about 20 per cent. This meant he could get rich from a film that actually lost money for Paramount. The problem was summed up by Nina Jacobson, Disney’s production chief, in an interview with the Los Angeles Times: “You can find yourself, under a traditional first-dollar deal, writing huge checks while you are bleeding. It doesn’t seem fair.”
If times were good in the movie industry, all this might not be such an issue. But costs have risen so much faster than revenues over recent years — Variety recently pointed out that it took 90 years for Hollywood to produce its first $100 million film, and less than a decade after that for budgets to more than double again — that some kind of reckoning was inevitable. Said one Los Angeles film executive, who has worked with the likes of Martin Scorsese (he too did not want to be named): “There have to be some adjustments in the system, otherwise no one’s going to make any money — not the producers, not the agents, not any of the people who surround these A-Listers.” The executive pointed out, however, that stars can typically demand such high prices because, without them, financial institutions will not put up any funding: “Take The Da Vinci Code. Could it have been a monster hit without Tom Hanks? Sure. But could it have been financed without Tom Hanks? Not so sure Da Vinci, which has made $752 million globally.” The economics of movie megastardom, however, finally appear to have reached their tipping point: the slightest transgression by an actor now justifies a public dressing down or, better, a Cruise-like dismissal. The only consistently profitable films in Hollywood these days are tiny-budget, no-star horror flicks such as Saw II, which cost $4 million to make and has taken $144 million globally, with essentially no marketing budget.
One of the final straws to many studio chiefs was news that Superman would have to collect more than $600 million in global revenues just to break even (the budget was estimated to be $250 million with marketing costing the same again).
It’s hardly surprising that Hollywood is so obsessed with opening-weekend figures — the first few days of a film’s release, in a market with a diminishing attention span, gives the studio its first and only big chunk of cash to begin repayments on its loans. And studios are relying increasingly on credit from outside sources — private equity firms provide a pool of about $2.7 billion of readily available cash for all the “majors” in Hollywood. This is also how Cruise expects to finance his production company, Cruise/Wagner — which claims that it broke off talks with Paramount a week ago to set up outside financing. If the actor thinks that Redstone is hard to work for, it’ll be interesting to see what he makes of the average Wall Street fund manager.
Ultimately, however, most Hollywood executives believe that actors’ contacts will continue to be renegotiated — or terminated — until they come down. The studios are replacing first-dollar deals with “cash break-even” deals (the actor gets only a percentage of revenues after the overheads are paid), and seem to be trying to get the message out in other ways: those movie budgets were leaked to the Smoking Gun at around the time of the Oscars, when virtually all the films being honoured (Brokeback Mountain, Capote, Crash) were low-budget semi-independents.
As for the way in which Cruise and Paramount parted, opinion is split. “I think they should have handled it a bit better,” says the executive who worked with Scorsese. “Isn’t this a closed-door situation? There’s got to be a better way to fire someone. There’ll be other movie stars in the future, and maybe they’ll look at Paramount and say, ‘My God, I don’t want to end up being treated like Tom Cruise’. Then again, we probably don’t know the real story, do we? Maybe Tom was at Redstone’s house and did something wacky at the dinner table. Who knows?”
In Malibu, at the director’s home, there was a different take on Redstone’s chastisement of Cruise for allegedly ruining the promotion of Mission: Impossible III with his erratic, Scientology-promoting behaviour (Redstone told The Wall Street Journal that Cruise had probably cost the movie $150 million in ticket sales). “I think this trend is very healthy,” said the director. “I don’t know why these very over-privileged people should be spared the criticism that ordinary people have to deal with at home or in the office. Why do they have to be treated like mental and emotional dwarfs? They’re like those losing children who get the same prize as the winning children. How can you correct your behaviour, or improve yourself, if you don’t know why everyone is so f****** angry with you?”
