Why everyone lies about their movie's budget

I was at PEN USA's annual Literary Awards Festival a few weeks ago, having a great time, hobnobbing with all sorts of illustrious writers, when I ran into "There Will Be Blood's" writer-director Paul Thomas Anderson, who was there to accept an award for his film script. A huge fan of his work, I told him how much I'd liked his movie. He nodded and shyly smiled, and I thought he might say something like, "Oh, geez, thanks for the compliment." What he really said was: "In that story you did, you got the budget wrong."

If I actually believed in New Year's resolutions, I'd happily promise to never write about a movie's budget ever again -- all it does is cause pain and misery, both for the press, which is always being spun by studio executives and producers, and for the filmmakers, who are always convinced that clueless reporters and columnists are wildly inflating their movie budgets. (It is safe to say that no one in the history of Hollywood has ever complained about the press underestimating the cost of his or her movie.)

To be fair, Anderson wasn't all that angry. We went on to have a perfectly amiable conversation. But I'm sure he was unhappy, since when I made reference to his budget, which I said was in the vicinity of $45 million, I was making the point that his movie -- a dark, intense historical drama -- cost so much (along with the marketing outlays of Paramount Vantage's Oscar campaign) that it could never possibly make a decent profit.

The problem that journalists have in reporting about movie budgets is that nearly everyone they ask about a movie's budget tends to -- how do I put this nicely -- offer a whopper of an untruth. In other words, shock of all shocks, people in Hollywood lie. The studio chief who made the movie gives you a low-ball number. The head of a rival studio, eager to make a competitor look bad, gives you a wildly inflated number. Most journalists have reported that Baz Luhrmann's recent film, "Australia," cost $130 million. 20th Century Fox insists that it cost less, saying it received a hefty subsidy from the Australian government, knocking $30 or so million off that figure. But every rival studio chief I spoke to about the film said with great authority, as if they'd seen a host of internal Fox documents, that the film cost $170 or $180 or $200 million, just to throw out the three different figures I got from three different executives.

What's a reporter to do? Who tells the biggest whoppers? And how does one reporter use triangulation to figure out the real budget number? Keep reading:

I'm old-fashioned about reporting budget numbers. I like to go to the source. In other words, I try not to report a number unless I've gotten it from a top executive at the studio (or financing company) that made the picture or a producer or some other high-level member of the production team. You'd think this would work out pretty smoothly, but even then, I've discovered that budget numbers are a slippery business.

My colleague John Horn, who is something of an expert on movie budgets, since he is always writing about film profitability, reminded me of the legendary example of funny numbers involving Jeffrey Katzenberg and his DreamWorks Animation films. When "Shrek 2" was being released, Katzenberg (like most studio execs) was eager to make the film look as profitable as possible, so he didn't stop reporters from believing his movie cost a pittance. That's why Newsweek, in 2004, reported that the film's stars Mike Myers, Eddie Murphy and Cameron Diaz "got $10 million each to reprise their characters, which accounted for almost half the film's modest $70 million budget." But after DreamWorks Animation went public, its budget figures suddenly soared dramatically, with the company acknowledging that the original "Shrek" cost closer to $130 million, with its and other DreamWorks sequels costing "15 to 30% higher" than that.

Once burned, twice shy, which is why the showbiz media has a healthy skepticism about budgetary information from studio executives. Sometimes you get the feeling that you could ask five people who worked on a film to tell you the budget -- and you'd get five different answers. When I was writing about the unknown screenwriter who'd penned Clint Eastwood's "Gran Torino" last month, I reported that the movie (co-financed by Warners and Village Roadshow) cost $35 million. Warners immediately called to complain, saying my number was totally wrong. Rob Lorenz, a delightful guy who's one of the producers of the film -- and has worked with Eastwood for years -- asked how I could have possibly gotten such a wrong figure. Actually, I told him, I got the budget figure from Bill Gerber, who -- ahem -- was the other producer of the film, with Lorenz and Eastwood. Since Gerber had once been a head of production at Warners, I figured he knew what he was talking about. Lorenz told me the film cost closer to $25 million, so I amended the figure, saying the film cost "less than $30 million."

This happens all the time. I wrote in a recent post that Sam Mendes' "Revolutionary Road," a Paramount film produced by DreamWorks, cost $45 million. I didn't make up the number -- it's what a top executive at Paramount (which then owned DreamWorks) told me the film cost. As soon as the story ran, Stacey Snider, who runs DreamWorks, e-mailed me to say the film only cost $35 million. It seems unlikely that Paramount would inflate the cost of a film it financed and distributed, since if "Revolutionary Road" fails to find an audience, it will look like an ever bigger flop if it cost $45 million instead of $35 million. But I also trust Snider, who has a better track record than most studio chiefs in offering honest numbers. So what does the movie cost? Let's just say -- that's a work in progress.

As you can see, assessing movie budgets is a skill that relies on instinct as much as actual reporting. Horn uses something akin to triangulation, i.e. the art of measuring from three different points of reference, the epicenter being where those lines intersect. As he puts it: "Ask three people without axes to grind, or reasons to lie, what a movie's budget is, and the average of those numbers can be a close approximation of the film's true cost."

When Horn was reporting on the budget of "The Curious Case of Benjamin Button" for his Word of Mouth column, he asked a few executives "close to Paramount" what the film cost. Two got back to him. One said $175 million. Another said $185 million. Horn ran the lower figure. Even so, the studio complained, saying that while the film's initial budget was in fact $175 million, incentives from Canada and Louisiana -- where much of the film was shot -- reduced the actual cost to $150 million. The Times published a clarification to explain why our original budget number was off the mark.

But right around the time that Paramount was upset that our "Benjamin Button" number was too high, I found myself on the phone with a studio boss who complained that our "Button" number was too low, saying, "You guys are so gullible. That movie cost at least $200 million." I guess that makes us damned if we do, damned if we don't. It makes for a frustrating experience all around. As a baseball junkie, I take pleasure in the sanctity of numbers. You know that at the end of game you can accurately calculate every player's batting average, based solely on his performance. Fudging isn't allowed. If a player's hitting .315, he's hitting .315. If he goes 0-for-4 in the next game, his batting average goes down. No explanation, no exception.

But movie budgets, like everything else about the business, are never black and white. In Hollywood, the numbers are a lot like the truth -- they are always subject to interpretation.   

Photo of Daniel Day-Lewis and Paul Thomas Anderson, right, on the set on "There Will Be Blood" by Melinda Sue Gordon/Paramount Vantage.

Comments

[c]

If the companies are publicly owned don't they have to release how much a movie cost? Just asking.

[Tim1965]

What about prints and advertising (P&A)?? Those numbers are rarely reported, and very usually far off when they are. At one time (before its purchase by Amazon.com), Box Office Mojo was reporting P&A budgets and adding them to the cost of films (which is something only a sensible person would do). Suddenly, after BOM is purchased by IMDB (a subsidiary of Amazon.com), those figures are never reported on BOM any more. (They were never reported on IMDB.)

Even a superb researcher like Peter Biskind can't find good data on P&A costs. At most, Biskind (in "Easy Riders, Raging Bulls" and "Down and Dirty Pictures") can only cite averages.

The problem is that not reporting P&A costs does the public, and the industry, a major disservice. Say "Prince Caspian" costs $140 million to make and rakes in $420 million at the box office. Half of ticket sales stay with the theater owner, and half goes to Disney/Walden -- and suddenly "Prince Caspian" looks like it is a money-maker ($70 million in profit). But if Disney/Walden spent $85 million on P&A, suddenly "Prince Caspian" is a money-loser -- and Disney's decision to end co-production of further Narnia films becomes very, very, verrrrry understandable.

P&A costs are not "add ons" or "not part of the production budget." Yes they are! What would you say if the auto industry decided the price of a car did not include getting that vehicle from Detroit to Los Angeles, or did not include the cost of advertising on this Sunday's football game? You'd say the automaker was cheating, and would go bankrupt if it really didn't do that. (Okay, bad example.)

P&A costs are especially important in an era in which going super-duper-wide is increasingly common for blockbuster films (which desperately rely on taking the #1 spot in box office to keep ticket sales high for the second and third weeks out), and in a time when films are less and less released one country at a time or one region at a time and more and more worldwide. This boosts the "print" part of P&A tremendously, and no one benefits if the costs are hidden or ignored.

And personally, I don't care if Louisiana gives XYZ Movie incentives to film there. Guess what? Foreign pre-sales will also reduce your budgeted costs, too. And licensing fees will as well. And so will expected box office! So why not just toss rationality out the window and start claiming every movie makes a profit right now based on its pre-sales, licensing, expected box office, 100-year cable and broadcast expected revenues, and all that stuff? (Don't worry, Hollywood will start doing that soon, I'm sure.)

[masterpuff theater]

Can we then also triangulate the profits that the studios report are also lies? And when it comes to paying the talent and people associated with the film, can we also extrapolate that they are lying when it comes to paying up? And everyone wonders why SAG wants to strike.

[Annoyed]

Here's an idea...stop reporting budget numbers...this morbid fascination over budgets and box office has killed the movie industry.

[Furious D]

The scary part is that the people might not be lying, that they honestly think films cost these wildly varying numbers because they don't know what's really happening.

Hollywood's business elite believe that the only way they can stay on top is to make everything as complicated as possible, so they can pretend that they are the only ones who can make sense of it all.

The problem is that it's become so complicated that even they cannot make heads or tails of what's happening in their own companies without a team of forensic accountants, lawyers, and a sniffer-hound named "Geetch."

[abhishek]

Fox is the biggest liar....80 million for The day the Earth Stood Still.....Puhlease!!!!! Four Christmases cost that much!(though I don't know why).....May be the special effects are not effects. May be Fox managed to get real aliens land on the earth and filmed them. They used their connections from Star Wars.

[Cadavra]

Who gives a damn what a picture costs, anyway? As Billy Wlider once put it, nobody ever says, "Hey, let's go to the Roxy. They're showing a picture that came in on budget."

[st pooch]

because you know how hollywood does & what kind of people are...

[Growler]

Another reason why budgets are slippery numbers.... It is in the interest of Independent Film Makers to hide their actual budgets for the simple reason that in the rare instance when a film is "bought", a studio/distributor will pay more for a film that cost more to make. Strange but true.

[Ravenwood]

I agree with "Annoyed." Just tell your editor you are no longer going to print the budget of the film - it has no value in terms of discussion other than to get an "Oh, wow... Really? $100 million?" As far as the value of the film, it has little relevance. I've seen micro-budget indies and massive tent-pole summer pics that are equally good and equally bad. So... Who cares?

Skip it.