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Patrick Goldstein and James Rainey
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Is Hollywood always in panic mode? Ari Emanuel's history lesson

November 2, 2009 |  6:11 pm

If you've been reading the gloom and doom stories in the press lately, you know that Hollywood is going through its fair share of belt tightening. Unsure about future profits, studios have been cutting back on everything including movie production budgets, A-list stars' first-dollar gross deals and perk packages, as well as movie premieres, screenwriter salaries and -- oh, yes -- newspaper advertising.

It's all been a big bummer, especially for the town's talent agents, who have had to weather a thousand-and-one grumpy phone calls from top actors and filmmakers unhappy about seeing their once-reliable salary quotes being tossed out the window.

Life It's nervous time for talent, especially with the studios crowing that most of their biggest hits this year ("The Hangover," "Star Trek," "Transformers") have come without the presence of any big-name above-the-line talent.

But guess what? This ain't the first time that Hollywood has tried to get tough and dump all that expensive talent baggage. That's the message that WME boss Ari Emanuel delivered to his troops recently, sending out to all his agents a copy of a 1970 Life magazine that detailed Paramount Pictures' efforts to revamp its business by jettisoning most of its costly star talent.

Even though 1969 was a banner year for movies, seeing the release of such groundbreaking films as "Midnight Cowboy," "Easy Rider," "The Wild Bunch" and "Butch Cassidy and the Sundance Kid," to name just a few, it was a lousy year for the studio bottom line. In the fall of 1969, Paramount had laid off 150 employees. As Life pointed out in its story, at the same time as Paramount was cutting overhead and writing down its production losses, Warner Bros. had $59 million in losses, MGM had $53 million in losses and Fox had $67 million in losses, all in an era where a million really meant a million.

Paramount's parent company, Gulf + Western, which had acquired the studio in 1966, was run by the mercurial Charles Bluhdorn, a brilliant financier with big, square Chiclet-like teeth who had such large holdings in the Dominican Republic that he had his own private landing strip for his Gulfstream jet. Always willing to push the limits in search of a killer deal -- he was under investigation by the SEC for much of the 1970s -- Bluhdorn had little patience for the vagaries of the movie business. When films would lose money, he'd pound the table, bellowing in a guttural Austrian accent: "While we've been sitting here, I made more [expletive] money on sugar than Paramount made all year!"

You can imagine any number of top GE executives saying the same thing about Universal Pictures this year, if you simply replaced sugar with light bulbs or jet engines. Forty years ago, people were just as frustrated by the excess and unpredictability of the movie business as they are today. Emanuel wouldn't get on the phone with me to explain exactly why he focused on this Life story, but one of his agents, who sent it along to me, said that Ari's point was simple enough: Don't overreact to the current studio cost-cutting frenzy. As this story makes all too clear, the more things change, the more things stay the same. Studios always think they can make the movie business into a more rational enterprise, but that's a bean-counter fantasy. Making movies will always require a leap of faith.

It's almost comical reading Bluhdorn grouse about his economic woes, knowing that he was voicing the exact same complaints echoed by the overlords of News Corp., Viacom, GE and Time Warner today. All you have to do is add a zero and his beefs are in perfect sync with today's studio's economic grumbling. "This paying stars $1 million against 10% of the gross -- paying directors $500,000 -- that's nothing less than insanity," he told Life. "You see, to recoup you must take in $3 million at the box office for every million up front. And for these expensive movies, the odds against recouping are enormous."

Just as today's studio chiefs think that they can now make "Transformers" and "Hangover"-style hits without movie stars, Bluhdorn was convinced that high-priced talent was superfluous. "You get from these big stars a document of conditions of how many hours they'll work, what they'll do and won't do.... Well, who needs them? With today's young audiences, names won't sell a picture anymore. A great script and a devoted director -- that's what makes things happen."

Substitute "special effects" for "script" and you could easily slip those words into any of today's studio bosses' mouths. So why didn't cost-cutting formulas take hold? Why did Bluhdorn's resolve weaken? Will the same thing happen today? Keep reading:

Despite the similarities between today and 1969, it's important to recognize that Hollywood was a very different place at the end of the 1960s. As late as 1965, the original moguls were still in control of most of the studios, but they were fading old men who no longer had any feel for the emerging youth culture. Jack Warner loathed "Bonnie and Clyde." If it wasn't for Warren Beatty's sheer persistence, the studio would've buried it. When Bluhdorn brought Robert Evans in as a production exec in the late '60s, he told him, "The Paramount [dolt] in charge now is 90 years old. He saw 'Alfie' and he couldn't even hear it."

The studios didn't have all the ancillary revenue streams they have today -- they largely lived or died by the theatrical performance of their films. But they lost money the same way people lose money today -- by trying to do knockoffs of past successes instead of embracing something new. Even though 1969 was a heady year of creative breakthroughs, the studios were still reeling from the failures of the mid-'60s when, encouraged by the huge success of musicals like "My Fair Lady," "Mary Poppins" and "The Sound of Music," they nearly went broke producing such epic failures as "Dr. Dolittle," "Paint Your Wagon" and "Hello, Dolly!"

Dickzanuck "Musicals were the tentpole movies of their day and everyone thought that if one was a hit that you could just churn out more of them and rake in the money," recalls Dick Zanuck, still one of the industry's top producers, who was head of production at Fox for most of the '60s. Fox had nearly been bankrupted by "Cleopatra," a disastrous 1963 flop that audiences spurned, despite the presence of Elizabeth Taylor and Richard Burton, two of the biggest stars of the day.

Zanuck says Fox was so broke when he arrived in the early '60s that "we had to close the studio for four months. Most of the employees were laid off, the commissary was shut down." By the late '60s, most rival studios were in just as poor condition. When Francis Ford Coppola was making "The Rain People," one of his first films, at Warner Bros. in the late '60s, he recalled being amazed by how empty the back lot was. "It was like a ghost town," he told me years afterward.

What finally got the studios back in business, as the '60s ended and the '70s began, was something in short supply today -- a willingness to take risks on new filmmakers and adventuresome material. Bluhdorn was ridiculed for hiring the handsome young Evans -- a man with dazzling white teeth and a permanent tan -- to run Paramount. Evans had so little experience, having come from the shmatte business, that the town assumed that Evans was sleeping with either Bluhdorn or his wife, Yvette, who'd recommended Evans to her husband as executive material since he was such a "gorgeous" guy.

Evans was colorful and erratic -- he certainly wasn't like the cautious, buttoned-down marketing execs that get the call to run studios today. But he had a keen eye for talent. By the mid-1970s, relying on Evans' often spontaneous creative hunches, Paramount had enjoyed one of the most remarkable runs in the annals of the business, releasing such cinematic gems as "The Godfather" and its sequel,  as well as "Serpico," "The Conversation," "Chinatown," "Nashville" and "Paper Moon."

The best movies, with rare exceptions, weren't the most expensive ones. They certainly weren't the films that tested well with research audiences. They weren't remakes. They were diamonds in the rough, made fast and cheap by talent with something to prove. One of the most profitable movies Zanuck made at Fox was a war film with two little-known newcomers and a director who'd been laboring for years in obscurity, doing episodic TV. It was called "MASH."

To Zanuck, it was as unlikely a hit as last year's breakthrough "Slumdog Millionaire." "It was just a hunch," he recalls. "I loved the script, by Ring Lardner Jr., but all sorts of well-known directors turned it down. No one had heard of Robert Altman at all -- he was still shooting 'Combat' TV episodes. But it only cost $1.5 million and it felt fresh."

Zanuck refused to spend a penny more. All the war-zone scenes were filmed at Fox's studio ranch in Malibu Canyon. When Altman initially insisted that the film, for authenticity purposes, had to be shot in Korea, Zanuck found a bunch of pictures of rural Korea and a bunch of pictures of Fox's ranch. "I told him if he could tell which was which, he could go to Korea, but he couldn't tell the difference," Zanuck recalls. "So he had to stay here. When he needed to shoot the golf scenes [set] in Japan, I told him to put a couple of caddies in kimonos and shoot it across the street [from Fox] at Rancho Park."

If Ari really wants to buck up his troops, he should have Zanuck stop by the agency and tell some more "MASH" stories, which only serve to remind us that hit movies don't come off a sequel assembly line. Hit movies are born out of ingenuity and raw creativity. The studio bosses can try, as they are today and as they did 40 years ago, to slash costs and squeeze blood from a turnip. But if they rely on retreads instead of embracing originality, they will find themselves with a new generation of "Cleopatras" and "Dr. Dolittles" on their hands.

" 'MASH' worked for the same reason that 'Slumdog Millionaire' or 'Juno' or 'The Hangover" worked today; it was irreverent, inexpensive and it was in sync with the culture," says Zanuck. "It was a discovery and I've been around long enough to know that if there's anything audiences love, it's to discover something new."

Photo of Dick Zanuck by Lori Shepler / Los Angeles Times.

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