The Land of Finke ...

COLUMN TWO  An incomprehensible mishmash of other reporter’s stories, leading to her assessment that Sony had finally gotten it right with this summer’s group of “tentpole” movies.  (Uh, Nikki, “tentpoles” aren’t tentpoles anymore… “franchise” or “event.”)  The slightest effort at research would have reminded Finke that Mark Canton’s record-breaking slate of Summer1997 movies was presided over by John Calley, not Canton, and that Godzilla was the last major release from Canton’s regime.  Calley did give it the ultimate greenlight, but that was just months after his arrival and that deal was the key to bringing the Devlin/Emmerich team to Sony from Fox, which was initiated by Canton.  Of the many mistakes that Calley has made during his five year tenure at Sony, Godzilla should be deeply discounted.  In fact, I would say the passive release of Godzilla 2000 was a bigger mistake than greenlighting the hottest filmmaking team in Hollywood at the time.  Stuart Little 2 cost more to make than Godzilla and the “got it right” film will gross less than half of what Godzilla grossed.

COLUMN THREE.  Finke’s cockeyed screed about exhibition versus the studios.  There wasn’t much bile in this piece, but as an apparent neophyte to the issues of exhibition, Finke went off on the many tangents that have been bandied about and dropped over the years.  As usual, she hits some important notes.  But she skates over the only two important issues:

1) Digital projection is still too expensive and studios are likely to receive a greater benefit than the exhibitors, so who pays the bill?  Anschutz’s access to the wires on which to deliver digital cinema is one of the great non-issues in the history of man. 

2) The power of Anschutz and the other handful of mega-players in exhibition does make it easier for them to battle for changes in the percentage returned to studios.  However, the reason for this battle is not that robber barons have gotten into the exhibition business.  The reason is that the near four-walling-without-paying deals made for the biggest blockbusters  (90/10 split in the initial weeks, to the studio side), starting with Jurassic Park, has become the near standard during the summer and holiday movie seasons and has brought up the percentages on the mid-range movies as well.  Once the studios got their foot in the door, they started taking advantage on a different track, doing everything they could to front-load the box office and getting the vast majority of their money in before their exhibition deals gave higher percentages to the theater owners. 

Theater owners wouldn’t mind making all of their money on concessions if every weekend was opening weekend.  Where they are getting killed is on Weekend Three of Goldmember (for example), down to $1250 per screen each weekend day, while they are still paying New Line at least 80 percent.  The exhibitor is earning about 60 percent less per screen than they made just two weekends before.  By the time they get to 70/30 or 60/40, the film is gone, heading to video. 

It is much like CDs costing more than tapes or records when they arrived because the market was so small that people were willing to pay a premium.  When CDs became the standard and the costs became lower than tape or records, the labels didn’t drop the price.  They spent all that profit like drunken sailors and made it possible for otherwise law-abiding citizens to feel comfortable stealing music via Napster or other sites.  After all, they were robbing us, so what’s wrong with a little payback? 

The biggest difference between the music business and the movie business is that the studio system hasn’t gotten the benefit of their increased revenue to the degree the record business did in their heyday.  Instead of being thrilled to be getting more income out of their releases and allowing them to play, the studios got greedier and started chasing the opening weekend even harder. 

When Jurassic Park hit, it ran for eight months or so in second run.  That was less than 10 years ago.  Theaters were making good money on concessions and their percentage deals meant that they were making about as much for each ticket sold in second-run as they made in first-run.  That cash cow has been killed by the four-six month video/DVD window. 

The irony, however, is that the studios have become like the dog chasing its own tail.  Squeezing a bigger percentage of the gross out of the first three weekends of every film means increased marketing costs.  Increased marketing costs for the bigger movies means increased marketing costs for the smaller movies…. which means even greater marketing costs for the bigger movies… and so on and so on and so on. 

The exhibitors are dragged into this too.  Now that the ticket prices in the Top 50 markets are increasing annually, moviegoers are becoming less inclined to pay exorbitant prices for concessions.  When it cost $28 to get your family of four into the movies, another $20 in concessions didn’t hurt so much.  When you are paying $40 to see the opening weekend of Attack of the Clones, another $25 is beginning to piss you off.  Worse, these ticket price increases are having only a marginal effect on the exhibitor’s bottom line. 

My point is, Phillip Anschutz’s big shadow is not the greatest concern of this industry.  He may be the straw to the studio camel’s back.  But the need for change comes because the system has become viral.  We are now in a business where content is secondary to distribution… and all the digital cameras and projectors in the world is not going to change that. 

Unfortunately, the history of this business tells us that only one thing brings major changes in short periods of time… disaster.  One studio has well spent over $800 million releasing six films this summer.  They will survive the choice because one of the films will make over $400 million in profits.  But some other studio will emulate this summer and end up bankrupting themselves. 

COLUMN FOUR.  Steve Ross to Jerry Levin are “polished con artists,” but Bob Pittman, who helped sell Time-Warner some beans on the way to the fair that wouldn’t turn into a beanstalk is the “fall guy.”   Steve Ross was a slickster, no doubt.  But he built an empire the way empires used to be built… from garbage to greatness.  I don’t know why she’s using the same brush to paint Jerry Levin.  He made one huge mistake… he got in bed with AOL.  And now, he is gone.  Buh-bye.  But where was Levin’s con?  And where was his hucksterism? 

Finke goes on to use a rather bizarre “glass half full” analogy, which seems to be trying to take the onus off of the fact that AOL was a already a shell of a company when Pittman and Steve Case used an inflated stock price to take over Time-Warner.  (Levin’s folly was buying their hype.)  She also seems to be completely unaware that the problems with the ad market are 18 months old and that ad market problems alone would not drop AOL/T-W with the thud that has now occurred.  The reason Pittman is out is that the Time-Warner people HATE the AOL people and that AOL dragging down Time-Warner’s stock price opened the door for his well-earned departure.  The problem with AOL wasn’t the ad market… it was that it is a company in extreme decline, now spending more to keep it’s industry leadership than it is making as an industry leader and falling behind technologically every single month.

But Finke isn’t done with the insult parade.  Edgar Bronfman Jr. is a “rich idiot.”  And God knows, this column hasn’t been a source of support for his choices.  But Finke seems to be implicating that something more was going on there than a guy making a bad choice of buyer for his company. 

Michael Eisner and his “henchman,” Bob Iger, should be in jail by Finke’s standards.  She is hardly the only Eisner detractor these days.  Of course, the key to this, as all things Disney are for Nikki Finke, is the Pooh lawsuit.  Ms. Finke doesn’t disclose her pending lawsuit with Disney over Pooh until two paragraphs later, where she offers: “Full disclosure: I am in a legal dispute with Disney and News Corp.” 

How do the editors of the L.A. Weekly allow Ms. Finke to continue to write about and aggressively defame Michael Eisner when she is in the midst of a lawsuit against the company… particularly when the issues behind the suit speak specifically to Disney’s contention that Ms. Finke has a predisposition to overstate the facts in the Pooh situation?  Isn’t this the place when the editors say, “Nikki, you can write about anything but Disney and Fox, particularly when you are opining about the character of their leaders… WHO YOU ARE SUING!!!!” 

Of course, Steve Bornstein was “Disney's designated fall guy for the dumped Go.com,”  It wasn’t that Go.com was an ill-conceived mess that was only a little messier than Time-Warner’s Pathfinder disaster.  No.  Once Eisner made the mistake of buying Infoseek, no one else at Disney had any responsibility for over-estimating the short-term potential of the internet.  Nah.  It’s all about Mike. 

Apparently, the only people to blame for the internet bubble and its burst were the corporate suckers who bought in.  The guys who sold the smoke are the victims.  Have I got that right?

Sumner Redstone and Mel Karmazin are both going to Finke exile for daring to take home  “obscene $15 million paychecks in 2001.”   Indeed, both men got $12 million bonuses in 2001… which were less than their $15 million bonuses in 2000… and way more than Redstone’s salary and bonus of $0 in 1999.   There were increases in both revenue and operating income in 2000 and 2001, which is how bonuses are determined in most companies.  And they got them.  But those are just details.

Finally, Rupert Murdoch gets smacked for daring to plan on giving power of his empire to his son.  How outrageous!  How unusual!  The guy who owns 25 percent of the company he built wants to leave his son in charge.  Couldn’t Finke come up with a better argument against her legal nemesis than this?   Guess not. Things are going so well at News Corp that even the SEC seems to be doing the company’s bidding.  So Finke finds the only vulnerability… the future. 

COLUMN FIVE.  The animal column.  She thinks some snakes may have been thrown around too aggressively on Fear Factor.   Someone ate something on Survivor.  Pooh is not mentioned.  ZZZZzzzzzzzz.

COLUMN SIX. Be vewy quiet… Nikki’s hunting Eisner…

Once again, the editors at the L.A. Weekly look the other way as Ms. Finke chases one of her favorite ghosts.  As usual, Finke looks for ways to embarrass her tormentor, all the while doing her best to accuse anyone who isn’t pillorying Eisner of cronyism and suggesting that she is not a crony of those who would be happy to see Eisner fall. 

Finke gets it right when she suggests, “when it comes to Disney, all bets are off now that the company is in the crapper.”  Yes, the failure of others make small men (and women) quite brave. 

Which is not to say that I am a supporter of Eisner’s post-Katzenberg run at Disney.  As I have written before, his board has done Eisner and their stockholders a disservice by not forcing him to deal with a significantly more independent infrastructure beneath him.  But piling on it not attractive.  Or necessary.  Particularly when everyone knows how much you hate your target.

One of Finke’s specialties is to embarrass people with small comments and awkward moments that would be assumed to be off-the-record by most journalists not looking to grind an axe.  In this story, we get a snide comment from a financial analyst and some sniggering that goes with it.  We get the New York Times, which is now apparently in charge of Disney and Eisner’s career.  (“The New York Times has given Eisner an expiration date.”)  There are silly rumors that Jeff Katzenberg is heading back to Disney to take over for Eisner.  There is, of course, Pooh, which Finke turns into the loss of the entire franchise and not just money at every opportunity.  And we get the Shanghai/Hong Kong Disney duo… which has yet to emerge as a major problem.

Finke does point out “dismal earnings, two credit-rating firms threatened to downgrade Disney's debt, and Disney stock fell to an eight-year low.”  Dear God!  Legitimate issues!!!

But they only get a sentence.  The really important event was Daniel Gross’ column on Eisner on Slate.  Remember, the media is far more important than the stockholders, the board or even the CEO.  Disney’s reliance on The New York Times and Slate is showing.  My oh my!  It’s a good thing that Finke takes a swipe at the Wall Street Journal’s Bruce Orwall, a real reporter who actually reports facts and does analysis without name-calling.  Maybe Nikki should organize an 800-line so “influential entertainment journalists” can call up and vote Eisner off the island.

After a couple of graphs of mockery and sure-handed analysis that this year’s “Eisner is dead” feeding frenzy means something more than a slow August news cycle, Ms. Finke regales us with this: “IN THE LAST DAY OR SO, TIPSTERS HAVE phoned influential entertainment journalists detailing a laundry list of Eisner errors…”

Okay, Journalism 101 time.  What question do you ask when someone calls you and offers a laundry list of someone else’s errors?  “Why?”  You ask, “Why?”  Did it occur to Finke that “influential entertainment journalists” are actually “writers who are willing to spread the bad word without questioning the motivations behind the effort?”   I guess not.  She just prints the list.

There is one legit beef on the list.  Disney did grossly overpay for Fox Family Channel.  The value of IFC/Bravo is more a question mark than a giant “X” on Eisner’s forehead.  But the rest of the list tends towards the petty, old and out of context.

I don’t know how and when Disney allegedly passed on Harry Potter, but I know that Lord of the Rings was Harvey Weinstein’s deal and Harvey wanted one movie (I guess, to rule them all).  Eisner’s fingerprints are not on the move to New Line… at least not according to Peter Jackson… but I’m sure that he’s just been brainwashed by Evil Mike.

There is no evidence that the Columbia production of Peter Pan will fly successfully and uh, Nikki, Miramax has a version of Pinocchio coming out in December.  Does the company need another?

Passing on CSI, Felicity and The Weakest Link… she’s kidding right?  Tell me she’s kidding.  Besides the reality that ANY company could make a longer list than this of the passes that paid off elsewhere, did someone mention to Finke that Felicity didn’t make it to Year Five… and that the show only had to do WB level numbers? 

And yeah… everyone saw The Sixth Sense coming.  We definitely need to beat him up for that.  After all, Disney only saw a few hundred million in profits from that film.  I can’t believe that Nikki didn’t take the chance to shred Rupert Murdoch for splitting Titanic.  What a moron!  His company only made a billion or so on that film.  And about that cheapskate Sixth Sense Oscar campaign… the horror!  A summer movie without a massive Oscar push!  It’s not as though DreamWorks generated all of $6 million during its Oscar run for Gladiator or that Moulin Rouge added less that $1 million during its Oscar run.  Damn that Eisner… thinking that $275 million was enough without wasting $20 million on an Oscar campaign!  And another wasted opportunity to attack Fox, which didn’t go hog wild pushing Cast Away, content with its $233 million domestic run and no gold.  Oh, but then Finke might have to criticize her friends at DreamWorks, who split the movie with Fox and only got foreign.  Tsk, tsk.

Finke saves her best for last.  Back to her opening graph and Disney’s troubles with Pixar.  I agree with Nikki.  It is unlikely that Pixar will stay with Disney after their contract expires.  But again, without apologizing for Eisner, this kind of break-up happens all the time.  When Devlin & Emmerich left Fox for Sony because of personal conflicts with Bill Mechanic, did Fox win or lose?  When Arnie Koppelson left WB for Fox, who won?  Imagine stayed at Universal, as did DreamWorks.  Rudin stayed at Paramount.  Silver at Warner Bros.  Fox gave big bucks to keep Tom Sherak in-house just long enough to get Star Wars and then they did wrong by him (at least in his perception) and he left.  This is the nature of the beast.  All that Fox has gotten out of Jim Cameron’s deal since Titanic is a cancelled TV show and half of Soderbergh’s Solaris.  Will losing Pixar hurt Disney?  Absolutely.  Is it more than business as usual?  Nah.