"The next couple of years should be good for the business," says the studio executive, relaxing over a second tumbler of Dewar's in a Manhattan bar.
"But they might be bad for Hollywood," he says.
Good times for "the business." Bad times for Hollywood. That seeming paradox lies at the heart of a new order that appears to be taking hold of the movie industry as the 1980s draw to a close.
After expanding rapidly for a decade, moviedom has plunged into its first serious consolidation since the early 1970s, when audiences contracted, the number of films dropped and financial pressures forced the sale of Columbia Pictures, while pushing MGM, National General, ABC, and CBS out of movie distribution.
Over the next few years, the number of pictures is again expected to drop by one-third or more. That's largely because movie investment money, a cyclical commodity, dried up some months before last year's stock market crash, squeezing many small production companies--and some big ones, like MGM/UA--at a time when costs were rising, and revenue increases from video and pay cable were beginning to level off.
Audiences will now have less to choose from, though many of the weaker films clearly won't be missed. "In the last three or four years, I've seen a lot of movies that should never have been made," says Cary Brokaw, co-founder of Avenue Pictures, and former head of Island Pictures, which released "Kiss of the Spider Woman" and "She's Gotta Have It."
The contraction also could spell serious trouble for theater owners, who expanded rapidly in recent years, and for craftsmen and Hollywood's creative community, which prospered as new film companies bid the price of actors, writers and directors upward in the mid-1980s.
According to many close observers, however, the squeeze could benefit Hollywood's biggest studios, which look forward to a potentially rich period of diminished competition and strong profits at a time when European television markets are opening to U.S. films, and new technologies such as high-definition television or video/audio laser discs promise fresh revenue sources.
"We've entered the beginning of a prolonged period of concentration," says investment banker Roy Furman of Furman Selz, which aggressively backed small firms like Cannon Group and Kings Road Entertainment during Hollywood's recent go-go years. Furman' new gospel: "(Size) will be the principal competitive theme, complemented by international muscle."
Hollywood traditionalists began complaining of a "picture glut" as early as 1983, when it became apparent that new players--notably, Tri-Star Pictures, co-founded by CBS, HBO, and Columbia--intended to bid for premium talent and theater space. Those commodities had been reserved to six established majors (Columbia, Fox, MGM/UA, Paramount, Universal and Warner Bros.), along with Orion Pictures (which never took more than 5% of the box office), and a small, family-oriented Walt Disney movie unit (which had slipped to about 3% market share).
That year, when about 400 pictures were released in the United States, Barry Diller, then chairman of Paramount, told the Wall Street Journal: "In the next three years, the industry will take a nose-dive that will take another two years to get over."
Instead, the bull market in stocks and bonds poured still more money into Hollywood--about $2 billion in 1986 alone. Orion and Disney expanded, and newcomers like Lorimar Motion Pictures, De Laurentiis Entertainment Group and Cannon Group Inc. geared up, forcing the number of films to an apparent peak of roughly 500 this year.
America's movie binge is about to end, however.
Projected film counts are notoriously tricky, because inventories remain high, and distributors increase or decrease release schedules on a moment's notice to take advantage of perceived market changes.
Yet Carolco Pictures President Peter Hoffman is predicting a "dramatic drop, in the 30% range" next year. Similarly, DEG Chairman Stephen Greenwald, whose company filed for bankruptcy protection in August, puts the shrinkage at "more than 20%, but less than 50%," as independent releasing companies like Island, Cannon and others pull in their horns.
Oddly, the number of production starts still appears strong. The trade paper Daily Variety logged 458 English-language movie starts worldwide for the first 10 months, up from 438 for the same period last year. But Greenwald and others say many of those largely low-budget films are funded by the burgeoning European television industry and will never be released to theaters in the United States.
More seriously, a reduction appears likely in "Hollywood" pictures--movies that use mainstream writers, directors and actors and vie for serious attention from audiences and critics.
"Clearly, there will be fewer major films out there. Financing just isn't as readily available as it was," says ex-investment banker Jeffrey Barbakow, who was recently named chairman of MGM/UA Communications Co. after 19 years at Merrill Lynch.
