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In the salary tug of war between studios and talent, it's no contest

Actors and filmmakers are getting less up front. Call it the acceptance phase.


It wasn't so long ago that, after putting in years building up his career, Denzel Washington finally cracked the $20-million star salary club. But now he's taking a sizable pay cut to star in the upcoming 20th Century Fox film "Unstoppable" after the studio threatened to pull the plug on the picture in order to get its costs down.

David Fincher used to make $8 million to $10 million per picture, along with a nice piece of first-dollar gross, as an A-list director. But he's taking considerably less money -- and no first-dollar gross -- to get his new Sony Pictures film, "The Social Network," off the ground.

The same goes for "Dinner for Schmucks" star Steve Carell and director Jay Roach. They may be two of the top comic talents in the business, but the duo aren't getting their usual salary quotes for the upcoming Paramount movie. When Julia Roberts told Disney she wouldn't cut her salary to star in the recent comedy "The Proposal," the studio bailed on Roberts, hiring Sandra Bullock for even less than what it had offered Roberts. The movie turned out to be one of the summer's biggest comedy hits.

What's going on here? In Hollywood, whenever a studio executive would sit down to negotiate with an agent for an actor, writer or filmmaker, one of the first questions volleyed across the table was: What's your client's quote? If you'd written, directed or starred in a big hit, or even enjoyed a couple of modest successes in a row, your quote went up. And unless you ran off to make some nutty labor-of-love indie film where everyone committed suicide in the third act, your salary level was assured. That quote stuck like glue. Even after a few stinkers, a big star could still get their $15- or $20-million fee.

Not anymore. For basically everyone except Will Smith, salary quotes have evaporated, simply vanishing into thin air, as have the much-coveted first-dollar gross deals that top actors and filmmakers used to get. As one successful producer put it: "Quotes and first-dollar gross have just flown out the window -- the studios simply won't make those deals anymore," he explained. "It's all about what the role is worth in that particular movie. The studio pays for the lead actor or actress, but after that, well, the talent is just getting grinded. Everyone else is lucky to be working."

(You'll notice that no one is quoted by name here because, in addition to the natural Hollywood aversion to talking about salaries, the studio chiefs don't want to look like they're gloating about reining in talent costs -- although they often are, gloating that is -- while the agents and managers don't want their clients to think that they've been largely powerless to stop the new austerity measures, for fear that their talent will skedaddle to another agency.)

In Hollywood the new mantra is: "cash break zero." Instead of paying out first-dollar gross, where top talent would start collecting huge wads of cash right off the top from the very first box-office receipts, the studios are now constructing deals where the talent participates in the profits from a film only after the studio has recouped both its production and marketing costs. The new arrangement can still lead to huge windfalls -- in part because the studios are now giving top talent a far bigger piece of the home video take than they could get before. But the talent only reaps the rewards if they are willing to bet on themselves and can deliver a hit.

Just ask Michael Bay, who has boasted that he made $80 million from his share of the box office (and merchandising) from the first "Transformers" film. Director Todd Phillips is also enjoying a lucrative payday from Warners after making "The Hangover," where he gave up a chunk of his up-front salary in return for a bigger piece of the back end. But not every movie is a monster hit. In the new "cash break zero" universe, if a film flops, or simply underperforms, the star isn't walking away with the first batch of money that comes rolling in. If the studio doesn't get to its break-even point, the talent (except for their reduced up-front salary) is walking away empty-handed.

Why did the movie studios finally get tough with talent? And is this really good for the movie business? Bad for talent? Or just a rare sign of fiscal sanity?

In Hollywood, everything revolves around leverage. When the business was flush (and at some point, it will be again), talent had the edge. If one studio wouldn't do a deal, usually someone else surely would. But in lean times, it's the studios who have all the muscle. While some talent reps smell collusion, it's more likely that the talent is being hurt because of the way film budgets are put together. At its most basic, a movie has below-the-line costs and above-the-line costs. Below-the-line costs are basically the actual production expenditures on a film, including special effects, soundstage rentals and crew salaries.

Shift in power

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