is this a new business model?

[ProblemAgain]

there has been some discussion about the movie industry lately and dire predictions of doom and gloom. i'll have to admit i am somewhat perplexed. what the hell is wrong with these people? here is an example....

"Despite achieving huge success with The Avengers and Iron Man 3, Disney failed to learn a crucial lesson from its past failures. Last year, Disney released John Carter, based on a 1912 novel by Tarzan writer Edgar Rice Burroughs. The film cost $250 million to produce but only grossed $282 million worldwide. Disney then followed that disappointing film up with this year’s The Lone Ranger, which cost $225 million but has only generated $147.5 million in global box office sales to date.

Both films were unsuccessful, desperate attempts at launching a new franchise to follow up The Pirates of the Caribbean, which generated a combined a $4.7 billion in revenue over the course of four films between 2003 and 2011."

now in a normal business venture, if i make an investment and get 65 per cent payback in three weeks and the payback is ongoing, i'm pretty much smiling cause, in short order, the money streaming back in is on the profit side of the ledger. so give it a year and, even with the loss of the 'new', as long as they have made a good product, they have a half a billion in...and they whine?

there are films still bringing in nice margins and profits that are so fricking old, they are in black and white.....and the checks go out to the participants....nice work if you can get it

to put the fine point on it, why is a film that makes back 65 per cent of its cost in three weeks a 'failure'? have these people gotten so damned greedy that they no longer view the film as an investment that pays back over time but rather they demand everything be a blockbuster with huge barrels of cash flowing endlessly? well perhaps they need to stop producing crap as well. i know i know...fat chance....but the crap dilutes their other product. in fact for the most part, the studios need to know that, in the words of the cop from all the grade b movies: "move along folks nothing to see here"

[Snagg]

Back in the 70's, Paramount Studios got in a shitload of trouble when they made something like 1.3 billion dollars in profit, instead of a PROJECTED 1.7 billion - So they tried to write the entire 1.3 billion off as a LOSS on their taxes. So, Yeah...Utter greed and delusion are still the order of the day in Tinseltown.

[ProblemAgain]

and on the same subject...

Said (George)Clooney: “I’ve been reading a lot about Daniel Loeb, a hedge fund guy who describes himself as an activist but who knows nothing about our business, and he is looking to take scalps at Sony because two movies in a row underperformed? When does the clock stop and start for him at Sony? Why didn’t he include Skyfall, the 007 movie that grossed a billion dollars, or Zero Dark Thirty or Django Unchained? And what about the rest of a year that includes Elysium, Captain Phillips, American Hustle and The Monuments Men? You can’t cherry pick a small time period and point to two films that didn’t do great. It makes me crazy. Fortunately, this business is run by people who understand that the movie business ebbs and flows and the good news is they are ignoring his calls to spin off the entertainment assets. How any hedge fund guy can call for responsibility is beyond me, because if you look at those guys, there is no conscience at work. It is a business that is only about creating wealth, where when they fail, they get bailed out and where nobody gets fired. A guy from a hedge fund entity is the single least qualified person to be making these kinds of judgments, and he is dangerous to our industry.”

Why is he dangerous?

“[Loeb] calls himself an activist investor, and I would call him a carpet bagger, and one who is trying to spread a climate of fear that pushes studios to want to make only tent poles,” Clooney said. “Films like Michael Clayton, Out of Sight, Good Night, And Good Luck, The Descendants and O, Brother Where Art Though?, none of these are movies studios are inclined to make. What he’s doing is scaring studios and pushing them to make decisions from a place of fear. Why is he buying stock like crazy if he’s so down on things? He’s trying to manipulate the market. I am no apologist for the studios, but these people know what they are doing. If you look at the industry track record, this business has made a lot of money. It creates a lot of jobs and is still one of the largest exporters in the world. To have this guy portraying it that Sony management is the bad stepchild and doesn’t know what it is doing and he’s going to fix it? That is like Walmart saying, let me fix your town, putting in their store, strangling all the small shops and getting everyone who worked in them to work for minimum wage with no health insurance.

“It’s crazy he has weight in this conversation at all,” Clooney continued. “If guys like this are given any weight because they’ve bought stock and suddenly feel they can tell us how to do our business — one he knows nothing about — this does great damage than trickles down. The board of directors starts saying, ‘Wait a minute. What guarantee do you have that this movie makes money?’ Well, there are no guarantees, but if you average out the films Will Smith and Channing Tatum have made, you will take that bet every time, even if sometimes it just doesn’t work out.” Clooney also said he believes that down the line both films have a chance to be a wash. Clooney was particularly sensitive on the subject of job creation.

“Hedge fund guys do not create jobs, and we do,” he said. “On the movie we just made, we put 300 people to work every day. I’m talking about nice, regular people, and when we shot in a town, we’d put another 300 people to work. This is an industry that thrives; there are thousands of workers who make films. You want to see what happens if outside forces start to scare the industry and studios just make tent poles out of fear? You will see a lot of crap coming out.”

http://movies.yahoo.com/news/george-clooney-hedge-fund-honcho-danie...

http://movies.yahoo.com/news/george-clooney-hedge-fund-honcho-danie...

oh this is rich.....now there is a controversy because the manager of a hedge fund that owns 7 per cent of sony's stock wants sony to sell off it's assets to 'maximize value for the shareholders'...anyone else remember kerk kerkorian back in the day when he pushed mgm into selling off their assets including the backlot property where they made their movies? that's right...it was pretty much the end of mgm as a major player.

that's right....the job of a 'hedge fund manager' is not to do business but to conduct firesales even if they have to set the place on fire in order to do it. remember the stories about bain capital buying and then breaking up businesses to sell their assets. for those of you who remember the old days of wall street...shades of ivan boesky...corporate raiders....they were considered pirates because they boarded the company ship by buying in and then forced the business to sell off it's parts and bankrupt themselves.. all these asshole capital management, hedge fund investment guys were pushing 'm and a' a while back...making money thru fees on mergers and acquisitions....and they took profits from that before the realizations that sometimes it just fricking doesn't work...so you have for instance the ny times selling off the boston globe for 70 million after they bought it for one BILLION...or ford selling off all their acquisitions like volvo jaguar etc for huge losses....they don't really know how to RUN a business, all they know how to do is do deals..even if the deals don't work out...and we even had one run for president...

[CaliforniaNow]

businessmen getting involved in artistic media is like rednecks taking over the hippies' pot

[WS]

I have to agree Snagg, not to mention that big successes can help float the smaller ones. Art has always been a precarious balance between pursuit of money and of principle and whenever bankers get involved the only principle that is in the forefront has to collect interest!

Film companies recoup a lot of their expenses with video rentals and sales, but of course those first 3 weeks are the only time that the big money is made in ticket sales, so that becomes a watermark for a film's success.

Great topic and great replies!