Hollywood Cuts, Retools and Looks to the Future

A brutal year was 2009, one of the scariest Hollywood and the world economy has seen in decades.

And yet 2010 dawns with what should be a sense of optimism.

In 2009, Hollywood underwent a vitally necessary correction, one that was painful but which places the entertainment industry on much healthier footing as it faces the future.

The dark news came all year as production companies closed, independent movie studios floundered and studios and networks cut hundreds of jobs. People were eliminated at Warner Brothers (800), News Corp (400 at MySpace), Disney (1,900), Sony (300) and Lionsgate (45).

DreamWorks sat idle for months as it struggled to close its funding from a reluctant Indian partner. That, after giving up its dreams of being an independent studio. MGM began its downward slide toward a still-unresolved end game.

Universal and Disney both underwent clean sweeps of their top executive ranks, and brought in younger and – in Disney’s case – more aggressive change agents.

Both Hollywood news trades went through serial cutbacks. Senator films sunk. Weinstein shrunk. The indie world sat there and shivered, as a whole.

But after decades of the most insane profligacy – which was the studio that flew multiple Winnebagos to Europe for John Travolta? Or was it Bruce Willis? -- the change felt necessary.

Looking ahead, the companies will be leaner, the budgets will be tighter, the stars will work harder and so will the agents. Those who still have their jobs will be more focused on keeping them. Those with tighter budgets will be more creative with a buck.

As a result, the movies will be better and -- isn’t that the point? (No, the point is Ari Emanuel’s bonus, I get it. But still.)

There’s nothing like a strike followed by worldwide recession to focus the mind. And people in this industry seemed to get the message. 

For the second time in a row, in 2009 Hollywood made fewer films this year than the year before. In 2008 it was 605. This year it was 520, 20 percent fewer, and the movies were more profitable.

Funny enough, the correction wasn’t something that Hollywood necessarily needed to adopt. People flocked to the movies in the first four months of 2009, seeking relief from the terrible economic news. Attendance was up a whopping 18 percent, which might have been a signal to release more movies, not fewer.

And yet, the executives at the top were nervous. Despite the optimism brought by Obama’s inauguration, in early 2009 financial markets were in disarray, without a sign of when the bleeding might be stanched. Even the top experts and government officials were telling us they weren’t sure where the bottom was.

You could almost see the worry lines forming beneath the Botox. CAA stopped validating parking. The Hollywood Reporter stopped reimbursing business lunches. Premiere parties became sparser and junkets were junked. If you needed a room in Park City for Sundance – actually, it wasn’t a problem.

And then the pink slips started coming.

But in addition to the salutary slicing, a few other items suggested the future of the movies.

Paramount, reputed for constant overspending, found a gold mine in “Paranormal Activity,” a tiny, mothballed project that – using the Internet -- grew its audience slowly to a domestic wallop of $107 million. That felt like a new moviemaking model.

What also happened was “Avatar,” a monumentally expensive movie that proved its spectacular entertainment value. It’s already gone over $1 billion in global ticket receipts, and has infused audiences with much-needed enthusiasm for going to the theater and putting on 3D glasses.

But the correction isn’t quite through. The next big thing that has to be adjusted are the inflated salaries of the moguls at the top of the studios. They cannot justify cutting hundreds of jobs while continuing to claim tens of millions of dollars per year – each of them – for running much-reduced operations. Bob Iger: $30 million. Les Moonves: $36 million. Rupert Murdoch: $37 million. Jeff Bewkes: $19 million. (Read up on the rest here.)

They need to lead by example. And if the industry is going to feel some pain, the moguls need to show that they can feel it, too.