Bob Baradaran, managing partner at Greenberg Glusker and longtime attorney of beleaguered effects shop Rhythm & Hues, told TheWrap that the company was the victim of a “perfect storm” that swept the Oscar-winning studio into bankruptcy last year.
“It was just the perfect storm of the technology being available globally and labor costs in the U.S. being higher than in other jurisdictions,” Baradaran said. “Studios want to keep their budgets in line, but they still want to make all sorts of changes and do different things with their movies, but they don’t want to pay for them.”
Instead, it is vendors such as Rhythm & Hues that shoulder many cost overruns on projects, because unlike other production industries such as cinematography or editing, visual effects companies are asked to submit fixed bids. They are not paid hourly rates for their work.
Baradaran worked with Rhythm & Hues for eight years and was one of the attorneys tasked with helping the company file for Chapter 11 protection. He spoke to TheWrap nearly a year after Rhythm & Hues filed for bankruptcy and was sold in auction to Prana Studios.
Rhythm & Hues was considered a leader in the field with its work on films such as “Babe,” “Superman Returns” and “Life of Pi.”
“A wonderful company went bankrupt and the short term effects are that the cost of making equivalent quality products will likely rise for the studios or they will not make products that are as good,” he said. “They will sacrifice quality for lower cost.”
Studios looking to economize have increasingly shipped their work overseas to countries such as Canada and the United Kingdom that offer tax subsidies or India that boast cheaper labor.
“Rhythm & Hues amalgamated wonderful talent right here in Los Angeles and that comes at a cost,” Baradaran said. “I don’t believe that level of talent exists offshore.”
Baradaran said it was “heartbreaking” to see the company fail because he had great respect for the company’s founder John Hughes and the way he took care of the roughly 700 men and women who worked at Rhythm & Hues. The problem was not profligacy, he argued.
“The company’s motivations were ‘lets take care of our people’ and ‘lets do excellent work,'” Baradaran said. “They were working at cost. They weren’t running the company to make big profits.”
Fourteen days after filing for bankruptcy, Rhythm & Hues won an Academy Award for Best Visual Effects.
“To do ‘Life of Pi’ with the same quality would have cost millions more,” Baradaran said. “This was a company that did not want to sacrifice quality.”
The failure of Rhythm & Hues galvanized visual effects workers, leading to a protest outside last year’s Oscars that drew 500 people, and scores of articles and blog posts about the dire state of the business. The publicity it generated stunned Baradaran.
“It’s very difficult to explain how a company that was at the pinnacle of its creativity and was creating excellent products and winning Oscars at the same time was going through a dissolution or bankruptcy,” he said.