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FROM THIS EPISODE

This is Rob Long with Martini Shot on KCRW.

I finished a book recently called Hollywood Economics by a brilliant mathematician named Arthur Devany. I say "finished" the book instead of "read" the book because it's filled with a lot of complicated graphs and tables, and words like "Gaussian curve" and "fractal" which resulted in me turning a lot of pages in eye-watering stupefaction. But I got the gist.

The gist is, the entertainment industry is a business of uncertainty and randomness, and whenever we try to hedge our bets –- spending a lot of money on marketing, say, or paying a lot for a star-driven cast –- we're at most barely improving our chances of having a hit, and, in fact, making a terrible business mistake by spending scarce resources on things that don't change the bottom line, rather than spending them on things that do, like making more movies. It's a cliché, I know, to say that studios would be better off, and a lot more profitable, by making more movies for less money -– but Arthur Devany actually proves it. At least, I think he does. It's a complicated book. And I failed calculus.

And it reminded me of this story: A newly minted studio chairman is making a presentation to his uber bosses. There was a time, I guess, when a studio chairman had no uber bosses, but these days, they all do. Board members, media moguls, holding company CEO's, even private equity investors –- everybody reports to somebody.

So the guy is sketching out his plan for the studio in the coming year at the annual corporate retreat, which usually happens at some place like the Biltmore in Santa Barbara, and often involves, over expensive dinners, a lot of talk about cost-cutting.

The way I imagine it, it's one of those awful PowerPoint presentations, with colorful block graphs, bullet-pointed lists, and words like "synergy," "ROI," and cross-platform branding." Nonsense, in other words. In one of those hotel function rooms called "The Sunset Room" or "The Hacienda Vista Room…."

The way it was told to me, the guy wraps up his presentation with a quick forecast of the coming year.

Now, of course, that's silly, right? We have no idea what's going to be a hit and what's not going to be a hit. That Hollywood is a business built on risk and luck and a certain recklessness, and it's impossible to forecast with any accuracy at all what's going to work. But it's hard for a guy with a title like "chairman" to face a bunch of guys in The Sunset Room or The Hacienda Vista Room with a lot of money in this game and use words like "uncertain" and "random" and "dunno" especially when this is the part of the presentation where they expect a forecast, a prediction, and the entertainment business, as everyone who works in it, as opposed to everyone who invests in it, knows, resists this.

But he does his best. "We're going to make twenty pictures in the next twelve months," he says. "Of which," he tells the group, "about a dozen will fall into the middle group, with about six or seven more showing strong potential as DVD franchises or even low-budget sequels, with maybe two or three breaking out of the pack to become major blockbusters, and four or five being total money-losers."

Presentation over. Light come up. "Any questions?"

Hands up all over the Hacienda Vista Room. "Wouldn't it be better," asks one of the uber bosses, "to eliminate the money losers and just make the hits?"

Which, when you think about it, is a brilliant idea.

That's it for this week. Next week, we'll employ a framing device. For KCRW, this is Rob Long with Martini Shot.

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