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FROM THIS EPISODE

I'm Matt Holzman with The Business Brief, a guide to what's happening in and around the business.

A couple of weeks ago on The Business, heard on this very station Mondays at 2;30pm, the chairman of the Walt Disney Studios acknowledged that the faltering economy had finally given Hollywood the leverage to cut bloated star salaries.

Host Kim Masters asked Dick Cook, "So are you finding that the talent says, ‘Yes, I understand, I'll take half'?" Dick cook's response: "No one gets by this downturn and so everybody's having to do it."

Kim followed up this interview with an article for the Daily Beast web site in which she looks deeper at the studio's salary hardball strategy. Not only are they going after up front fees, but those back end deals that can turn a $300 million movie into a net loser. If an actor balks at an offer, she writes, the studios say they'll just move to another choice. "They're not f'in around," she quotes one agent saying. "They know exactly who that next person is, and sometimes they'll tell you."

The people and the press seem to be reveling in the star's comeuppance. Kim's piece for the Daily Beast got picked up all over the web, and she's been interviewed about it by Good Morning, America and KCRW's own To the Point. Comments on her beast story reveal a seething pot of schadenfreude for our beloved movie stars. "Oh....poor sad multi-millionaires....what a pity!!" One reader wrote, "They may have to stoop to shopping at Nordies instead of Louis Vuitton."

Bear in mind that the studios have been trying to find the will to kill the ravenous salary beast even while they were creating it. Joe Roth, a former chair of Disney Studios was quoted in the New York Times as saying star salaries were two high…in 1995.

But how did salaries get so big in the first place? Well, there are lots and lots of reasons, but part of the blame has to be laid at the feet of the evil genius of Mike Ovitz and his Creative Artists Agency.

By packaging projects and talent in the late 80's, CAA gave negotiating leverage to the artists and the studios went along. And that got even uglier as movies started to have bigger and bigger potential to make money. Remember having to stand in line to have even a hope of seeing a hot movie opening weekend? That limited revenue. But where there were 20,500 movie screens in 1987, there were 31,000 –- half again as many -– a decade later. So no one would get turned away. And DVD's meant movies could keep earning long after they'd left the theaters.

As potential upside grew, competition for the limited number of a-listers who could really open a movie got more ferocious. And that in turn caused quotes for lesser stars to escalate, even though they couldn't guarantee a return. A huge influx of capital into the business in the last decade just added fuel to the free-spending fire. After all, it's easier to get out your checkbook when the money in the account isn't yours!

Obviously, the real reason the erstwhile businessmen let star salaries get so high was that no one wanted to play bad cop to the big stars. It's too bad it took the total destruction of the world economy to give them the chutzpah to just say no.

I'd love to know what you think. Send me an e-mail at TheBusiness@kcrw.org. You can download a podcast of this commentary, share it with a friend, or embed it on your blog with the click of a button from our new media player at KCRW.com/TheBusinessBrief. For KCRW, I'm Matt Holzman.

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