Has Hollywood lost it?

Hollywood 2 a.m. A young movie executive is tossing and turning in bed. He gets up, flips on his laptop, and begins typing out a memo. No, not a memo — a MISSION STATEMENT. Suddenly, the answer to his moral dilemma becomes clear: fewer films, less money, more attention to artistic integrity. He entitles it ”The Things We Think And Do Not Say…”

Yeah, right. Not even Tom Cruise could pull off that scene. If Hollywood has a mission statement for 1997, its title is ”Show Us the Money.” The budgets being reported for some of the studios’ upcoming films are beyond staggering: $70 million for Alien Resurrection, $90 million for Volcano, $95 million for The Devil’s Own, $100 million for Starship Troopers. Not to mention James Cameron’s Titanic, rumored to be so expensive — upwards of $180 million — it took two studios to finance.

Meet the hot concept in Hollywood right now: the Event Movie. Twice or more the cost of ordinary studio films — and usually twice as dumb — these massive marketing contraptions come in a variety of genres and styles, all designed for maximum global audience penetration. Action Events burn big bucks on lavish high-speed chases and outlandish explosions (see the $104 million Speed 2, opening this June). Star Events bust their budgets on mixing top-dollar talent in must-see combinations (like Mel Gibson and Julia Roberts, whose salaries for this summer’s Conspiracy Theory added a reported $31 million to the bill before a single frame was shot). Special Effects Events blow fortunes on groundbreaking camera tricks, usually involving mayhem on a planetary scale (think Godzilla, who’ll be taking on Manhattan in a $90 million update for summer ’98).

Event Movies are not necessarily a bad thing — hey, who doesn’t want to see the big guy stomp New York? — but the trend does have a dark side. As the studios spend more and more on these whopping mega-productions, less and less is left over for what used to be Hollywood’s mainstay — the mid-priced story-driven drama. And that means that audiences searching for such cheap thrills as intelligent plotlines, snappy dialogue, and characters they actually care about — i.e., the stuff Oscars are made of — have had to start looking elsewhere for their cinematic kicks. Like digitally enhanced rereleases of 20-year-old movies. Or films made outside the studio system.

It’s no accident that four out of five of this year’s Best Picture nominees (Miramax’s The English Patient, Gramercy’s Fargo, October’s Secrets & Lies, and Fine Line’s Shine) were produced not by one of Hollywood’s major studios, but by independent companies. Indie flicks also picked up three of the year’s Best Actor nominations, four for Best Director, and all five for Best Actress. The only studio production to snag a Best Picture nomination (along with Best Actor, Best Supporting Actor, and Best Original Screenplay) was TriStar’s Jerry Maguire, a quirky, unstudiolike cautionary tale about a hotshot agent who suddenly grows a conscience and decides to change his shallow, moneygrubbing ways. A sports agent, not a Hollywood one.

The point is, Hollywood today seems bent on trashing the very traditions that once made it great. For 70 years the studios have been able to mix a little art with their commerce, balancing big-budget spectacles with less expensive quality dramas. Just about every important American film ever made—from Casablanca to Taxi Driver, from It’s a Wonderful Life to The Godfather—was made on their dollar. But lately, with the invasion of the $100 million B movies, those sorts of mid-priced (now about $30-40 million), plot-based stories are becoming harder and harder to sell in Hollywood. Today’s studio executives believe that any movie worth making is worth making only for an obscene amount of money. They believe that bigger isn’t just better—it’s financially essential.

And the really scary part: They could be right.

Here’s how one former studio head does the math: “It’s less risky to make an $80 million Event Movie, because you can sell it globally and merchandise it with consumer products. You’re better off making two or three $80 million movies than 15 movies for $20 million.”

Indie mogul Harvey Weinstein, cochairman of Miramax, the company responsible for The English Patient, crunches the numbers with the same cold logic—not to mention a truckload of self-interest: “The studios are making Event Movies because it’s good strategy,” he says. “Even if you make a bad Event Movie, you can make money. With all the offshoots—the CD-ROMs, the records, the publishing divisions, and the overseas sales—it feeds the whole conglomerate. If I was in the studios’ position, I’d do the same thing.” (Instead, he’s in the position of making millions by providing audiences what the studios won’t—smart, well-marketed mid-priced movies.)

The theory works this way: Take a hypothetical worst-case scenario—an $80 million Event Movie we’ll call, oh, say, Daylight. Pretend it tanks domestically, earning only $33 million. But since foreign audiences are still wild about beefy American superstars with monosyllabic delivery, it earns another $111 million overseas. And because big dumb action movies tend to rent smartly at video stores, chuck another projected $20-30 million into the pot. Add a few more potential millions for TV rights, fast-food tie-ins, and merchandising, if any (Daylight CD-ROM, anyone?), and before you can say Sly Stallone, you’ve turned a profit.

Now take a brainy mid-priced period piece like The Crucible. It costs only about $25 million but grosses a meager $7.3 million domestically. It’ll probably do about the same overseas. And since a Crucible CD-ROM is about as marketable as a John Proctor action figure or an Arthur Miller Happy Meal, forget about ancillary profits. In short, you take a bath.

Of course, the numbers don’t always add up this way. Some recent Event Movies have been spectacular disasters. Cutthroat Island, MGM’s $92 million lady-pirate adventure, was such a colossal dud (earning less than $10 million domestically and even less overseas) it helped to bankrupt Carolco, one of its backers. And some mid-priced studio movies have done boffo box office. Jerry Maguire cost a relatively modest $50 million and has so far grossed $135.1 million domestically. Paramount’s First Wives Club cost even less and grossed $105 million domestically and another $46 million overseas. And when one of these lower-priced flicks does click, its makers end up pocketing a much bigger profit percentage, since the films cost so much less to make in the first place. For instance, Universal had to spend $175 million on Waterworld to eventually eke out a worldwide gross of $255 million, but the studio had to invest only $23 million in Babe to make $204.8 million.

But give the studios the facts and they draw their own confusions. “The mid-range movies don’t work,” Fox Filmed Entertainment chairman and CEO Bill Mechanic insists categorically. “They don’t make sense anymore. They’re going away.” In their place, the studios are settling for even lower-budget films. And while the results can occasionally be surprising youth hits, like last fall’s Romeo & Juliet, more often, they’re low-concept schlockfests starring ex-SNLers, like Chris Farley’s Beverly Hills Ninja or Adam Sandler’s Happy Gilmore. Not exactly the sort of cinematic masterpieces that get For Your Consideration ads in Variety.

“They’ve forgotten how to make smaller movies,” says Ruth Vitale, president of Fine Line Features. “The same machinery that makes and markets Independence Day or Dante’s Peak is simply not equipped to make and market a movie like Shine. They’re used to huge budgets and putting out 2,000 prints and doing nationwide publicity in one weekend. It’s a completely different set of skills.”

Indeed, suits today do seem a bit lost when faced with a budget less than $70 million. When The English Patient was being pitched at Fox, for instance, execs suddenly got perversely stingy about its $31 million budget—and insisted on flashier stars. This from the studio that just spent $70 million for a movie with Jeff Goldblum about invading Frisbees from outer space. “There’s not a big idea inside of The English Patient—it’s a character piece, a little downbeat,” Fox’s Mechanic still believes. On the other hand, when producer Lawrence Bender was peddling Pulp Fiction for a mere $8 million at TriStar, the suits there took the opposite approach. “They kept telling me I didn’t have enough money in my budget,” snickers Bender, who made the film at Miramax instead (it went on to gross $210 million worldwide). “They have no idea how to make low-budget movies. It’s just not part of their mentality.”

He’s right—there has been a mentality shift at the studios over the past few years. Movie executives used to come into the business with at least the pretense of loving the art form. Now they come into it with MBAs from Wharton and a love of cost-benefit analysis and synergistic financial models. As the studios have grown into international conglomerates, their people have become more market driven and less creative. “When I entered the business under Darryl F. Zanuck,” recalls veteran producer David Brown (Jaws, The Sting), “there were no marketing meetings. No member of the sales organization was permitted to read a script. God forbid they should go to the dailies. That was unthinkable.”

From the studios’ point of view, though, that’s just business as usual in the Event Movie age. “You look at the numbers,” says the former studio head. “The syndication, the video sales, the print ads—you put everything into the salad. And you realize that you’re better off making an Event Movie, because the upside is just so terrific.” And there’s no denying it: When an Event hits pay dirt, the cash flow is a thing of beauty to behold. Mission: Impossible has so far downloaded more than $450 million worldwide. Twister has swept almost $500 million in global ticket sales. And Independence Day has made enough to turn an alien green, grossing almost $800 million worldwide. With numbers like these, it’s no wonder the studios are hooked.

“It’s the same as people gambling at a craps table,” says director Joel Schumacher, now filming Warner Bros.’ reported $80 million Batman & Robin. “If you gamble 5 bucks and 10 bucks, if you’re slow and steady, maybe you build something. But if you gamble $25,000, you may get rich overnight.”

“It’s the home-run complex,” agrees producer Mark Johnson, whose $35 million Al Pacino-Johnny Depp drama, Donnie Brasco, opened strongly Feb. 28, with good reviews helping it pull in $11.7 million in its first three days. “A movie that turns a nice five- or six-million-dollar profit should be a big deal. But for the studios, it’s almost not worth their while.”

Entertainment abhors a vacuum—which is where the independents come into the picture. They’ve been around for decades, of course, mostly in New York and Los Angeles, and have even been known to turn up at the Oscars on occasion. (The indies first tasted real Oscar clout in 1986, when Kiss of the Spider Woman and The Trip to Bountiful, both released by tiny Island Alive, took the Best Actor and Best Actress awards for William Hurt and Geraldine Page.) But over the past few years, as the studios have been backing away from discount dramas, the independents have started to flourish by rushing to fill the void—and not just with the sort of guerrilla cinema that goateed twentysomethings finance by maxing out their Visa cards. Look at the independent films up for Oscars this year: Shine and Secrets & Lies are family dramas; Fargo is a murder mystery; The English Patient is an old-fashioned sweeping war epic. Exactly the kinds of movies on the Hollywood reject pile right now.

In fact, the indies have been such successful businesses that most of them have been bought up by conglomerates—a point studio execs highlight at every opportunity. Miramax is owned by Disney; Gramercy is owned by the Dutch entertainment giant PolyGram; Fine Line is owned by New Line, which in turn is owned by Time Warner. Some studios have even started up their own indie offshoots, like Sony’s Sony Pictures Classics. The poaching has become so pervasive that October Films has taken to bragging that it’s the only true indie left, since it hasn’t been bought yet (a claim that may not last; Universal, among other studios, is rumored to be interested).

“There are no independents—they’re all part of the studios,” spins the former studio head. “We’ve bought them all. It’s just another way for us to do business. You get less control, but there’s also less overhead and less of an investment.” Also less hassle. “Studio heads are only human,” he says. “It’s hard to focus on a $15 million movie when you’re also making Batman.”

But wait a sec. Isn’t there something wrong with a studio system that’s so bloated by its own elephantine budgets that it can make smaller pictures only by proxy? Isn’t the fact that the studios have been snapping up these companies an admission that something isn’t working? That they’ve blown it so badly with an entire type of film—the type that’s most worth seeing—that they’ve had to subcontract it to a bunch of out-of-towners? And another thing: With so little money in play at the independents, why do the studios even care? After all, the profits from Sling Blade probably wouldn’t pay for a single lifeboat on Titanic.

“It’s ego,” sniffs David Brown. “Or let us use the words corporate pride. They buy these independents for the same reason Mobil does public service. It’s jewelry, like having your wife wear a really spectacular necklace.”

Fine Line’s Vitale has a simpler explanation. “They want tickets to the Oscars, too,” she says.

At least the studios have been smart about one thing: For the most part, they’ve let their indie subsidiaries make movies with a minimum of interference. No patrols of development girls have stormed their offices; no teams of vice presidents have turned up with reams of script notes. But that doesn’t mean the indies don’t make mistakes. At times, they can be every bit as boneheaded and shortsighted as their bosses at the studios. When director Scott Hicks was pitching Shine at Miramax, for instance, he was stunned by the response. “The clear message to us was to get rid of Geoffrey Rush,” he says. “We had a strenuous conversation.” Rush, of course, is a favorite to win this year’s Best Actor prize.

Still, there is one crucial difference between the way the studios and the indies think: It turns out that when you’re producing smaller films with narrower profit margins, the most lucrative financial strategy is to make good movies. Shocking but true. For an inexpensive indie release, positive reviews can mean the difference between success and a quick trip to back shelves at Blockbuster. And an Oscar nomination, with all its priceless free publicity, can really turn around your cost-benefit calculations. It’s the reason the independents spend so much time and money wooing Academy voters every year.

“It’s much more important to us,” admits Amir Malin, cohead of October. “If you talk to any studio guy, he’ll tell you that Oscars don’t really mean anything to them. They look at the Oscars as something that’s going to cost them more money. They’ll have to launch a campaign that they know they’re not going to win, and if they do win, it won’t translate into box office dollars.”

In other words, if, say, Twister had been nominated for Best Picture this year—to pick the doomsday scenario—it wouldn’t have boosted its box office because everyone in the global market economy has already seen it. As one studio executive told a producer, “I’d rather have the Bank of America Award.”

Okay, so the studios are making big movies and the indies are making smaller ones. What’s the hitch? As long as audiences are happy, who cares?

The problem, it turns out, is that this arrangement doesn’t always produce the best possible pictures. The indies have been keeping up their end of the deal—last year, along with their Oscar contenders, they gave us Big Night, Lone Star, Emma, Trainspotting, and Breaking the Waves. But the studios have simply been piling more and more cash on ever less eventful Events. Granted, Independence Day‘s alien death ray was mind-blowing. Yes, Twister‘s tornadoes were way cool. And Dante’s Peak, it blowed up real good. But most of these films aren’t exactly creating the sort of cinematic legacy one proudly delivers to future generations. Even compared with Event Movies of the past—Raiders of the Lost Ark, for instance, or Terminator 2: Judgment Day—they come up short. The studio chiefs themselves sense something is missing.

“The big movies are dumbing down,” laments Tom Pollock, the former chairman of Universal’s Motion Picture Group and now head of the American Film Institute. “Nobody cares about logic. Nobody cares about character. It’s all about the number of jokes. Today’s thrillers move very fast, but character used to get built into those slower scenes. Character today is about commenting ironically on the action, especially after you’ve killed somebody.”

If you need evidence that this is so, that Event Movies aren’t what they used to be, check out the lines for Star Wars, the Event that started the whole phenom. There’s a reason this 20-year-old creaker has earned $125 million since it was rereleased last month. And it’s not just its special effects, which today seem touchingly quaint. Star Wars offers something no recent Event Movie has bothered to include: characters you care about, a plot that not only makes sense but delights, and even a spiritual message—the Force!—that might seem gushingly cornball if it weren’t delivered by a Jedi Knight with a lightsaber.

Need further proof? Ask yourself this question: Twenty years from now, would you buy a ticket for the digitally refurbished special anniversary rerelease of Twister?

Uh-huh. When cows can fly.