Disney slashing movie production

Kai Ryssdal Jul 12, 2006

KAI RYSSDAL: Johnny Depp, Keira Knightley, a spin-off of a theme-park ride, and boom: $135 million for the Walt Disney Company. The “Pirates of the Caribbean” sequel broke all kinds of box office records this past weekend. So you might think it’s high times for Disney. But there are rumblings out there of big cuts in its movie budget. Michael Speier is the managing editor at Daily Variety. Michael, good to talk to you.

MICHAEL SPEIER: My pleasure.

RYSSDAL: I don’t mean to be — oh, how shall we say — snippy about this. But how bad can things be at Disney when they made $135 million in two days with Johnny Depp and “Pirates of the Caribbean”?

SPEIER: You know, it’s like any other kind of business. You can have a good week. And, in the movie business, which costs a lot of money to make movies, they can have a good week, too. It doesn’t mean that the rest of the year is great — and Disney’s certainly hasn’t been great. And it doesn’t mean that the industry, in the whole, is great. I mean, there are problems and this is one way to decide, “We’re doing so well let’s tighten our belt. Let’s use this opportunity to do that.”

RYSSDAL: I guess maybe the biggest problem is movies are just out-of-control expensive to make today.

SPEIER: They really are. They’re out of control. And if you click with one, like “Pirates” does, then you can justify it. But if you are out of control and you don’t, and you miss in a big way, that’s when everyone starts really wringing their hands and pointing the finger.

RYSSDAL: Let’s talk about some of the costs that the studios do have to pony up to get these movies made. I would guess — I don’t know for sure — but I would guess the biggest line-item would be stars’ salaries?

SPEIER: Stars’ salaries is certainly the biggest and the most sexy for the general population. That’s the one people talk about. So Johnny Depp getting $20 million plus a percentage of the gross, that’s the big salary. But making a movie, let’s say it’s “Superman Returns,” and while there’s no stars in that movie, that movie still cost about $215 million to make. Because you have all the production on a movie that has to look real nowadays. Everything has to one-up each other. And you have to look like you’re flying, and you have to look like there’s effects. And everything is very, very expensive. And that’s not even including the marketing costs.

RYSSDAL: Disney has one of the great brands in corporate America. It’s got, you know, Walt Disney Studios working for it, but then it has these subsidiary studios like Touchstone and all them. They’re all gonna go away, you say.

SPEIER: Yeah, certainly their role will be diminished. They have to be. Because right now Disney makes about 18 movies a year. That’s going to be trimmed down to about eight. And so right away 10 movies get taken out of the mix and not only that but they’re all going to be Disney-branded movies, which means it won’t be a Touchstone movie released by Disney. They’ll all be sold as big Disney productions, like “Pirates of the Caribbean.” So, Touchstone . . . their role will be diminished. And, you know, Touchstone itself is a very successful off-shoot. There are other little companies that probably will go away.

RYSSDAL: Well, suss it out then for me, Michael. Do you think it’s going to work: Disney trying to, sort of, get its infrastructure back in line?

SPEIER: They have the right idea. You know, everyone likes to harp on the movie business for making really bad decisions, but they all answer to shareholders and so, if you’re going to cut movies and you’re going to assume you’re going to make big, big motion pictures, and you’re going to pray that everything is like a “Pirates of the Caribbean,” then you have the right idea. Because if everything can be about a $100 million opening, and there’s only eight of them and they’re all great, that’s terrific and the shareholders would love that. Because you’re trimming costs and you’re trimming staff and your movie’s going to be big.

But the problem comes . . . what if they have a movie like “Poseidon,” which is expensive and wonderful and sounds great on paper. And then it comes out and it’s a complete stinker. And that’s when everyone will then say, This is the bad decision.

RYSSDAL: Alright. Michael Speier is the managing editor at Daily Variety. Michael, thanks for your time.

SPEIER: My pleasure.

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