Wednesday, October 8, 2008

Hooray for Hollywood! Great Article form Variety Magazine

Studios prep major film production
Cameras ready to roll despite SAG stalemate

by Michael Fleming

After mostly sitting on the sidelines since the June 30 expiration of the SAG contract, studios are preparing to put 40 or more films into production between spring and summer.

Hundreds of millions of dollars in production financing will be committed to fill slates for 2010 and 2011, signaling the end of the de facto thesp strike that has kept pic production at a low ebb for nearly a year.

With a handful of exceptions, the majors mostly stopped greenlighting films in October 2007, which led to a large number of productions that wrapped before June 30.

Studios are ready to replicate that pre-strike rush by creating the same kind of boom market for production starting early next year.

Studio toppers are moving forward with a healthy level of anxiety. The recent credit crunch won’t impact the next batch of film starts, execs said, because that money has already been secured and budgeted. And there’s clear evidence that audiences will continue to come to theaters, even if the economy remains in the toilet by the time these films are released.

Studios are more nervous about the financial exposure they face if SAG does go on strike. But the prospect of gaping holes in their distribution slates for 2010 and 2011 is a worse scenario for the majors, and so they are willing to risk the consequences of moving ahead despite the SAG uncertainty.

Films like "Terminator Salvation," "Transformers 2," "Angels & Demons," "Night at the Museum 2" and "2012" went into production after the expiration of the SAG contract, and each of those productions worked in strike contingencies that ranged from agreements with stage houses to shut down and leave sets intact to deals with cast members to return 48 hours after a strike is settled.

All those films completed production without incident, and several studio pics are in production now, including the Judd Apatow-directed "Funny People" (Universal), the Todd Phillips-helmed "Hangover" (Warner Bros.) and the Dwayne Johnson starrer "Tooth Fairy" (Fox 2000), with no problems.

The next batch of studio starts will have no strike protection. Studios begin spending money on pics during the pre-production phase, which usually begins 12 weeks before the start of principal photography. That means the clock will begin running next month on many pictures that will begin lensing in spring. There is no strike insurance available and no real way to protect against the millions of dollars in costs that will be incurred if a shutdown occurs.

Production on studio-sized films costs anywhere between $100,000 and $500,000 per day, and if a production halts because of an actor walkout, studios have only an eight-week hold on casts. There is potential for catastrophe.

Several top agents said the crumbling economy and the way their acting clients are itching to get back to work leaves them hopeful that a strike won’t disrupt film starts. Studios are betting on it.

Studios will protect themselves to some extent by waiting until March or so to start most of their films, creating some cushion for the labor picture to clear.

Even if a deal isn’t reached before SAG’s 2009 elections, execs and agents feel that productions can still move forward under terms of the deal that expired in June. Several agents said studios’ relationship with SAG could replicate the situation between the guild and the town’s top tenpercenteries. The guild’s longstanding franchise agreement with agencies expired in 2002, when a proposed revamp of the rules was voted down by SAG members by a 55% to 45% margin.

Six years later, business has continued more or less as it did under the franchise agreement for thesps and their agents, albeit with the agencies having more flexibility to be involved in financing and producing projects for their clients.

Agents aren’t eager to revisit the franchise agreement issue because since 2002 they have become far more entrepreneurial — by necessity, they say — and routinely create opportunities for clients in film, TV and digital by plugging in the financing. The agents said SAG has traditionally frowned on such maneuvers because of conflict-of-interest concerns, but they are betting the guild doesn’t have the leverage to do anything about it.

"Do you think a big star is going to have its union tell them who can negotiate their deal?" one top dealmaker asked rhetorically.

Meanwhile, most studios will put five or more pictures into production by the spring, though some of the specific start dates are being firmed around locations and casting.

While DreamWorks is expected to go into production early next year on "Up in the Air" with George Clooney starring and Jason Reitman directing, that title is an apt description of other pics expected to begin lensing such as the Steven Spielberg-directed "Tintin," as the company is fresh from a divorce from Paramount and is just plugging into financing from India-based Reliance Big Entertainment.

Most studios have full slates with a mix of moderately budgeted and event-sized fare.