The New Hollywood: Dead or Alive?

By Richard Corliss. Reported by Elaine Dut-ka/New York and Martha Smilgis/Los Angeles

Beset by megabudgets and minimoguls, the movie industry suffers a crisis of conscience

Next Monday is Oscar night, when Hollywood's elite will tux and tart themselves up, like 3,000 extras in some impossibly opulent '30s costume drama, for the movie industry's spring ritual of self-congratulation. In the packed Los Angeles Music Center they will hear a former B-movie swain and Screen Actors Guild president named Ronald Reagan deliver an address on the theme "Film Is Forever." They will bestow Academy Awards on their most envied colleagues. They will snicker as professional actors flub a three-line introductory speech. For the benefit of 80 million TV-watching Americans, the movie people will put on a spectacle that combines the solemnity of graduation day at West Point with the giddy naivete of a greasers' sock hop.

They might also, according to some observers, be attending a state funeral --for the state of the art and the industry. Hollywood shows every sign of a town in crisis. The movie audience is shrinking as budgets soar toward the $40 million point and beyond. The average studio movie today costs $10 million to make and $6 million to publicize in newspapers and on television. Because of inflation and high interest rates, producers want to release films that will make their money back quickly. This means recycling the familiar into the surefire: 1980's biggest hit was The Empire Strikes Back, George Lucas' sequel to Star Wars. It means signing box-office stars at huge salaries: Burt Reynolds pulled in a reported $5 million for The Cannonball Run, Barbra Streisand $4.6 million for All Night Long. Directors are stars too: Francis Ford Coppola was offered $3 million to direct One from the Heart. Says Director Martin Scorsese, 38: "We're working ourselves right out of jobs. I'm concerned that the industry is being destroyed."

With inflation and recession come managerial convulsions. Five of the seven major studios have suffered abrupt changes of management in the past two years. The rash of new production outfits, born in the flush of Star Wars and Grease profits a few years ago, either have folded or are struggling to survive. The U.S. Congress disallowed most no-risk tax shelters, which once offered the hope of a quick buck for producers and a long write-off for investors, and 19 states have outlawed blind bidding, which allowed studios to extract money commitments from theater owners for an unseen product. Now cable TV and cassettes are starting to offer the movies serious competition for the entertainment dollar. The gloomiest forecast is of a nation of stay-at-homes getting all their fun from the giant video screen. "We are supporting a dying business, and the change is scary," says Paul Schrader, 34, who wrote Taxi Driver for Scorsese and directed American Gigolo. "Movies are on their way out."

The corpse sprawls over the business and entertainment pages of daily newspapers. In the Polo Lounge and at college seminars, amateur detectives search for the murder weapon. And, as in an Agatha Christie movie, there are suspects aplenty, all swearing they were the deceased's best friend. The Producer: claims he tried to keep the costs down; charged with lack of vision and insufficient use of his power. The Studio Executive: claims he really does support good pictures; charged with not knowing the business and caring only about his skin. The Agent: claims he has filled the creative vacuum left by producers and studio men; charged with seeing films as "packages" of familiar actors and directors, all of whom are his clients. The Star: claims he is the main attraction, thus has the responsibility to supervise production; charged with squandering his leverage by spoon-feeding the public with junk-food comedies. The Audience: claim they are the victims; charged with leaving the scene of the crime.

The prime suspect is the Hot Young Director. In the '70s, a swarm of graduates from film schools and TV revitalized an industry grown geratic with aging talents and traditions. Coppola (the Godfather films), Scorsese (Mean Streets), Lucas (American Graffiti), Steven Spielberg (Jaws, Close Encounters of the Third Kind) and others became Hollywood royalty. They worked on each other's projects, helped even younger film-school grads make movies, dreamed bigger dreams, sweated to put their dreams on film. They made millions for their studio sponsors: of the eight alltime highest-grossing films, six were directed by men who were under 35, and the other two were produced by men under 35. The experience was a heady one, and for some the thrill is still there. Says Coppola, now 41: "If we coordinated, we could take control of the movie business in one minute."

These Young Punks couldn't play Leonardo and Peter Pan forever. After their early hits the hot directors almost mega-bucked their way to disaster. In the mid-'70s Coppola went to the Philippines to make his Viet Nam epic, Apocalypse Now; battled typhoons, Marlon Brando and a regiment of skeptical bankers; mortgaged his home to pay for the movie; spent $31.5 million. Spielberg lavished $27 million on the slapstick 1941; critics reviewing it replayed the Japanese attack on Pearl Harbor. John Landis, whose $3 million National Lampoon's Animal House earned $74 million in North America, invested $30 million in a two-hour car chase called The Blues Brothers. The rampant inflation of budgets and ego may even have affected Warren Beatty. Beatty has spent two years and more than $30 million on Reds, a biography of Writer-Revolutionary John Reed, and the picture is still at least nine months from release.

The biggest turkey arrived just in time for last Thanksgiving. Michael Cimino, fresh from his Oscar for The Deer Hunter, blew $36.5 million on Heaven's Gate, a handsome, incoherent western that United Artists withdrew from release after New York critics gave it--and the profligate artist at its helm--a sound drubbing. Heaven's Gate opens in an abridged version next month, but in its initial release, about 8,000 moviegoers paid to see it: U.A. had spent $4,500 for every ticket sold. At the premature burial of Heaven's Gate--and, many thought, of the New Hollywood--the pallbearers could be seen dancing on the grave.

Hollywood is an industry built on the suspension of disbelief and the eternal attraction of melodrama; no wonder its denizens believe their press clippings--even the obits. But before moviegoers queue up for the wake, or make plans to go bowling for the rest of their Saturday nights, or draft David Stockman as a cost-slashing cinema czar, a note of caution should be sounded. These are not the best of times; these are not the worst of times. The theatrical film is unlikely ever to regain its standing as America's most popular art form: the 1 billion tickets sold in the U.S. last year amounted to only a quarter of the number of admissions in 1946, the industry's best year. But the 1980 count represented a 25% increase over 1971, and though ticket sales and profit margins dipped in 1979 and 1980, the decade was Hollywood's healthiest since the '40s. All but two of the alltime top 25 moneymaking movies have been released since 1970, and three films--Star Wars, Jaws and The Empire Strikes Back--have earned their producers and distributors around $200 million each.

Undoubtedly, these hefty "rentals" (gross profits returned to the studios) are distorted by inflation; in real-dollar terms, Gone With the Wind remains the alltime box-office champ (see chart). But inflation has also bloated the budgets of recent movies. During an earlier spending spree in the '60s, Hollywood produced ten films with $20 million-plus budgets. Considering a dozen years of the incredible shrinking dollar, even Heaven's Gate cost less than Tor a, Tora, Tora (1970) or Hello, Dolly! (1969). If the Elizabeth Taylor Cleopatra ($44 million in 1963) were made today, it would cost $110.6 million.

Like most of the runaway-budget movies of Old or New Hollywood, Cleopatra was a producer's--not a director's --folly. But then, producers are supposed to spend money on movies, yachts and beautiful women; directors are supposed to toil in their ateliers creating works of art that make other people money. The legend of the wastrel director has its root in this assumption. The Young Punks have earned far more money for their employers than they have wasted; and like most overpriced movies, theirs have eventually broken even or turned a profit. But the price in frayed emotions and aborted careers can be high. In the words of Ned Tanen, president of Universal Pictures (1941, The Blues Brothers): "Life is too short to pray every night for a smash hit just to get your money back."

When a studio executive does get down on his knees, he prays to the young. As Art Murphy, a veteran Variety reporter and the industry's unofficial historian, observes, "People go to the movies--and, even in the coming age of full-service home video, will continue to go--because it gets them out of the house." Frank Price, 50, president of thriving Columbia Pictures (The Blue Lagoon, Stir Crazy), calls movies "a dating phenomenon." Who goes on dates? Who goes to the movies? Overwhelmingly, the young: 76% of all moviegoers are between the ages of twelve and 29. Some are even younger: Popeye made $45 million of its gross from discriminating film lovers under twelve.

These are facts of an industry's life, not its death. Hollywood may be a company town--as Scorsese notes, "Everything is geared to turning out the product"--but United Artists is not Chrysler. This gaggle of statistics can act as balm to the harried film maker's brow, but is unlikely to stanch the malaise. If Hollywood is conducting business as usual, few people seem enthusiastic about the enterprise. Robert Redford, 43, whose directorial debut, Ordinary People, is the odds-on favorite in the Oscar sweepstakes, asserts that the industry's "obsession with demographics has produced mass-market films--and people finally get used to what they're fed." Universal's Tanen, 49, sees today's audience as "young, cynical, smart-ass and jaded." Paramount's Barry Diller, 39, who has the longest tenure of any current top studio boss (six years), shrugs and says, "We are in a relatively uninteresting period. It goes in cycles."

Columbia's Price frets that the studios are "run by the three A's: accountants, attorneys and agents." Stan Kamen, who represents Warren Beatty, Barbra Streisand, Michael Cimino and a dozen other heavyweights, and whose William Morris Agency is sent 2,500 scripts a year, counters that "ex-agents are running major studios. They were packagers. They know how these deals are made. Half the Hollywood movies today are packaged or semipackaged by agents." Diller agrees ruefully: "This town is Deal City. Do you know the amount of time spent on deals instead of what the movie is? I hate the whole process."

If the chairman of Hollywood's smartest studio does not have fun making deals, what are those visionary mavericks Coppola and Lucas doing playing the game --indeed, setting up their own studios? For one thing, it allows them to buy control of their films. With the profits from Star Wars and The Empire Strikes Back, Lucas, 36, could probably buy control of every film in Hollywood and have enough left over to pick up an MX missile: he is said to be worth more than $100 million. He is building a model-village production plant--a sort of Disney World for cineastes--in Northern California's Marin County. He has seven more Star Wars movies in mind. And he has just produced an adventure film by another strong director: Spielberg's Raiders of the Lost Ark. Spielberg is proud that their picture was completed under schedule and within the budget: $19 million. "Lucas was to me what David O. Selznick was to his directors on Gone With the Wind. I respect his comments totally. Raiders proved that two people can make a movie together and remain friends." The film will be released this June.

"Lucas has a bank called Star Wars," notes Spielberg, 33. "Coppola doesn't have a bank--only courage and fortitude. Chutzpah too: his Zoetrope Studios is preparing more than a dozen challenging projects, despite the fact that Coppola nearly went bankrupt just a month ago. The minimogul, who drives a mini-limo, a customized black Volkswagen Rabbit with dark tinted windows, admits that it is hard to keep one eye on the artistic horizon and the other on the bottom line. "Film makers are not necessarily good administrators. And the concept of the studio is vitally important. But the majors understand the selling of films more than the making. Zoetrope is based on the new technology. We're in the vanguard of the electronic revolution, and I want the other studios to copy us. They can make excellent pictures and a lot of dough too."

At the moment, Zoetrope--where Coppola is shooting his $23 million musical drama One from the Heart--is a futuristic anachronism. The technology is indeed new: computerized story boards, video-taped rehearsals and pre-editing on video rather than film. But the concept of actors and artisans under contract recalls the studio system that flourished for 40 years and died out in the '60s. Can Zoetrope work? Can it be profitable? Will a dozen cantankerous directors chafe under the effusive rein of an auteur-mogul? Many people in the New Hollywood, including some of Coppola's competitors, hope he makes it. Others are more skeptical. Says Ned Tanen: "Francis has all the answers. Too bad someone doesn't give him the questions."

Ray Stark, for one, wishes Coppola well. The producer of Funny Girl, seven Neil Simon movies and the $35 million film of Annie, says of Coppola: "I respect him as a creator. He's a fine writer and director. His problem is that he wants to be a mogul. I tell him, 'Francis, there hasn't been a mogul in 20 years.' In the old days Samuel Goldwyn or Darryl Zanuck found material, selected a director, discovered stars. But the age of the great producer is over." If there is no great producer, there is surely a strong one: Stark. "I'm the director's conscience," he says. "Directors know they can't do what they want at whim. We arrive at a happy medium."

Martin Scorsese agrees on the need for a creative producer--in his case, on Raging Bull, the team of Robert Chartoff and Irwin Winkler. "When you're so close to a picture, you tend to lose perspective," Scorsese says. "You need someone near by who loves you--not to yell at you but to help you along. They act as a buffer between us and the studio so that we don't feel the squeeze as much."

Raging Bull was nominated for eight Academy Awards (tied for top honors with The Elephant Man, directed by Film-School Graduate David Lynch), and Scorsese professes surprise at his film's success. He calls it "a kamikaze film: I went in thinking it could well be my last studio-financed film. The rising costs of film production could make studios opt for pictures with big budgets and bigger box-office potential--and the more independent, individual films, like Raging Bull and Ordinary People, won't get made."

Robert Redford, who will be competing with Scorsese on Oscar night, shares his concern. "I'm afraid that the next four years will see a narrowing of focus, the same old systems being depleted, rather than a real search for new solutions. When movie executives decide what projects to undertake these days, they look at their hand calculators rather than responding to their gut feelings." Sitting in his Manhattan office, Redford exudes both the glamour of an Old Hollywood star and the cost concern of a New Hollywood minimogul. He's proud of his record as head of Wildwood Enterprises --and willing to open his books to the public.

"You want figures, right?" he asks. "O.K.: Downhill Racer cost $1.8 million to make. Jeremiah Johnson, $3.5 million. The Candidate, $1.6 million, with a 41-day shooting schedule. All the President's Men cost $7.8 million, largely due to Government interference and paranoia. Ordinary People came in for about $6.3 million. So it is still possible to make films at a reasonable cost. You just have to work at it." As director of Ordinary People, Redford worked for scale ($52,000), and his entire cast was paid $600,000. "Even the crew took cuts. This mutuality of chance-taking gave the film the look I wanted: the feeling of hunger, of people willing to try things."

Robert Benton, 48, the writer-director of last year's Oscar winner and surprise box-office smash Kramer vs. Kramer, agrees that the challenge is to work on small budgets (Kramer cost $6.6 million). "The cost of movies is astronomical now," he says, "and that's dangerous. It makes it difficult to take creative risks. If it continues, fewer pictures will get made. With stakes so high, directors can't afford to fail. I just don't know how Hollywood will bounce back. The person who comes up with the answer has my nomination for the Nobel Prize."

To predict Hollywood's future, it helps to be both Cassandra and John the Baptist. Most of the major directors see a timid few years ahead, followed by the explosion of technological liberation. Benton hopes "Coppola is right: that the software revolution will increase the demand for material and change the structure of film making." Redford is convinced that "with the cable market opening up, we need a larger supply of film makers, a wider range of options." To this end, he has established the Sundance Institute of Film and Video in Provo Canyon, Utah, which holds its first session this June. Says Redford: "I'm hoping that our program will help people realize you don't have to go into the mainstream in order to survive."

Already film makers are leaving Hollywood, at least geographically, to survive and thrive. George Lucas presides over a contingent of resourceful directors in the San Francisco area. And New York, which lost its production-center supremacy to California 65 years ago, is again nourishing film makers. Benton, Brian De Palma and Woody Allen all live and work in New York. And if Ordinary People cops the top Oscar, it will be the seventh consecutive Best Picture directed by a man who grew up or lives in New York.

But the New Hollywood need not be New York, or Marin County, or any where. The art industry is a state of mind -- a gorgeous hallucination dreamed by a few inventive writers, ambitious directors, daring producers and caring studio bosses. It is a dream that can still seize the world's imagination on a screen. And it is not a new dream. In 1919, when D.W. Griffith, Charles Chaplin, Mary Pickford and Douglas Fairbanks deserted the studios to form United Artists, one executive declared: "The lunatics have taken charge of the asylum." That wasn't -- and isn't -- a bad thing. To make films, it helps to be cost-conscious. But to make a difference, you've got to be a little movie-mad.

-- By Richard Corliss.

Reported by Elaine Dutka/New York and Martha Smilgis/Los Angeles

With reporting by Elaine Dut-ka/New York and Martha Smilgis/Los Angeles

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