The Dreamworks Animation CEO attributes his movie’s problems to an “oversaturated marketplace” as the release was overwhelmed by family friendly competition. “We hit a perfect storm here,” Jeffrey Katzenberg told analysts in a call to discuss Q2 earnings. The release on July 17 “was just a bad date.” This summer included 50% more tentpole releases than in the same period last year, he says. What’s more, “we’ve seen more animation this summer by about 100% than we’ve ever seen before.” That “caused us to fall short of our expectations.” But he says that Turbo ”will be profitable” after Q3. There’s “still upside for Turbo domestically” where it has generated more than $60M at box offices. It’s a let down because “our movies are $150M to $200M grossing movies. In the real world, a movie in the vicinity of $100M is still considered a hit.” The company says that Turbo cost about 20% less than Rise Of The Guardians, which required a $87M writedown. Katzenberg also says that Turbo likely will be a hit overseas, including markets where it will face less competition when it opens. He adds that DWA’s upcoming movies including Mr. Peabody & Sherman and How To Train Your Dragon 2 won’t have the same problems. “We have a very clear path as to what 2014 looks like and pretty much so for 2015,” Katzenberg says. “The good news …
UPDATE: Insiders now tell Deadline that Thursday’s fundraiser at George Clooney’s Studio City home now has reached close to $15 million. The breakdown when the total was at $14.5M equaled $6M raised for the dinner and $8.5M for the accompanying online raffle which attracted general public donations for a chance to attend by leveraging Hollywood star power. In actuality, the fundraising dinner co-hosted by Obama bundler Jeffrey Katzenberg and organized by his political right-hand Andy Spahn is attracting an expected 150 Democrats ticket-price guests who come from a number of industries in Los Angeles besides showbiz including finance, law and healthcare. They spent $40,000 per ticket for the Wolfgang Puck-catered dinner at Clooney’s canyon home. It’s the largest amount ever raised for a single Obama campaign event. And that exceeds the sum that the Obama campaign raised from the entire entertainment industry in the 2008 presidential race when Hollywood types were slow to embrace Obama as their candidate over Hillary Clinton. Meanwhile news reports are branding the fundraiser ‘Starmeggedon’ because of the traffic mess it’s expected to cause in the surrounding areas.
I hoped there would be fistfights. Or at least a chair thrown or two. “I tried but no one wanted to rumble,” Jeffrey Katzenberg told me later. Instead, Jeff Robinov, Tom Rothman, Rob Moore, Stacey Snider, Harvey Weinstein, Rob Friedman, and Katzenberg demonstrated remarkable restraint as they talked, joked, and mused about the Oscars process today. Everyone was ribbing everyone, and a few zingers landed as well. There were so many studio bigwigs at the first day of Deadline Hollywood’s two-day ‘The Contenders’ event (which continues Sunday at 10 AM with still more moguls) that it became a running joke. Deadline Awards Columnist Pete Hammond opened up the 2 PM ‘Moguls Panel’ by saying, “This kind of event has never been held before. You realize that, if a bomb dropped in here, Amy Pascal would own Hollywood.” (The Sony Pictures chairman couldn’t attend.) The other studio chiefs came from hither and yon to attend ‘The Contenders’, and the packed crowd was obviously appreciative. ”Just sayin’ it doesn’t get any better than that. So rare in these times to have as august a group come together and discuss,” one of the attendees emailed me afterwards. That’s why our venue, the Landmark Theatre, pulled out all the stops, even reupholstering the seats in anticipation of the Academy Of Motion Picture Arts & Sciences voters and select Hollywood Guild members who’d sit in them. More details about ‘The Contenders’ in coming days. Next week we’ll be posting the unedited video of the ‘Mogul’s Panel’ which was moderated by Hammond and Deadline Film editor/NY Editor Mike Fleming. Here’s some of the studio chiefs’ 1 1/2-hour-long discussion:
DEADLINE: “This is one of the most wide open Academy Awards seasons. Does that make you more likely to launch an aggressive campaign?”
TOM ROTHMAN, Chairman/CEO Fox Filmed Entertainment: “Yeah, we have a lot of pictures between the studio and Fox Searchlight. But I am a contrarian about this. I think the whole notion of a race and spending is hugely exaggerated. I think voters know what they want to vote for once they’ve seen the movies. Our job is to get them to see the movies. To advance positions for them to think about. Ultimately the Academy is gong to decide. And I think in contrast to what is often said, ultimately I think it comes down to the movies. As it should.”
DEADLINE: “Can an aggressive Oscar” campaign hurt?”
ROTHMAN: “Well, I don’t know, I guess there’s some truth to it. I suppose it depends on what you mean by campaign. Academy Award winners sometimes gain a momentum because of a particular performance, and sometimes for length of career and all the work that has been done. Look recently at Paul Newman. You might not say [1986's The Color Of Money] was his best performance. But he won for his great body of nominations and work. I don’t really think, being on the stump so to speak, when in the privacy of the voting booth which is their living room that it necessarily makes a difference.”
JEFF ROBINOV, PRESIDENT OF WARNER BROS: “I’d say Mr. Weinstein proves him wrong every year.”
HARVEY WEINSTEIN, CO-CHAIRMAN THE WEINSTEIN COMPANY: “That is the only thing that counts, so Tom and I agree more than you think.”
ROTHMAN: “You have just witnessed an historic moment.”
WEINSTEIN: “I’ve said this a thousand times. The most important job is getting voters to see the movie. If they don’t see the movie, they won’t vote.”
DEADLINE: “But it’s not as good to see these movies on a small screen via screeners.”
ROTHMAN: “It’s hard to get them to see movies on the big screen. Planet Of The Apes is not as good on a small screen. Also the other thing I think is time. It’s hard because of the crush of films that all come in at the end. Voters try to be responsible, but sometimes they’re seeing multiple movies [in one day]. I agree with Harvey completely on the need to see films in the theater as they were intended.”
KATZENBERG: “We could end up with a horse against an ape this year.”
DEADLINE: “Isn’t that especially true of 3D films?”
JEFFREY KATZENBERG, CEO DREAMWORKS ANIMATIONS: “Yeah, just to sort of cut to the chase on this, we spend 4 years and $150 million on trying to make an exceptional experience in the movie theater. And use tools one of which is 3D. So we settle for the fact that many many many people will never see it this way.”
DEADLINE: “Is it best to release an Oscar contender earlier in the year and get out early like The Hurt Locker did in June?”
ROB FRIEDMAN, CO-CHAIRMAN/CEO SUMMIT ENTERTAINMENT: “I think what everybody’s saying is it’s vital to get the movies seen. In this case having the film out in June gave more time to build critical and audience response.”
DEADLINE: “How did The Hurt Locker manage to compete since its revenue cycle was over by the time big Avatar came out?”
FRIEDMAN: “By the way, I did offer Tom [Rothman] and Jim [Gianopulos] the offer to trade revenue streams.”
ROTHMAN: “We thought about it.”
FRIEDMAN: “Actually we had not completed our revenue cycle. It was not out on DVD yet. It performed massively in those revenue environments. We knew that any kind of Middle East/Iraq film was challenging at best. It found its level theatrically, but was enormous in the home market.”
DEADLINE: “Tom, would you have been happy to forget awards for Avatar as long as could count the money?’
ROTHMAN: “I guess the technical answer to that would be fuck, yes. [BIG LAUGH] Yes, we were disappointed to lose. I think Robbie and I found ourselves waiting for our cars by the heater that night, and I congratulated him mightily. But I made my career being honest, and if I said I wasn’t brutally disappointed it would be an understatement. I think it is a common problem that happens. David and Goliath is a very good narrative. It is easy to root for the little guy. I understand that emotionally. Fox Searchlight’s Slumdog Millionaire was small and won. The Academy giveth, and the Academy taketh away. We had a good year with Fox Searchlight’s Black Swan and Best Actress last time. Those things happen. I do think, if I can get on my bully pulpit for a few seconds, that sometimes I think the craftsmanship and artistry in what is thought of as commercial cinema is not always given its proper place. Hurt Locker was ultimately thought the better film that year, that I understand. But when you look down categories, sometimes I think that other crafts get swept along. I was surprised and I would also say disappointed that the hard-working creative folks on Avatar were not recognized.”
DEADLINE: “Which other of your films were unfairly overlooked over the years?”
ROBINOV: “I think the quality of Harry Potter films has been somewhat discounted. Especially the last one. It feels like the type of movie that traditionally would receive some Oscar attention. Also Inception was a very bold movie, yet it was not rewarded for risk-taking, I do think there is some bias against Hollywood and the resources that it has. Nice when a movie like Titanic actually gets what it deserves.”
Now that Big Media’s 2Q earnings season is over, the big question on Wall Street is: Did it give us any insight into the future? CEOs’ cheery talk about strong ad sales in TV’s upfront market, the expected bump next year from political ads, and the revenues coming in from online streaming services may be irrelevant if the economy sinks into a deep, new recession. CEOs say they see no evidence of trouble yet. The industry’s leading cheerleader, CBS chief Les Moonves, channeled his inner Buzz Lightyear last week saying that he has “every reason to believe that we will deliver strong results throughout the rest of the year, into 2012 and beyond.” Investors still sliced 6.3% off of CBS’ market value. The Dow Jones U.S. Media Index is down about 16% in the last month as traders anticipate cuts in ad spending, ticket buying, subscriptions — the works. If the pessimists are right, then the race is on: Which company will be the first to change its message from “people will buy media because they have cash” to “people will buy media because it helps them to forget their problems”?
Here are other themes from the latest earnings reports:
Jobs: Media companies still aren’t hiring. No one said that so baldly, but it’s there between the lines: CEOs talked more about financial engineering – cutting costs and returning cash to shareholders – than about spending to become more competitive. Time Warner recorded $24M in layoff-related expenses, quadruple the amount from the same quarter last year, while Viacom spent $14M, up from zero last year. Yet virtually every media company is repurchasing shares or increasing its dividend. The message? CEOs can’t persuade investors that the companies know how to make a decent profit from their cash, and shareholders want it back.
Pay TV: This was “the weakest (quarter) in the industry’s history,” says Bernstein Research’s Craig Moffett. Analysts were startled to see the largest cable, satellite, and telco companies collectively lose about 195,000 video customers. The cord cutters don’t fit the stereotype of well-to-do technophiles. Moffett says that “all the evidence” shows that a growing number of people – especially young adults — simply can’t afford pay TV. Dish Network seemed to confirm that thesis by saying that it will shift its marketing focus to upscale consumers instead of bargain hunters. With the U.S. market stalled, it’s easy to see why cable programmers want investors to look at their expansion efforts in growing markets overseas such as India, Russia, China, and Brazil. “It is the current momentum and potential of our international assets that present a meaningful, unique opportunity for us,” Discovery Communications CEO David Zaslav told analysts.
Analyst Richard Greenfield of Wall Street’s BTIG has long been skeptical of claims by Jeffrey Katzenberg and James Cameron that 3D would do wonders for the movie business. But now Greenfield says that 3D is actually hurting the industry: “U.S. consumers are increasingly rejecting 3D movies,” he said in a report today. Attendance for Disney’s Pirates of Caribbean: On Stranger Tides “would have been higher” this past weekend if half of its screens showed the movie in conventional 2D instead of just a third, he says. The evidence? He notes that about 38% of the $90 million in box-office revenue for the film’s opening weekend came from non-IMAX 3D screens. That’s much lower than the average last year, when 54% of the opening revenues for DreamWorks Animation’s Shrek Forever After, and 57% of the initial sales for the studio’s How To Train Your Dragon, came from non-IMAX 3D screens. Greenfield says that “pricing remains our single biggest concern, especially with so many 3D movies aimed at the family segment.” He figures theaters charged $14.85 a ticket to see Pirates on IMAX 3D, $10.85 for non-IMAX 3D, and $7.60 for 2D. He adds that family films also are hurt by “young children not wanted to wear 3D glasses.” His advice: Hollywood should make fewer 3D films in 2012. “Focus on making consumer-desirable films rather than worrying about the technology,” he says.
Hollywood is jetting to the annual Allen & Co investment conference in Sun Valley starting today. I’ve just been emailed the in-room schedule by a participant, and this year showbiz is back in favor because of an “Entertainment Panel” consisting of Barry Diller, Peter Chernin, Jeff Katzenberg, and Bobby Kotick (the CEO/president of Activision Blizzard for those who are joystick challenged). Ken Auletta, the CEO pornmeister, moderates. No Friday night dildos. No sandwich boards for out-of-work moguls. Gawd, Camp Allen has become such a showbiz snorefest. Just look at the sked:
– “Women In Technology” – Tom Brokaw moderating, with panelists: Ursula Burns and Anne Mulcahy from Xerox and Sheryl Sandberg for Facebook.
– “Modern Europe” – Tom Friedman moderating, with panelists: Lionel Barber from the Financial Times, Mathias Döpfner, and Niall FitzGerald from Thompson Reuters, Jean-Bernard Lévy from Vivendi
– “Social Internet’ – Erin Burnett of CNBC moderating with panelists: Marc Andreessen, Reid Hoffman and Mark Zuckerberg.
– Lunchtime Panel – “Understanding The Brain”
– “Global Risk” – David Ignatius moderating, with panelists consisting of military dudes.
– “The Business of Running a City” — Charlie Rose moderating with panelists: Mike Bloomberg, Cory Booker, and Richard Daley.
– “The New Breed Of Companies” featuring Square, Pandora, thinged and groupon.
– Untitled Panel moderated by Anderson Cooper with panelists: Warren Buffet, and Melinda and Bill Gates.