Looks like staying home and renting movies is in store. Apparently Hollywood isn't recession proof!
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Paramount Pictures' abrupt decision to delay two major holiday films -- including one with Oscar aspirations -- may be an early sign of Hollywood's retrenchment in the midst of the U.S. economic crisis.
Paramount is delaying the release of two major films, including "The Soloist."
Paramount late last week said it would delay "The Soloist" -- a Los Angeles drama about a homeless violin player and the newspaper columnist who intervenes in his life -- until next March. The movie comes from DreamWorks, the Paramount unit whose principals, Steven Spielberg and Stacey Snider, recently left to start a new film venture.
The decision to delay the movie came barely a month before its planned Nov. 21 debut, and means that Academy Awards consideration for "Soloist" star Robert Downey Jr. will be put off until next year.
The studio also delayed the limited release of "Defiance" -- a war picture with Daniel Craig from its Paramount Vantage specialty unit -- until the end of 2008, meaning the film won't be in wide release until January.
Paramount, a unit of Viacom Inc., announced the delays as part of a new business strategy in which it is cutting costs by reducing the number of films released each year from about 25 to 20. To start cutting back in 2008, the studio delayed a couple of films, which puts off most of the cost of marketing and distributing the movies until next year.
Including other reductions the studio has made this year, Paramount will wind up saving about $60 million in overhead in 2009. Paramount hadn't yet started a television campaign for "The Soloist," so the delay won't cost the studio any wasted advertising money, says Rob Moore, vice chairman of Paramount.
The new plan "is definitely responsive to the current economic climate," Mr. Moore said. He added that the studio has been eager to implement the new plan for some time but first had to resolve a number of outstanding issues, including the recent departure of DreamWorks' principals, before instituting the cutbacks.
"We now have a new strategy that wasn't possible before the DreamWorks deal was concluded," says Mr. Moore. "We couldn't engage in long-term planning because there was a big variable blocking that process."
The film industry has long argued that it is recession-proof, able to attract audiences during down times because moviegoing is cheaper than some other forms of entertainment such as sports and travel. Paramount's cutbacks signal that Hollywood is nonetheless bracing for the impact from the current economic turmoil.
"Defiance," starring Daniel Craig, won't be in wide release until January.
Hollywood already made a round of reductions this year. Most of the major studios shuttered or downsized their "specialty" divisions -- which release small, indie-like films -- in reaction to a crowded marketplace that has made it more expensive to compete for audiences. In June, for example, Paramount absorbed the majority of the staff at its Paramount Vantage label into its main studio, cutting about 50 employees and reducing the number of releases. Time Warner Inc.'s Warner Bros. made a similar move with its New Line division.
Paramount's trims also come at a time of turmoil for Viacom, as the advertising down turn has pressured its worsening financial outlook. Recent market swings even forced media mogul Sumner Redstone to sell a $233 million chunk of his holdings in Viacom and CBS Corp. to head off debt problems at his family's holding company.
Cutbacks are also beginning to show up elsewhere in the entertainment industry. NBC Universal Chief Executive Jeff Zucker told staff in a memo Friday that the company would be cutting its budget by $500 million next year.
Too bad about the Soloist I was looking forward to it!
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Source: WSJ
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