[lbo-talk] a question about the movie business

[SA]

Here's a question for those who know something about the business of 
movie-making. There's so much talk these days about movie studios being 
unable to turn a profit. My very uninformed impression (all impressions 
related herein are uninformed) is that the major cost of running a movie 
studio is the exorbitant salaries of star actors and directors. So my 
question is - why can't studios return to the system that reigned in the 
old days, where talent was engaged by long-term contract?

Think about it. Let's say we bought a big studio with enough capital to 
turn out 20 movies a year. And let's say we started the studio by 
signing up eager unknowns under, say, 7-year contracts at $50,000 a 
year. By the terms of contract, the actors/directors would be barred 
from making movies with any other studio, and would be required to work 
full-time on our studio's movies.

Naturally, most of the talent would turn out to be of little star power. 
But if just one in twenty (or whatever) actors turned out to be a big 
box-office draw, we could put those actors in movies and keep paying 
them just $50,000/yr for the life of the contract while raking in money. 
Since big stars can demand $1 million or $5 million or $10 million or 
(way) more on a picture, think of the huge money we'd save.

Why don't film studios do this anymore? The fact that this would 
radically reduce earnings inequality and increase job security in the 
acting business is a major selling point for me (it acts as a form of 
social wage insurance) - but I don't see why it wouldn't also be very 
profitable.

SA