Cinema, Corporate Style

Bankrolling a motion picture has always been half investment, half gamble: the percentage of flicks that flop is an astonishing 70%. In the best of times-which these are not-the lure of the long shot attracted enough moneyed players to keep the game alive. In recent years, however, recession, declining profits and rising costs have sent the movie industry into a dizzying downward spiral.

As recently as two years ago, $20 million production budgets were not uncommon; $5 million is now considered extravagant, and the average producer is lucky to raise half that much. Investment bankers, the industry's traditional financiers, long ago deserted what they assessed to be a sinking ship. Thus it is all the more surprising that with the motion-picture industry at its nadir, some of the most conservative and successful U.S. corporations are putting their loose cash behind a new-found belief in the future of movies.

Many major companies, including General Electric, Mattel Toys, Bristol-Myers and Xerox, are gearing up to invest heavily in feature films. Quaker Oats anted up the entire $2 million for the musical Willy Wonka and the Chocolate Factory, and is now ready to plow its considerable profits back into new films. Wells, Rich, Greene, the advertising agency, will soon complete its first film, Dirty Little Billy, an irreverent rehash of the Billy the Kid legend.

The latest entrants into the celluloid sweepstakes are convinced that they can turn a handsome profit. Says Tom Moore, former president of ABC television, who now heads G.E.'s newly created film division, Tomorrow Entertainment: "The big pictures' losing big is what ruined Hollywood, but if you take those out and look at the grosses on the smaller budget pictures, the business isn't so bad. We intend to turn a profit as quickly as we can." Mary Wells Lawrence, president of Wells, Rich, Greene, is even more explicit: "It's not the ego satisfaction; we're going into movies to make money."

No Catch-22s. Because they are unencumbered by outmoded Hollywood traditions of production and financing, and can apply fresh and effective production methods to an industry that has never been known for its efficiency, the new film makers may well succeed. All of them agree on the need to keep production costs in the $1 million-to-$2 million range, a ceiling that the state of the economy has imposed on old-style Hollywood productions as well. "We have no intention of producing Catch~22s," says Richard Kent, treasurer of Bristol-Myers, which will bring out three movies in the fall-all in what Kent calls "the low end of the cost structure."

A few companies, such as G.E. and Xerox, have set up production subsidiaries. Many of the others are putting up the cash and hiring independent production companies or individuals to make their films. Doubleday is making a production deal for a film version of one of its own books, The Parallax View, by Loren Singer; it has contracted for a screenplay by Lorenzo Semple Jr. (Pretty Poison), and hired Director Michael Ritchie (Downhill Racer). Mattel has worked out an arrangement for eight children's films-what else?-with Producer Robert Radnitz (Misty, A Dog of Flanders); Radnitz is now at work in Louisiana on Sounder, from the 1970 Newbery Medal novel by William Armstrong.

The entrance of big firms like G.E. and Bristol-Myers into the moviemaking field is not likely to mean any loss to art, for art has seldom had any direct relationship with the box office. Doubleday's Robert Banker, however, insists: "Our rule is going to be that we will produce things that will entertain and be provocative." Says G.E.'s Moore: "We just would not be interested in producing R and X pictures. But, more important, G and GP are where the long-range values in the negatives exist. They are products with longevity."

Longevity, translated into mass markets and repeated showings, is obviously the key to the new corporate film wave. It has an allure not confined to members of FORTUNE'S august list of the 500 largest U.S. industrial companies. Kirk Douglas, after 25 years as one of Hollywood's most backable stars, recently had trouble raising money for A Gunfight, a property with a strong screenplay starring himself and Johnny Cash (see CINEMA). Then the Jicarilla Apaches, a wealthy Indian tribe (gas leases and mineral rights) with a sophisticated investment policy offered to put up the entire $2 million. For once, it was the Indians to the rescue.

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