Hollywood Downbeat Despite Blockbusters

Led by the summer blockbusters Twister', Mission: Impossible' and Independence Day', Hollywood had a banner year in 1996.

Box office receipts rose 8 per cent to a record $5.86 billion, a dozen films grossed more than $100 million domestically, more than ever before, and the number of people going to theaters rose slightly for the first time since 1993.

So why is Hollywood concerned?

For starters, the cost of producing and marketing movies continued to rise, squeezing profit margins for the major studios. Add to that the number of films that missed the mark, and some of the year's sparkle begins to fade.

According to the Motion Picture Association of America, the cost of making and marketing a film rose 7.6 per cent to $54 million in 1995, the latest full-year figures available. Industry analysts expect costs rose further in 1996, fueled by an increase in salaries and higher promotional expenses.

Already a handful of studios have announced plans to reduce the number of films made each year because of rising costs. Walt Disney Company, which spent $3.7 billion in the financial year 1996 to develop, produce and acquire rights to film and television properties, recently announced plans to cut the number of films it produces nearly in half. Disney officials hope the strategy will result in more successful films, along the lines of the Nicholas Cage and Sean Connery thriller The Rock', which pulled in more than $134 million at theaters in the United States.

Paul Dergarabedian, executive vice-president for Exhibitor Relations Company Inc, which tracks box office receipts, said although costs were rising in Hollywood, studios were taking in more money from video and overseas markets than ever before.

While the cost of making films certainly seems to go up every year the potential sources for money-making seem to go up as well, Dergarabedian said. We have to look at it as more of a global market.

Indeed, the biggest box office surprise of the year, News Corporation's Independence Day', took in $306 million in the United States and $427 million overseas, making it the third highest-grossing movie ever after Jurassic Park' at $977 million and The Lion King' at $755 million.

Movie critics credited the film's popularity to savvy marketing on the part of 20th Century Fox and a simple storyline