Are the Japanese growing queasy about Hollywood? The question has stirred the town this summer, less than three years after the start of a spending spree by the Sony Corp. and, to a lesser degree, the Mat-sushita Electrical Industrial Co., that amazed even Hollywood.
If the marriage between Japan and Hollywood seemed, from the outset, a bit shaky, the strains have now left the participants anxious and defensive.
What has caused the difficulties are the two interlocking facts of life about the movie business, which is often financially unpredictable, chaotic and nasty. And the line between fact and fiction-or truth and rumor-is blurred.
The latest rumor involves some cost-cutting moves at Sony Pictures Entertainment, which owns Columbia and Tri-Star studios. Cost cutting is generally given lip service in Hollywood: Everyone is in favor of it but few actually manage to do it. Yet when Sony tries to cut costs, after being on a spending binge for two years, the town seems shaken.
Several of Hollywood`s biggest agents, who spoke only on condition of anonymity, say they have been told by Columbia essentially to cool it on proposed deals for the next six months or to sign contracts but delay payment until next year. The reason: Columbia has stockpiled a number of high-profile, expensive projects, and the studio has spent too much money in the first place.
”Columbia has made it clear that from now until January they`re not in the development business,” one agent said. ”They`ve got plenty in their inventory.”
Officials at Columbia deny that its parent company has laid down an edict to limit costs. But even if Sony`s president, Norio Ogha, did so at a recent meeting in New York-as has been rumored-is there anything wrong about that?
After all, Sony purchased Columbia Pictures Entertainment in 1989 for $3.4 billion plus $1.3 billion in assumed debt.
Sony is not the only Japanese company in Hollywood expressing concern about the balance sheet. One year after Sony bought Columbia Studios, Matsushita acquired MCA Inc., which owns Universal Pictures, for $6.1 billion. In recent months, relations between Matsushita and MCA have grown tense. This is partly because of a disappointing year at MCA as well as Matsushita`s high-level executive turmoil.
But it is Sony that has aroused the most attention, largely because the company spent so extravagantly when it arrived in Hollywood. Aside from the astronomical purchase price, Sony shelled out at least $1 billion, and possibly far more, to put the people it wanted in place at Columbia.
Moreover, Sony`s free-spending ways in recent years resulted in some extraordinary deals, including a five-year exclusive arrangement with writer and director James Brooks said to be valued at $65 million.
Essentially, numerous deals have been set, money spent and the returns have not yet come in. Sony is, quite naturally, a little worried.
”Sony and Matsushita did not understand how quixotic and cyclical the entertainment business can be,” said a major Hollywood producer who works closely with the Japanese.
In surveying their big movies of the past two years, Sony executives insist that ”The Prince of Tides” and the big-budget ”Hook” will eventually earn profits because of their international appeal. But ”Bugsy”
is considered a loser, and the executives acknowledge that the company ”crash landed” on the 1991 ”Hudson Hawk” (a loss of at least $20 million) and last year`s ”Radio Flyer” ($40 million to $50 million gone).
Currently Columbia`s hopes are pinned on the Penny Marshall comedy ”A League of Their Own,” which needs to maintain its box-office strength through the summer if the studio is to earn back its costs.
Mark Canton, chairman of Columbia Pictures, which has an array of big-star films coming out in the next few months, brushed aside all the talk about Sony holding back on development of new films. But he made it perfectly plain that the company was no longer spending with abandon.
”This company is running with imagination, with openness, and there`s a shingle outside the door saying we`re open for business,” he said. ”It`s patently not true to say we`ve stopped developing.”
