Though some may think otherwise (paging Paul Blart), Hollywood is plummeting into a serious financial mire. And now the biggest, importantest canary of 'em all has gone and croaked. Steven Spielberg can't get financing.
We are talking about the Father of the Modern Blockbuster here. People don't say no to Steven Spielberg because he's scary, they don't say no to him because his shit makes bank. But the ever-hungry maw of the current economic sinkhole knows no name or status. And now he's scrambling to finance his DreamWorks production house, what does that say for the rest of the industry? For the little humble producers hoping to get studio deals? Well it ain't good.
The New York Times reports today that Spielberg's DreamWorks, the little mini-studio that he started with Jeffrey Katzenberg and David Geffen back in the late 90's, is in early talks to enter into a distribution deal with Disney. This is big news considering the company had announced a shiny new deal with Universal just a few short months ago. A deal that's now fallen apart, loudly. "We wish them luck in their pursuit of funding and distribution of their future endeavors," was Universal's passive-aggressive kiss-off announcement today. And while it may seem like just a simple statement, its implications are pretty bleak.
There have been plenty of indications of how hard it is for even Spielberg to find money. Last month, he accepted a lifetime achievement award at the Golden Globes that focused on his talents as an executive producer in what looked like an investor pitch session. And he was forced to dip into his own coffers to retrieve 17 DreamWorks properties that were being held captive by the studiolet's former owner, Paramount. Spielberg split the cost of the buyback with an Indian conglomerate Reliance, a rickety alliance forged out of panicky desperation.
When it was first struck, Reliance agreed to back DreamWorks with $350 million if they could raise another $350 in a debt offering headed by J.P. Morgan. Investors have not been forthcoming and as Nikki Finke reports, DreamWorks needs to find $100 million like yesterday or it could lose the money the Indians have already pledged.
Though New York journalists flown out for a few days and feted to within an inch of their lives like David Carr might think the situation in the Southland is hunky-dory (box office is up! Studios' East Coast owners are the ones in trouble!), the reality is less pleasant.
It's been decades since box office was an indicator of a studio's financial health, though studios acts like it is when they have a hit. Which made last month's Paul Blart: Mall Cop-driven numbers something of a Pyrrhic victory because the studios' good receipts have cost them important production tax breaks. The Senate just didn't want to finance a Hollywood bailout. And for every unexpected hit—like the previously mentioned Blart or Old Man Witherstaff's Gran Torino—there have been trundling disasters like the $150-$180 The Curious Case of Benjamin Button or the recent Fox catastrophe Australia.
You can bet that DreamWorks will have to take a hit, and a humbled Spielberg will have to hold a sad little hat in hand. An image lots of people never thought they'd see. A sobering thought for all of those people whose plan B is to head West and hit it big in Pictures.