Hollywood studios pinching pennies

Viacom (NYSE: VIA) subsidiary Paramount Pictures, which recently distributed the hit Will Ferrell comedy Blades of Glory, followed the premiere with a private gathering for the cast and crew. The event cost the studio about $50,000, or roughly one-tenth of what an average premiere party might run.

A studio executive told The New York Times that "There has been a cultural shift in Hollywood where the size of a party doesn't show how much you believe in a movie anymore ... a party is not going to sell movie tickets."

With shareholders and corporate partners eager to trim costs, the nation's movie studios are reportedly scaling back the high-cost hubbub that accompanies a movie's big-screen release. Some production firms are forgoing the lavish after-premiere parties, while others are scrapping the red-carpet premiere concept entirely, preferring to host laidback industry screenings.

Marketing costs among the major studios crested in 2003 but have steadily been paring back. Last year, costs dropped 4.4% to $34.5 million. This move helped offset the 3.4% increase in the average price of a film, which hit $65.8 million, according to the Times.

That trend is expected to continue, so those of you in the red-carpet business might be seeing a decline in sales. Same is true for purveyors of top-shelf champagne and caviar.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.