According to The Wall Street Journal (subscription required), Viacom (NYSE: VIA) really wants to keep Steven Spielberg in its studio roster.
The media company is due to make some righteous bucks from Spielberg and his new Indiana Jones flick, which is set to hit theaters in a couple months. CEO Philippe Dauman wants to correct any missteps he made in his relationship with the extremely famous and powerful director after perhaps not singling out his importance as much as he should have in comments made at a conference last year.
I'm a big fan of Steven Spielberg; the man definitely knows how to make money. But, I do have to confess that, when it comes to chasing big, expensive stars, I think CEOs of studios must consider two things: 1) success in the movie industry is so random that every project represents extreme risk, no matter who is attached; 2) it is the deal that matters most; or, put another way, it is the return on invested capital that must be chased, not the celebrity of a certain individual. Say what you want about Disney (NYSE: DIS) and its movie-making ways, but keep in mind that the company does focus on ROIC, to its credit.
I think studios at Time Warner (NYSE: TWX), News Corp. (NYSE: NWS), and General Electric's (NYSE: GE) NBC Universal tend to give too much credence to the pull of stars. This may sound insane when speaking about Spielberg -- hey, don't get me wrong, the guy has incredible brand pull, to say the least. And, again, I am a fan. However, I guess what I'm saying is that I hope Dauman keeps in mind that a less-than-perfect relationship with Spielberg -- or, even no relationship -- won't kill his media company. He must remember that it is a great idea, in synergy with the competent marketing of said idea, that rules. Never go to inordinate lengths to please a star, because that means that shareholders will not see as much in the way of profits. We need look no further than a movie like Cloverfield to see proof of such. Remember how Redstone said good-bye to Tom Cruise? Paramount is still standing, my friends.
Disclosure: Steven Mallas owns shares of Disney and General Electric; positions can change at any time.
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Reader Comments (Page 1 of 1)
3-11-2008 @ 3:52PM
Sheldon L said...
Steve,
Everything you say is true, however, since each deal represents risk and nobody has 100% hits, all you can do is hedge your bets.
The likelyhood of Spielberg having a hit is greater than most anyone else. You are right that it's all about "the specific deal" but you absolutely must be negotiating deals with Spielberg as much as possible.
...direct from Hollywood!
3-11-2008 @ 5:30PM
Kadabr said...
Normally, I'd say I see your point but...
Spielberg is not a star. He is an institution. He is a giant, a mastadont if you will.
Over nearly four decades in the entertainment industry Spielberg has showed staying power unlike any that of any other filmmaker of mogul. Not only is he the most successful filmmaker on a verge of omne of his biggest hits yet, people generally like him and want to work with him. That's the most important issue for Paramount, and one of the biggest reasons why they want him around - he is a talent magnet. Not only doee he get the best scripts first he is also able to attract and cast virtually any actor or actress he wants. Because people want to work with him.
He is not merely a star, he has a power to make other stars. The guys is not almighty of course and he had a few difficulties here and there, especially lately, (and not I'm not talking about China) but overall, he's a friggin galaxy ;) .