Now, here is an interesting little spat. Michael Bay, according to The Hollywood Reporter, is upset with Viacom (NYSE: VIA). Why? Well, there's a movie coming out this week called Transformers: Revenge of the Fallen. It's the sequel to the big summer hit from a couple years back that brought the Transformers brand into the multiplex culture. Bay directed both projects. And he apparently has taken a tantrum, a little baby-like tantrum, over the marketing of the new film.
The Reporter article, which talks about the TMZ.com post that brought an email Bay wrote in May to the world's attention, says that Bay believes the quality of the marketing support so far on the second Transformers is way below par. He feels no buzz equity surrounding the movie. He doesn't think that an appropriate zeitgeist of support has been synthetically manufactured by the powers that be at Paramount. And he wonders if it might have to do with money: "I cannot figure if this is a cash issue with your company?" Further, he proffers: "Right now we are not an event. We are just a sequel, which is different."
Look, truth be told, I'm big on marketing, too. I know what Bay is getting at. But, as a shareholder of media companies such as Disney (NYSE: DIS) and General Electric (NYSE: GE) -- yes, GE is sort of a media company because it owns NBC Universal -- these comments irritate me. Does Bay realize that Viacom is having problems growing its businesses? Did he look at the company's recent quarterly earnings?
If Viacom feels that it is in the best interest of its shareholders to spend a little less on marketing (I'm not sure that's the case, I only have Bay's anger to go on), then I think Bay should possess at least an iota of an inkling as to why Viacom feels this way. We know why he's complaining, though, don't we? Greed. He wants Viacom to buy as many revenues as possible through advertising so that he can take a nice chunk of a huge gross. Keep in mind, though, that a sequel should, as some theories go, not need as expensive a marketing campaign considering that there already is a built-in audience for the franchise.
I hope Viacom doesn't succumb to Bay's complaints. Actually, the Reporter says that a follow-up communication sent by Bay to the company was more positive about the marketing paradigm. But what happens in the future when the economy is a little better? Will Viacom leverage a ton of shareholder equity to satisfy screaming Hollywood brats? This is the problem with the movie model: if execs give talent participation in the cash flow of a project, then they will cause friction throughout its release process. I'd argue that paying flat fees to talent instead of constructing complicated compensation packages is the better way to go.
Bay has to understand that the new Transformers film cost a reported $200 million to make. Has to understand? He does understand. Capital isn't limitless, pal. And if you don't like what your sequel eventually grosses, too bad, go put your own capital at risk. Viacom may have a reason for being economical when it comes to marketing. Hopefully that reason is the shareholder...
Disclosure: I own Disney, GE; positions can change without notice.
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Reader Comments (Page 1 of 1)
6-23-2009 @ 7:13AM
Thanh T. said...
A young reporter for the New York Journal once said, “Ninety-five per cent of films are born of frustration, of self despair, of ambition for survival, for money, for fattening bank accounts. However five per cent, maybe less, are made because a man or woman has an idea, an idea which he or she must express.”
He also mentioned, “Van Gogh was a great inspiration for passionate film students, a guy for whom life was work and work was life. Mr. Sammy wanted to be like him, except he didn't want to go nuts and cut off his ear.”
[“Limited chocolates and no cigars…kid.”] (Sam M. Fuller 1912-1997)
6-28-2009 @ 9:12PM
Dave said...
I think your analysis is rather short sighted, penny wise dollar foolish if you will. This film cost $200 million as you say and what is the best way to recoup that money? Will saving a few million on marketing help this movie at the box office? The best way viacom can help shareholders is by making sure that the maximum number of people buy/watch this movie and without a strong marketing campaign many people may decide to simply wait for Netflix. Michael Bay is right, you act like his interest in making money is at odds with those of the shareholders. The more money Bay makes the more money the movie made and the more money viacom makes. Bay is not the enemy here, he is trying to sell as many tickets to this thing as possible. Any shareholder should want that.