Spring 2010

The Hollywood Economist: The Hidden Financial Reality Behind the Movies
(Melville House Publishing, 252 pages, $16.95)
By Edward Jay Epstein

Hollywood EconomistEdward Jay Epstein started his career as an investigative journalist plumbing the murky, ambiguous depths of the Warren Commission Report on the Kennedy assassination and was legal advisor on the highly convoluted case involving the film Sahara, an excellent double apprenticeship for anyone seeking to decipher the black art of Hollywood accounting.

His 2005 book, The Big Picture, annoyed movie moneymen and astonished business journalists with its grasp of the numbers, all backed up by the kinds of documents that producers would kill to keep under wraps. In the more reader-friendly The Hollywood Economist, Epstein again maintains—quite rightly—that the media’s image of Hollywood and its money is still founded on a studio-centric template fully five decades after the studio system ceased to matter, and that weekend box-office figures are the worst imaginable guide to Hollywood’s fiduciary well-being, offering “nothing more than bragging rights” to a studio for one week.

Arguing that the Oscars are an annual “quality alibi”—a fig leaf to hide the pre-packaged, test-market-ed, teen-centric movies that make the real money (a tough argument to support after this year’s Oscars)—Epstein notes that whatever groundbreaking art gets made in Hollywood, the real avant garde stuff comes in the form of deals, contracts and packages, and far less often in product. Arnold Schwarzenegger’s contract for Terminator 3 is held up for examination as a “state-of-the-art exercise in deal-making” that involved 18 months of painstaking drafting by lawyer Jake Bloom. We also learn why Lara Croft: Tomb Raider, for all its shortcomings as a movie, is a “masterpiece” in the realm of movie finance deals.

Epstein reorients our perceptions toward the prevailing economic reality of the industry, reminding us that “you can’t make money on movies in theaters,” that many innovative kinds of financing were killed off by the September ’08 stock market crash, and that the Internet will prove to be both a blessing and a curse to movie financiers. Epstein makes his medicine go down nicely with illustrative anecdotes on Nicole Kidman’s uninsurable knee, the depressive effect of nudity on a movie’s box-office prospects, and why America is played in the movies, more often than not, by Canada.

Review written by John Patterson.


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