Hollywood studios' trade group faces leaner budget

Tue Mar 3, 2009 5:55am GMT

The Hollywood sign is seen on a hazy afternoon in Los Angeles, California, November 4, 2007. REUTERS/Danny Moloshok

The Hollywood sign is seen on a hazy afternoon in Los Angeles, California, November 4, 2007.

Credit: Reuters/Danny Moloshok

LOS ANGELES (Hollywood Reporter) - Hollywood studios have cut more than $20 million from the Motion Picture Association of America budget this year. The resulting staff and program reductions are expected to permanently shrink the scope and size of the six-studio trade and advocacy group.

Separately, the MPAA board is expected to announce soon a contract extension through summer 2010 for CEO Dan Glickman, who was rebuffed in a bid for a new multiyear pact. His current contract expires in June.

On Monday, Glickman acknowledged recent budget and staff cuts but declined to detail the moves or discuss his contract status.

"Virtually every trade association in Washington is suffering cutbacks, and it's reflective of our times," said Glickman, who was hired in 2004 to replace longtime chief Jack Valenti in the studio group's top staff position. "We're no different from those trade associations."

Those familiar with the situation said the MPAA budget has approached $100 million in each of the past several years, not including select project initiatives budgeted separately, such as a $20 million pilot initiative on European film piracy or a litigation contingency fund.

Cuts finalized in December "whacked tens of millions" from the MPAA's fiscal 2009 budget, reining in basic expenditures to about $75 million, a well-placed source said. More than half of the group's annual budget in recent years has been spent on multifaceted global efforts to combat film piracy.

PAYROLL CUTS

In a series of related moves, the 87-year-old trade organization laid off an estimated 20 percent of its staff and consultants in Los Angeles and Washington, leaving a stateside work force of about 160. Another 40 or so employees work overseas for the group's international arm, the Motion Picture Association .

The MPAA's education department virtually was eliminated and its strategic operations were severely slashed, with cuts as high as executive vice president/chief strategy officer Dean Garfield and exec vice president communications Seth Oster, key lieutenants to Glickman and MPAA president Bob Pisano.

The cutbacks parallel similar cost-cutting measures at the studios because of recessionary challenges.

All of the major studios pay equally to fund the MPAA and get equal representation on its 14-member board, which is chaired by Glickman and also includes Pisano. Glickman acknowledged an ongoing re-evaluation of the MPAA's mission, but he stressed that the group remains key to its members' corporate interests.

Others see a diminishing role for the trade group.

"The MPAA is never going to look the same," an informed industryite said. "In the heyday of Jack Valenti, you needed them to do everything -- lobbying, anti-piracy, all sorts of things. Now the studios all have their own major lobbying efforts and anti-piracy stuff. They have their own resources."

Beyond that, the member studios don't necessarily agree on priorities for the group, making it tough to achieve consensus on initiatives and other items that require board approval.

"The studio CEOs view the MPAA as a place where things go to die," a source lamented.

LEGISLATIVE CLOUT

Glickman points to three recent legislative coups as proof that the MPAA remains a strong industry voice: securing industry-friendly provisions in economic stimulus legislation, strengthening federal safeguards on intellectual property and getting a requirement for on-campus anti-piracy efforts inserted into higher-education legislation.

Still, Glickman -- who had a hard act to follow in the iconic Valenti -- seems to lack broad support among studio chiefs.

"Dan spent almost all of 2008 trying to get some clarification about whether he was going to be re-upped," a key source said. "That says everything you need to know about the relationship."

To be sure, the MPAA remains an important vehicle for studio lobbying efforts on issues such as film and TV production incentives, anti-smoking legislation and intellectual copyright protection, and its ratings system is a cornerstone of its theatrical public relations. But there is a spreading sense the MPAA will be asked to make do with leaner operations permanently.

"My understanding is that the reductions were not meant to be temporary but are for the foreseeable future," a highly placed studio insider said.

(Editing by Sheri Linden at Reuters)