Malin: Studios must change
More will be sold, he predicts in VSDA speech
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At a keynote speech Saturday before the Video Software Dealers Assn., Malin blasted the "upside down business model" of studios and the self-protective approach of execs concerned about maintaining salary and status.
Afterwards, Malin told Daily Variety that "none of the studios are interested in making money. They're like sports franchises; they only make money when they're bought."
Malin would not identify which studios he believes will be sold.
"The people making decisions are making fat salaries and they don't care about maximizing marketing potential," he said.
Malin also said that even though some summer theatrical releases have performed well, "not one of them has captured the audience's hearts and minds. That's what we have to do."
A 'new paradigm'
During his address, Malin held up Artisan as the "new paradigm" of how an entertainment company should be run, an alternative to the "deteriorating state of the major studio system."
Although overall revenue at Artisan is small compared to that at major studios --company's revs rose in the past year to nearly $400 million -- Malin noted that "profitability on the EBITDA line has risen to $40 million."
By comparison, he noted that Universal posted a loss last year of $206 million and that as a result of "Titan A.E.," News Corp. will take a write-down of $120 million for its fiscal fourth quarter.
After his speech, Malin said, "It's sad that on an operational basis the movie industry is not profitable."
During his address he said that Artisan's revenue-to-overhead ratio is 8% compared to an average of 15%-20% for the major studios. Production budget averages of $55 million per picture and P&A costs of $27 million are, according to Malin, far too high.
Overhead over head
"The major studios still rely on exorbitantly high overhead and operating costs to do what can be done for a fraction," he said.
Citing a list of recent theatrical movies like Sony's "Random Hearts," Universal's "End of Days," Fox's "Fight Club" and Paramount's "Bringing out the Dead," each of which cost far more to make than it generated in box office, Malin said: "It's sheer arrogance on the part of the major studios to make movies that cost too much to produce and too much to release. It's unnecessary to make pictures that nobody wants to see in order to justify production overhead."
After the speech, Malin said the industry is "embedded in a system in which budgets don't matter anymore."
Other "state of the art" elements of the Artisan business model cited by Malin during his speech are components already long in place at other studios, including output deals with premium cable channels; distribution to basic cable networks; pre-selling theatrical movie rights to international markets; and sharing production costs through output deals with overseas distributors.
