This Sunday a global audience second in size only to that for the Super Bowl will watch television's most lucrative infomercial -- the 72nd-annual Academy Awards. For some three and a half hours, interspersed with clips from currently-available movies, many of Hollywood's most publicized stars, acting as mobile product-placement platforms for their own and other images, will ecstatically award 55 13-inch-high gold-dipped statuettes. The recipients of these awards have already been determined by a mail-in poll of some 4,200 eligible members of the Motion Picture Academy of Arts and Sciences, which the studios created in 1927 expressly for the purpose of sponsoring this image-building event.
The Academy's voting mechanism is murky at best -- it studiously avoids disclosing how many of its members vote, what the margin of victory is for any winner (which in a five-nominee race might be pretty slim) or, for that matter, what part of a winning vote was provided by members with a vested financial or career stake in the film or its sponsor. But almost nobody cares about such obvious flaws in the process. For insiders, the point is not the empirical validity of the vote but the value, in money and status, it bestows on the honorees -- and to greater Hollywood.
Who are these unnamed winners? The studios obviously think an Oscar win matters to them. Because they are prohibited by Academy rules from using the telephones, mail, FedEx or even banquets to electioneer, they advertise in the two trade papers, The Hollywood Reporter and Variety, to alert Academy members of their vested interest in films. These multicolored "For Your Consideration" advertisements are not cheap. Variety, for example, charges $29,100 for ads that are tacked over its cover. To date, Dreamworks has reportedly spent more than $775,000 in Variety alone to push a single film, "American Beauty." And, in the last three months, such ads have provided these journals with a substantial part of their annual revenues. Another unambiguous winner is the Academy itself. It received $40,161,000 for the 1999 domestic and foreign broadcast rights. The show cost it $10,715,000 to produce, leaving it with a hefty profit of $29,446,000 (not including what it makes from the books, posters and other mementos it sells on it Web site).
ABC, the subsidiary of Disney that broadcasts the program, is also a winner. It gets almost half the television audience that night, which it then sells to advertisers in the form of commercial time for $1.3 million for each 30-second slot. That adds up to bills of $13 million for the major advertisers taking 5-minute packages. At this rate, with 48 slots to sell, it collects $62.4 million on a program for which it paid the academy $36.6 million for domestic rights. (The value to the advertisers, aside from prestige, has been called into question this year by Revlon's decision to cut back its commercial package from five minutes to one -- saving itself more than $10 million -- because, as one of its in-house ad people explained to me, "there is too much advertising clutter on the program.")
Determining how much the films themselves -- and their distributors -- benefit from Oscars is more problematic. Conventional wisdom holds that films winning Best Picture produce enormous profits through their re-release, or "bump." Variety, for example, reports that in recent years these Oscars have "produced a worldwide box office bump worth an average of nearly $150 million." On the other hand, studio executives argue that the post-Oscar lift is greatly exaggerated -- and point out that the "average" cited by Variety is fatally skewed by the inclusion of "Titanic" and its nearly $800 million post-award worldwide windfall in 1998. The extent to which a film profits from a re-release, according to these insiders, depends both on when in the season -- and how -- a "Best Picture" was initially released.
In any case, box office grosses for re-releases do not necessarily translate into profits. On the second time around, theaters keep a larger share of ticket sales -- 60% as opposed to 30% in the initial run. Also, the distributor has to advance additional money for advertising (having already disbursed millions for the pre-Oscar ad campaigns), which can be greater than the box office receipts.
Consider the sad case of "The English Patient." The producer Saul Zaentz managed to make the film for only $33 million by getting its stars and crew to defer $10 million of their salaries, which they were to recover when the film broke even. And with its Oscar bump and re-release, "Patient" grossed $225 million dollars worldwide. But, as it turned out, that was not sufficient to pay the additional marketing charges levied against it by its distributor, Miramax. Despite its nine academy awards, it still has not repaid the $10 million its stars and crew effectively lent it -- nor has it made a profit. Whatever the cash value the Oscar bump may add to films, its status value greatly benefits studios, especially the newer studios, which thirst for credibility (this helps explain the superabundance of Dreamworks and Miramax ads in Variety and The Hollywood Reporter).
For their part, studio executives tend, characteristically, to take a Byzantine view of the value of Oscars. One very savvy executive, who asked not to be quoted, explained to me that the chief beneficiaries may be directors. Not the directors who themselves win Oscars for directing but directors whose stars win Oscars for acting. His logic went as follows: Superstars, who get a fee of $20 million or more for a picture, want to win the Best Actor Oscar because of the prestige it brings; they make big bucks anyway. Studio executives also believe, rightly or wrongly, that certain directors are able to make films that win Oscars for the actors who star in them. And, if those actors think such a director will get them the prize they covet, they will often cut their fee, which will save the studio tens of millions of dollars. Studios thus seek to make deals with a director whose stars, they think, tend to get Oscars, because they hope these directors will attract Oscar-hungry newcomers to act in their films -- on the cheap. For example, Woody Allen, whose star Diane Keaton won best actress for "Annie Hall" in 1977, has since been able to get dozens of stars (such as Bruce Willis, Leonardo DiCaprio, Sean Penn and Julia Roberts) to waive their multimillion-dollar fees to act in his films.
Finally, the 4,200 academy voters benefit at least psychically, if not materially, by believing that their choices will, like Archimedes' lever, somehow influence the universe of entertainment. Expressing this belief in their global power, the co-producer of the industry infomercial, Richard Zanuck, told Variety: "We will have to be cognizant of the fact that there will be 800 million people watching around the world." But there were only 78 million American viewers last year. Thus, to meet this projection, some 722 million foreigners, many without television sets, would have to stay up through the wee hours of the morning and the next working day to watch a show in a foreign language -- an extraordinary conceit since some of the largest countries in the world, such as China and India, are not even licensed to carry the program. Whether or not this vast -- if unverifiable -- alien audience materializes on Sunday night, the Academy voters will continue to take great satisfaction in their perceived universal power.