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Despite Economy, the Show Must Go On in Hollywood

It's a city where perception is reality and image is everything. But Hollywood is having trouble keeping up appearances in the midst of the nation's economic downturn, even during its splashiest, most self-celebratory time: awards season.

Hollywood
Hollywood

Of course, the show must go on. The Academy Awards bring $130 million into Los Angeles, and city economists expect that to be true this year, too. But it's in the ancillary activity -- parties, studios' campaigns for Oscar votes, glossy ads in trade publications -- where less money is being thrown around.

Even director Danny Boyle, whose "Slumdog Millionaire" is the front-runner to win the best-picture Oscar, acknowledged the awkward paradox of backslapping as the economy slides backward.

"When you read a headline like last week, I read 60,000 jobs lost in a day in America, you just think you've got to be very careful because we live in a very glamorous world, you take lots of photographs, there's lots of smiling asked for and stuff like that," Boyle said backstage after winning the top prize from the Directors Guild of America.

"We're very lucky," he added. "And we're aware of that."

So how does the lavish machinery keep running during such tough financial times? Longtime events planner Chris Benarroch says smaller parties are the new normal, "not having things for 1,500 people, maybe 100 or 250."

Entertaining at home is also becoming a popular option, with studio or agency executives hosting a dinner, for example. With elegant linens, candles and flowers, that costs maybe $50,000, versus the half a million dollars and more that can go into enormous soirees staged from the ground up.

"There's more emphasis on buying out a restaurant like Spago, not going over the top where you were building a tent with decking, floor-to-ceiling creating a whole environment in a parking lot or a raw space. You're using an already existing venue," she said. "You're going to see a lot of people attending the (post-Oscar) Governor's Ball more than ever before, taking advantage of that opportunity. Everyone is just really scaling back."

The annual Vanity Fair party on Oscar night will be more intimate with a smaller guest list -- the Sunset Tower Hotel expects about 750 people -- and chicken pot pie will be on the menu: "The whole idea of, in tough times, it'll be cozier and we'll be serving comfort food, the kind of food that makes people feel better," said the magazine's spokeswoman, Beth Kseniak.

The added benefit: It'll be even more exclusive than ever before. "It's always hard to turn people down," Kseniak said, "and this will make us have to."

Normally corporate sponsors help pay for the cost of a party and get the prestige of their association -- Cartier co-hosted a Golden Globes viewing and post-party with NBC/Universal, (General Electric is the parent company of NBC Universal) for example. But that money is drying up, too.

"One by one they were like, `We just can't do it. We just don't have the funds,"' said Benarroch. "Normally it's a huge coup to have a company come on board and host an Oscar party. Normally we have the pick of what works best with the film. This year, it's slim pickings. ...

"What company's not laying off people?" she added. "How do you justify that?"

The economy is also affecting the way awards campaigns play out in the trade publications, where high-profile ads are a crucial component of the annual bragging rights.

"It would be ridiculous to say it isn't," said Variety president and publisher Neil Stiles. "You can see it in the volume of advertising we're carrying and The Hollywood Reporter is carrying or not carrying, coupled with the L.A. Times on the fringes and The New York Times."

Oscar Award Statue
AP
Oscar Award Statue

Stiles wouldn't say exactly how much Variety's print ad sales are down, but said it's less than 40 percent. (The Hollywood Reporter declined comment because it didn't want to reveal financial figures.) Variety's online ads, meanwhile, are up about 6 percent from 2007 to 2008, though the expectation was that they would have increased by 15 percent.

Several elements are at work simultaneously, Stiles said. Almost half the number of films were offered for awards consideration compared with previous years. Then the art-house branches of several major studios, often the origin of such awards contenders, got folded into the studios themselves -- Warner Independent into Warner Bros., for example -- shutting down internal promotional infrastructure.

Now, the corporations that own these studios are reporting huge quarterly losses. News Corp. , parent company of 20th Century Fox, announced that it lost $6.4 billion in its most recent quarter. Walt Disney reported a 32 percent decline. Time Warner , which owns Warner Bros., posted a $16 billion loss in that period.

The result: They just don't have the money to promote their films the way they once did.

Studios are traditionally reluctant to go on record discussing the financial specifics of their campaigns. But longtime awards observer Tom O'Neil, columnist for the Web site TheEnvelope.com, estimates Oscar budgets are down 30 percent to 40 percent this year.

"The average Oscar campaign now is in the range of $5-10 million, where it used to be in the range of $7-20 million. `Gladiator's' was $20 million" when it won best picture and four other Academy Awards in 2001, he said.

Meanwhile, new emphasis has been placed on online ads and Q&A screenings, where a studio brings in the director or stars to answer questions after a showing of the film.

"There used to be a lot of luncheons and dinners they would do for about $15,000 apiece to bring in 80 Hollywood insiders, hoping to net 30 Oscar votes, and they realized that's not efficient -- that for $6,000 to $10,000, they can do a Q&A screening and bring in 200 guild members, which is likely to have a much higher percentage of Oscar people."

Another way the studios are cutting back, O'Neil said, is in the number of what he called "illegal Oscar parties."

"There's always some bogus, alleged reason for, you know, a star's birthday, or congratulations 'cause they just won a guild award or got nominated. You're not, obviously, allowed to campaign blatantly to Academy members -- it's against their rules, they can pull your number of tickets to the ceremony per studio, that's the punishment -- but there are scores of illegal Oscar parties that go on every season. There used to be, certainly, more than 100 of them during Oscar season."

Los Angeles California skyline
AP
Los Angeles California skyline

Now, he estimated those have been cut by about 75 percent.

Still, glamour must prevail.

Jack Kyser, founding economist of the Kyser Center for Economic Research at the Los Angeles County Economic Development, still expects the Feb. 22 Academy Awards to bring $130 million to the city.

That's everything from hotel suites, where designers share their fashions with top stylists for weeks before the big event, to the annual nominees luncheon to plastic surgery sessions.

"You're on stage globally so you've got to look your best," Kyser said. "So you'll go get your lips plumped, you'll have Botox injections, maybe a little tan sprayed on you."

Maybe the escapism Hollywood provides is more necessary now than ever, said veteran jeweler-to-the-stars Neil Lane. Celebrities are still making a statement, but perhaps it's through valuable yet understated pieces and less bling; then again, that might be a matter of individual taste, he said, not an effort to avoid seeming ostentatious.

"If the look commands a huge, expensive diamond then that's what you wear. I don't think the economy is going to prevent that. If that's what the look is about then that's what you need to do," said Lane, whose designs most recently appeared on Katy Perry, Sheryl Crow, LeAnn Rimes and others at the Grammys. "Hollywood is definitely aware of the world. Hollywood is definitely sympathetic. I am very sympathetic to the crisis in the world. But again -- it is Hollywood. ...

"The world doesn't want to see paupers going to the red carpet in rags and tatters," Lane added. "They want a moment of respite and happiness and joy. They want to go `Wow!' and have their eyes open. They want to dream."

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