Cruise’s lawyer, Bert Fields, called Redstone’s decision "petulant and puerile" and suggests that Redstone may have "lost it completely." Redstone noted, well, yes, petulantly, that Viacom shares were up yesterday and that proved "the street approves of what I did."
The relationship between Hollywood and Wall Street has always been an uneasy one. The latter is drawn to the Hollywood for the glamor, the celebrity, and of course the parties. Hollywood is grateful for the money, but it is loathe to surrender creative control or suffer any sort of interference.
This is the way Cameron Crowe put it several years ago.
You have more and more people coming into the tent with the creative guys. You have marketing and concept testers, advertising people. What you find gets the high numbers is easily appealing subjects: a baby, a big, broad joke, a high concept. Everything is tested. The effect is to lessen the gamble, but in fact you destroy a writer’s confidence and creativity once so many people are invited into the tent.
Let’s face, it with the intervention of business, the world of movie making might be a lot more like film making in Paris, and for that matter, American culture a lot more like French culture. (And one shutters, absolutely shudders, to imagine this. We would all eat, dress, and vacation much better than we do…and American culture would be a pale shadow of its present self.)
The "tension" between Hollywood and Wall Street, between culture and commerce, usually plays in the former’s favor. Hollywood must occasionally defer to the money men, but in the process it secretly converts them. Put it this way: how is Redstone acting? Quite a lot like a an old time studio boss, no? In this contest, the capitalists act like the Hollywood people, thinking from the gut, going with their instincts. This is not a partnership. Hollywood always wins.
When will Capital begin to act with the same discipline and due diligence and fudiciary responsibility it exercises elsewhere. Yes, there’s a problem. When it comes to culture, commerce often draws a blank. There are no good models of what a star like Tom Cruise is worth, no clear way of estimating what his public declarations cost Mission Impossible III.
Wall Street has got better at every sort of calculation. Observations are gathered. Numbers stream. The world is better monitored and newly intelligible. So, when do we start to think about culture with new acuity?
References
Edelstein, David. 2006. M. Narcissus Shyamalan. New York Magazine. here.
Marr, Merissa and Kate Kelly. 2006. For Hedge Funds, Backing Cruise Could Prove to Be a Risky Business. Wall Street Journal. August 24, 2006
McCracken, Grant. 2006. Mr. Redstone, get off the couch. This Blog Sits at the Intersection of Economics and Anthropology. August 23, 2006
Weinraub, Bernard. 1997. Hollywood learns small is beautiful. New York Times. February 25, 1997.
I hate to be That Guy, but I think you mean “shudders” instead of “shutters”.
Edward Jay Epstein has a financial take on the divorce in today’s “Financial Times” (maybe behind a sub-wall), here:
http://www.ft.com/cms/s/d817b680-33a0-11db-981f-0000779e2340.html
An excerpt:
“The good news is that Mr Cruise takes no cash fee up front for his acting or producing role, which otherwise would be $35m-plus per film. The bad news is that Mr Cruise gets 22 per cent of the gross revenues received by the studio on the theatrical release and the television licensing. Even worse, from the studio’s point of view, is Mr Cruise’s 12 per cent cut of Paramount’s total DVD receipts.
What most stars and other Hollywood participants get is a cut not of the DVD revenue itself but of a 20 per cent “royalty”. The other 80 per cent goes to a subsidiary of the studio, the home entertainment division. In other words, in the conventional deal for most other stars, one arm of the corporation collects all the money from DVDs and then pays a mere 20 per cent of it to the studio, which then becomes the “gross” number that the studios report to participants. The justification for this system was that, unlike other rights, such as television licences, which require virtually no sales expenses, DVDs have to be manufactured and marketed. So, usually stars and other participants get their share of just the 20 per cent royalty. For example, if a star has a 10 per cent participation, he gets 10 per cent of only the 20 per cent, or just 2 per cent. But not Mr Cruise. He insisted – and gained – in his first Mission: Impossible deal “100 per cent accounting”, which means that the studio, after deducting the manufacturing expenses, paid Mr Cruise his 22 per cent share of the total receipts.”