International markets have long been crucial to film biz

Hollywood

International markets have long been crucial to film biz.
By Hy Hollinger and Cynthia Littleton

http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1000999360

"Without the foreign markets, Hollywood would be bankrupt."

It's a statement that is as true today as it was when it was penned 70-odd years ago by The Hollywood Reporter founder and publisher William R. "Billy" Wilkerson in his Page 1 Tradeviews column."The loss of (foreign) markets would necessitate at least a 50% cut in production costs," he wrote in his Feb. 18, 1937, column detailing the rising threat of government-imposed censorship, tariffs and other restrictions on Hollywood's exports."

For some of us to say 'To hell with Turkey! Forget about Roumania' ... would be talking out of the wrong side of our mouths," he wrote.As The Reporter boss could see back then from his Sunset Boulevard perch, Hollywood was destined to become an ever-more internationally driven business.In the 1930s, foreign boxoffice revenue accounted for about 40% of the major studios' annual revenue. From the 1950s to the '70s, the U.S. studios are reported to have brought back about 30% from the offshore market, a percentage that started to rise in the '80s to the current 50% level.Today, filmed entertainment represents the U.S.' second-largest export after aircraft.

Indeed, the industry paid attention when MPAA chief Dan Glickman reported in March at the annual ShoWest conference that the percentage of worldwide boxoffice revenue from international markets exceeded that of domestic for the major studios for the first time ever last year.Of the 24 films that topped $100 million at the overseas boxoffice in 2004, 20 exceeded their North American takes, with several more than doubling domestic returns and others helping to salvage domestic disappointments."International activities have grown in importance for the MPAA (and) for our member companies," Glickman said at ShoWest, though in the same breath he warned against the growing threat of worldwide piracy and trade barriers to content providers in developing markets like China.

But as much as the international aspects of the film business are becoming more prominent at home for Hollywood, the record during the past 75 years in The Reporter in many ways shows that things haven't changed all that much from the industry's formative years, when film exports were more commonly measured in feet rather than dollars.A few generations ago, Wilkerson was bullish enough on the promise of the European film business that he launched The London Reporter, a British-based daily trade paper covering the U.K. and continental market. It lasted five months, from March-August of 1936."We felt that there was enough production going on in London, enough being planned, enough throughout Europe to support a strictly production daily paper," Wilkerson explained in his Aug. 1, 1936, Tradeviews column in the hometown edition.

"We were wrong."But history has proven that Wilkerson hardly was wrong to have focused a good deal of The Reporter's newsgathering efforts from the start on letting the hometown industry know what was going on in foreign markets. (The nomenclature switched to the less ethnocentric "international" markets with the first rumblings of globalization in the 1980s.)When The Reporter debuted Sept. 3, 1930, the dubbing problem was the big international concern for Hollywood's largest studios at the time. That challenge came at a time when British, French and German filmmakers represented serious competition. Titles in any language easily could be inserted in silent-film prints.Talking pictures by then had taken root in the domestic market, but it was a different story overseas. MGM, Paramount, RKO, Warner Bros. and other majors were experimenting with dubbing for non-English-speaking markets and with the production of "version" pictures, in which actors of different ethnicities would shoot at night on sets populated by Hollywood stars by day.The Reporter had been publishing for less than two months when it asserted "No Profit In Foreigns" in the banner headline of its Oct. 23, 1930, edition. The story noted that "out of the 23,477 motion picture theaters throughout the world, excluding those in English-speaking nations, there are but 2,727 equipped to run talkies."

The grim picture painted in that story didn't stop the newspaper from proclaiming "Foreign Market Solved" less than a year later, in the banner story of its July 30, 1931, edition. The solution was that the majors had gotten "dubbing down to a fine art" and adjusted release plans in markets that preferred subtitling.But that was only the beginning. As the major studios established sales offices from Melbourne to Mexico City in the 1920s and '30s, Hollywood had more than a few battles looming on the horizon with foreign governments.Gaining access to the lucrative British market was a particularly fierce fight at times for the pioneering Hollywood moguls and MPAA ambassador Will Hays, of Hays Office legend, who fought hard in the 1930s and '40s against the British and their quota system mandating the studios produce a set percentage of films in Britain, which became known as "quota quickies" in the parlance of The Reporter.

Then as now, foreign presales were a key component of film financing for independent producers and studios alike. In its Dec. 19, 1930, edition, The Reporter trumpeted the "Big Deal For Chaplin" news that a British distributor had advanced auteur Charlie Chaplin the record-setting sum of $2 million against 75% of the British gross for the distribution rights to "City Lights."And Hollywood always has been quick to sound the alarm on film piracy."Indies Charge Piracy," read The Reporter's banner headline in its Jan. 30, 1936, edition. The story reported that Mexico was a principal "hotbed" for stolen prints and that I.E. Chadwick, head of the Independent Motion Picture Producers Assn., was planning to appeal to the State Department "for cooperation from foreign governments in stopping wholesale piracy."By the late 1930s, Hollywood was getting nervous about Adolf Hitler and his impact on foreign markets. "Hitler's Fist at H'wood," warned The Reporter's banner story of April 6, 1937, detailing the "suppression in Germany of American boxoffice hit pictures on unknown pretexts." (A few days later, The Reporter carried an item about the Nazi government explaining that "Charlie Chan at the Opera" had been banned in Germany because it contained "too many murders.")

The slowdown and eventual collapse of key European and Asian markets that came with the onset of World War II in the late 1930s was at first a major cause of panic for studio chiefs who only a few years earlier had grappled with the adverse effects of the Depression.Even the most prophetic readers of The Reporter couldn't have known that the loss of foreign revenue in the 1939-45 war years would be comfortably offset by the spike in domestic demand. Indeed, planning and strategizing among the majors for rebuilding European operations began as early as 1943, the record in The Reporter shows. Two months before the D-Day invasion, in the banner story of the April 4, 1944, edition, The Reporter predicted "a vicious cutthroat war for dominance in the world film market when the present global conflict is over is foreseen by the heads of the picture industry, who are even now making plans to come out on top."

The end of the war served as the catalyst that helped propel Hollywood films to worldwide pre-eminence. The buildup of global distribution networks and assistance from the U.S. government in pushing film exports played a major role in entrenching Hollywood's domination of the international film trade and advancing it during the march toward globalization.In 1944, the majors organized individual foreign holding companies -- Universal International Films Inc. and Columbia International Corp., for example -- that took over each of the company's foreign assets and controlled all of its foreign operations. There was some discussion at the time about forming a single export company to handle all the product of the majors so as to counteract monopolies that existed in Italy, Germany and Japan.That never came about, but some form of a joint venture emerged during the economic decline of the 1970s. Charles Bludhorn, chairman of international conglomerate Gulf + Western, which owned Paramount, and Universal's Lew Wasserman sparked the formation of United International Pictures, a London-based overseas distribution partnership of Paramount, Universal and MGM.Jack Valenti, who helped steer the industry's path overseas in his 38 years at the helm of the MPAA, famously preached that a viable local film industry created a desire to see movies from all countries.

Today, major companies, facing a decline at the domestic boxoffice, are teaming with offshore filmmakers for production, co-production or distribution of local-language films."It does make us a good citizen of the world to be able to bring our expertise and resources to aid a lot of great local filmmakers," Jim Gianopulos, co-chairman of Fox Filmed Entertainment, told The Reporter in May, shortly after the studio unveiled plans to invest in the production of Russian-language films through a three-picture deal with director Timur Bekmambetov. "It affords us an opportunity for growth beyond our own homegrown slate."