"The great enemy of truth is very often not the lie--deliberate, contrived, and dishonest--but the myth--persistent, persuasive and realistic. Too often we hold fast to the cliches of our forebears."

John F. Kennedy
Yale Commencement, 1962

The advertising, promotion and publicity of the world's greatest PR machine, appears to include a considerable amount of misinformation and myth about the nature of film and the industry. As David McClintick states: "Hollywood--its mores, its modus operandi, even its raison d'^etre--has been shrouded in myth since movies began and remains so today." Some of these Hollywood myths (and the accompanying misinformation) are discussed below:

The Industry is Very Different Today than During the Studio Era--Although "Bordwell, Staiger, and Thompson, in The Classical Hollywood Cinema (1985), argue forcefully that 1960 was the 'end' of the studio system mode of production . . . " and that the end of the studio system made a great impact on the way business is conducted in Hollywood, the research in support of this book series suggests that much too much has been made of that point. After all, most of the same major studios are still alive and well today and continue to dominate Hollywood movies in much the same way they did during the earlier period prior to the so-called "end" of the studio era. Even though, it is obvious that the major studio/distributors do not do everything in the same manner, however, those things that have changed are not so significant, at least with respect to the issues raised in this series of books, relating to who controls Hollywood, how they gained and maintain their control and what are the results of that control.

The widely held belief that the end of the studio era really affected those with power in Hollywood relative to most others who have never had power in Hollywood is another myth perpetuated by the industry and those who fail to apply any significant level of critical analysis to industry activities. As an example, it is one thing to point out that some power shifted from the studio executives to the agents following the demise of the so-called studio system, but of what relevance is that to the independent producer, the independent distributor, the vast majority of talent that cannot rely on agents to effectively represent them and the movie-going audiences around the world? Not much!

The Industry Will Be Destroyed--Paramount attorney Robert Draper said during the Buchwald v Paramount trial that Buchwald attorney Pierce O'Donnell " . . . who loves to sue movie studios, is leading Mr. Buchwald and all the other creative people in the industry--actors, directors, producers, writers and studio people--down a primrose path that would destroy the industry." This is another film industry myth that is commonly trotted out whenever anyone criticizes the way business is conducted in Hollywood or threatens the Hollywood power structure in some way. Mr. Draper could not possibly believe that suing the major studio/distributors will destroy the industry. He could only honestly mean that those entities in the industry that he prefers to work for (i.e., the major studio/distributors) might be destroyed or severely weakened if more and more courts are asked to review their business practices. On the other hand, the U.S. film industry itself would continue. It just might not be the same. Independent producers and distributors, would quickly fill whatever gap was created, if any, and the old entrenched insider group might not be able to skim off nearly as much of the movie revenues to the exclusion of other interests in the industry.

MPAA president Jack Valenti is also guilty of putting out the same kind of Hollywood establishment propaganda. For example, he recently " . . . reiterated his call for the United States to tread very carefully in pending trade proposals and warned that the future of the country's copyright industries are at stake. Testifying before the Senate Judiciary Subcommittee on Patents, Copyrights and Trademarks . . . Valenti told lawmakers that America's most valuable export prizes face destruction without Congressional pressure and administration support for eliminating trade barriers. Valenti said . . . 'The future of this vast trade bounty is being put to risk by the ingenuity of international trade hazards, whose form has many shapes, but whose objective has one, and that is to exile, shrink or otherwise restrict the free and unhobbled movement of American intellectual property in too many countries of the world." Although Valenti's concern about foreign pirates stealing American intellectual property and copyrighted works without compensating their makers is valid, the Valenti warning about "destruction" of the industry, again, is just so much hyperbole. Besides, if we want foreign countries to play fair, we must also insist that our American companies play fair. The U.S. film industry as represented by the MPAA companies has a long history of utilizing anti-competitive practices in foreign countries in their relentless pursuit of excessive profits.

Power In Hollywood Cannot be Transferred--Charles Kipps also provides a rather misleading view of the transfer of power in Hollywood. He claims that " . . . in Hollywood, power has a . . . subtle basis. It is not seized by force nor can it be obtained by right of transfer. It must be cultivated over a long period of time." This is nothing more than additional Hollywood establishment propaganda. As this book and its companion volume The Feature Film Distribution Deal demonstrate power in Hollywood has mostly been gained through unethical, unfair, anti-competitive, predatory and in some cases illegal business practices, and it has in fact been transferred from generation to generation by many of the same extended families, to the mostly politically liberal and not very religious Jewish males of European heritage. If Hollywood power cannot be transferred (i.e., retained in the hands of a small close-knit community in Hollywood) and the industry truly functioned as a free market economy, then power in Hollywood would have naturally become more dispersed throughout the industry's nearly 90-year history among the many other racial, ethnic, religious, cultural and regional groups that make up our diverse society.

Hollywood Has Become More Fiscally Responsible--Nicolas Kent provides us with another example of Hollywood misinformation in suggesting that " . . . when Heaven's Gate, a lavish western from the Academy Award-winning director of The Deer Hunter, Michael Cimino, went so far out of control that it forced United Artists out of business, fiscal responsibility became the order of the day." First, it is simply not true to state that the UA movie Heaven's Gate forced UA out of business. In truth director Michael Cimino's fiscal irresponsibility on Heaven's Gate merely encouraged a profitable sale of United Artists. It also is not accurate to suggest that fiscal responsibility became the order of the day among the major studio/distributors, following the Heaven's Gate debacle. It is absolutely foolish to suggest that the major studio/distributors have been fiscally responsible at any time in their history.

It's Only Money--Some of the Hollywood players also rationalize their schemes to deprive other people of the economic benefit of their work by stating that "[i]t's only money." They're expressing the view that the film business is merely a game, that many of the disputes that occur only relate to money and that is not important. The truth is that in most instances, the money being squabbled over represents several years of people's lives, expertise and efforts as well as their dreams, and that many of the film industry professionals whose rights are being trampled because "it's only money" end up with a drinking problem or some other dysfunction due to the dilemma they find themselves in, (i.e., they don't feel they can sue the distributor and still be able to get another job in this town, or in this industry). In addition, the competition for money in the film industry also determines who gets to make future movies, who gets to hire the people who work on those movies, what scripts among the thousands available are selected to be produced, what ideas are communicated through such films and how many theatres will screen the film. It's not just about money, it's also about peoples lives and careers.

But It's All True--Quite often, spokespersons for the Hollywood establishment will respond to criticism by taking the position that the people places and things portrayed in their movies are accurate representations of people, places and things that actually exist. In other words, if a particular portrayal of a person is very negative, their defense is that there really are people like that. Or if a portrayal of an extremely violent event is included in a movie, their argument is that such things do occur in real life, therefore it is appropriate to put it on the screen. This argument, unfortunately, tends to focus on individual movies as opposed to the patterns of bias of concern in this series of books (see Patterns of Bias in Motion Picture Content and Motion Picture Biographies). In other words, it is irrelevant that people as portrayed in one or several movies actually exist, if the movies generally provide negative portrayals of some populations in our society and consistently portray other populations in a positive manner. It is even more offensive if the people who are consistently portrayed in a positive manner, at least more positive than those populations that are consistently negatively portrayed, are in some way related to the same people who control Hollywood. Such a slanted pattern of bias then rises to the level of Hollywood propaganda (see A Study in Motion Picture Propaganda).

Outsiders Are Inept--Another myth underlying many statements about Hollywood is that outsiders do not know as much about the film industry as the insiders and therefore the outsiders cannot effectively run the major studio/distributors. For example, Peter Bart makes the statement that in " . . . the early 1980's, Disney had fallen into a corporate torpor under the management of Walt Disney's son-in-law, Ronald W. Miller." Similar, if not worse statements have been made from time to time about the founders of United Artists, Joseph Kennedy, Howard Hughes, Kirk Kerkorian, Rupert Murdoch, Ted Turner, etc. This kind of statement is nothing more than insider propaganda directed against any outsiders who may temporarily gain a measure of power in Hollywood. This seems to be a common practice, that is to denigrate the efforts of the outsiders who come to Hollywood, to make such statements self-fulling prophesies by engaging in unfair, unethical, anti-competitive, predatory and illegal business practices, which, in the long term, force the outsiders out of business, so that they can be replaced with more Hollywood insiders. In this way, the myth is perpetuated and seems to be true.

Films are Merely Entertainment--The entertainment moguls have consistently misrepresented the nature of their business. They have repeatedly maintained that they are merely providing "entertainment", when in truth, every movie, song, radio show, television program, video tape and compact disc is, without question, in addition to hopefully being "entertainment", a form of communication, and as communication, each of these devices communicates ideas and messages. The perpetrators of the "it's only entertainment" myth are hoping no one will examine the film industry as closely as these books have, for fear the general public and the disenfranchised in the industry will come to realize what is really going on in Hollywood. Part of that reality is that the Hollywood insider community is using the feature film as a significant medium of communication to at the very least, tell their important cultural stories to the general exclusion of the important stories of other cultural groups (see discussion under the heading "Why It All Matters" in Legacy of the Hollywood Empire).

Films Do Not Influence Behavior--These same entertainment moguls are fond of saying, that there is no proof that the ideas and messages contained in their various forms of so-called "entertainment" influence behavior or is harmful to anyone. On the other hand, parents only have to stop and think about how many times they have asked themselves the question: "Where did my child come up with that idea, that language or model for behavior?" to know that somebody besides the parents, the schools and churches are influencing the daily behavior of their own children. In addition, isn't it odd that the entertainment industry pays millions to advertise and promote their products based on the assumption that such advertising will influence people to pay money for those same products while denying that other forms of communication besides advertising can have any effect on human behavior? The motion picture industry is also guilty of taking the embarrassing position that movies do not influence the behavior of people whileaccepting hundreds of thousands of dollars for products which appear in such movies, again based on the proven assumption that such "movie product placements" actually result in significant increases in sales for such products. Finally, on this point, no person who is even slightly aware of the development of Western civilization (or other human cultures or societies) can honestly deny the power of an idea. We all know and recognize that ideas are powerful. And since, again, all of the above mentioned media communicate ideas, only the intellectually dishonest "entertainment moguls" can espouse the position that their "entertainment" does not influence behavior (see discussion at "Movies Influence People" in Legacy of the Hollywood Empire).

Parents Alone Are Responsible for What Their Children Think--These same entertainment moguls also argue that it is the parents' responsibility to see that their children do not listen or watch to any of these various forms of entertainment/communication that the parents' deem offensive or inappropriate for their children. But the "entertainment moguls" know full well that a parent taking such a position is put in an extremely awkward position with respect to the oftentimes delicate relationship with their child, and short of adopting the isolation practiced by the Amish, parents are in fact not very likely to be successful in preventing their children from being exposed to pervasive mass media messages and/or influences.

The Public Votes With Its Pocketbook--Next the entertainment moguls argue that they are just giving the American public the kind of "entertainment" they want to see and pay for. On the other hand, as stated above, the people who make this argument control the world's most powerful "PR" machine. They are experts at misleading the American public about what they are about to see or hear on the movie screen and other media. To demonstrate this, you only need to ask yourself how many times have you gone to a movie you thought you wanted to see (based on the advertisements for the movie) and been disappointed because the movie turned out to be something very different or certainly less than advertised. Thus, it is hardly honest to argue that people only go to movies they like. It is more accurate to say that people go to see movies they are tricked into thinking they will like. A significant portion of the box office gross for movies is money moviegoers would take back if offered a money-back guarantee.

Movies Merely Reflect Society--Film industry marketing consultant Richard Lederer offers the opinion that "[t]o some degree, the contemporary audience dictates the type of film Hollywood will produce. It is sad but true . . . " Lederer claims, " . . . that movies have always been an imitative--not an innovative--industry." As we shall see, it is entirely incorrect to assert that movies " . . . have always been imitative . . . " It would be more accurate to say movies are sometimes imitative but on other occasions, movies are innovative. Hortense Powdermaker knew and stated as much more than 40 years ago, saying: "Hollywood is no mirror-like reflection of our society, which is characterized by a larger number of conflicting patterns of behavior and values. Hollywood has emphasized some, to the exclusion of others." Powdermaker also said, that "Hollywood is . . . not a reflection, but a caricature of selected contemporary tendencies . . . "

In their ongoing effort to avoid responsibility, the "entertainment moguls" continue to argue, however, that their movies merely reflect the state of our society. To test this argument, a small number of teens who lived in the presumably violent city of Los Angeles, were asked how many murders they had seen in real life. They all said "none". They were then asked him how many murders they had seen in movies and on television, and the estimate was somewhere in the many thousands. If other parents would try this simple little test, the vast majority would get similar results. That demonstrates that movies and television do not actually reflect the real world for most people, but rather that the entertainment moguls choose to emphasize and exaggerate some of the more outlandish aspects of our society just to attract the gawkers.

You Are Violating Our Right to Free Speech--Another knee-jerk reaction from the "entertainment industry" whenever anyone criticizes their work product is that we are violating their First Amendment rights to free speech. The free speech argument only applies to those film industry critics who are telling the film industry that it must change the content of its movies. Those are not the remedies suggested in this series of books (see Motion Picture Industry Reform).

This series of books takes the position that the Hollywood control group gained and has maintained its power for the nearly 90-year history of the Hollywood-based U.S. film industry by utilizing unfair, unethical, anti-competitive, predatory and, in some case, illegal business practices. This series further contends that if the U.S. antitrust laws and employment discrimination, among others, were vigorously enforced in the film industry, the result would be greater diversity at all levels in the industry, and that such diversity would result in greater opportunities for all segments of our society to tell their important cultural stories through this significant medium for the communication of ideas.

The Film Industry Is Important to Our Economy--The film moguls are also fond of pointing out that the US films industry is one of the nation's most important exporters, (i.e., the industry brings in a significant amount of revenues based on its exports to other countries). On the other hand, if a substantial amount of the money brought to the U.S. by the film industry is spent bringing in immigrants from other countries for the purpose of taking away jobs from perfectly capable people already here, paying excessive salaries to studio executives, actors, actresses, writers, directors, agents and entertainment attorneys, making contributions through political action committees and otherwise to political candidates that help the major studios maintain their control over the industry, pursuing a decidedly liberal political agenda through film, and making charitable contributions to causes favored by the Hollywood insiders at home and abroad, why is it so great that the industry generates such a high level of exports? Who does it benefit other than the Hollywood insiders? Only a very narrow cross-section of American society actually benefits from those income revenues generated by Hollywood's exports.

The Censorship Smokescreen--The "entertainment moguls" also routinely put forth the "straw-man" argument relating to censorship (i.e., misstatements or exaggerations of the arguments of the opposing side which are easily toppled), by suggesting that the only available remedy favored by industry critics is some form of government censorship. The real reason such an argument is generally put forth by the industry establishment is that the censorship remedy is easily refuted by the "entertainment moguls" since hardly anyone seriously supports it, and that is exactly why it is mentioned in most of the articles spewed out by the "entertainment industry". The censorship argument is a smokescreen at best (see the discussion regarding censorship as a remedy in Motion Picture Industry Reform).

We're Different--Most people who have worked in the film industry for any length of time are quite aware of the general reputation of the major studio/distributors for oppressive tactics. Often, for example, distributor representatives will make oral representations early in discussions with producers that their distribution organization is not typical of other feature film distributors, (i.e., suggesting indirectly that they do not conduct their activities in a manner substantially characterized as described in this book and its companion volume The Feature Film Distribution Deal). The proof of such self-serving descriptions, should lie in the actual conduct of the distributor over a period of time and in a consistent pattern of behavior which avoids much of the above-described business practices. On the other hand, if you are ever sitting around a table with a group of independent producers (or chatting with them at an industry seminar) and ask if any of them knows of an honest distributor, (and that exact question has been put to thousands of such producers in seminar settings for the past ten years), you are likely to get the same answers, (i.e., no one has yet stepped forward with the identification of or a favorable recommendation on a distributor who distributed their film).

Academy Awards Are Primarily Designed to Recognize the Deserving --Although still the most coveted film award, . . . the aura of the Oscar has become increasingly tainted. Since the 1960s the voting system has been under fire by members of the industry and outside critics as being influenced more by publicity and sentiment than by actual quality and merit." In addition, commercial considerations appear to play a huge rule in the selection process. As David Prindle reports, " . . . the winners of the Academy Award for best picture garnered an additional $30 million at the box office (adjusted for inflation) after the ceremonies (during the '80s)." And Steven Bach reports that " . . . the Oscar wins caused Deer Hunter box-office receipts to rise $100,000 a day in the New York area alone." While the Katz Film Encyclopedia provides a more conservative estimate of the value of an Oscar, (i.e., a " . . . best picture award can be worth tens of millions of dollars more at the box office . . . "), these numbers bring into question the expensive promotional campaigns waged by the studios on behalf of their films and the motives of those voting. On the down side, Variety reports that " . . . loser nominees (at the Academy Awards) often experience a sudden skid the following weekend at the box office."

One of the more puzzling of motion picture industry phenomena is the rather common occurrence at the annual Academy Awards for independently produced films to win a disproportionate share of the more important awards, (e.g., best picture, best director, best actor, best actress, best screenplay, etc.), particularly since many of those same award-winning films are not as commercially successful as many of the films produced by the major studio/distributors. Some industry observers would quickly dismiss that anomaly as the result of differences between movies that are targeted for the large mass audience (commercial product) and those that are designed to be small films tailored for a limited but more discriminating audience (not commercial). Another factor in how well these two categories of films are received at the box office may have nothing to do with whether such pictures are quality award winners or merely commercial, but have more to do with which distributors have the market power to get their films shown at theatres, to spend the money to advertise and promote their pictures and the leverage to collect film rentals from exhibitors. Besides, the more artistic award-winning independently produced films, after receiving all of the free publicity and promotion associated with the Academy Awards, are suddenly now more "commercial" and those distributed by the major/studio distributors before the awards can be re-released (or continued in release) to take advantage of their new profit-making potential.

Distributor Rentals Are About Half of the Box-Office Gross--In the Jason Squire book, entertainment attorney Peter Dekom is quoted repeating an old industry rule of thumb, that distributor " . . . rentals are about half of box-office (gross) . . . " Entertainment attorney Mark Litwak repeats the myth in his more recent book on Dealmaking, saying "[g]enerally, exhibitors retain about half of the box office receipts and pay the other half as rental payments."

That portion of a film's box office receipts that are paid to the distributor by the exhibitor is referred to as distributor rentals. It is typically calculated based on negotiated percentages of the exhibitor's net (and in the alternative percentages of box office gross). Exhibitor's net is arrived at by deducting the exhibitor's expenses (contractual theatre overhead) from the box office gross. While the major studio/distributors are able to extract distribution terms for a major motion picture which calls for the payment of as much as 90% of the exhibitor's net (or 70% of box office receipts; whichever is greater) during the film's initial week or two of release, the range is quite wide indeed, varying from as low as 25% to as high 65% over the entire run of the film. The average film rental ratio for MPAA releases is about 43%. In any case, the industry rule of thumb of 50% is likely to be very misleading if utilized in any calculations relating to a film's prospective revenue stream.

The Film Industry is a Risky Business--Film industry executives have been able to persuade David Prindle to perpetuate the myth that the entertainment industry is the "Riskiest Business". He states that the " . . . Hollywood entertainment industry is a business whose product is art . . . a less-than-ideal object of commerce . . . although it is fairly easy to gauge the market for . . . movies in general, it is nearly impossible to do so for a particular artistic product . . . successful screen art is nearly impossible to replicate . . . firms can reproduce a successful product nearly indefinitely. Not so with entertainment . . . Much of what Hollywood does can be interpreted as a series of strategies to replicate the unreplicable . . . the difficulty of predicting public tastes and the impossibility of exactly duplicating a hit--make the enterprise of producing film and television extraordinarily risky." Prindle goes on to say that "[a] consequence of the high risk inherent in the business is the rate of failure. Most ideas for films never make it to celluloid: the few that are produced often lose money."

Entertainment attorney Peter Dekom seems to agree, saying that the " . . . profit margins in the motion picture business are coming down . . . Everyone knows that the motion picture business is risky . . . " Joseph Phillips echoes the industry refrain by stating that "[i]t is clear that the risk of financial loss in producing commercial films is great . . . " As further support Phillips cites the fact that " . . . Joseph E. Levine, president of Avco-Embassy, (stated in 1974) . . . that only 'one out of 20 pictures makes it now' compared with pre-TV days when 'nine out of ten earned money.'" Director Steven Spielberg even joins the industry chorus, saying that "[a]ll motion pictures are a gamble. Anything having to do with creating something that nobody's seen before, and showing it, and counting on 10 or 20 million people, individuals, to go into the theater to make or break that films--that's a gamble."

Paramount even made the so-called "risky business" argument in the Buchwald case. However, the " . . . court . . . never reached the merit of (the) . . . argument because the studio abandoned its 'risky business' defense--that its net profit formula is justified by the nature of the film business--a month and a half before the date of the (court's) decision." Commentators speculated that Paramount executives felt the company might be compelled to reveal additional details of its financial activities if it maintained the "risky business" position.

Jason Squire also has apparently accepted this Hollywood myth or misinformation because he states that " . . . the high risk inherent in the business points to why conservative capital has historically shied away from the motion picture investment although control of motion picture companies has always been attractive to a broad spectrum of players." Unfortunately, Squire simply seems to accept the industry myth that it is risky without exploring the many other possible reasons why "conservative capital has historically shied away from he motion picture investment . . . " as this book does. In addition, it is one thing to say that " . . . control of motion picture companies has always been attractive to a broad spectrum of players . . . " but it is quite another thing to suggest that " . . . a broad spectrum of players . . . " has been able to succeed as "players" in the U.S. film industry. As the material in this book attests, that would simply not be an accurate statement (see discussion of "The Hollywood Outsiders" in Chapter 4 above).

On the other hand, Rudy Petersdorf testifying in the Buchwald v Paramount case refuted the studio's "risky business" defense saying that " . . . there were still sufficient sources of revenue so that an unsuccessful picture at the box office (in domestic theatrical release) would recover most of the studio's investment from sources such as network television, syndication and foreign. So even pictures which were way down on the list in terms of performance at the box office generated enough money to recover the studio's cash outlay and perhaps even make some money for the studio." Furthermore, if the film business was such a risky business more of the major studio/distributors would have gone under during the past century. In truth, it would be more accurate to say that the film industry is a risky business for everybody but the major studio/distributors precisely because of the business practices utilized by these major studio/distributors which in turn make it difficult for anyone else to financially succeed in the business.