How MCA Rediscovered Movieland's Golden Lode By Peter J. Schuyten (Page 3) Kojak prowls at midnight. Three years ago, MCA broke the practice of syndicating a show only after the network had canceled the original series. The trouble with the traditional way of doing things was that by the time syndication began, the show was dead in the ratings and worth less than it would have been when it was popular. Now MCA peddles syndication rights during a show's third year, for delivery after its fifth year. Friedland says that selling a series early more than doubles the take. A TV code provision, which went into effect last year, dimmed the syndication potential of such action-type (read "violent") shows as "Baretta" and "Kojak" by discouraging their presentation during the family hour. MCA responded by selling old episodes for late-night viewing while the series is still being shown in prime time. The practice brings in money sooner than ordinary syndication, with a lot less work; on sale, to the network, versus, say, 100 selling jobs to separate stations. The price runs only 70 percent of what the regular syndication twice might have been, and the practice makes the show somewhat less valuable for further syndication later. But in the end, MCA figures to come out well ahead. MCA executives also think they will get a big payoff from syndicating the new limited-term novels. The stations like the scheduling flexibility a short series gives them. For its part, MCA doesn't have to sit around for three or four years waiting for the money. Currently, it has only its original "Rich Man, Poor Man" available, but that is bringing in more than double the price per episode of most recent popular series. Finally, the company is trying to make what can only be termed an end run around the networks. MCA is selling first-run network-quality programming (to be distinguished from low-budget shows like "Mary Hartman, Mary Hartman") to an informal syndicate of nearly fifty independent and affiliated stations-a group that is calling itself Operation Prime Time. The first of the sales has been made for a twelve-hour novel planned for showing next May, when the networks will be in reruns. Since this is an attempt virtually to create a new customer akin to a fourth commercial network, the company is more than pleased that it will come close to breaking even on the original sale. Last year, while making use of these seemingly endless variations, MCA booked some $38.3 million in revenues from domestic syndication. Since most of the costs were expensed as the shows were being produced, much of that is pure profit. When the magic touch disappeared. By the mid-Sixties, MCA had become a smoothly running engine for TV production, and Wasserman looked forward to realizing his dream of making movies for the silver screen. By then he had eliminated one barrier to theatrical filmmaking by taking MCA completely out of its old talent-agency business. But making first-run features requires not only more money per film than TV programs but also a different kind of expertise and sales capability. So in 1966, MCA merged with Decca, which owned Universal Pictures, the company whose studio Wasserman had bought seven years earlier. But when Wasserman finally got his chance to make movies, the touch that had been so effective in television seemed to desert him. Under his direction, Universal got the reputation of being a studio where top management exercised far too much control over producers and directors, and hired only those who would give the front office precisely what it dictated. The pictures that resulted were generally uninspired and their financial performance uninspiring. Wasserman himself admits, "We stumbled around some, working out our problems." Nevertheless, MCA did make one big bet in the late Sixties that was soon to pay off. The company plowed $10 million-the second-biggest investment in Universal's history-into Airport, which was released in 1970 and ultimately brought in $55 million. That same year, MCA also set about changing the studio's image in the film community. It put up money for six low-budget films-around $1 million each. Universal Pictures President Ned Tanen says: "We told a group of people to go make us movies. We told them we weren't going to control them in-house." The climate got better. While the program was not a big commercial success-two films made money, two broke even, and two were losers-Tanen credits it with successfully enhancing the studio's creative image. "To be sure," says MCA President Sidney Sheinberg, "we haven't abdicated the final decision-making to any of our film-makers," but Universal gradually became known as a place where movie people liked to work. Sid Sheinberg is a Texan by birth, a lawyer by training, and plain spoken by inclination. "People say I'm to candid and I've also been accused of a holier-than-thou attitude," he says, "but I believe in running an open company." Today, Universal has contracts with more than twenty of Hollywood's top producers, writers, and directors, including Alfred Hitchcock; Mike Nichols; the Mirisch Corp., which most recently made Midway, Universal's top picture of 1976; the Zanuck/Brown organization, which produced The Sting and Jaws and is now doing McArthur; and William Friedkin, who made the highly successful Exorcist for Warner Bros. and is now making Sorcerer for Universal. Walter Mirisch, whose company has won the Oscar for best picture three times, thinks "we've found a climate here that allows us to make the kind of picture we want." Top producers are looking for more than a happy home, of course, and in MCA they have also found a wealthy patron. "We like knowing that we don't have to follow the annual stockholders' meetings to find out about our future film-making activities," says Richard Zanuck of Zanuck/Brown. "We know the company has ample resources to back our pictures. An all-consuming film. Feature films and TV production have turned out to be a marvelous combination. MCA's television operation performs much the same role that the B movie played for the Hollywood studios in an earlier era: it pays for most of the studio's overhead by providing a steady flow of production. In fact, MCA couldn't afford to keep the studio if it relied on theatrical features alone. "The studio," says Tanen, "Simply would not exist." The money from TV makes it possible for MCA to follow a relatively conservative, two-pronged strategy as it invests in motion pictures. On the one hand, Universal invests in "safe" theatrical properties that won't hurt the company financially if they flop at the box office. As Tanen explains: "You need to make a minimum number of films a year. There are films you come across that look very safe. The downside risk is fairly minimal, so therefore we will take them on. You do enough of these films and out of that group will suddenly emerge a picture that is a huge hit." For example, American Graffiti. The other part of the strategy involves big bets, $4 million to $10 million on films Universal sees as potential blockbusters. Unlike some other movie studios, Universal can select these opportunities with extreme care, without having to worry that if if doesn't have one smash hit a year, the studio will have to close its doors. The strategy seems to pay off: Universal has had at least one big success in each of the last three years. This is not to say that MCA has discovered the elusive secret, if indeed there is one, of turning moviemaking into a wholly predictable business. Nor do its executives make extravagant claims about having done so. There's no better testament to the vicissitudes of life in movies than MCA's own experience with Jaws. Originally budgeted to cost around $4 million, Jaws devoured cash at a far faster clip, eventually consuming $9 million. "The problem was," says Tanen, "the damn shark kept sinking." As the picture went further and further over budget, the producers credited Sheinberg for having the cool nerve not to pull the plug. Sheinberg, whose wife, actress Lorraine Gary, played an important role in the film, today admits with a rueful smile that he hadn't been aware how much Jaws was really costing. "There was a screw-up between the production office and the accounting department," he says. "If we'd known all the facts, we might have canceled it." Bloody secrets divulged. The fact is, no system of management has yet been devised that could guarantee the sustained dominance of one Hollywood production organization over the others. As MCA recognizes and Sheinberg points out, "You're dealing with the creative process, and anyone who thinks you can put in the same kind of control system as General Motors is insane. You can't reduce the product to sausages-and anyone who tries will go bankrupt." Sausages may be the only thing MCA is uninterested in-it looks for tie-ins with almost everything else. The company licenses "Kojak" lollipops, "Emergency" lunch boxes, "Bionic Woman" dolls, and Jaws T-shirts. MCA Records, originally called Decca, makes money not only on its stable of artists-Elton John, Neil Sedaka, Olivia Newton-John-but also releases occasional big-hit movie soundtracks like The Sting. But the spin-off to end all spin-offs is the Universal Studio Tour, one of the biggest tourist attractions in the nation. This year some three million visitors will ride gaily colored trams to see such attractions as the Psycho house, a western back-lot street, and prop warehouses while tour guides divulge such secrets as how Hershey's chocolate doubles as blood in black-and-white movies. Most of these activities all but disappear in the shadow cast by the tremendously profitable movie and TV businesses that have piled up much of the $175 million MCA now has sitting in its treasury. But the company's top officers, including Wasserman, are at best tentative about what they intend to do with all that money. For one reason or another, they rule out getting into broadcasting, cable TV, the Las Vegas hotel-and-gambling game, fast-food chains, or professional sports. << Page 2    Page 4 >>