Movies Costs Are Through The Roof

The cost of big Hollywood movies soared in 2003, with the top seven studios spending an average of $102.8 million to make and market their films, up 15 percent from the previous year, an industry leader said.

Studios spent an average of $63.8 million on production budgets or their 198 releases in 2003, an 8.6 percent rise, said Jack Valenti, head of the Motion Picture Association of America, Hollywood's top trade group.

Average marketing budgets for those movies jumped to $39 million, up 28 percent, Valenti said at ShoWest, an annual convention of theater owners.

"Budget discretion has to be a fervid priority at every studio," Valenti told theater owners in a speech to open the convention.

Production and marketing budgets have fluctuated greatly in the last few years as studios tried to balance surging costs for top-name talent with shareholder pressure to hold down expenses. Average costs shot up 14 percent in 2002 but had dropped two out of the three previous years.

Last year's higher costs came as Hollywood revenues fell for the first time since 1991. Despite higher ticket prices, domestic receipts came in under $9.5 billion in 2003, off 0.3 percent from 2002's record revenue, Valenti said.

With ticket prices averaging $6.03 last year, up 23 cents from 2002, movie admissions came in at 1.574 billion. That was a 4 percent decline from the previous year.

Still, it was the second-best year for movie attendance since the mid-1950s, when television was eroding theater audiences. In Hollywood's glory years of the 1930s and '40s, as many as 4 billion movie tickets were sold domestically each year.

Attendance has risen steadily over the last decade as theater chains lured viewers with new cinemas offering stadium seating, huge screens and improved sound.

"If you look at the overall admissions trend, you can see that we're on the rise," said John Fithian, who heads the National Association of Theatre Owners.

By David Germain