Surprising Hollywood Stumble for CBS' Les Moonves
The master television producer has yet to translate his success on to the big screen. Peter Lauria on whether CBS belongs in the movie business.
Les Moonves, the intensely competitive leader of CBS, is regarded as television’s King Midas, a CEO with a producer’s touch who can spot ratings gold in otherwise formulaic and mundane shows like Two and a Half Men and NCIS. But when it comes to Hollywood movies, a new CBS initiative, Moonves, to twist the Greek myth, has been seeing through donkey eyes.
CBS’s second foray into the box-office business, The Back-Up Plan, failed to connect with audiences, opening to critical barbs and a modest $12.3 million in box office. And that movie did relatively well compared with the first CBS effort, Extraordinary Measures, which grossed just $12 million at the box office. Moonves had some ownership over the latter, acknowledging in a New York Times story that he personally suggested a reordering of certain scenes and the cutting of others because he wasn’t happy with the ending.
Moonves once took to the stage during television’s upfronts with boxing gloves and proceeded to pepper a punching bag emblazoned with rival NBC boss Jeff Zucker’s face.
For The Back-Up Plan, Moonves moved the release date to last weekend from April 16 hoping for a better opening against softer competition. Steve Friedlander, CBS' executive vice president of distribution, says the opening was in line with projections and will make a profit for the company.
"It's nice to have one in the win column," says Friedlander.
But in a town where perception is everything, the fact that CBS is labeling a $12 million opening a “win” has led some to wonder if Moonves’ Hollywood ambitions don’t need a back-up plan of their own.
“Les is a very image-conscious guy, and he’s a demanding boss,” says one CBS insider. “I’m sure he wasn’t planning on launching with two movies that made $12 million each. He doesn’t want to be known as the guy who makes bad movies.”
Adds Laura Martin, senior entertainment analyst at Needham & Co., “Les is the best living television programmer on the planet, but the story arc and complexity of a two-hour movie is much different than a 30- or 60-minute TV show.” To wit, The New York Times termed The Back-Up Plan "innocuous and unmemorable, and pretty much looks like a lot of sitcoms do. It will scale down well on your television."
Strategically, the rationale for launching a film unit makes sense—CBS owns the movies it makes and can run them on its cable channel Showtime, or on the CBS and CW broadcast networks, thereby eliminating the cost of paying other studios for their films. Hit movies also drive subscribers to Showtime, which, in turn, would produce new revenue in the form of subscriber fees and allow for the potential to increase carriage fees in future contract negotiations with cable distributors. And given its radio, outdoor advertising, online and television assets, CBS saves significantly on the costs to promote a release, or eventual DVD sales.
CBS is also taking a fiscally conservative approach to moviemaking. The company’s mandate is to release four to six films per year with production budgets of less than $50 million. For perspective, CBS generates roughly $13 billion in annual revenue, $6 billion of which it spends on content, so a $50 million film amounts to about one-half of 1 percent of its annual programming costs. CBS’ roughly $16 stock price isn’t likely to pop or sink based on the success or failure of any one film.
Even so, a rival studio source estimates that CBS will lose around $30 million on Extraordinary Measures, based on its box-office performance. A third CBS source concedes that Extraordinary Measures will lose money, but says the amount will be much lower, though this person declined to specify a figure. Meanwhile, Friedlander says The Back-Up Plan will be "in the black." "We expect this film to hang on for a long time," he says. "Lopez films have great legs, as does Jennifer herself. There's not much for female audiences next week with Nightmare on Elm Street and Furry Vengence."
Critics contend that CBS is being disingenuous with its low-cost/low-risk talking points regarding the film unit’s business model. They note, for example, that while CBS spent less than $40 million each to make Extraordinary Measures and The Back-Up Plan, marketing costs probably ran about $10 million, even after leveraging its other platforms, bringing the all-in production amount closer to $50 million.
Industry sources also note that CBS incurred “significant startup costs” to launch the studio, and unlike other studios, CBS Films still lacks a back catalog of movies that it can exploit on TV, DVD, video-on-demand, and digital to generate cash to cover expenses while waiting to book the revenue from its theatrical releases.
“This is no time to be testing Hollywood’s waters,” says the rival studio source. “The economic basis of their model is just too hard to turn a profit.”
Accordingly, CBS’ two remaining releases this year— Beastly, a teen romance about a superficial boy who is cursed with a facial deformity and must find someone to love him in order to get the spell reversed, and Faster, which stars Dwayne Johnson, aka “The Rock,” as man recently released from prison seeking revenge for the death of his brother during a botched bank robbery—are under greater pressure to perform.
Indeed, sources scoff at the notion that CBS has modest goals and minor ambitions for its film unit, noting that Moonves once took to the stage during television’s upfronts with boxing gloves and proceeded to pepper a punching bag emblazoned with rival NBC boss Jeff Zucker’s face with jabs to symbolize how CBS was going to knock that network off of its No. 1 perch.
Moonves, a relentless optimist, can find encouragement in the story of Summit Entertainment. The independent studio, which had none of the ancillary support that CBS’ other assets bring to its film division, started off with such forgettable releases as horror film P2 and comedy Sex Drive, which grossed an unimpressive $4 million and $8 million, respectively, before becoming the hottest studio in Hollywood with the first two Twilight movies, which have grossed nearly a half billion dollars combined. “If ever there was a guy with the genetic makeup to succeed as a movie executive,” says the first CBS executive, “it’s Moonves.”
Peter Lauria is senior correspondent covering business, media, and entertainment for The Daily Beast. He previously covered music, movies, television, cable, radio, and corporate media as a business reporter for The New York Post. His work has also appeared in Avenue, Blender, Black Men, and Media Magazine, and he’s appeared on CNBC, Bloomberg, BBC Radio, and Reuters TV.