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Why movie trailers are not like Goldman Sachs

Don LaFontaine
Don LaFontaine
1940-2008

One of the best business journalists on the scene today is Megan McArdle, in large part because she truly gets business in a way that most of her colleagues don’t. In recently published, intriguing article on how Wall Street always lands on its feet in a pile of money, McArdle compared investment banking to the movie trailer business in that they are both “one shot deals” upon which returns on big investments depend:

When a studio spends tens of millions of dollars producing a film, and further tens of millions advertising it, cheaping out on a voice-over makes no sense. You could pay a Don LaFontaine successor $300,000 a spot and still eat up just a tiny percentage of the film’s overall budget. A bad voice-over would cost you far more than you could hope to save. When you have only one chance to get it right, you tend to open up your wallet and pray. So one-shot deals are very, very expensive—a logic that prevails with weddings, funerals, and college diplomas.

This, she says, is why voice-over talent like Don Fontaine gets paid big, big bucks:

When a studio spends tens of millions of dollars producing a film, and further tens of millions advertising it, cheaping out on a voice-over makes no sense. You could pay a Don LaFontaine successor $300,000 a spot and still eat up just a tiny percentage of the film’s overall budget. A bad voice-over would cost you far more than you could hope to save.

In the same way, if you don’t pay Goldman Sachs outrageous fees to handle your merger or your IPO, you stand to lose boatloads of money.

As intriguing as this sounds, I can tell you as a veteran of film marketing who has been involved in dozens of trailers, that it’s just not right. What McArdle really misses — as an East Coaster whose familiarity with the film industry is largely second-hand — is how stunningly irrational, nonsensical, and senseless the film industry really is. At least in comparison to some more heavily starched industries such as high finance.

First, let’s get some quibbles out of the way. Unlike M&A’s or IPO’s, film studios don’t throw the dice on one trailer. Most trailer companies develop several scripts and often produce several trailers (my company on the average would produce a dozen scripts and half a dozen preliminary cut trailers). They then do something Goldman Sachs would never dream of in an IPO: they test, test, test and measure, measure, measure, and then hit the editing bays. No film marketing department would trust a moderately priced film with a media budget and trailer schedule to an untested trailer, let alone trust a major tentpole production to an untested trailer. You’ve seen those 2012 trailers? Tested, tested, tested, measured, measured, measured, changed, changed, changed.

In reality, the only untested trailers out there are for the lowest-budget indie films, which typically don’t throw much money in theatrical showings or TV.

And, believe it or not, those tests don’t justify paying Don LaFontaine astronomical wages.

Hollywood, as a business, makes some of the worst and irrational business decisions on the planet. McArdle describes the unreality of working for Goldman Sachs; well, a day in a Hollywood business office is like a day among the Ewoks for the average East Coast MBA. They seem to be just like us if only you could understand it, but no amount of Harvard genius will suss out any rational pattern.

Why? The gears that drive the film industry are relationships. Maintaining those relationships is rule number one. It’s not that a Don LaFontaine voice-over makes a ton of money for your studio; it’s Will Smith and Ridley Scott and James Cameron and Cameron Diaz who make a ton of money for your studio. And when you do a film with some A-lister like Tom Cruise, you fly him in to publicity events in a privately chartered plane (and one for his family and another for his agenty and yet another for three people he met at the gym yesterday) and you put him up in a penthouse suite (and one for his manager, and one for his family, and . . . you get the picture). When you cut a trailer for Ridley Scott, you pour everything into it. Why? If the film does poorly, Ridley Scott (or Bruce Willis or Nick Cage or Angelina Jolie) is not going to blame himself and the film he made, but the studio.

And guess what? The studio ain’t going to blame Ridley Scott (or Burce or Nick or Angelina) — at least within earshot. (Of course, most films do poorly because, well, they suck. The script sucks, the direction sucks, the actors suck. But you’d never hear anyone at the studio blame the talent.)

But when the talent blames you, their manager calls up to tell you it’s goodbye time, “Tom” (or “Angelina” or “Spike” or “Tommy Lee”) isn’t going to work with your studio anymore.”

Don LaFontaine with his high-priced voice-over talent serves a very useful function. He is the voice-over version of a privately chartered jet, a penthouse suite, or a business lunch at the most expensive restaurant in Beverly Hills.

Don LaFontaine is “proof” that you’re willing to throw fistfuls of money at A-list talent. That’s it. When Roland Emmerich is having an apoplectic, vein-popping fit that you didn’t market his movie well (even though the movie sucked), that’s a bad time to point out to him all the money you saved on the trailer.

Once you understand that relationships are everything in the film industry, then all that Ewok language and behavior starts to make sense. A truly panic-inducing moment, indeed, since, well, all this Ewok stuff really doesn’t make sense.

(I’ve actually worked with or voice-directed Don LaFontaine on a few occasions. He was a splendid, generous, and humble man. One important aspect of his value that McArdle misses is that he almost invariably nailed it on the first take. So, yeah, he costs a bundle, but you’re also saving money on retakes. “And flights of angels sing thee to thy rest.”)

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