Oscars to take movie ads

Looking to save its primary source of revenue, the Academy of Motion Picture Arts and Sciences has lifted its longtime ban on running commercials for movies during the Oscars.

Board members voted late Tuesday to ditch a tradition that stretches back more than 50 years and -- in the eyes of some -- was a relic from a simpler and less competitive era. The move comes amid concerns over the softening TV advertising market and lower ratings for Hollywood’s biggest event of the year.

“The revenue from the show fuels our programs all over the world,” Academy President Sid Ganis said. The academy generates more than $65 million a year in TV license fee revenue from Walt Disney Co.’s ABC television network and foreign channels.

“That’s a lot of dough, and it’s very important to us,” Ganis said. “Since the show is a celebration of movies, why not let upcoming movies represent themselves in a way that is intelligent and smart and not offensive to anyone?”

The ban was put in place in the early 1950s, when the Academy Awards were first broadcast. At the time, the academy fretted that commercials for films during the show would be unseemly and viewers could conclude that the awards were influenced by the studios that bought the ads. In recent years, some -- including ABC -- have lobbied to reverse the prohibition.

“It’s a perfect advertising venue for films,” said George Belch, a marketing professor at San Diego State University. “The telecast delivers an audience that is very interested in movies, and that’s the target audience that the studios want to reach.”

Under the new rules, a studio will be allowed to buy only one 30- or 60-second spot in the show. However, a media company with multiple distribution arms could buy a commercial for each label. Ads for movies that are in contention for an award would not be permitted in the show. ABC will determine where the spots are to run.

Only newly created ads for movies will be accepted, and then only for films released the final Friday of April, or later. The Oscars will air Feb. 22.

Not lost on the academy was the success that pro football’s Super Bowl has had driving up ad rates, in part by creating “event television” with splashy ads. More than a decade ago, Fox used the Super Bowl to launch a marketing campaign for its big-budget movie “Independence Day” with a catchy TV ad announcing, “This may be your last Super Bowl.” In some years, there has been more buzz surrounding the innovative ads than the action on the field.

The academy hopes that studios will instead use the Oscars to begin promoting their big summer and holiday movies, turning the show itself into more of an event that will attract younger filmgoers. The Oscars have long been criticized for not keeping pace with the times, from the style and length of the show to the arthouse movies singled out for awards.

The show has been steadily losing audience. Ten years ago, 55 million people tuned in the night “Titanic” swept the awards. This year a record low of 32 million watched.

“We pay attention to those ratings, and of course, that did not sit well with any of us,” Ganis said.

Academy officials said they weren’t pressured to change the policy. But there is no doubt that external forces were at work.

“I would attribute a lot of this change to the softening advertising market,” said Belch of San Diego State. “Marketers are cutting back their ad budgets, and ABC might not be commanding a premium dollar for time on the show this year -- but movie companies would pay that premium.”

In August, troubled automaker General Motors Corp. said it had pulled out of the Oscar telecast. For years, GM had used the glamour of the show to sell its marquee lines, including Cadillac. Automaker Hyundai Motor America has stepped in to replace GM.

The lower ratings prompted fears that ABC would not be able to hold or increase the rates it charges sponsors. A 30-second commercial in last February’s show cost $1.8 million, a 6% increase over the previous year. In recent years, ABC has made $10 million to $20 million in profit on the show.

Now ABC and the academy are betting that the studios, which already are willing to pay some of the highest rates in television, would not blink at spending top dollar for prominent placement. ABC might be able to drive up rates for commercials at strategic moments in the show, such as directly after the opening skit or just before the best-picture winner is announced.

“It doesn’t make a lot of sense for them to exclude an entire category of advertisers, particularly when times are tough economically and the show hasn’t been performing that well in the ratings,” said Larry Gerbrandt, head of consulting firm Media Valuation Partners.

--

meg.james@latimes.com

claudia.eller@latimes.com

Times staff writer John Horn contributed to this report.