The Oscar race: Is it time for a luxury tax on studio spending?

Nov. 29, 2011 11:31 AM PT

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When it comes to big-time Oscar campaigns, Warner Bros. is the New York Yankees of the movie world. The studio spent a jaw-dropping amount of money unsuccessfully pursuing a best picture nomination for “The Dark Knight” during the 2009 Oscar derby. Now the studio is pulling out all the stops for “Harry Potter and the Deathly Hallows — Part 2,” the final installment in the studio’s multi-billion-dollar Potter series.

Warners believes that even though Oscar voters have roundly ignored the past “Potter” movies, the final installment will be buoyed by the same kind of wave of affection that propelled the third film in the “Lord of the Rings” trilogy to a best picture victory in 2003. So it’s spending money like a drunken sailor. Several veteran Oscar campaigners I spoke to recently say they’ve never before seen an Oscar campaign this early in the contest with the sheer volume of ads that Warners has unleashed in recent weeks.

Warners has even taken the unprecedented step of running “for your consideration” ads for “Hallows” on L.A.-area video billboards. This last weekend I found myself staring at one of them on a billboard stationed above an International House of Pancakes in my neighborhood. In an era when Oscar ads are targeted to run in publications specifically geared toward academy voters, I had to wonder — just how many academy members had I ever seen tucking into the blueberry pancakes at my local IHOP?

When I asked Warners marketing chief Sue Kroll if the studio’s “Hallows” video campaign was too lavish, she was unapologetic. “You can call it lavish, but I think it’s simply a way of getting people, at a time when they are forming opinions, to think about our film,” she said, noting that the film had recently arrived on DVD, so the cost of the billboard ads was shared with the studio’s home video wing. “Because ‘Hallows’ came out in the summer, we wanted to remind people of the merits of the film, which was one of the best-reviewed movies of the year. In an industry town, you sometimes need to do things that have never been done before to get everyone’s attention.”

If you’re an Oscar libertarian, you’re probably saying: So what? Why shouldn’t Warners be allowed to spend as much as it wants? I agree. But I think it’s time the academy, which is always passing rules to promote fairness, got serious about studio campaign spending. My modest proposal: a luxury tax.

If a studio’s expenditures soar over a certain ceiling — I’ll leave it to the academy to decide what’s an appropriate number — the studio would pay a luxury tax that would go to a good cause, whether it’s helping to fund the academy’s ambitious museum project or providing film school scholarships for underprivileged kids.

By publicly identifying the biggest spenders, a luxury tax could serve as a disincentive for crass studio excess. It might also help level the Oscar playing field. The vast majority of recent Oscar best picture nominees have been films that were either financed by a major studio or one of its specialty film divisions, which, if necessary, can draw on the resources of the parent conglomerate. (The 2007 best picture nominee “Babel” from Paramount Vantage is a good example.) Given the new formula for picking best picture nominees, if Warners’ ad spree earns “Hallows” 5% of the first-place votes for best picture, it could knock a smaller movie out of the running. Even though indie movies can still earn a best picture win, as Summit’s “The Hurt Locker” did in 2009, most Oscar insiders say that when it comes to vaulting your film into the awards season conversation, money talks.

Take the case of “Margin Call,” a tiny, $3.4-million movie made by Roadside Attractions and Lionsgate that is belatedly trying to get an academy campaign off the ground. So far, it’s gotten little traction from most of the Oscar pundits despite a treasure trove of great acting turns from its cast, notably Kevin Spacey, whose performance as a conflicted Wall Street trader is as good as anything you’ll see all year. Roadside co-president Howard Cohen isn’t crying foul, noting that the academy has “a long tradition of recognizing independent films.” But he admits that big studio films have an edge, saying the “star-driven, prestige studio films can definitely nose out an independent picture.”

The academy itself has made it clear it wants a more level playing field. That’s the major impetus behind a set of new rules announced earlier this year that puts a squeeze on campaigning once the Oscar nominations are announced in late January. The academy felt the extravagant parties and movie star screening appearances were giving studios an unfair competitive advantage.

Under President Tom Sherak, the academy has made a serious effort to change with the times. The results have largely been admirable. Even bolder moves may be coming, with insiders buzzing about online voting and a plan to move the 2013 Oscars up into January.

A luxury tax would be another step in the right direction. It’s no pie-in-sky theory. In fact, it’s exactly the way business is run today in Major League Baseball, the great American pastime. Any team whose payroll goes over the luxury cap limit pays a percentage of the amount it went over the cap, the penalty increasing each year the team topped the cap. The Yankees have forked out roughly 95% of the tax payments, which MLB uses to fund player benefits and baseball programs in developing countries.

It’s not a panacea. But if you’re a baseball fan, you’ve surely noticed that the Yankees are no longer going to the World Series every year, while small-market teams like the Tampa Bay Rays and the Milwaukee Brewers — baseball’s equivalent of Lionsgate or Summit — managed to make the playoffs this year.

I suspect the academy would have a host of concerns, starting with the fact that baseball Commissioner Bud Selig has a lot more sway over the 30 teams than Sherak has over the major studios. But if the academy can require studios to abide by all sorts of arcane rules about campaigning and film eligibility, surely it could exercise similar control over the budgetary excesses of Oscar campaigns. It may not be as easy to track ad buys as it is the number of appearances Leonardo DiCaprio makes at Q&A screenings, but it only took me a couple of email inquiries to get a range for the cost to buy a month’s worth of airplay at video billboards around town.

Money is what fuels the entire Oscar merry-go-round. I’m not enough of a wacko idealist to try to make it disappear entirely, especially since some of that advertising money helps my own newspaper keep the lights on. But if the academy is changing its rule book to promote fairness, it should use its rulebook to remind the industry’s biggest spenders that when it comes to winning Oscars, the focus should be on the movies, not the money.

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-- Patrick Goldstein