Shooting The Works Lights! Camera! Money!

By John Greenwald

The script called for blizzard scenes at a major airport. To film it, the entire cast and crew of this summer's Die Hard 2 embarked on a multimillion- dollar odyssey last December that led them to normally snowy Denver and northern Michigan. But relentlessly mild weather in both places forced 20th Century Fox to abandon its costly snow chase and shoot the sequel to the 1988 Bruce Willis thriller on a Los Angeles sound stage. As if that humiliation was not enough, the delays and moving expenses helped push the film's original $40 million budget to as high as $60 million.

While the ornery weather may turn Die Hard 2 into the most expensive film Hollywood will release this summer, the episode was merely part of a runaway spending spree that has made movies more costly -- and risky -- than ever. With an eye toward lucrative video and foreign revenues, studios are lavishing breathtaking sums on everything from stars to scripts to scenery. Hollywood now spends an average of $23.5 million to produce a major movie, up 40% from 1985. (The Consumer Price Index rose just 14.5% over the same period.) "Studios just keep piling on the cost, thinking that they will get it back somewhere," says Jerome Gold, director of the media and entertainment division of the Ernst & Young accounting firm.

The moguls throw their biggest bucks at films released during the summer months. "Kids can see three pictures in a week," notes Roger Birnbaum, Fox's president of production. "There are no school nights." Summer hits accounted for 40% of the record $5 billion that films raked in at U.S. box offices last year. Worldwide theatrical, TV and video revenues boosted that take to more than $10 billion. In hopes of luring even larger audiences, studios are spending $30 million or more apiece on as many as a dozen films set for release between late May and Labor Day.

The lineup is once again heavy with sequels and action flicks. Among them: Universal's $40 million Back to the Future III; Disney's $30 million Dick Tracy, starring Warren Beatty and Madonna; Warner Bros.' $32 million Gremlins 2; and Paramount's $45 million Another 48 Hrs. "This is the summer of the blockbuster," says Sidney Ganis, president of the Paramount Motion Picture Group. "If one or more of them fail, next summer there won't be nearly as many rolling."

The cost of such movies largely reflects the price that studios pay for the handful of megastars whose presence is expected to guarantee a hit. The top guns include Tom Cruise, who reportedly will earn some $9 million for playing a race-car driver and co-producing Paramount's Days of Thunder. For reprising his role as Nick Nolte's streetwise sidekick in Another 48 Hrs., Eddie Murphy will take home at least $8 million, plus a share of the film's revenues. Arnold Schwarzenegger can count on $10 million for starring in Total Recall, a $50 million-plus sci-fi picture filmed by Los Angeles-based Carolco and distributed by Tri-Star.

In the star-struck world of Hollywood economics, many studio bosses see a film's big budget as an insurance policy against failure. "Hollywood is a place full of scared people," says Alex Ben Block, editor in chief of Show Biz News, a weekly newsletter. "It's less scary to make a $50 million film than a $10 million film. For $50 million you can afford big stars and special effects and know you'll get some money back -- even if it's only on videocassette sales. With a $10 million film with no stars, you run the risk of losing it all."

That spare-no-expense approach can apply to every facet of moviemaking. Disney has gone about $5 million over budget on Dick Tracy, in part because the studio decided, five months after the film had been shot, to upgrade the 57 matte-painting backdrops that were used to help create a comic-book appearance. The improved matte work includes twinkling lights and moving boats and cars. Paramount had to frantically accelerate the editing of Days of Thunder to get the film ready for its summer release. The speedup meant that crews had to work around the clock, piling up mountains of overtime. Die Hard 2 had the same deadline problem. Says Birnbaum: "The prints will still be wet, but they'll be in the theaters on June 22 as promised."

While filming on location, major stars seem to feel entitled to almost anything they want. When humorist Art Buchwald won a suit against Paramount for using his idea as the basis for the 1988 blockbuster Coming to America, court documents showed that the studio had treated America star Eddie Murphy very well indeed. Among other things, Murphy enjoyed the services of a valet, a physical trainer and a $2,000-a-week chauffeur.

Studios abide such extravagance because their executives have visions of global markets that are hungry for Hollywood films. For every $1 that American films earn in the U.S., they typically make another 70 cents overseas. "You now have to look at movies as a worldwide business," says Thomas Pollock, chairman of Universal Pictures Motion Picture Group. "Where you get your revenues from has changed radically over the past several years. Few films make their money back just from theatrical releases in the U.S."

But because America remains Hollywood's largest single market, studios spend prodigiously to promote their films at home. Marketing expenses can equal the cost of producing a picture. Says Mara Balsbaugh, an industry analyst for Smith Barney: "It used to cost $5 million to $6 million to open a movie. Now it costs $15 million." To make a big splash, a major film might open on as many as 2,100 screens. The prints alone, at $2,000 apiece, would cost $4.2 million.

Surprisingly, Hollywood can usually judge a film's long-term fate by its , performance on its first weekend in the theaters. On Saturday mornings Hollywood's phone lines buzz with the sound of moguls offering congratulations or condolences based on industry polls of Friday-night receipts. With so much money at stake, this summer's calls could be highly emotional. "There are a number of films that can do $100 million or more," says Jeffrey Katzenberg, chairman of Disney Studios. "But you can't look for another Batman; that's a fool's mission. There will be triples and home runs, but probably no grand slams."

Some moviemakers think this summer's crop may include some disasters. "I can't imagine a more boring lineup of films," says one anxious executive. "The costs are out of hand, and the need for a safety net causes people to make formulas and sequels. I have this incredible sensation that the industry is at the top of a deep rapids and that there's going to be a fatality rate. Anyone who denies that is a fool or a liar."

Hollywood spending is likely to rise until some box-office disaster forces studios to retrench once again. When film legends Charlie Chaplin, Mary Pickford, Douglas Fairbanks and D.W. Griffith formed United Artists in 1919, a Hollywood wag famously quipped, "The lunatics have taken charge of the asylum." Today's top stars are seizing power by demanding -- and getting -- salaries and revenue-sharing deals that may be pushing the cost of movies to reckless heights.

But if Hollywood was not deliriously extravagant, would anyone go to the movies? When this summer is past, the studios will have to top themselves again for the big Christmas season. No problem there. Sylvester Stallone reportedly will be paid $20 million to write and star in Rocky V, a $40 million MGM/UA release due in December. The year-end holidays will also bring to the screen Francis Ford Coppola's Godfather III. The problem-plagued sequel was originally budgeted at $44 million, but it could become the first film to top $100 million.

CHART: NOT AVAILABLE

CREDIT: TIME Chart by Steve Hart

CAPTION: DIE HARD 2

IT'S PRICIER THE SECOND TIME AROUND

Die Hard 1988 Die Hard 2 1990

TOTAL $30 mil. $60 mil.

Bruce Willis $5 mil $7.8 mil.

Screenplay $300,000 $800,000

Production $20 mil. $40 mil.

Plus

Marketing and

Advertising $20 mil. $23mil.

With reporting by Richard Natale/Los Angeles and Janice C. Simpson/New York