In January 1991, Jeffrey Katzenberg, then the head of Disney’s motion picture divisions, wrote a memo that ended up being circulated throughout Hollywood. Even though it is 21 years old, it is remarkably relevant to the current movie business. For example, the United States was in a recession as we are today. The movie industry was confronted by numerous financial challenges tied to technological advances and cultural shifts, also as we are today.

Over the next few weeks, I will be posting the entire memo. If you have any interest in screenwriting or working in the film business, you should read it. Why? Because it gives you a wide-open view of how studio executives think. After all, any script you write and circulate in Hollywood doesn’t exist in a vacuum, rather it funnels through a system, one that operates based upon the business principles and practices of studio heads like Katzenberg.

Today: Rules

Rules

In this paper, I’ve implied a lot of rules — go for singles and doubles, hold down costs, keep hands on, watch your appetite, be wary of the Big Stars, pay ancillaries no mind, etc. Here’s one more rule — there are always exceptions to the rules.

Filmmaking is not a science. This memo is being offered as a reflection on and a re-thinking of our business. Clearly, there are going to be instances of “yes, but…,” as in, “Yes, I know this project violates Rule X, but the concept is so compelling that it’s worth it.”

But, to as great and extent as possible, we should try to adhere to a set of reasonable, rational rules. Not so much for us, but for them, i.e. the outside world.

If we exercise the necessary discipline to make some rules stick, then the people we deal with will have a clear set of expectations when they sit down to the table with us. By self-enforcement of a clear code, we will make it possible for agents to think, “As long as they treat everyone else that way, at least I know it’s not personal.” People will come to us understanding our terms and framework in advance. Or, if they don’t agree with our approach to business, they will avoid us and save everyone from wasting a lot of each other’s time.

And, if we are consistent in asserting our bottom line, in the long run we are likely to make less expensive and more profitable films. There is no way to minimize the long-term importance of being willing to walk away from any one movie. There are over 200 projects under active consideration at any given time at this studio. None of them is a certain winner, since there is no such thing. If we can’t make one, there will be another to take its place. We must always keep this in mind when we sit down to negotiate. We must always be willing to walk away at the moment that a deal no longer makes sense for us. For every project we lose in the short run, in the long run we are likely to get five others on terms advantageous to us because the other side will know that we mean it when we say, “That’s it.”

While there is always going to be some flexibility on many of the rules discussed in this memo, there are two rules that must never be broken:

1. Always exercise intelligence and good taste.

These are two things to never compromise. If we decide to make a “tent pole” movie, then let’s make it as intelligently as possible, with intelligent risk. If we choose to use a major star, let it be an intelligent choice for that role and for that movie. And, as we develop projects, let us always keep in mind the indefinable question of taste. Disney films mean something very specific. But, Touchstone and Hollywood films also reflect a certain entertainment ethic, one that we can be proud of and one that we should continually respect.

2. Reserve the right to fail.

We’ve become big enough and successful enough that no one movie can be the difference between profitability and unprofitability for our studio. If we are to achieve greater success, we must be creative. If we are to be creative, we must risk failure. Therefore, to succeed we must occasionally fail. And sometimes, not so occasionally.

“Pretty Woman” came on the heels of five consecutive failures. In the scheme of running this movie studio, those five failures were necessary for that one extraordinary success. And they were worth it.

If we remain intelligent about our projects and exercise good taste, then the failures will remain manageable. And we will continue to be successful.

Maybe studios have some rules. But for screenwriting, there are no rules. I have a lot of thoughts on this very subject that have been roiling around in my brain. I’ll post something on that soon.

That said, another quotable quote from Katzenberg: “Filmmaking is not a science.” Especially on the front end [i.e., the creative part].

To read Part 1 of the Katzenberg memo, go here.

For Part 2, go here.

Part 3, go here.

Part 4, go here.

Part 5, go here.

Part 6, go here.

Part 7, go here.

Part 8, go here.

Part 9, go here.

Part 10, go here.

Part 11, go here.

Part 12, go here

Part 13, go here.

Part 14, go here.

To read the entire memo, go here.

In January 1991, Jeffrey Katzenberg, then the head of Disney’s motion picture divisions, wrote a memo that ended up being circulated throughout Hollywood. Even though it is 21 years old, it is remarkably relevant to the current movie business. For example, the United States was in a recession as we are today. The movie industry was confronted by numerous financial challenges tied to technological advances and cultural shifts, also as we are today.

Over the next few weeks, I will be posting the entire memo. If you have any interest in screenwriting or working in the film business, you should read it. Why? Because it gives you a wide-open view of how studio executives think. After all, any script you write and circulate in Hollywood doesn’t exist in a vacuum, rather it funnels through a system, one that operates based upon the business principles and practices of studio heads like Katzenberg.

Today: The Rising Sun

The Rising Sun

Of course, the focus has shifted to hardware for a very good reason. The people who make the hardware have been buying up Hollywood.

This has resulted in a rising tide of hysteria and paranoia that has bordered on panic.

Let’s calm down.

The Japanese have been buying studios in the belief that if they can control the software, there will be great synergistic advances of vertical integration with their hardware. This may make sense if you’re in the auto business and you own the company that makes the sparkplugs for your cars. I contend that it simply doesn’t make sense in the movie business.

It all started when Sony was first on the VCR scene with its Betamax, only to lose out to the VHS format. Sony chairman Akio Morita has concluded that history would have been different if Sony had owned an American studio and therefore been able to direct the market by putting film titles on Beta tapes.

This thinking is absurd. By owning Columbia, Sony now controls less than 15% of Hollywood software output. Fifteen percent does not comprise the critical mass necessary to direct a market.

Beta didn’t lose to VHS because it didn’t have the software. VHS won, despite not being the first out of the gate, because of a superb manufacturing, distribution and marketing effort that ultimately succeeded in making VCR and VHS synonymous in the marketplace. And it was also a better product.

Now, Matushita is making what I believe is a defensive move by following in its competitor’s path and buying MCA. This is not unlike what occurred in our business a few years ago when many of the studios followed one another into the theater business. Like the Japanese hardware manufacturers, these studios believed that some sort of synergy/vertical integration magic would happen if they controlled the screens their movies played on. Ridiculous prices were paid for assets that are now declining in value.

Luckily, we stayed out of the theater business, sticking instead with the business we understand best.

And this is where the wisdom of the Columbia and MCA purchases is particularly questionable. The Japanese are getting into a business that is to some extent outside of their cultural context.

Filmmaking at its essence is about the conveyance of emotion. Not coincidentally, filmmakers by their nature are an emotional group — from the actors on the screen to the dealmakers behind the scenes. It is said to be a crazy business and most of its practitioners admittedly are, by normal standards, a bit eccentric.

The Japanese, on the other hand, culturally err on the side of withholding emotion. In saying this, I am not simply offering an American perspective. The Japanese are the first to tell you this about themselves.

This sense of discipline and self-control has no doubt been a major factor in achieving the Japanese economic miracle that has turned a small island nation into one of the world’s pre-eminent industrial powers.

But it is also why I firmly believe that the recent marriages between Japanese hardware makers and American movie makers may not be ones made in entertainment heaven.

There will be a chasm in the fundamental understanding of the movie business that will likely prove exceedingly frustrating for Japanese and Americans alike.

But, whether I am right in this expectation of incompatibility or not, one fundamental truth will continue to hold forth during the era of Japanese studio ownership: only the product matters.

If we at Disney continue to produce a successful slate of films, they’ll line up down Buena Vista Street to buy our products to display on every one of their new fangled gadgets.

We don’t need to be associated with hardware manufacturers any more than we need to be associated with exhibitors.

We only need to be associated with good movies.

Nice history lesson. And did you realize that for a time, two movie studios were owned by Japanese companies: Columbia (Sony) and Universal (Matsushita). Katzenberg was at least 50% right as the latter arrangement didn’t work out so well as after a five year ownership stake, Matsushita sold Universal to the Canadian company Seagram. Meanwhile Sony has owned Columbia since 1989 and after some rough years, they brought in John Calley and Amy Pascal, the latter of whom is still head of production, and the studio has done quite well for itself.

That’s probably the key: Sony was smart enough to hire people who knew the Hollywood culture and the film business.

The idea of ‘vertical integration’ still has a lot of power in the business community and ironically Disney has not been immune in purchasing since Katzenberg’s memo ESPN, Marvel and Pixar among other companies.

But this is my favorite quote from today’s excerpt: “Filmmaking at its essence is about the conveyance of emotion. Not coincidentally, filmmakers by their nature are an emotional group — from the actors on the screen to the dealmakers behind the scenes. It is said to be a crazy business and most of its practitioners admittedly are, by normal standards, a bit eccentric.”

Don’t get lost in the “eccentric” bit. We all know this. Indeed I’ve written two The Business of Screenwriting posts on the subject titled “They don’t think like you” here and here.

As screenwriters, the line to remember is this: Filmmaking at its essence is about the conveyance of emotion.

That, my friend, is worthy of tacking up at your desk where you right. This is straight from the mouth of one of the more influential studio execs in the last quarter-century, this is a core principle for him and I would think most of the buyers out there.

Of all the moving targets you try to hit when you write a spec script, apart from the strength of your story concept, I can think of no other more important element than this: Convey emotions. People who read scripts for a living get dulled from the experience, so many words, so many pages, so much crap. They are desperate to read something that shakes them out of their doldrums. They want to feel something.

I don’t mean melodrama. I’m talking about the whole variety of emotional reactions. If it’s a comedy, make readers really laugh. If it’s a thriller, scared the crap out of them. If it’s a drama, craft a deeply compelling story. And yes, this all pretty much comes down to what you do with your story’s characters within the context of the story’s central situation as characters are the conduit of a script’s emotions.

Don’t ever forget that fact: Filmmaking at its essence is about the conveyance of emotion. If there’s nothing else you take away from this daily grind of plowing through Katzenberg’s memo in its entirety, take this point to heart.

To heart… emotion… get it?

To read Part 1 of the Katzenberg memo, go here.

For Part 2, go here.

Part 3, go here.

Part 4, go here.

Part 5, go here.

Part 6, go here.

Part 7, go here.

Part 8, go here.

Part 9, go here.

Part 10, go here.

Part 11, go here.

Part 12, go here

Part 13, go here.

To read the entire memo, go here.