Cinema: The New Hollywood: Dead or Alive?

Beset by megabudgets and minimoguls, the movie industry suffers a crisis of conscience

Next Monday is Oscar night, when Hollywood's elite will tux and tart themselves up, like 3,000 extras in some impossibly opulent '30s costume drama, for the movie industry's spring ritual of self-congratulation. In the packed Los Angeles Music Center they will hear a former B-movie swain and Screen Actors Guild president named Ronald Reagan deliver an address on the theme "Film Is Forever." They will bestow Academy Awards on their most envied colleagues. They will snicker as professional actors flub a three-line introductory speech. For the benefit of 80 million TV-watching Americans, the movie people will put on a spectacle that combines the solemnity of graduation day at West Point with the giddy naivete of a greasers' sock hop.

They might also, according to some observers, be attending a state funeral —for the state of the art and the industry. Hollywood shows every sign of a town in crisis. The movie audience is shrinking as budgets soar toward the $40 million point and beyond. The average studio movie today costs $10 million to make and $6 million to publicize in newspapers and on television. Because of inflation and high interest rates, producers want to release films that will make their money back quickly. This means recycling the familiar into the surefire: 1980's biggest hit was The Empire Strikes Back, George Lucas' sequel to Star Wars. It means signing box-office stars at huge salaries: Burt Reynolds pulled in a reported $5 million for The Cannonball Run, Barbra Streisand $4.6 million for All Night Long. Directors are stars too: Francis Ford Coppola was offered $3 million to direct One from the Heart. Says Director Martin Scorsese, 38: "We're working ourselves right out of jobs. I'm concerned that the industry is being destroyed."

With inflation and recession come managerial convulsions. Five of the seven major studios have suffered abrupt changes of management in the past two years. The rash of new production outfits, born in the flush of Star Wars and Grease profits a few years ago, either have folded or are struggling to survive. The U.S. Congress disallowed most no-risk tax shelters, which once offered the hope of a quick buck for producers and a long write-off for investors, and 19 states have outlawed blind bidding, which allowed studios to extract money commitments from theater owners for an unseen product. Now cable TV and cassettes are starting to offer the movies serious competition for the entertainment dollar. The gloomiest forecast is of a nation of stay-at-homes getting all their fun from the giant video screen. "We are supporting a dying business, and the change is scary," says Paul Schrader, 34, who wrote Taxi Driver for Scorsese and directed American Gigolo. "Movies are on their way out."