The biggest winner at Sunday night's Academy Awards won't be "Brokeback Mountain" or "Crash."
It will be the Academy of Motion Picture Arts and Sciences, which will receive about $50 million from ABC for the right to broadcast the Academy Awards ceremony, according to the Academy's annual report and confirmed by an Academy officer.
To put that number in perspective, rights to the television industry's Emmy Awards go for between $6 million and $7 million per year. The Academy's broadcast fees are so rich that they dwarf the $1.5 million in dues income paid by the Academy's approximately 6,000 members. The Academy's only other significant income is $13 million from investments.
The Academy won't pocket all of that TV money because throwing Hollywood's biggest bash is a pricey undertaking. The cost of putting on the Oscars is close to $20 million. That includes staging the Kodak Theater ceremony, producing the broadcast, and advertising and promotional events like screenings. Still, when all the envelopes have been opened and everyone's mom and agent have been thanked, the Academy should be left with a tidy $30 million profit. That sort of return has enabled the Academy to accumulate $221 million in assets, according to its annual report.
"Those assets are considerable," said USC Film School professor Richard Jewell, an authority on the history of American film and the Academy. "The Academy uses the money generated by the awards broadcast to do a lot of valuable things. Their library alone is a phenomenal resource, and it all comes from the fact that the awards themselves are such a big deal. They are asking for a tremendous amount of money to telecast the awards, but it's reinvested in the best sense of the word."
The Academy received $51 million from TV rights to the Oscars in 2005 and $47 million in 2004. The actual amount of money the Academy will see from the Walt Disney Co., ABC's parent, will be determined based on a complex formula involving the fees paid by advertisers, which are adjusted when the ratings come in. The event is annually the second-most-watched telecast in the United States, with an average 45 million viewers. And its heavy female viewership has earned it a reputation as the "Super Bowl for Women."
No one is expecting record ratings for this year's Oscars. History indicates that the more popular the most-nominated movies are at the box office, the higher the ratings will be, because viewers are more inclined to tune in to a show about films they've seen. Four of this year's five best picture hopefuls "Brokeback Mountain," "Crash," "Capote" and "Good Night and Good Luck" are limited release movies. Of those, Focus Films' "Brokeback" has made the most at the box office with a relatively modest $72.4 million. Steven Spielberg's "Munich," from Universal Pictures, is the only wide release film in the mix, and it's made just $44 million. By contrast, "King Kong" which has run up $216 million in box office receipts, is nominated only in technical categories.
Overall, viewership of the Academy Awards has decreased since "Titanic" swept the awards in 1998 with 11 Oscars. Last year's Oscar ratings were down about 5 percent from the previous year, with an average viewership of about 41.5 million.
On the record, Academy officials say they don't spend a lot of time worrying about the ratings.
"The telecast is the frosting," said spokesman John Pavlik, who confirmed the Academy's financial numbers. "The actual event is the presentation of awards for excellence in filmmaking, and that's the whole purpose."
But he admits that with this year's mix of small, serious films, it is difficult to handicap potential viewership.
"We're a little nervous this year," Pavlik conceded. "Are people tuning in for the horse race or to look at the horses?"
To cover themselves, ABC and the Academy have launched the Oscar's most aggressive promotional campaign ever. In addition to an ad blitz on network TV and radio, the Oscars are being pumped on Disney-owned cable nets like ABC Family and ESPN. For the first time, Oscar ads are on billboards, tall walls and bus shelters in L.A., New York and Philadelphia.
The non-blockbuster lineup has not deterred advertisers. Commercial time is going for an average of $1.7 million per 30-second spot, up from $1.6 million last year, according to the trade journal MediaPost. Even ABC's "Oscar Countdown" show, which has been expanded from 30 minutes to an hour, is bringing in around $800,000 for a 30-second spot.
For ABC, which has carried the show since 1976 and locked up the rights through 2014 by renewing its deal with the Academy last year, the show's value goes beyond the bottom line.
"This is the marquee event on ABC," said Andrea Wong, ABC entertainment's executive vice president of programming, specials and late night. "It's critical for us to have this franchise and that's clearly indicated by our reentering the deal with the Academy."
In 1953, NBC paid $100,000 for the broadcast rights. The tremendous increase in the amount of money brought in by the Oscars couldn't come at a better time for the Academy.
The organization is planning to break ground on a Hollywood movie museum, expected to cost more than $200 million to build, in 2008. The 75,000-foot structure will be built along De Longpre Avenue near Vine Street and Cahuenga Boulevard, near the Academy's Pickford Center and south of the ArcLight Theaters.
"It's not yet a big project in terms of resources, but we are all anticipating that it will become the tail wagging the dog in pure scope and size in the next few years," Pavlik said.
Two staffers have been hired and fund-raising efforts are underway to bankroll the project. Pavlik said that the intent is to make it a first-class museum.
"We don't want it to be Hollywood's attic or a lot of old junk, and it's not going to be a lot of static displays," Pavlik said. "We want it to be more interactive in the widest range of that term. If they do it right, it will be just terrific."
Other than putting on the Oscars, the Academy's largest expenditure is on administrative costs, at roughly $11 million in 2005. The Academy has about 200 full-time staffers, more than double the number eight years ago, according to Pavlik.
The next cost is the maintenance of the Margaret Herrick Library, he said. The facility, which houses the Academy's historic collections, contains more than 27,000 books, 60,000 screenplays, 200,000 clipping files, 25,000 posters and about 8 million photographs. Operating the library runs about $5 million per year, and that figure is rising as the collections grow with the advances in film restoration and digital conversion.
The increased money from the Oscars has allowed the Academy to grow its other programs, too. The Academy is adding programs and endowments, such as the Academy Film Scholars Program, established in 2000 as a $25,000 project grant awarded to two professors, historians or other academics each year.
"We could never have done that a few years ago, without the increased Academy Awards revenues," Pavlik said.
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