Film studios laying out lots of green to reel in Oscar gold

While the value of an Oscar is priceless, the price tag of an Academy Award campaign is dear. Yet the win isn't about the statuette alone; it's also about the film's enhanced earnings potential.

This year, the average bill for the Oscar hunt of a multiple nominee is $10 million to $15 million, according to Tom O'Neil, whose website, goldderby.com, is the gold standard for all things Oscar.

Ever since 1999, when mogul Harvey Weinstein ambushed contender Saving Private Ryan with his $15 million ad blitz for Shakespeare in Love, Oscar spending has exploded.

Are Academy campaigns cost-effective? You bet, says O'Neil. "This year, we're seeing the most dramatic example of a movie cashing in on its Oscar profile," he says, pointing to The King's Speech. "This period costume drama, initially projected to take in about $30 million globally, will, with help from its 12 Oscar nominations, probably cross the $200 million mark."

The Weinstein Co. is behind Speech, which most handicappers predict will beat out The Social Network and True Grit for best-picture honors at the Academy Awards on Feb. 27.

As with cries for transparency in campaign financing, calls for Oscar-campaign reform largely go unanswered.

For good reasons.

One is the Oscar Bump in short-term box office. The other is the Million Dollar Baby delivering the long-term revenue.

Think of the Bump as the Slumdog Millionaire effect: By the time Oscar nominations were announced in January 2009, that Danny Boyle movie had grossed $44 million. Ten nominations and eight Oscar wins (including best picture) helped boost its domestic earnings to $141 million and global box office to $377 million.

While that sounds like a lot of money, the Bump represents only a fraction of the kernels in the popcorn bucket of a movie's total income. What drives Oscar campaigns is the Million Dollar Baby, those dollars delivered after a movie has left the big screen.

Revenue from theaters accounts for just 13 percent of the money made by a film's producers, according to IBISWorld, a market-research firm. (On average, 50 cents of each ticket dollar goes to the producer; the theater owner gets the rest.)

"More than 48 percent of the money a producer pockets comes from downloads, on demand, Netflix, and streaming," says Agata Kaczanowska, IBISWorld's entertainment-industry analyst.

"The stamp of Oscar winner makes a movie more valuable down the line," according to Len Klady, box-office guru for moviecitynews.com. "Their film libraries basically keep the studios running."

Still, there is a fevered debate about whether burning up immediate profits to chase potential profits yields the best return on investment. Was Jeff Bridges, last year's best-actor winner for Crazy Heart, joking when he cracked that more time and money had been spent on the film's Oscar campaign than on the indie, which took 24 days to shoot?

"The upside is having the imprimatur of Oscar winner. You can market that on disc and on demand and have it as a marketing tool for all broadcast media around the world," says Klady. "The downside is you spend millions and get no Oscars - or only get one, for costume design."

Among this year's best-picture front-runners, The King's Speech (12 nods) and True Grit (10) got immediate Bumps. In the 21/2 weeks after the Jan. 25 announcement of Oscar nominees, the box office of Speech rose from $58 million to $84 million and that of Grit from $139 million to $155 million. The Social Network (eight nods), a fall release in fewer than 300 theaters on nomination day, was already on DVD and available on demand the week after announcements were made.

Unsurprisingly, "The Social Network was the most rented on-demand title for the week ending Feb. 6," reports Jeff Alexander of Comcast.

"We've seen Oscar nominations improve performance for video-on-demand titles in the past," says Verizon spokeswoman Heather Wilner. "For example, we saw significant lift on The Hurt Locker last year after its Oscar nominations and subsequent wins."

Most important, says Paul Dergarabedian, box-office analyst for Hollywood.com, "the Oscar Bump and post-theater life of a movie will have impact on movie-delivery systems that haven't been invented yet."