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Pare Down. Another reason for investor approval of the movie business is that it has markedly changed since the era of intuitive plungers like Darryl Zanuck and Jack Warner. Many prudent, budget-pruning professionals are at the top these days. To analyze marketing methods, Fox brought in Doyle Dane Bernbach, the New York City ad agency, while Columbia turned to McKinsey & Co., management consultants. With an eye on Wall Street, most movie companies are paring down debt, presenting an image of stability and conservatism. MCA, for example, paid off all its long-term debt with the help of earnings from Jaws, and has a comfortable $150 million in the till.
With all that cash, the movie companies are diversifying to offset the roller-coaster effect of unpredictable film earnings. MGM is investing in a new casino complex in Reno. Columbia acquired D. Gottlieb & Co., a Chicago maker of pinball machines. MCA owns a savings and loan association. Another safety cushion is provided by television's appetite for what movie people call "product." Gulf + Western is getting $76 million for leasing a library of films to ABC, CBS and NBC. MCA grossed some $250 million last year from sales to the networks and independent TV stations.
The movie game itself, though, remains a gambler's domain. Says MCA President Sidney Scheinberg: "You try to make the best value judgment you can. But I doubt that anyone can call a Jaws or a Star Wars in advance."