The Financial Times has a story today about how Hollywood’s movie studios are feeling the pinch of a wrecked economy, and it’s beginning to cost some high-powered executives their jobs. At Disney, which released the box office duds G-Force and Confessions of a Shopaholic, studio chairman Dick Cook was shown the door. Never mind that he was responsible for the enormously profitable Pirates of the Caribbean movies. Hollywood is nothing if not a "what have you done for me lately" town.

Besides, If you ask me, the Pirates franchise has to be one of Hollywood’s luckiest success stories. A movie based on a Disney ride? Starring the wooden Orlando Bloom and Keira Knightly? All bonuses had better have been paid to Geoffrey Rush, Bill Nighy and (of course) Johnny Depp. Without his iconic "Keith Richards plays dress up … and a little gay" turn, the first movie is a flop-er-ooo of historic proportions.

Before we get into the meat of FT’s story, a quick aside. Shopaholic was labeled a bomb. Though it placed a paltry 4th in its opening weekend, it grossed $44 million in America and the film still raked in $106 million worldwide. That’s a "dud"? Even G-Force, which according to Wikipedia had a budget of $80 million, pulled in nearly $170 million in box office receipts.

If that kind of performance can cost you your job in Hollywood, how can anyone stay employed? For that matter, I can’t believe that Shopaholic cost more than $30 million to make. And isn’t a $76 million profit considered a good thing? As for Land of the Lost? Now that’s a bomb—$100 million-plus budget, the worst reviews of any film in years, and a (miracle) box office gross of $63.5 million. But that’s what Universal Pictures does—produce bloated, awful movies. Yet it still cost the jobs of Marc Shmuger and David Linde, the co-chairmen of the studio.

Anyway, back to the story:

After a summer bursting with expensive box office flops, a film made for a paltry $15,000 and starring an unknown cast is shaping up to become one of the year’s surprise successes.

Paranormal Activity, a horror film in the mould of the Blair Witch Project, has been selling out midnight screenings in a handful of US cities and looks set to become a bona fide hit when it is released across the US by Paramount this month.

Again, if that once-in-a-decade-or-two crap shoot is the new standard of job-keeping success in Hollywood, the whole industry is in trouble. A Blair Witch or Paranormal should be considered a bonus to employees and stockholders, not a studio-saving necessity.

Blog-master Sam (S. T. Karnick) has remarked often that Hollywood has only itself to blame for its moribund condition. During the Bush years, Hollywood obsessed over making movies that they thought only insulted the then-president but ended up alienating general audiences who were not willing to plunk down $12 plus snacks for films that insulted their country’s military as well as their intelligence. We’ll never really know if a slate of movies honoring the heroism of our fighting men and women in battle would have succeeded in keeping Hollywood financially healthy. But Hollywood execs threw so much cash down their antiwar ideological hole, they’re now paying a deep price.

One would think Hollywood would be recession-proof. Yet it’s time for the kind of belt-tightening every other industry (and family) is now enduring.

At Universal, Ron Meyer, the chairman who decided to dismiss Mr Linde and Mr Shmuger, has vowed to make cost control a priority when commissioning films. “We have overspent and underperformed,” he says of the films released this year. “We have to change with the times and look at the economics of today’s movie business.”

In an industry rife with bloated salaries, talent pay is the most obvious area to cut. Some stars receive astronomical fees for their work and the “20 and 20” pay day–referring to a $20m upfront payment plus 20 per cent of the film’s gross before the studio earns a penny–is not uncommon.

Not uncommon, eh? Not for long. Seriously, what bankable stars are left out there? I’m having trouble thinking of any. Sandra Bullock’s latest film was a disaster, and I’m sure she had the clout for the "20 and 20" demand. As Sam pointed out last week, the days of Bruce Willis’ name on the marquee ensuring box office success are pretty much over. Tom Cruise? Please. Jim Carrey? He’s got a re-imagining of A Christmas Carol coming up. I have serious doubts about that (though I wish him and the film luck). Julia Roberts long ago lost her luster. And even Adam Sandler’s Funny People was a bomb and lost money thanks to director Judd Apatow’s self indulgence.

Since the only critical and box-office boffo movie I can recall from this year off the top of my head is Pixar’s UP, it appears that the future of profitable movies in the foreseeable future are exceptionally well-made animated features with great scripts and plots. (And, we should remember, that UP was considered a huge risk for Pixar before release–no bankable voices, no toy tie-ins, unique adult-centered plot, etc.).

At any rate, at least Universal is drawing a line in the sand when it comes to overpaying for "big stars" in its movies.   

Universal’s new management team refuses to be drawn on star salaries, with Donna Langley, the new co-chairman, insisting there are other areas to consider, such as the rising cost of energy and materials.

“Greenlighting any film is becoming more and more difficult [because] the cost of making movies has risen,” she says.

Just wait until Hollywood’s beloved Obama signs the cap-and-tax energy bill!

Top talent will continue to command a premium price, according to Barry Katz, president of New Wave Entertainment, which represents stars such as Dane Cook.

“I can guarantee you that the big stars aren’t going to take a pay cut,” he says. “Studios need them to bring in the audiences.”

Dane Cook is a "star"? I missed the memo. In any case, the idea that the studios need "stars" to bring in the audiences just isn’t backed up by box office take so far this year. As of this morning, here are the Top 10 grossing films of 2009 (subject to change, naturally, after the Christmas movie season):

Bottom line: adaptations of already-familiar material and animated productions are pretty much the only sure things in Hollywood these days. The days of movie stars luring huge crowds to the cineplex are long gone. And Hollywood’s economics will have to adjust to that reality sooner or later.

As a bonus, maybe they’ll actually start producing better films. How about casting "stars" in those movies based on video games, toys, and children’s books—and get on with financing the work of small filmmakers who can produce cheap gems that make people leave the theater feeling they got much more than their money’s worth?

–Jim Lakely