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Hollywood Reeling From DVD Slump

Disappearing profits threaten movies, star deals

By Peter Fearon, Newser Staff

Posted Jan 16, 2009 6:40 AM CST

(Newser) – Hollywood studios are faced with huge losses because of a 21% slump in DVD sales and the fallout from the crisis on Wall Street, reports the Financial Times. Studio heads have been forced to cut back on the number of new movies in production and are preparing to trim the multi-million-dollar deals of Hollywood stars.

Studios rely on DVD sales for profitability, since many movies merely break even at the box office. “Studios are going to have to renegotiate a lot of talent deals if new movies are going to get made,” said one senior studio executive. “There’s nowhere else to shave the money than with the talent.”

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Shoppers look through bins of DVD movies. DVD sales are slumping so badly that Hollywood studios may be forced to renegotiate their deals with stars. (AP Photo/Mike Derer)

Steven Spielberg has delayed creating a new production company because he can't raise $500 million from investors. (AP Photo/Mark J. Terrill)

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The studios are saying DVD sales are off 30%. They’re making fewer movies and are hammering budgets.” - Hollywood talent agency head

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Hollywood Reeling From DVD Slump