Behind the Academy Awards' best picture decision

By Meg James

June 25, 2009 12 AM PT

Call it the Marion Cotillard Effect.

Few American moviegoers had heard of the French actress before she won the Academy Award last year for her performance in the art-house film “La Vie en Rose.” That year also marked the lowest ratings ever for an Oscar telecast.

Publicly, executives of the Academy of Motion Picture Arts and Sciences and ABC, which has broadcast the show annually since 1976, shrugged off the sinking ratings. But privately, they began looking at ways to make the broadcast more popular. The economics are simple: Without a large TV audience, ABC would be unable to continue demanding lofty prices for commercial time during the show. Those commercial rates in turn affect the licensing fee the network pays the academy, its principal source of income.

“Movies that have been nominated in recent years have been critically acclaimed but many were too obscure for the mainstream moviegoer,” said Shari Anne Brill, director of audience analysis for the ad-buying firm Carat. “Most moviegoers had never heard of these films, let alone seen them.”

Widening the field of movies jockeying for the big prize from five to 10, as the academy announced Wednesday, should help attract more viewers, and potentially more advertisers to the show.

This year, amid one of the worst advertising recessions in decades, several sponsors bailed on the broadcast. The rate for a 30-second commercial in the Oscar telecast dropped to below $1 million for the first time since 1998, according to the Nielsen Co.

Sid Ganis, president of the academy, said Wednesday that the motivation to change the rules was not concerns over ratings.

“That was not the purpose but, of course, there is the hope that there’ll be even more interest in the Oscars around the world,” Ganis said. “We have to think about that with the other side of our business. The show is important to us, but we are not going to turn ourselves upside down and backwards to accommodate the ratings.”

ABC executives discussed with the academy how to make the broadcast more popular with a larger audience, according to people familiar with the talks.

The show was given a new look and tone this year by producers Bill Condon and Laurence Mark and was hosted by “X-Men” star Hugh Jackman, who brought a song-and-dance act along with a “sexiest man alive” pedigree to the show. The ratings were somewhat higher than the 2008 low, but academy members nonetheless concluded that more than a cosmetic fix was needed.

“This is a huge positive from ABC’s perspective,” said Geri Wang, ABC senior vice president for prime-time sales. “It’s going to offer a broader palette of films being considered, and that should increase the interest in the show. Viewers, and the industry, will want to watch and root for their favorite films.”

Not everyone agrees that in a populist culture in which the Internet allows almost everyone to instantly register their public opinion on anything and “American Idol,” the medium’s most popular series, is decided by more than 100 million votes cast by viewers, that increasing the number of Oscar nominees will guarantee greater interest.

“Hollywood is out of step with an audience that has already gone interactive with their own reviews, recommendations and Tweets,” said television analyst Larry Gerbrandt of Media Valuation Partners. “They no longer want a group of industry insiders telling them what they have already spent hard coin to validate. TV is about the mass audience, not auteurs or political correctness or even critical acclaim.”

The academy’s decision this week was the second time in the last year that the board has changed its rules, in part to attract advertising to the show. In October, the academy lifted its more than 50-year-ban on movie studio advertising during the telecast to increase the pool of Oscar advertisers.

It still plans to limit each movie studio to buying just one advertisement during the telecast to make sure that viewers at home don’t mistakenly believe that a studio that buys a lot of commercials might have an edge in the voting.

The academy garnered $73.7 million in revenue related to the Oscars in its 2007-2008 fiscal year, according to the organization’s financial statements. Most all of that money came from the license fees paid by the Walt Disney Co. for domestic and international rights to the program. The academy’s total revenue for the year was $81.7 million.

Of that, the academy spends $31.1 million to stage the Academy Awards, Oscar luncheons and the Governors Ball. The excess revenue is hugely important to the organization, helping it to sponsor an array of public events and exhibits, and pay for restoration work, film archives, financial grants to other institutions, student contests, screenwriting competitions and science and technology programs.

In 1953, the first time the Oscars were televised, four out of every five TV sets turned on in America were tuned in. That year, “The Greatest Show on Earth” won best picture. By 1974, when the Nielsen Co. began measuring viewers, more than 44 million people watched when “The Sting” took the top prize.

In February, 36.3 million people watched as “Slumdog Millionaire” swept the Oscars. In 2008, 32 million viewers caught the show as “No Country for Old Men” was named best picture.

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Staff writers Rachel Abramowitz and Claudia Eller contributed to this report.