Tinseltown less tinsel-y this holiday season (VAR, THR)

By Nancy Tartaglione-Vialatte

The economic meltdown may make for a less mirthful holiday season in Hollywood. Variety reports that the Hollywood party circuit is being scaled back as part of industry-wide belt-tightening while The Hollywood Reporter weighs in on the financial crisis that is hitting the business in general.

Media companies are suffering with NBC Universal cutting $500 million from its 2009 budget and likely trimming staff, while Viacom and Disney both recently reported quarterly earnings that were far off last year.

"Studios are taking a much harder look at the bottom line," analyst Larry Gerbrandt of Media Valuation Partners in Beverly Hills, told THR.

Further, the flow of private equity has slowed to a trickle. Late last month, Societe Generale, a key movie financing player, abruptly exited the business. That move followed Deutsche Bank’s recent example.

Yesterday, it was reported that Citigroup and Relativity were exchanging lawsuits over Citi’s attempts to amend a deal that gave Relativity the funds to co-finance a slate of Sony films. And, Citi has also cut ties with production and finance arm Continental Entertainment Group.

Meanwhile, hedge funds like the Merrill Lynch-backed Melrose I fund that backs 24 films in Paramount's slate are either under water or seeking to extricate themselves from the film business, notes THR. Indeed, Variety reports today that Steven Rattner is pulling the plug on the media-centric hedge fund portion of his Quadrangle Group.

Although it has avoided the current Wall Street credit freeze by sourcing funds from India’s Reliance Big Media, DreamWorks has delayed its pitch for the remainder of its hoped-for $650 million or so through JPMorgan until the new year as a result of poor market conditions.

For TV companies, some of the belt-tightening measures were already in place due to the writers’ strike.

ABC Studios was the most aggressive during the strike, terminating nearly 30 overall deals. It recently became the only studio so far to impose budget cuts on its shows via a 2% production cost trim on all series.

At News Corp.'s TV divisions, a hiring freeze has been implemented.

Sony Pictures Entertainment’s cost-cutting measures include less plane travel and hotel downgrades, fewer print subscriptions, no internal meetings outside the company offices and cutting airport parking costs.

Layoffs, meanwhile, remain likely as the holidays approach. "Without a doubt," Sanford Bernstein analyst Michael Nathanson told THR when asked whether layoffs are likely between now and early in the new year. "There will undoubtedly be layoffs," concurred Hal Vogel, president of Vogel Capital Management. "How many, I don't know."

Back on the party circuit, Variety notes that several congloms have cancelled their bashes, while others are toning down the revelry. Scaling back post-premiere parties is also being examined. "It would be foolish if we weren't taking a look at it," one studio exec told Variety.

However, scaling back those parties is especially tricky for studios in awards season as execs maintain that it's in their best interest to give these pics a nice sendoff.

"We still need to make a splash," said one studio event planner. "We still need to make our filmmakers and talent happy."

The big challenge is how to make cuts without alienating the A-list or compromise the promotional value of the event.

Premieres also drive publicity, so in order to generate that publicity at lower costs, "what you're going to see are more premieres at the Academy with a relatively inexpensive reception in the lobby and then a couple big, themed parties every quarter," a planner told Variety.

The holiday soirées are considered more expendable than the premiere events. Thus far, Disney and Viacom have canceled theirs. Universal will let individual divisions decide on their merry-making and Sony, which usually has a tented party, will throw its bash on Main Street and give staffers the days off between Christmas and New Years.

Still, if they think it will help their cause, showbiz denizens will continue to tie one on, writes Variety. "We still have a business to run," one exec said.