Former Disney studio head Michael Eisner says that writers are stupid to strike against the industry and to ask for a cut of digital sales:

The problem, Eisner said, is that the Writer’s Guild is lobbying for a bigger cut of the profits from digital distribution–and according to the former Disney chief, those profits simply aren’t there.

Gee whiz, where have we heard that before? It’s practically a mantra with the studios. This was portrayed pretty well on last weekend’s SNL, on Weekend Update, where a “Studio Head” talked about an end to studio profits:

Studio Head: DVDs and the Internet have put an end to all that. You know what it costs to make a DVD? Sixty cents. You know how much we charge? Twenty-nine dollars. And the writers want a bigger piece of the profit. What profit??? You know, we asked our accountants to figure out what twenty-nine dollars minus sixty cents is, and you know what they came up with?

Amy: Twenty-eight forty?

Studio Head: Negative thirteen dollars.

If that sounds like exaggeration, just take a look at Forrest Gump. Winston Groom wrote the novel, and made a deal with the studios to get 3% of the net profit. Not the gross, which is everything the film takes in, but the net, which is what’s left over after costs have been deducted. Tom Hanks and Robert Zemeckis got cuts of the gross, and made something like $40 million apiece.

The budget was estimated at about $55 million. It made $330 million domestically, and had worldwide ticket sales of $661 million. That’s before even DVD sales. And yet at that point, Paramount claimed that the movie was $60 million in the red. Somehow costs of $55 million became costs of $720 million. The studios, however, graciously admitted that “someday” the film would show a profit, and so “advanced” Groom a quarter of a million dollars to show their good will. This is commonly known as “Hollywood accounting”; many more examples can be found here.

So what is the new pitch? How come the movie studios aren’t making anything new off of Internet sales of TV and movies?

Blame Steve Jobs. According to Eisner, he’s the baddie:

Eisner, a well-known critic of Apple (whose CEO, Steve Jobs, is a powerful member of Disney’s board of directors), suggested that the profits may be getting sucked up elsewhere. The studios “make deals with Steve Jobs, who takes them to the cleaners. They make all these kinds of things, and who’s making money? Apple! They should get a piece of Apple. If I was a union, I’d be striking up wherever he is.”

Okay, two things. First of all, Apple makes most of its profits from sales of hardware like the iPod. I seriously doubt that they get much more a cut of retail sales than any distributor. And second, what Eisner is effectively saying here is that writers should be angry at Jobs for being a smart businessman, and not at the studio heads who bargained away all of their profits. Somehow that makes the writers “stupid” and the studio heads blameless–assuming that again, Eisner isn’t lying his ass off.

But that’s the problem with Eisner or anyone else who represents the studios. They are well known for being habitual, if not obsessive liars when it comes to profits. You do that, it may get you more money in the short run, but in the end, no one believes a word you’re saying, and simply assumes that everything coming out of your mouth is a self-serving lie.

Which it probably is.