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The Oscar Money Machine Is in High Gear

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A win can mean millions more at the box office, and advertisers say the broadcast is almost as important as the Super Bowl.

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Sunday's Oscars broadcast will be more than several hours of bad teleprompter readings, questionable jokes and self-directed Hollywood sentimentality.

For the entertainment and communications industries, the Academy Awards are a money machine that can radically change the fortunes of individuals and corporations.

Advertisers say the Oscar TV broadcast has become nearly as important to their industry as the NFL's Super Bowl.

"Consumers expect advertisers to come to the Oscars with their A-game," Andy McMillin, a Coca-Cola (NYSE:KO) vice president, tells The New York Times. The company will be featuring a new Diet Coke ad during the broadcast.

Oscar broadcaster ABC, part of Walt Disney (NYSE:DIS), is reportedly charging advertisers up to $1.8 million for 30 seconds of commercial time during the Oscars, the highest rate for the event since 2008.

New social media technology has also helped revive Oscar's fortunes among viewers. The Los Angeles Times reports that, after several lackluster years, more than 39 million people watched the broadcast in 2012 and that both marketers and broadcasters credit social media with creating "more buzz around the event."

Hollywood studios also look at Oscar wins as potential financial windfalls. A 2011 report by the research firm IBISWorld said movies that won the Best Picture category for the previous four years brought in, on average, an extra $14 million at the box office.

With those dollars in mind, the film industry often braces for an advertising blitz from the movie studios pumping up their nominees. The LA Times notes a single-page cover ad in the Hollywood trade newspaper Variety can cost up to $80,000, while outdoor advertising at prime locations around the city often costs more than $200,000.

And then there's the hundreds of thousands of dollars spent on media availabilities, receptions, parties, first-class travel, and the other expenses racked up by actors, directors, and producers as they campaign for their particular movie.

In this year's race for Best Picture, both Warner Bros., a division of Time Warner (NYSE:TWX), and Disney (NYSE:DIS) have reportedly spent a record $10 million or more to help the chances of their respective films, Argo and Lincoln -- amounts the Times says are "up to double what a costly campaign has totaled in years past."

"Hollywood spends on average about $150 million a year to win an Oscar that costs $400 to manufacture," Tom O'Neil, editor of the awards-tracking website GoldDerby.com said to Southern California Public Radio. "Now that's proof that Hollywood is crazy right there."

And of course there are the famous gift baskets given out to Oscar nominees, which this year reportedly contains $75,000 in swag. According to Joseph Gibson at Celebrity Net Worth, some of the pricier items in last year's baskets include:
  • $1,645 in "non-surgical" beauty treatments.
  • A Mexican resort vacation package worth $3,350.
  • A $10,000 home makeover.
  • $15,000 in top-shelf liqueurs.
  • An African safari worth more than $15,000.
Editor's Note: This story by Bruce Kennedy was originally published on MSN moneyNOW.

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