COVER STORY : The Man Who Makes You King : Joe Farrell is one of the most powerful people in Hollywood. You’ve never heard of him? Why, he’s the guy who tells studio bosses what movies ‘test’ the best. An inside look at his consumer approach and why it drives the creative folks nuts.

He’s Hollywood’s best-kept secret, a professorial sculptor and furniture designer who, in the last decade, has worked his way into the upper stratum of the film industry. Armed with a Harvard law degree and an MFA from Notre Dame, a five-year stint as the director of the Lou Harris Poll, and an uncommon gift for salesmanship, Joe Farrell now has a virtual lock on market research in movies, testing about 80% of the major studio releases to determine audience response.

That makes him not only one of filmdom’s most powerful figures, but one of its more controversial. Market research--surveying the public to determine a product’s market potential, then fine-tuning the products and/or their advertising campaigns in light of the findings--has been commonplace in the world of packaged goods for nearly half a century. But a movie, many argue, is a creative expression, an emotion-laden, subjective vision that cannot and should not be dissected like a deodorant or soft drink.

Critics acknowledge that previewing a work-in-progress or a finished film in front of a recruited audience, assessing likes and dislikes from post-screening questionnaires and discussion groups may be valid in working out a marketing strategy. But too often, they claim, research is used to justify changes in a movie’s content--changes that can diminish it.

“They’re saying to the audience ‘tell us what you want and we’ll give it to you,’ ” says director Sydney Pollack. “From a business point of view that can do a lot of good but, as a filmmaker, it scares and angers me. As the film industry economically depends more and more on market research, it becomes less and less satisfying to the filmmaker. All it does is make the audience’s movie and not your own . . . there’s no two ways about it.”

Such charges are not news to Farrell or his colleagues at the studios. Nor is the claim, made by market researchers outside the industry, that the methodology of the Hollywood variety is somewhat suspect. Though Art and Numbers are joined at the hip these days--some say as an outgrowth of the industry’s MBA mentality and a fixation with numbers fed by the media--few people in the industry will discuss research--or its leading practitioner--on the record.

“Joe Farrell is a guy you need but don’t want anyone to know you know,” admitted one marketing chief. “Everyone wants to keep moviemaking a ‘feeling’ business, a ‘gut’ industry, but the guy has information everyone wants.”

With so much money--and ego--riding on the summer releases, the industry had more than a passing interest in Farrell’s most recent data: The “1992 Summer Competitive Positioning,” a survey indicating first-weekend box-office forecasts for the 35 films opening from mid-May through Labor Day weekend.

Studios, eyeing potential release dates, were informed that a poll of 1,200 moviegoers 12 to 59 years of age had selected “Lethal Weapon 3,” “Batman Returns” and “Patriot Games” numbers one, two and three, respectively, in terms of summer “wanna-see.” The yet-to-be released “Wind,” “Stay Tuned” and “Honeymoon in Vegas” were at the bottom of the heap, with “minimal” marketing potential. Marked “absolutely confidential” in the upper right corner, the study was disseminated only to a select group of clients--ensuring that Farrell, unlike fellow pollsters Roper or Gallup, is kept safely out of the limelight.

That suits Farrell just fine. Uncomfortable with publicity, pledged to secrecy by his clients, he has never before agreed to be interviewed. He’s only talking this time, he insists, to set the record straight.

“People see me as a pyramid with an eye radiating light out of some luxury building in Century City,” says the 56-year-old Farrell. Two blue eyes peer out of a pair of tortoise-shell glasses. A shock of silver hair spills down on his forehead. “I actually operate out of a downtown Hollywood office, where I’ve been for the last 14 years. When I moved in, there was an office of hookers next door. There’s no alchemy or magic involved. I provide information, of course--but it’s the studio executives with their hands on the throttle.”

Farrell was a man in the right place at the right time. When his National Research Group was established in 1978, market research in movies was far more limited than it is today. Studio executives had previewed films since the 1930s, when they rode the Big Red Cars--L.A.’s former mass transit system--to out-of-town screenings and read evaluation cards on the way back. Marketing techniques were documented in Leo Handel’s 1950 book “Hollywood Looks at Its Audience: A Report of Film Audience Research”; and the Motion Picture Assn. of America started a research department more than 40 years ago.

But a deep-rooted skepticism and lack of collaboration caused Hollywood to lag a couple of decades behind the packaged goods industry. What was needed was an available database, an information clearinghouse from which patterns between movies could be detected and predictions made, and someone who could test the effectiveness of trailers, TV commercials and other promotional materials.

“Farrell came into the business with a program that made sense,” recalls Barry London, president of Worldwide Distribution for Paramount, which jumped on the bandwagon early on under then-marketing chief Frank Mancuso. “He turned around information very quickly, which is rare--and important, since things are always done on the fly. He lowered costs by getting studios to share them. And, just as crucial in an industry built on relationships, Joe knows how to deal with people.”

A onetime street artist and lobbyist for such cultural organizations as the National Endowment for the Arts, the Brooklyn-born Farrell lined up a few studio clients. Given the “musical chairs” nature of Hollywood executive life, they soon blossomed into a handful.

Farrell’s firm and such competitors as Lieberman Research, Audience Studies Inc., Charles Walker and Associates, and Dubin Market Research set out to impose methodology on movie marketing. And not a moment too soon from the vantage point of harried studio executives. In an era in which the average film represents an investment of nearly $40 million in production and marketing, research has become a safety net, a way of bettering the odds. Numbers also provide decision-makers with a way of justifying marketing and creative choices--both to themselves and corporate management.

Many in the creative end, however, believe the process is abused. “There’s an overreliance on marketing in Hollywood,” maintains Ron Shelton, director of the hits “White Men Can’t Jump” and “Bull Durham’--neither of which scored well in their pre-release screenings. “That contributes to the lowest common denominator mentality and the proliferation of formulaic movies and genres. I want to confound expectations in my movies . . . not cater to them. In trying to fit a mold, you insult the audience.”

Farrell insists that capitalism and creativity are not antithetical. “The movie is everything,” he says, easing into one of the orange leather couches he designed under the name Giuseppe Farbino (“Who would buy furniture made by an Irishman?”).

“The film is the athlete. I just give it every training tip I know. Filmmaking is a creative pursuit but must ultimately go commercial. Market research, a town meeting of sorts, lets the filmmaker know if he’s communicating effectively with the public. We’re not saying that something as personal as filmmaking should be abdicated to the masses. We do believe, however, that every film deserves its best shot in the marketplace.”

To this end, Farrell--a 16-hour-a-day man--and his 900 full-time and part-time employees accumulate data. Research on movies makes up about 70% of the “tens of millions” he says his firm bills annually; TV and home video make up the rest. There are the dozen or so screenings Farrell--with some help from his London office and affiliates in Japan and Australia--conducts daily in such disparate spots as Burbank and Barcelona. Post-screening questionnaires (“Would you rate this movie “excellent”? “good”? “Would you recommend it to friends?”) are filled out by audience members, some of whom elaborate on their responses in “focus groups” later on. A weekly tracking survey determines awareness of, and interest in, upcoming movies. Occasional “white papers” analyze where the world is going in terms of movies. And three times a year, surveys are conducted indicating the first-weekend box-office potential of movies being released at the same time.

Studios whose “product” (a term anathema to the anti-research school) tests poorly, however, take comfort in the knowledge that market research is more of an art than a science. Even its most ardent proponents suggest it’s an informational tool better at reasonable estimates of how a film will perform than at precise bottom-line predictions.

“In academic research, the goal is truth . . . absolute, documentable truth,” observes Arnie Fishman, chairman of Lieberman Research. “The goal of market research is to reduce risk. If we’re only correct eight out of 10 times, that’s still better than flipping a coin.”

Certain limitations are built in. No survey, after all, can factor in critical response, word-of-mouth or the precise environment at the moment of release. Paramount’s “Frankie & Johnny,” for instance, was released just before the Clarence Thomas-Anita Hill hearings last fall, a time when older women--the group at which the movie was aimed--were glued to the TV. “That event captivated the country,” recalls Paramount’s London. “The whole deck was shuffled.”

“A survey is only a moment in time,” says Perry Katz, senior vice president of marketing for Universal Pictures, which, for reasons of confidentiality and accuracy, is the only studio that designs and interprets its own research. “Knowing its limitations is as important--if not more so--than knowing what it can do.”

Cinematic history is fraught with miscalls. Director George Lucas was informed that the title of “Star Wars” would turn people off and that people weren’t interested in watching robots. (He ignored the counsel and saw his film emerge as the No. 2 box-office success of all-time.) Twentieth Century Fox was told that the black comedy “The War of the Roses” would flop. (“People didn’t want to admit upfront that they liked a movie in which one spouse was trying to kill another,” is the way Farrell explains it, with hindsight.) In the research, “Tribute”--a 1980 film starring Jack Lemmon as a life-of-the-party guy who develops cancer--was one of the highest scoring films in Fox history. But when it came to shelling out money to see two hours of disease and dying, nobody came.

The extremes, the biggies and the flops, are a lot easier to read than those in between. It doesn’t take a genius, after all, to predict that a star-driven sequel such as “Terminator 2” is going to explode. In last summer’s competitive positioning survey, Farrell called the top and bottom categories correctly, but was hit-and-miss in the middle of the pack. “Doc Hollywood” and “The Doctor” opened stronger than anticipated while “Dutch,” “Rocketeer,” “Mobsters” and “Hudson Hawk” fared considerably worse. “Boyz N the Hood,” described as a “movie with appeal mainly to blacks” proved to be one of the year’s crossover hits: By the third week of its release, more than half of the audience was white.

In fairness, note the experts, movies pose a unique set of problems. For one thing, movies, unlike packaged goods, are almost entirely a “new product” business. Since each release, other than sequels, is a new one, there’s no brand loyalty, or traditional value associated with an item. For another, there’s no standardized product, so it’s harder to generalize from one instance to another. And because the shelf life of a movie is so short, effective marketing--getting people into the theaters on that all-important opening weekend--becomes even more crucial.

“With movies, you’ve got only one chance to get it right,” observes 20th Century Fox executive vice president Tom Sherak, who formerly directed the studio’s marketing and distribution. “It’s almost impossible to rebound from a bad campaign as they did with Coke (which unsuccessfully introduced a new, sweeter formula in 1985). Once it’s out, it’s out.”

Marketing, say the pundits, can spell success or disaster for a film, particularly if the product is a weak one. “Cape Fear” didn’t go over too well initially with die-hard Martin Scorsese fans who found the thriller tougher and scarier than expected. After reviews and commercials “educated” the public as to what was in store, however, the response considerably improved.

“The rule of thumb is that if the picture is good, a good campaign will enhance it by 15% to 20%,” says Lieberman’s Fishman. “If the picture is bad, it can enhance it by 50%. At least you get them in before they find out how terrible it is.”

Research is also used to determine a studio’s distribution strategy: a determination often made on the basis of not only “marketability” or interest in it prior to release, but “playability,” the satisfaction a movie gives the audience. If a movie is strong in the first category, but weak in the second, as with “Exorcist III,” a decision is usually made to open it “wide”--in as many theaters as possible before negative word-of-mouth sets in.

Harder-to-peg films such as “Field of Dreams” and “Fried Green Tomatoes”--low marketability, high playability--are usually nurtured on a more limited “platform” basis until they can find an audience.

Data also helps studios structure publicity campaigns. “If the cards show that an actor is perceived as stuck-up,” Farrell suggests, “he’d be advised to go on a talk show joking, hair tousled--a regular guy.”

Five years ago, Farrell put his money where his mouth is, serving as executive producer on “Mannequin”--the story of a young man (Andrew McCarthy) who falls in love with an Egyptian spirit inhabiting the body of a department store mannequin (Kim Cattrall). Each aspect of the film was designed for maximum appeal, prompting one top studio executive to refer to it as a “McMovie.”

“It was light, frivolous entertainment for 7-year-old girls,” recalls Farrell. “A variation on the ‘Pygmalion’ story, which has been done in various forms since the beginning of time. It works for a certain type person--young, female, optimistic about life, which is a big part of the population since aspirations know no social bounds. Every actor in the movie had been successful in a youth movie before. Kids like familiarity. They like what they like.”

And it worked. The $7.9-million production took in $41 million in the United States and Canada alone. “Most think my financial success came out of this company,” says Farrell, who arrives at studio meetings and screenings behind the wheel of a Rolls-Royce. “That’s not true. When Lou Harris’ company was sold to Gannett, I had some participation. Then little ‘Mannequin’ came along and popped for a lot of it.

“Still,” he adds with a grin, “I don’t aspire to do another movie. This way I can have a perfect track record.”

To those who suggest that producing films presents a distinct conflict of interest, Farrell says he advised the studios about the cast, the goal of the advertising campaign, even the date “Mannequin” would open.

Other charges are harder to parry, however. Though no one advertising agency represents more than one auto company, Farrell not only deals with all of the major studios but attends some of their marketing meetings. Most people say he’s the soul of discretion, but admit occasional breaches of confidence are inevitable.

“I’m fanatic about even the smallest part-time worker signing something that approximates a death sentence if it’s breached,” Farrell says. “And the information we provide is easily compartmentalized--not creative, which is what gives someone the edge.”

And if a studio pumps him for information about rival product? “I won’t tell them at what angle to ram another studio’s boat in order to sink it,” Farrell replies, scribbling on an easel and using a slide projector to hit home his points. “I can only make sure their boat is made of good wood and has strong oarsmen.”

Though concepts, casting and titles are occasionally tested for marketing purposes, Farrell insists that no project has ever been greenlighted or killed as a result of research. With good reason. Film, as one top marketing executive points out, is an “execution medium.” “How movies are carried out is essential,” he observes. “If you did a concept test on ‘E.T.’ with no stars and that story line, you’d never expect it to be (the all-time) number one.”

Fine-tuning--or even restructuring--a movie once it’s off the ground is another matter, however. “The vast majority of movies are re-shot these days and what gets re-shot, to a great extent, has to do with the numbers,” notes director Jim Abrahams, who asked 20th Century Fox to forgo testing entirely on his most recent hit, “Hot Shots!” “Scenes are added, trimmed, removed, endings are messed up. Research has a lot to do with final cut--which doesn’t make for visionary filmmaking.”

The most famous example in recent memory, of course, was Paramount’s “Fatal Attraction” in which the original ending--a ritualistic suicide by Glenn Close’s character--was replaced, after three or four screenings by Farrell, with one considered more satisfying to the audience. “The most important thing in any picture is what people think about when they’re walking up the aisle,” notes producer Frank Price, former head of Universal and Columbia. “People can be entertained royally, but if the ending disappoints, they hate the picture.”

Though the “Fatal Attraction” decision was said to be a joint one, decided by studio higher-ups as well as by director Adrian Lyne, Paramount acknowledges it isn’t above a little arm-twisting. “It depends on who we’re dealing with,” says marketing chief London. “The studio tries to bring about what it believes is the best possible product. It’s a partnership, a collaboration. We win or lose together. If the movie doesn’t work, the finger-pointing is at all of us.”

Weak numbers, some filmmakers charge, can become a self-fulfilling prophecy as studios, reluctant to throw good money after bad, decide to cut back on promotion. Farrell says the fear is ungrounded, since the goal is to maximize the potential of every film. Filmmakers, he says, are among his staunchest supporters, grateful for the “fresh eyes” screenings provide.

“Whatever the merits of the statistics, they provide qualitative information for people who have gotten too close to a film and lost perspective,” notes producer Gina Blumenfeld. “The preview process isn’t evil. What’s the difference between that and a play opening out of town?”

Universal’s Perry Katz had a similar thought when he read the reviews of Neil Simon’s play “Jake’s Women.” “The critic remarked how much better the Broadway production was after being reworked,” he recalls. “But when Adrian Lyne modifies the ending of ‘Fatal Attraction,’ they paint it as the abrogation of art in pursuit of the almighty dollar. That’s not fair to the filmmakers.”

Sydney Pollack took seven minutes out of “The Way We Were” after an unsuccessful preview of the film. “Friday night it didn’t go over well,” he recalls. “Saturday night it was a hit.” Comedies, particularly, benefit from previews that indicate just where--and how long--the laughs are. The findings go beyond mere likes and dislikes of the audience, however, as Farrell points out. “The director of (the World War II spy saga) ‘The Eye of the Needle’ stands to benefit from knowing whether the audience knows the difference between the Normandy Invasion and the Norman Conquest,” he says. “If not, he might want to insert a ‘roll’ (in which information is presented on screen) upfront.”

Studios spend between $100,000 and $200,000 to market-research a movie, a sum that generally includes between five and 10 previews. Farrell conducts many of them himself, chatting people up before the film and coordinating the focus group afterward. “It’s ingenious the way he talks and picks their brains,” remarks Abrahams. “As sophisticated a fellow as he is, he starts groping for words to put them at ease. It’s like talking to Dad about a movie.”

Maybe so. But, according to market researchers outside the industry, that doesn’t guarantee results. Critics claim that Farrell’s preview sample isn’t representative of the American populace, nor large enough to extrapolate from. Moreover, they charge, participants in post-screening focus sessions have been tested so often they’ve become “experts” instead of the “average Joe.”

“Hollywood market research is bad market research,” notes a leading pollster. “They’re using the same techniques used to market packaged goods and it isn’t an easy transition.”

Adds another in-town marketing executive: “Secular researchers say our data is mediocre, at best. But there’s no one here to evaluate Joe. Like the Nielsen Co. in TV, he has no real competitor.”

Industry insiders also note that Farrell’s concept tests--surveys that analyze a story line’s appeal based on the studio description of the film--should be more carefully edited.

“Joe was off in forecasting ‘Rocketeer,’ because, when presented to the public, it was compared to ‘Raiders of the Lost Ark,’ ” recalls one marketing executive. “This summer’s ‘Cool World’ was described as continuing where ‘ “Roger Rabbit” takes off.’ That’s ‘advertising,’ not ‘concept.’ ”

Farrell’s critics say the interpretation crucial to deciphering the data occasionally borders on editorializing. His primary bias, they claim, is toward such high-profile films as “Billy Bathgate,” a Dustin Hoffman vehicle based on E. L. Doctorow’s bestseller, which took in only $4 million on opening weekend--far less than the “good to very good” potential Farrell had forecast. Others charge he puts a brighter face on the findings than the numbers warrant. “Joe Farrell tells the studios that their films are going to work,” claims one top studio executive. “He’s the messenger bringing good news.”

Buffy Shutt, president of Marketing at TriStar Pictures, believes Farrell is a convenient scapegoat: “Everyone wakes up on Saturday morning and, if the numbers aren’t there, they point to Joe and say he called it wrong. It’s a way of shifting the blame, of not taking responsibility for their choices.”

Farrell, too, takes on the naysayers:

- Yes, he agrees, his sample is often not as large as he’d like, but still valid considering the predictions he can make from his huge database. Besides, the specifics of each sample are drawn up in conjunction with the studio.

- True, he acknowledges, people in focus groups do turn into “critics” and may be influenced by the group leader. That’s why he discounts all but the first five or 10 minutes and does not project the results on any other population.

- As for charges of monopoly, Farrell maintains the advantages of representing so many of the studios far outweigh the disadvantages. Consolidating the process has not only enabled him to keep costs far lower than in other industries, but also to accumulate the necessary volume of information. Anyway, he argues: “Every assignment is a ‘per job’ situation. It’s not a matter of every (studio) throwing in the towel and saying, ‘You be it.’ ”

Farrell, say his legion of loyalists, is “good enough.” He maintains he’s much better than that. “Market research in Hollywood doesn’t breed long-term thinking,” he begins. “Rapid turnaround activities go on. But, within the limits of time and money, I think we do very well. Everyone on the outside likes to think we’re bumbling along, but what we’re doing is actually very sophisticated compared to them.”

Whatever the reality, there’s no going back. Market research is a fact of Hollywood life and Joe Farrell a well-liked, well-regarded fixture in the filmmaking process.

“If you buy the concept of market research from the top, if you believe it offers you a service, I’d rather listen to a guy like Joe who’s bright, energetic and sophisticated than someone who isn’t,” says Sid Ganis, president of marketing and distribution for Columbia Pictures.

Farrell, meanwhile, continues to implement his masterplan: bringing long-term planning and rational thinking to the business. If his National Research Group didn’t exist, he says matter-of-factly, the industry would have had to invent one.

Progress, he notes, has been tangible: In the ‘70s, marketing and movie positioning were examined on an ad-hoc basis using traditional market research techniques. The ‘80s saw the the beginning of data collection and modeling, which permitted forecasts about audience response. And the ‘90s? Farrell says there’s a major breakthrough on the horizon, possibly in the fall: Studio executives will be able to play marketing “war games” on their own computers, using Farrell’s statistics, to arrive at the optimal marketing campaign.

One man’s dream, however, is another’s nightmare: a cinematic Brave New World in which numbers reign supreme.

“If you approach film like a leisure-time disposable item,” notes Sydney Pollack, “the goal becomes the most crowd-pleasing diversionary movie possible. Market research may be a useful tool but, used excessively, will destroy the heart of the business.”

Fellow filmmaker Ron Shelton is more philosophical:

“To stay sane, I choose to look upon market research as liberating instead of inhibiting,” he says. “The studios don’t care if you make art or pap or subversive propaganda as long as they can sell it. If a movie advancing Marxism grossed $200 million, this free-market system would make 100 more of them. In some respects, that’s a wonderful thing.”

DOPING OUT THE SUMMER--EXCERPTS FROM JOE FARRELL’S SECRET BOOK

A League of Their Own “... starts out with somewhat above average initial ‘definite’ interest among females and below average interest among males (compared to the norm for a movie with star power). The concept description ... increases the initial interest to an above average level among females, especially older females, but males remain below average in their interest.”

Unforgiven “... starts out with a somewhat above average ‘definite’ interest among males (compared to the norm for a movie with star power) and somewhat below average interest among females. The concept description ... increases male interest to above average levels and older females’ interest to an average level, with only young females showing below average interest.”

Lethal Weapon 3 “... starts out with high awareness (68% versus the norm of 20% for a sequel) and the ‘definite’ interest based on title and stars alone is a very strong 50% (norm is 20%) for a sequel), with all sex/age groups showing strong initial interest and younger males even more interest than the others.”

Honey, I Blew Up The Kid “... starts out with average interest among younger and slightly below average interest among older moviegoers (compared to the 20% norm for a sequel). The concept description increases overall ‘definite’ interest to an average 26% (norm is 25%) with interest slightly above average among younger and slightly below average among older moviegoers.”