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TheStreet Open House

Oscar's Financial Picture

The following commentary is from an investment professional with Clear Harbor Asset Management who is a participant in TheStreet's expert contributor program.

NEW YORK ( TheStreet) -- I could sense desperation in the air on Sunday night as "The Academy" dusted off nine-time Oscar host Billy Crystal to take the stage once again at Hollywood's biggest awards ceremony in the house that he called "Chapter 11 Theater." It was the Kodak Theatre on Hollywood Boulevard, of course. Actually, it's now apparently called the Hollywood & Highland Theater because Eastman Kodak (EKDKQ.PK) recently requested in bankruptcy court to remove its name from the iconic home of the Oscars on the grounds that it was no longer worth its $70 million-plus price tag.

Kodak, the photographic film products maker, finally went kaput in February due to the rise of digital photography and camera phones. America's filmed entertainment industry, meanwhile, is in better shape, but behind the glitz and glamour of Oscar night, Hollywood is facing financial headwinds of its own for different but similar reasons that should leave investors wary.

The theme of the 2012 Oscars was "Let's Go to the Movies," which sounds like begging after a year that saw the lowest movie theater attendance in the U.S. in almost two decades. Crystal's introduction to a film montage that came early in the show built on this theme as he launched into a full-throated pitch for going to see movies in theaters, replete with the obligatory jokes about Apple's (AAPL) iPad and Twitter designed to demonstrate Hollywood's tech savvy alongside the timeless allure of the cinema.

Hollywood can be expected to pitch its products as shamelessly as any other industry, but there was an urgency in the marketing message embedded in Sunday night's script that I haven't heard before at the Oscars. This is probably related to the fact that U.S. box office receipts were down by a reported half-billion dollars in 2011. Everyone has a reason for this -- economic malaise, rising ticket prices, bad movies etc. I'm sure these are all factors, but I believe the fundamental problem facing Hollywood is ultimately the same problem that brought down Kodak: the rise of digital technology is fundamentally changing the way audiences consume and pay for filmed entertainment.

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