Hollywood Babble On & On #547: 2 Quickies

Welcome to the show folks...

OH BERGSTEIN, YOU MUST LOVE DEEP HOLES

David Bergstein, the man in charge of the failing ThinkFilm/Capitol Films conglomeration loves trouble. His companies are in bankruptcy, he's literally being sued by almost everyone he's ever done business with, his plan to buy Miramax, with partner billionaire Ron Tutor can't get debt financing. Why? Because every goddamn bank that might loan them that kind of money is either suing David Bergstein, or knows someone who is.

But that's enough trouble for Mr. Bergstein. Not by a long shot. Most recently he demanded that one of the companies suing him put up a $25 million bond to cover cost in case they lose the case, a demand that the judge promptly denied.

I'd like to take a moment to speak directly to David Bergstein and ask a question:

WHAT IS YOUR MAJOR MALFUNCTION?

I mean what the hell is going on. Your companies are bankrupt, your reputation is shot six ways to Sunday, if anyone goes into business with you, others demand they be tested for some sort of neurological condition, creditors have you surrounded, and forensic accountants are either going through your life, or about to go through it with a fine tooth comb.

You are screwed. It doesn't matter if what folks say about you are true or not, the forensic accountants will find something to nail you with. It's as inevitable as the sunrise. All the reporters, bankers, guilds, unions, and financiers can be completely wrong about you, and you can be as honest as the day is long, and you're still going to be bent over to kiss the gunner's daughter.

So why make them madder? Do you think such tactics will make them go away, or that a judge will somehow go for such tactics? Because it isn't going to work. They'll just come back at you with even more ferocity and the judge isn't going to be too pleased with you wasting the court's precious time. All this could ad up to either penury or the penal system, neither are good in any way.

Which is why I have to ask: If you are innocent, and that these are just misunderstandings born from bad business luck, then why are you trying so hard to look guilty?

WONDERFULLY WACKY WONDER WOMAN

DC is crowing that issue 600 of Wonder Woman, featuring the new costume and origin story has sold out.

Of course 90% of those sales were to journalists and media outlets who normally never buy comics, and won't ever become regular readers, but that won't stop DC from thinking their decision was brilliant.

My prediction: Within two years at the most, everything will be back to the status quo. It's the nature of the beast.

Hollywood Babble On & On #572: Perception Can Be Expensive

Welcome to the show folks...

Today I'm going to talk a little about perception and how perception can cost you more than it should. This is especially true in the movie biz, which is 99% perception and 1% actual truth.

PERCEPTION #1: THE SELF FULFILLING IDIOCY AT WORK

NBC-Universal has reportedly settled the lawsuit filed by actor Jack Klugman over profits from the show Quincy M.E., which he produced and starred in from 1976-1983. Universal claimed that despite a 7 year run with consistently solid ratings, and $242 million in revenues, and decades of reruns in both syndication and cable, the show had somehow lost $66.4million. Between 1998 and 2006 the show, according to NBC-Universal, generated $40.8 million in revenue, but still somehow lost $16.5 million.

According to Universal they spent $57.3 million on a show that stopped production in 1983.

Doesn't that sound a twee bit fishy?

NBC-U knows it sounds fishier than a fish market on the waterfront of Atlantis, so they settled as soon as they realized that Klugman wasn't going to die in time for them to weasel out of the suit.

Now the folks who run Universal TV think they were clever by trying to screw Klugman out of his share of the show, and then settling out of court for spare change on the dollar to keep the fact that the company's accounting makes the Central States Teamster Pension Fund of the 1960s look clean.

They weren't being smart though. In fact, they were being really stupid.

This is a classic case of what I call the Self-Fulfilling Idiocy. It's like a Self-Fulfilling Prophecy, only more stupid. It begins with someone, who thinks they're being smart, imagines an ordinary part of business, like paying residuals, as a problem. Being so clever they decide to "make extra money" by denying that person of their fair share, and then paying out a token amount if they raise a big enough stink.

But these self-proclaimed clever people are being really stupid. Sure, they can grab some extra cash, and then weasel out of paying out the full amount, but doing that is more expensive than they think.

This is where perception comes in.

People now perceive studios as monetary black holes when it comes to royalties, residuals, and profit shares. So they demand all their money up front, and squeeze as much as they can depending on the clout they wield. This is why the costs of making a film have an inflation rate somewhere between Zimbabwe and Weimar Germany when new technology should be making it cheaper. They are literally pricing themselves out of viability.

PERCEPTION #2: CAESAR'S WIFE

Construction magnate Ron Tutor & Co.'s purchase of Miramax is pretty much a done deal. But some folks like The Hollywood Reporter are wondering who would be willing to do business with the new Miramax, and how long that will take.

Why are they asking this question?

Well, there's that old bugbear perception again.

You see Ron Tutor entered the battle for Miramax with indie producer David Bergstein as the public face.

That was a mistake.

You see Bergstein is currently being sued by.... um.... how do I put it?..... EVERYONE!

Almost every person, bank, firm, guild, or company David Bergstein's done business with is suing him for unpaid bills.

Independent film-making is already a wildly uncertain business, and you don't want to go into that business with a Bergstein shaped cloud hanging over your endeavor. Tutor is saying that Bergstein was only involved in the initial negotiations, and will not run the company, but it will take time, and a lot of money to prove that to the satisfaction of the Hollywood community.

Perception is everything in Hollywood, and like everything else in Hollywood, it can be very expensive.

Hollywood Babble On & On #486: The Importance of Purity

Welcome to the show folks...

There are no two words that put sheer terror into the hearts of CEOs the world over: Forensic Accountant.

Now you're probably scratching your head, and furrowing your knobby brow in a futile attempt to understand, so I'll do a little explaining, and I'll start right at the roots.

The roots of the name comes from the words "Forensic" meaning: "suitable for use as evidence in a court of law," and "Accountant" which means: "boring guy who figures out where all the money went."

Alone they are subject for hit TV shows, and someone you go to when you can't understand your taxes. Together, they are a CEO's living nightmare, because it is never a good sign when a Forensic Accountant starts sniffing around your company. That's because Forensic Accountants are called in when companies are being sued for megabucks, going bankrupt, or under investigation from law enforcement. They are a small elite brotherhood who are masters of sniffing out the slightest sin, both mortal and venal, and bringing them into the light.

Now you're probably wondering why am I discussing the usually arcane and tedious world of accountancy on my humble little pop-culture blog?

It's because of this story.

For those too lazy to click the link, I'll do a little explaining.

David Bergstein runs ThinkFilm, Capitol Film, and about half a dozen other independent film-related companies. Those companies are all going tits-up in bankruptcy court, but that's not stopping Bergstein from making a bid for Miramax, but that's another story.

What's important is that every single person that this cluster-fark of companies ever did business with is currently suing them into oblivion. To guide it into this oblivion the court has appointed a trustee, a former FBI analyst and forensic accountant named Ronald Durkin. Durkin's job is to sort out the mess left by Bergstein and see what action, be it civil or criminal, is to be taken.

The folks suing the ThinkFilm conglomeration are hailing this appointment, figuring it's just what they need to nail David Bergstein's hide to the wall, and they are accusing him of everything from using company money to cover gambling debts to being the movie biz equivalent to Enron.

Now I'm not going to say whether or not Bergstein did any of the things he's being accused of. I'm not a mind-reader, and I can't make those kind of judgments until after the forensics accountant has had his way with the company's books.

What I can judge him about is why he is in this situation.

Because it's all his own damn fault.

It doesn't really matter if he's innocent or guilty, because he's worked so damn hard to look as guilty as possible. He fired Chief Financial Officers on a basis so regular, it has to look suspicious, with some reports saying he went through 5 CFOs in 22 months.

He made deals, even though he was completely unable to raise the money to close those deals. Created complicated and convoluted webs of interconnected shell companies and corporations so no one really knew just who or what they were doing business with at any given moment, even trying to get one of his shell companies to buy the film library of his bankrupt company. Then he let bills go unpaid, and generally got everyone he did business with pissed off at him.

If he isn't guilty of some malfeasance, then he tried damn hard to make everyone think he did, and that's just plain dumb.

I've said it before, and I've said it again, when you are in a position of authority, you must be like Caesar's wife, you can't just be pure, you have to appear to be pure in everything you do.

That's because of two things, the first is risk, and the second are the enemies you will make.

The movie business is risky when you're not a big studio. Even when you're a big studio you're prone to powerful feast or famine cycles. Those cycles are exponentially more powerful when you're an independent producer or distributor. You are literally walking a high wire, and even when you do everything right, the whole deal can turned to parboiled shit overnight. When you're independent you don't have a big parent company with deep pockets to see you through the lean times, and most companies don't survive.

Then there are the enemies you're going to make. Now I preach that one should do whatever they can to minimize the enemy making through good manners and common sense, but you can't please all of the people all of the time. There are going to be people that don't like you, it's inevitable.

So when your business goes to pot, you don't want a legion of enemies screaming for your pelt. A few are allowed, because they can be drowned out by allies who believe you to be fundamentally honest.

Do you get my point?

When you're honest in all your dealings, and also appear to be honest in those same dealings, your allies will defend you, and your enemies will have nothing to attack you with.

Your sins, whether real or imagined, are your enemy's ammunition.

It's up to you to make sure their cannons are empty, because if you don't, you end up with a forensic accountant picking apart your life.

Hollywood Babble On & On #714: Break The Seal, Break The Cycle

It's that time again...

Yep, it's time for me to gripe about something really blatantly obvious.

Today it's about new developments in the ongoing sinking saga of indie film impresario David Bergstein. Recently arguments were being made in bankruptcy court about unsealing the business records of Bergstein's ThinkFilm/Capitol Film indie film production and distribution debacle. They had been unsealed for about 15 minutes before Bergstein and his lawyers got them re-sealed, claiming that he needed to keep them secret.

Well, I say a hearty pshaw and fie on that, these financial records should be unsealed, and made public.

Here's why:
David Bergstein appears to be in the litigation crosshairs of just about everyone he's ever done business with. Unions, banks, investors, vendors, and probably his local paperboy are all suing him.
Businesses where things are done right do not attract that Michael Jackson level of litigation. We, and by "we" I mean all people remotely interested in the business and economics of pop culture need to sort through the stories, the counter-stories, the rumors, and the speculation. We need to know who got paid, who didn't get paid, I'm talking about the complete whos, whats, wheres, and whys of this whole debacle.

Why?

So hopefully we, and by "we" I mean all people interested in the film business, especially potential future investors/creditors/filmmakers, can hopefully avoid having history repeat itself with another independent film company crashing and burning, taking people's money and careers with them.

We need to break that seal, see where things went wrong for all involved, and hopefully break the unnatural cycle of boom followed by self-inflicted bust, that have claimed so many independent film companies in the past.

Isn't that obvious?

Hollywood Babble On & On #485: Tales of Brotherly Brotherliness

Welcome to the show folks...tonight, 1 Blog, 2 Stories, 3 Sets of Brothers!

GORIMAX?

There have been some developments in the ongoing sale of 90s indie powerhouse Miramax Films. From what I've been able to gather there are three major bidders. One is silly, two are serious, and one is very serious.

SILLY: Pangea Media, which is operated by David Bergstein.

WHY IT'S SILLY: David Bergstein is currently being sued by almost every single person, company, union, and financial institution he has ever done business with over the bankruptcy of his complicated web pf production and distribution companies. He's also being accused of malfeasance, misappropriation, and just about anything else his creditors can find, and they, and their lawyers and forensic accountants, will come down on any attempted deal like the wrath of an angry deity.

WHY IS DISNEY PAYING ATTENTION: It's either because Bergstein's legendary skill as a smooth talker are even better than we think, or the Disney exec handling this auction just wants to get as many in the list, whether they are real bids or not.

SERIOUS: Harvey & Bob Weinstein, making a play to get their hands back on the company they founded, built, and almost destroyed.

WHY IS IT SERIOUS: The Weinstein's have the support of billionaire Ron Burkle, who has obviously fallen under the influence of Harvey's notorious Hypno-Coin.

WHY IS DISNEY PAYING ATTENTION: If the Bros. Weinstein didn't have Burkle and the other investors backing their bid, they'd be just a filler name like Bergstein. Remember, their own company TWC is on life-support, and unable to raise the minimum $600 million necessary to make a remotely viable bid.

VERY SERIOUS: Tom & Alec Gores, brothers of Paradigm honcho Sam Gores.

WHY IS IT VERY SERIOUS: Alec & Tom are each billionaires, with track records of buying troubled companies, and either making them part of their growing personal business empires, or selling them for a profit. They have the combined cash for the buy, and the industry connections through their brother uber-agent Sam Gores. And I think it's also interesting to note that they're also looking into buying indie distributor Overture Films, and its related home-video co. Anchor Bay.

Combine Miramax's library & cachet, with Overture's distribution infrastructure, Anchor Bay's home video library and distribution capacity, they've got an integrated mini-major that could compete with Lionsgate and Summit, and literally have it overnight.

Personally, more I read about them, the more I think the Gores Bros. should win this auction. Partly because I think they have a plan to make Miramax a viable company, but mostly because Harvey's inevitable conniption fit over the loss will be clearly visible from space.

So good luck Gores.

WILL MGM GO SCOTT FREE?

This piece just caught my eye. Ridley Scott and his brother Tony, two major league directors and producers, have offered their services to run MGM once its financial future is settled.

Now while it makes me infinitely curious as to how it would turn out, part of me just knows it might not work out. Both Ridley and Tony would have to enforce the sort of budgetary discipline that neither of them have had to face in their careers since they've hit the A-List. So they would either surprise everyone with their management skills, which they might have in spades, or completely implode the company and themselves.

Maybe I can use my hobby in mad science to visit an alternate universe to see what happens? Then again, last time I did it, I ended up being chased by a dinosaur, and by dinosaur, I mean Larry King.

Hollywood Babble On & On #473: A Rare Moment...

Welcome to the show folks...

Well over a year and a spell ago, inspired by reports of money troubles with the Capitol Films/ThinkFilm conglomeration run by David Bergstein, I wrote a piece called the 7 Stages of Corporate Grief. Well, recent reports show that I was wrong, there are in fact 8 Stages of Corporate Grief, and here they are:

1. AGGRAVATION: This starts out as rumors that it is getting increasingly hard to do business with the company in question. Especially in areas associated with money.

2. FRUSTRATION: Those rumors become official reports in the media, meaning that there is of a preponderance of evidence to make them libel proof.

3. UNIONIZATION: This is when things start getting official, with complaints and grievances formally filed with the labor unions. Those unions start flexing their muscles and demand that bills get paid forthwith, or the production will be shut down. Like what happened with Bergstein's production Nailed.

4. LITIGATION: This is when the investors and creditors start getting ants in their pants, and the dreaded lawyers get involved. When the lawsuits are filed, it's inevitable that there will be at least one nasty--

5. ALLEGATION: This is the new stage, and even though it burns me to admit a mistake, I won't admit I made a mistake, I just left something out. Now part of the whole litigation process is the plaintiff declaring that the defendant is guilty of a whole catalog of shenanigans. In the case of Capitol Films/ThinkFilm's David Bergstein, he's accused of using company money to cover his gambling markers, among other sins both mortal and venal. If these allegations have even the slightest scintilla of evidence to back them up, then the company is going to get hit with a big fat--

6. INVESTIGATION: All it takes is somebody at the IRS, the SEC, or any of the others in Washington's alphabet soup of regulators, or some plucky state's attorney to decide that a Hollywood scented pelt would look good on their trophy wall. If the company reaches this stage, then it's on the road to--

7. DEVASTATION: Once the lawyers, creditors, and regulators are done, there will be nothing left by the company's name, and a few battered assets sold off to pay off a small percentage of the debts left behind. Also those who ran that company end up facing not only lawsuits, but fines, tax liens, and possibly jail time if any evidence of wrongdoing is dug up.

8. SALVATION: This is the final stage where the CEO of the wrecked company finds Jesus and a new life anointing the sores of hobos with leprosy. Either that, or they talk some investors into letting them start another company, and the process starts all over again.

Hollywood Babble On & On #527: Just A Quick Note...

Welcome to the show folks...

Just a quick Friday note for now kiddies. According to The Wrap.com Disney has entered into exclusive negotiations with troubled film financier David Bergstein and his backers to buy the moribund mini-major Miramax.

Now in case all this is new to you Mr. Bergstein is currently being sued by.... well.... everybody. I'm talking about every investor, creditor, union, casino, and corporation that he has ever done business with. So I'm sure that Item #1 on Disney's agenda for this deal is to get cash up front. It also shows that some of the reports of Disney being concerned with the condition and structure of the Weinstein Company weren't exactly accurate, considering, unlike Bergstein's ThinkFilm and Capitol Film ventures, they haven't had any bench warrants put on them in bankruptcy court. It had to have been over money and Disney's hope that they can squeeze some out of Bergstein's backers.

Of course this story also shows that Bergstein doesn't go out of his way to read an obscure entertainment business blog written by a Canadian literally thousands of miles from Hollywood, because if he did, he'd have read my advice on the matter. If you're too lazy to click the link I recommended that any other parties interested in buying Miramax do one thing:

WALK AWAY

To make a long post short, I advised to walk away, force Disney to sell Miramax to the Weinstein Brothers / Ron Burkle group, wait for it to all fall apart, which it will, and then feast upon the corporate entrails like vultures.

Well, now these folks might have to wait a little bit longer, but this adds a whole new aspect to the plan. Now wait for the Bergstein Group to fall apart, let the Weinstein Bros. / Burkle Group buy it, wait again for that to fall apart, then dive in.

It's a pain in the butt, but it's a method, that could save even more drastic corporate butt pain in the future.

Hollywood Babble On & On #880: Another Tainted Burrito...

Last week I wrote about how James Frey is like a tainted burrito, and by which I mean something unpleasant that keeps gurgling up again and again no matter what.

Another tainted burrito is bankrupt film financier David Bergstein.  I've written about him many times, and none of what I've written was remotely nice.  

Long story short he's a self-styled film financier who started about half a dozen or more independent film financing, production and distribution companies, with names like ThinkFilm and Capitol Media, all over Europe and North America. He then went on to drive all of them into bankruptcy and accumulated lawsuits the way a rich comic book geek accumulates action figures.

Well, fate has regurgitated Bergstein into the news again, it seems he's suing the current owners of Miramax Films over their purchase of the company from Disney.

He claims that he was instrumental in bringing billionaire Ron Tutor into the fray to buy Miramax by doing all the legwork and due diligence for him.  Bergstein then claims that other partners like Colony Capital moved in by kicking in some money of their own, and promptly began squeezing him out.  He saw his stake in the affair dwindle down and now he's suing to get back what he thinks is rightfully his.

I have to admit, if I was in Colony Capital's position, I'd probably do the exact same thing.

Hell, anyone with half a brain cell would want to distance the company from Bergstein and his decidedly colorful business history.

I'm not saying that Bergstein is a crook. He may be as pure as the driven snow, and just a victim of bad luck, poor decisions, and tragic misunderstandings.  However, his overly-complicated corporate structure, involving dozens of shell corporations, high flying casino-rocking lifestyle, and tendency to attract litigation like flies to shit, sure as hell makes him look like the last person you want to be in business with.

He has only himself to blame for that.

Does his case have merit?

That's for the court to decide, and then be appealed repeatedly until no one knows what the hell is going on anymore.

That's how independent film operates these days, and why it's so hard to get anything done.

Hollywood Babble On & On #492: Take My Advice Please

Welcome to the show folks...

The Weinstein Bros. and the victims of Harvey's hypno-coin Ron "Paper or Plastic" Burkle, and hedge fund Fortress-Colbeck have set up an "exclusive negotiating window" with Disney to buy Miramax to haggle over their offer of $625 million.

So now it's time for me to offer my advice to the other major bidders, David Bergstein/Pangea Media, and Tom & Alec Gores/Platinum Equity whether they want it or not.

WALK AWAY.

That's right, just walk away. Let the baby get its ba-ba, and by "baby," I mean the Bros. Weinstein, and by "ba-ba" I mean Miramax.

Let me explain, and the reasons are different for both contenders, so I'll address my advice to them individually.

DAVID BERGSTEIN / PANGEA MEDIA- Your companies are being picked apart by creditors and forensic auditors. It's only a matter of time before they find something to screw you. If there's one thing I've discovered about white collar prosecutions they don't really need to find anything actually criminal to stick you in a cell with a biker named Bubba who wants to know if you're "open-minded," and it isn't your mind he's talking about.

This is especially true when you try to play clever dick with a bunch of different holding companies, shell corporations, and a constantly shifting financial situation. All a jury needs to see is just how convoluted your businesses are, and they will convict, because they will assume that you have to be guilty of something, reasonable doubt be damned.

So here's my advice: Give up on Miramax, try to make some sort of deal with your creditors, and maybe pay some of the bills you already owe, before racking up any new trouble. Because that's all you're going to get, if you keep chasing Miramax, more trouble.

TOM & ALEC GORES / PLATINUM EQUITY- Now I'm offering the two of you different reasons for walking away from Miramax.

Chiefly, your bid is too serious. This negotiating window with the Weinstein's shows that Iger has no intention of letting anyone who might actually do anything productive with Miramax have a chance of winning unless they pay waaaay tooooo much for the company.

$625+ million is definitely hitting the realm of waaaay tooo much, especially for what is basically a name and a library of films of limited profitability, whether it be in TV/home video sales, or remakes, and convoluted rights management. Those same ownership rights means that you'll be stuck having to deal with the Weinsteins with almost every single decision made over that library.

So here's a new plan.

1. Leave the bidding for Miramax.

2. Buy Overture Films, and its home video sister company Anchor Bay.

3. Restructure Overture Films with a new lean structure, possibly new management, and more importantly...

4. A new name. Overture Films is possibly the dullest name on can get for a film company. Summit implies reaching for heights, Lionsgate implies an exotic and powerful animus, with endless possibilities lying just beyond some sort of gate. The name Overture comes across as snobby, dull, and pretentious. Plus, it has a great big goose egg at the opening of the name, a big fat zero. Find a name that implies energy, drive, and most of all excitement.

5. A new mission for the restructured/rebranded Overture Films. Lionsgate seems too wrapped up with fighting with Carl Icahn, and the majors are too wrapped in turning everything into overpriced 3D mega-busters with a frenzy that will only ensure that the whole thing will crash and burn very quickly. That means that there will be gaps in the market that you can exploit inexpensively. Corner that market, in alliance with independent producers/financiers left otherwise in the cold by the others.

Then, once you've built this new company up, you can...

6. Buy Miramax. That's right, walk away now, win later. How? It won't be too long before the Weinstein Bros. bring the company, and possibly their financial backers to ruin. That will create an opportunity to swoop in and buy out the library and the name completely, without the Weinsteins involvement and at a price more in line with their actual value.

Well, that's my smug-know-it-all advice, and I hope you take it.

Hollywood Babble On & On #548: House Of Cards

Welcome to the show folks...

Well, you can knock me down with a feather and call me Jehozaphat, but according to The Wrap, David Bergstein, his chief backer Ron Tutor, and two other unidentified backers are close to a final deal to buy the moribund Miramax from Disney. If this deal works out, the man who is most likely single-handed putting the children of Hollywood's litigator community through university will run the company on behalf of his backers as a "robust distribution company."

Hopefully more robust than the approximately 75 companies Bergstein ran in one form or another, that a creditor's lawyers called "The Enron of the entertainment industry."

I have 2 points and a question about this deal if it goes through:

1. I hope Disney gets its money up front, in cash.

2. The others looking at buying Miramax will now have to wait for this new partnership to collapse in a wave of litigation, allegation and recrimination like all the others before they can make a move on it, most likely getting it from Bergstein's many angry creditors.

3. How could someone with Bergstein's record get wealthy people to back him for one other deal?

Well, I think it's because in the movie biz, he seems to be the norm.

Why?

Take a look at this piece from Deadline: Hollywood about the "net loss" from one of the Harry Potter movies, which made just shy of $1 billion at the box office. This is the self-fulfilling idiocy I've ranted on about since I started this blog. Studios play fast and loose with accounting, screwing people out of fair shares of obviously profitable films. Those who possess the tiniest amount of clout in the industry, know they're going to be screwed over, and demand massive up front fees and fat "dollar 1" gross deals that make costs skyrocket.

Guess what, it also creates an atmosphere where someone with a record of bankruptcies, lawsuits, and angry guilds can get people to back him, because in Hollywood's business community, he's the norm, not the exception.

This has turned the whole business into a financial house of cards. Right now the people who run Hollywood feel comfy in the fact that they own enough of Washington to protect them. However, if the polls for congress keep falling, and someone in a position of authority on the commerce committee to realize that dragging movie stars and greedy studio bosses to testify about the business could be what they need to get re-elected.

It's a win-win for them. Even the networks owned by the same companies as the studios can't resist coverage of Angelina Jolie testifying how she got hosed from her profit shares from Mr. & Mrs. Smith. It's also a lose-lose for Hollywood.

That's it for tonight's jeremiad.

Hollywood Babble On & On #550: Signs of Hope?

Welcome to the show folks...

Today, I'm going to talk about some signs of hope in what goes on backstage in this crazy business we call show.

DO MY EYES DOTH DECIEVETH ME?

But it looks like David Bergstein has vanished from the negotiations between Disney and Ron Tutor's partnership's bid for Miramax, replaced by former Disney CFO Richard Nanula.

What happened to Bergstein?

My guesses are:

1. Alien Abduction.

2. Went sailing in the Bermuda Triangle.

3. Swallowed by the planet during recent LA Earthquake.

4. Slipped into an alternate universe where he isn't being sued by dozens of people, companies, and guilds, and decided to stay. Only to be sacrificed by cyborg druids.

5. Resigned to work on Lindsay Lohan's appeal.

6. Was cornered in a dark alley by angry creditors.

But enough silliness. Let's get serious, okay, semi serious, there are two potentially crippling problems facing the Tutor led consortium. They are:

1. Disney.

2. The Weinstein Brothers.

Disney's corporate culture, one that demands total and complete dominance, may balk at selling Miramax to someone that might actually do something productive with it. They don't like competition, and like competition springing from something they failed at even less. So they might just put the screws to the negotiations, or to the buyers to make sure nothing gets done with Miramax that might threaten their market share.

The next problem are the Weinstein Brothers. They started it, they built it up, sold it to Disney, and then almost destroyed it before being ousted. They still own a piece of several of Miramax's key franchises, and threaten to do everything they can to make the new owners as unhappy as possible. They'll file lawsuits in every court they can, claiming every possibly tort they can, and do everything they can to make the new owners pay through their asses for any sequels, remakes or reboots.

So it's up to you if this is a sign of hope, or just business as usual.

UPDATE: The deal is done and delivered.

May God have mercy on the buyers, because Harvey won't.

TWO BIG SUITS

Don Johnson, star of Miami Vice and Nash Bridges, won $23 million from Nash Bridges production company Rysher Entertainment. Meanwhile Celador productions, the folks behind Who Wants to Be a Millionaire, and even Slumdog Millionaire won $275 million from Disney/ABC over their handling of the American version.

Now part of me says "Hey! Great, stick it to those bastards!" but another part of me, the hyper-logical part, says, don't count your chickens before the appeals court is done.

Because it's not enough to win such a lawsuit against a company. You have to survive the years, if not decades of appeals, designed to completely bankrupt you financially, emotionally, and physically, before you see one thin dime of the money the court deemed your due.

Remember, to the corporations, extending these legal fights cost pocket change, while individuals can easily go completely broke really fast. Usually the only winners are the lawyers.

Now Celador, a sub-division of the Sony empire, has the best chance of survival, and even victory. They have the deep pockets and resources for a long protracted appeal fight, plus the prize is so big, that Disney/ABC may be willing to settle to make it go away for an amount that will appease Celador and allow Disney honcho Iger look tough.

Johnson, on the other hand, is going to have a long, expensive fight ahead of him. I wish him good luck, and while it was a good sign that he won this battle, he has a long way to go before he wins the war.

Hollywood Babble On & On #487: Take-Over Tid-Bits & Other Business!

Welcome to the show folks...

We've got a couple of take-over tid-bits to gnaw on tonight.

THE BATTLE FOR MIRAMAX

There's been a slight shift in the bidding for Miramax.

The Weinstein Bros. have proven that they will not give up their former baby again without a fight as long as they have Ron Burkle's money to pay for it. They have increased their bid to an all-cash up front offer of $600 million in a not-so secret meeting with Disney honcho Robert Iger.

David Bergstein's wad of corporations are still in the bidding. Reports say he has the highest bid, but is not considered a serious challenger, considering every civil litigator in Southern California is sending his backers (Deutsche Bank & an as yet unnamed Saudi) their cards "just in case." Yet, I have a theory about why he's still in the game, which I will get to in a second.

The best challengers to the Weinsteins to not only buy Miramax, but turn it into a viable company again, is still the Gores Bros. As I mentioned before, the Gores are reported interested in buying distributor Overture Films which comes with home video company Anchor Bay and its diverse and considerably sized library.

Which means we need to take a little visit into the mind of Iger.

Iger is the man who makes the ultimate decision of the fate of Miramax. His main goal is to sell the company and its library and get as much as he can for Disney and its shareholders.

But what is his secondary goal?

Disney is an company with what I call an old-school feudal mindset. That means its corporate culture hates competition, because competition means that they have to work for their money instead of just steamrolling over a facet of the market place and dominating it through sheer bulk, and non-stop marketing assaults.

So you must ask this question: Is Disney willing to sell Miramax to anyone that might succeed where they had failed?

That's why I think they're keeping Bergstein in the bidding. It's a longshot that he'll succeed, but if pigs start doing aerial cartwheels and he does win, Miramax will be immediately sucked into the vortex of litigation that's currently sucking all his other companies into the depths of bankruptcy court.

It's a similar story with the Weinsteins. Sure they founded the company, made it an indie powerhouse in the 90s, but they also drove it to the brink of destruction several times, and made truckloads of enemies, before moving onto their own company TWC, which has a better track record of wheedling, then evaporating investment capital and angering filmmakers than in making profitable movies.

The more I think about, the more I think that the sheer seriousness of the Gores Bros. bid might actually hurt their chances of winning.

Sure, Disney's moving almost solely into entertainment that can made into toys and merchandise, and a revitalized Miramax would be mostly competing against Lionsgate, Summit, and Focus Features at this stage, but is Disney willing to bet on it staying that way?

We will just have to wait and see.

THE BATTLE FOR LIONSGATE

The management of Lionsgate sent out a letter to their shareholders that they should reject the bid being made by billionaire Carl Icahn, calling it "inadequate, opportunistic and coercive."

Let's look at the facts:

1. I think it's up to the individual shareholders to decide if it's inadequate. No one wants to sell their shares at a loss. So the best way to win this fight, is to increase the value of those shares out of Icahn's price range.

2. As for it being opportunistic, well, all business is opportunistic. You see a way to make money, called an "opportunity" and you take it. The key to avoid being the subject of an "opportunistic" take-over bid is to not create such opportunities.

3. Coercive? Really? Is it as coercive as writing codicils in debt covenants that could seriously screw up the company for millions of dollars to keep outsiders from buying 30% or more of the company? I don't know much about Icahn's practices, but if he was going around holding guns to shareholder heads, he'd be facing some legal difficulties. No one can legally force shareholders to sell their shares.

I wish that both sides would realize that this little war is distracting to management and harmful to the company, and its shareholders. I wish that they could come to some sort of mutually beneficial agreement, where they can both get what they want, a profitable company making money for all of them, rather than a battered battleground that's not doing anything for anyone.

WHY CAN'T WE ALL JUST GET ALONG?

_______________

PS- It's come to my attention that someone in Beverly Hills has been trying to find out who I am. Though it's not really as big a secret as, let's say, a weekend meeting between Bob Iger and the Weinsteins, I try to not make a big deal out of it.

If this person, and you know who you are, is still interested, then you can drop me a line at screenanon(at)yahoo(dot)ca, and we can have a hopefully friendly chat.

Hollywood Babble On & On #793: Three More Little Thoughts From My Extremely Large Brain

GOD'S GIFT TO LITIGATORS

Film financier and bon vivant David Bergstein decided that being sued by everyone he's ever met just wasn't enough litigation in his life. He's suing his former lawyer for $50 million, claiming that she sabotaged his defense in some of the many lawsuits that led to the collapse of his company and his business practices being compared to Enron.

And folks wonder why investors are leery of getting involved in the independent film business. It seems the only people who make money out of it these days are the lawyers. At least they do until their own former clients sue them.

Why can't we just get rid of litigation factories like Bergstein and find people ready, willing, and able to run independent film like a proper business.

THE HORROR, THE HORROR....

The Wrap has an interesting piece about the failure of most of the recent crop of horror films to make a dent in the summer box office. I'd like you to read it, then read a piece I wrote in 2008, which was actually a callback to an article I wrote for Film Threat in 2003, and count how many times I was proven right.

Then go tell all your friends. My ego demands it!

ICAHN CRIES UNCLE

Billionaire investor Carl Icahn is selling off his stake in Lionsgate, and giving up his long running battle to buy up the mini-major studio, and both he and his one-time takeover target are dropping the lawsuits they filed against each other.

I have mixed feelings about this. I was hoping that some sort of middle ground would be found where both investor and upper management would work together happily and profitably instead of the seemingly universally adversarial relationship that dominates the film business.

Hollywood Babble On & On #480: Business As Usual

Welcome to the show folks...

Today I have a couple of little stories about independent companies, so away we go...

SINKFILM GETS ITS DAY IN COURT

David Bergstein's Capitol Films/ThinkFilm indie production and distribution mish-mash had a hearing today in bankruptcy court. According to one commenter at Deadline: Hollywood who claimed to be attending the proceedings, one of the lawyers for the creditors called it "the Enron of the Motion Picture Business."

BURN!

And the sad part is that it's so believable.

The really sad part is that too many independent companies end up in court with creditors and management fighting over the table scraps, and a lot of people not getting paid for their work.

I know it's hard to make money as an indie producer, the risk to return ratio is not great, but it doesn't help when producers leave themselves open to the sort of allegations that are currently assailing Senor Bergstein. When you're an independent producer you have to be like Caesar's wife, not only pure, but appearing to be pure.

Why?

Because the odds are pretty good that everything will go completely to shit when you're an indie producer/distributor. When these things go to shit, you don't want your investors and creditors saying the sort of things in court that could get your pelt nailed to the trophy wall of an ambitious State Attorney General, Assistant US Attorney, or IRS auditor. You want them to say: "Oh well, things didn't work out, but at least I can't accuse you of using company money to cover gambling markers without getting sued for libel."

But alas, it seems to be business as usual in Hollywood for indie producers to act like they're studio execs, and that their companies are their little personal fiefdoms and that they don't owe anything to their investors or creditors. Then comes the acrimony, the allegations, and all sorts of legal crap that end up costing everyone more than either side could want.

ALL THE BETTER TO SIT ON YOU WITH

Kanbar Entertainment the producers of the animated movie Hoodwinked are as mad as a wet hornet on 'roids at the Weinstein Company over the movie's sequel Hoodwinked Too: Hood vs Evil.

Apparently the film was supposed to be released in mid-January, alongside the toy line at Burger King, but in December 2009, the Weinstein Co. announced that the movie was going to be bumped back to February.

February came and went, and still no movie.

Now Kanbar Entertainment has made a petition to the Superior Court to force some form of arbitration with TWC over the non-release.

My question is:

Why is this news?

The Weinstein Co. is more famous for not releasing movies than for releasing them. To them it's business as usual to sit on a movie until at least 2 years past its sell by date, and then dump it in a way that ensures no one, including TWC, makes any real money off of it.

Which brings me to my next question:

Why are they still in business?

They need outside investors to give them money, and indie filmmakers to sell their films to TWC's own peculiar brand of oblivion, and I just have to wonder why. Their reputation has proceeded them, and while no one has accused them of criminality, they have been accused, repeatedly, and passionately, with being just plain bad to do business with.

Everyone who does business with them has walked away saying that the company operates on a blend of bullshit and bullying. And most of them walked away with nothing but ulcers and high blood pressure to show for their troubles.

So I think it would be news to hear a story about someone whose name isn't Quentin Tarantino being happy with doing business with TWC.

That would be news, and not business as usual.

Hollywood Babble On & On #589: DAMMIT! NOT AGAIN!

Welcome to the show folks...

Film financier David Molner of Aramid Entertainment Fund is being sued for misappropriation of funds by investors and is accused of using the investment fund as a "personal piggy bank."

If that sounds familiar, it's because Molner is one of the cast of thousands suing film financier David Bergstein for EXACTLY THE SAME THING.

Reports are saying that Molner was using Aramid for some un-aromatic business, using investor money to give loans to himself, others Aramid managers, and various corporate entities they control. Loans that weren't repaid, causing financial troubles for the fund and causing it to be de-listed from the Cayman Islands Stock Exchange (where the company is registered).

Reading such stories breaks my flinty little heart. Why? Well, it's because they illustrate how badly screwed up the entire industry is whether this Molner fellow is guilty or not. Here's why:

IF HE'S GUILTY...

It's yet another case of how people use the overly and needlessly complicated structure of international film finance to play silly buggers for their own enrichment at the expense of their investors. It's one of the main reasons people are leery to invest in film, because where they're willing to accept risk when it comes to films making or losing money, they aren't going to accept the stupidity of people just taking their cash and running away.

IF HE'S INNOCENT...

It's a classic illustration of how complicated business practices can turn around and bite you on the ass if your investors aren't 110% thrilled with your performance. It doesn't matter how honest someone is, or tries to be, but in the convoluted world of international finance, good forensic accountants can probably find if not 10 felonies on every page of the company accounts, at least grounds for a lawsuit.

How can business avoid such problems?

SIMPLIFY.

The tax code needs to be simplified, the accounting rules need to be simplified, and the film finance business needs to be simplified. Maybe finally put the self-fulfilling idiocy that's crippling the business to an end.

Because when things are simple to understand, it's harder to steal, and it's also harder to accidentally look like you're stealing.

Hollywood Babble On & On #772: Pitfalls of Independence

Yesterday I came across this article about producer Brett Saxon. Before this article Saxon was best known for working in infomercials, books about schmoozing celebrities, and producing the indie poker comedy The Grand, nowadays, his biggest claim to fame is as a target for lawsuits.

He's the target of lawsuits from investors claiming that he's misappropriated about $7.8 million in investment capital, fees, and loans, and an arbitrator has already ordered him to pay back one investor $2.25 million. Saxon's defense is that he's just been unlucky, especially at the box office since his biggest film The Grand only scored a little less than $115,000 at the box office.

Now I'm not going to pass judgement on whether Brett Saxon is guilty of all the malfeasance that he's being accused of, because it doesn't really matter. Business wise he is screwed six ways from Sunday, and could easily be litigated into the Stone Age.

So why am I talking about this guy?

Because it's a fate shared by too many indie film producers and companies, from the over litigated David Bergstein to the outright criminal shenanigans of the Q Media Assets/Cinamour scandal.

Which is a terrible shame, because right now is the perfect time to get a independent film company off the ground. The major studios continue to shrink their output of theatrical releases, huge gaps are forming in the marketplace, and while the risks are high, the potential for rewards are great. That's why there are film finance funds popping up, new distributors being formed, and even the Megan and David Ellison, the spawn of billionaire Larry Ellison are getting in on the act, working together on the hit western True Grit.

So how can these new companies avoid trouble, and the billionaire Ellisons avoid ending up millionaires, if they're lucky?

Well, they can start by listening to me, and my smug know-it-all butt-insky advice.

1. INFORMATION IS POWER: This is true, know thy enemy and know thyself as Sun Tzu once said to me at Machiavelli's barbecue. Before you invest a dime you learn everything you must learn three important things:

A) YOURSELF: Look inward, think if you are really ready for the meat grinder of the movie business. Ask yourself: What kind of movies do you want to produce? Are you in it for the money, the love of film, or a combination thereof?

B) THE BUSINESS: Learn everything you can about every facet of the business. Learn how movies are made, released, and marketed. Learn how the game is played, and how you can use those rules for your own benefit.

C) THE PEOPLE: You're going to get involved with a lot of different kinds of people in the movie business. Some are great, some are not. Look into who you're doing business with before you get in bed with them. Find out if they're fit for the red carpet premiere walk, or the perp walk. Do some digging, or better yet, have professionals do the digging for you, if you can afford it. Don't fall for a charming smile and a smooth pitch. Get the facts on your side.

2. SIMPLICITY: This is the best advice whether you're financing your own films, or dealing with investors, and here's why: PROTECTION.

If things are simple you are protected. If you have all the information about your business at your fingertips, and more importantly, understand that information, you can avoid trouble. The complicated bookkeeping games played by the majors only really work if you have a multi-billion dollar multinational conglomerate covering your ass. When you're an independent complications cause trouble. People can manipulate those complications to use against you, either to steal from you, or to show that you're playing crooked games with your books.

You see, indie film is extremely high risk at the best of times. That's why need to be as clean as the driven snow, and be able to show, upon demand, that your financial house doesn't have any dark corners where nasty things can hide. Because if you don't, investors and investigators can see that as a sign of trouble, and it can end in either litigation or prosecution.

You don't want that. You want to make movies in peace. That's the most important part.

Hollywood Babble On & On #450: More Random Thoughts...

Welcome to the show folks...

1. David Letterman has hired a female writer for the first time in years. Make up your own jokes about the situation of a woman working so close to the notoriously lecherous Letterman. I'm sure she's already heard them all by now.

2. The bidding for Miramax is heating up. Disney's eager to sell because the Pulp Fiction Experience at Disneyland featuring The Gimp's Playhouse, just wasn't working out. One of the bidders is Capitol/ThinkFilm's David Bergstein, which strikes me as interesting, because last I heard anything out of that company they couldn't even get a film finished, let alone buy another company. But who am I to understand the whims of investors and what they invest in.

3. Speaking of Miramax, its former owners, the Brothers Weinstein has purchased The Tillman Story. My condolences to the makers of The Tillman Story on the news that their film will never be seen again.

Hollywood Babble On & On #895: Wanna Buy Miramax?

Billionaire construction tycoon Ron Tutor has decided that he's had enough of playing mini-movie mogul who does everything he can to avoid actually making movies as much as possible, and announced that he's hoping to sell his stake in Miramax within the next week or so.

If you don't know your history, Miramax was the indie film powerhouse founded by brothers Harvey & Bob Weinstein in 1979.  It became an indie film powerhouse in the early 1990s, attracting the attention of the Disney empire which bought it in 1993.  However, the business practices and personalities of the Weinstein Brothers chafed with the more staid Disney management culture.  

Things came to a head in 2005 when the Weinsteins were forced out of the company they founded.  After that Miramax became just another division of Disney distributing art house films in ever dwindling numbers until 2010 when they sold it a partnership between Vegas builder Ron Tutor and investment fund Colony Capital.

Since then the number of productions dwindled even more to a token trickle, since the business plan of the new owners was to turn the company into a library management firm as opposed to a traditional movie company. They made some big deals licensing Miramax movies in various mediums, and even made a deal to add management of the rights to the Samuel Goldwyn film library to their stable.

Now this is the part where, if you listen carefully, you can hear me kick my own ass for being stupid.

You see, I should have seen this coming the moment they announced the Samuel Goldwyn deal, because that was the moment the whole Miramax as library business plan hit about as much value as it is ever going to get.

As I've been saying all along the key to running a successful film library is maintaining a steady stream of fresh product. A library that isn't growing will inevitably become dead weight. Even classics fall out of fashion for periods of time as the media outlets that require content look at everything you have and say "What else have you got?"

The Goldwyn library was the last major collection of cinematic assets that aren't already under the control of someone else. That's it, there is no more to be had.

Tutor isn't a dummy, he saw that too, knows that they've done the 3 things needed to be done to increase the value of Miramax while avoiding making new films as much as possible:

1. Deals were made to profit from the existing library.

2. They added all they could to the library by assuming management of the Goldwyn movies.

3. They got David Bergstein to fuck off. (Though it would have been better not letting him have anything at all to do with the deal in the first place)

There's nothing else they could do outside of making lots of new movies, and Tutor apparently has no interest in doing that because it takes time, serious calorie burning, and a hell of a lot of risk.

It's the smart move for him to sell out now, and I really should have seen it coming.

Hollywood Babble On & On #516: What Are We Going To Do With Miramax?

Welcome to the show folks...

There's a lot of confusing talk and speculation going on about Disney selling their moribund Miramax label and library to the Weinstein Brothers via billionaire Ron Burkle. Disney is saying the deal is dead, the Weinstein Brothers are saying they're still in the game, and so on and so forth...

Personally, I just think Disney is jerking the Weinsteins' chain in the hope of shaking some more cash from Burkle's money tree. I believe this because I think Disney believes that the Weinsteins taking back Miramax, is, in the long run, best in the eyes of Disney.

The Disney people know that the brothers can't really do much of anything with the company/library, that their relationship with Burkle will eventually sour, and the whole thing will crash and burn, which is exactly what Disney wants. This is because Disney is an old school monopolist that doesn't like anyone turning an asset they failed with into a viable entity that might someday compete with them.

However, people can do crazy things, and someone in a position of power at Disney might forget that the Weinstein/Burkle offer is more than what the experts have valued Miramax, and that it so sweetly fits their pre-mentioned corporate-philosophical criteria, and take that "no" from a tactical move into a outright end of the deal.

That would mean that Miramax would be back on the market, and putting it again between the Weinstein/Burkle faction to try again, as well as the Gores Bros. Platinum Investments, and ThinkFilm/David Bergstein's latest big money lawsuit in the making.

Well, I have some advice for the non-Weinstein potential bidders.

WALK AWAY.

Don't make any fresh offers. In fact, rescind any previously made offers, and move on.

Why?

Because with the way things are right now Miramax, no matter who buys the company, will come with two things no business wants:

Harvey and Bob Weinstein.

You see, when they sold Miramax to Disney they made a deal retaining an important piece of many of the films in the company's library. That means that if whoever buys that library has to involve Harvey and Bob in every decision that has anything to do with that library. This makes remakes, reboots, re-releases, sequels, or even home-video releases an incredibly expensive and aggravating proposition.

So here's the plan for anyone who wants to buy Miramax.

1. Leave Disney no other option. If the Weinstein/Burkle partnership is the only still interested, Disney will have to sell them Miramax. They need to get rid of that dead weight, make some cash off of it, and quick. Then you must...

2. Bide your time. It's inevitable that the Weinstein Bros' relationship with Ron Burkle will go south. It's only a matter of time and how much money Burkle is willing to burn in the name of his friendship with the Weinstein Bros. When that happens, when the lawsuits start flying, and the whole thing crashes and burns you then...

3. Strike down the weak and the wounded. Make sure that you wait until the Weinsteins' upcoming feud with Burkle reaches a point when Harvey and Bob's personal fortunes are at stake. Then you move in, buy out any decision-making claim on that library, and wrap the whole damn thing up, lock, stock, and barrel sans the brothers.

It may take longer, but it will avoid a lot of headaches in the future.