Over a turbulent few years, the Herbalife controversy has transfixed the business community.
The L.A.-based nutrition company has been at the center of a high-stakes play involving the hedge-fund manager Bill Ackman, who has alleged the company operates as a pyramid scheme and staked a $1-billion short investment on the claim. The Federal Trade Commission, meanwhile, has been investigating Herbalife.
Now that situation is bursting further into public view thanks to a new film--and a fresh fight over that film's origins.
The documentary, titled "Betting on Zero," made its world premiere at the Tribeca Film Festival, which runs through the weekend.
Made by Ted Braun, a well-regardeddocumentary filmmaker ("Darfur Now"), it tracks the battle between Herbalife and Pershing Square Capital's Ackman, threading in the activist trader Carl Icahn (he has sided with Herbalife) and a number of lower-level Herbalife citizen sales people who say they've lost their life savings because they are overextended on the company's products.
Ackman argues that Herbalife's profits are reliant on sales people bringing in new vendors below them and that its protein-shake and other products are essentially a fig leaf, one that takes advantage of working-class people who sink a lot of money into the products with little hope of profiting.
The company has said it offers legitimate and beneficial health products and that Herbalife's army of millions of sales people around the world functions in the same manner as other such outfits, known as multi-level marketers.
The movie focuses on Ackman, who granted a large degree of access to Braun and his team. Herbalife declined to participate, prompting Braun to use archival material from its chairman and chief executive, Michael Johnson, among others.
But "Betting on Zero" has become only a prelude to a larger story. Unlike many companies that feel they've had unfavorable attention by a documentary and keep a low profile, Herbalife has taken an aggressive stance. It boldly snatched up the website bettingonzero.com for itself and used it to launch a campaign against the movie.
The website makes a number of allegations, essentially arguing that Braun is in the pocket of Ackman and has not made an objective film. The site, which is clearly labeled as backed by Herbalife, intimates Ackman himself financed the film and draws connections between a co-producer, Devin Adair, and Ackman from their time at Harvard University in the 1980s.
"Most documentarians disclose their financiers. Curiously, the team behind 'Betting on Zero' has not disclosed who is funding this film, but we can guess," the site says, adding "is there a financial connection between the producer and Ackman?"
The site also asks why Herbalife distributors, as the company citizen vendors are called, were not included in the movie.
But Braun says that any idea that he came to the film with an anti-Herbalife agenda is strongly inaccurate.
"From the beginning, I was making a film that looked at all sides," he said in an interview at Tribeca. "I hoped audiences would be moved by characters and understand their motivations. There's a long tradition of documentaries that are argument or advocacy films, and I respect those films," he added. "This isn't that.'
Braun said he made every effort at including current distributors but was unable to because, he believes, the company instructed them not to talk.
Braun spent about three years making the movie. He said he has numerous off-the-record conversations with Herbalife executives, during which time he repeatedly reassured them he wanted to make a fair documentary and tried to persuade executives to participate in it. "My goal was to make a present-tense documentary, with all sides in it," he said. He ultimately was rebuffed, prompting him to rely on archival material for Herbalife's perspective, including interviews executives gave to other outlets, as well as corporate presentations.
Braun also waved aside the idea that the film's unnamed financier has any stake in the fight over Herbalife, and says the anonymity is simply a matter of silent investors preferring not to have their name in public, particularly on a sensitive issue, as is the wish of many film investors.
Ackman declined to comment for this story. But a spokesman for Pershing Square, Francis McGill, said there was no financial relationship between Ackman and the film.
"Neither Bill Ackman nor Pershing Square played any role whatsoever in the making or financing of the film, directly or indirectly," McGill said, saying that the only affiliation with Braun came with the access Ackman offered.
Braun said that the hedge-fund magnate did not see the film before the Tribeca screening and, though Ackman appeared at a Tribeca afterparty for the film, said it was simply as a subject. If Herbalife executives had participated in the movie, Braun said, they too would have been invited.
Viewers will draw their own impressions from the film. But one would be hard-pressed to come away with a favorable view of Herbalife. By including the citizen marketers who lost their savings, many of whom are poor immigrants, and juxtaposing them with slicker shots of the company's executives, "Betting on Zero" can pack an emotional punch.
Indeed, Herbalife's strong response suggests the public-relations mess it could face by the shining of such a high-intensity light on its actions.
And Ackman, though not lacking for confidence, is largely portrayed as an activist aiming to do the right thing, an impression bolstered by his commitment to donate any proceeds from his short investment to his charitable foundation.
The movie does, it should be noted, highlight a poor public performance from Ackman as well as a number of archival scenes of ordinary people who got wealthy because of Herbalife, leavening the effect.
A spokesman for Herbalife did not immediately reply for comment for this story.
To date, Ackman's short has not panned out. Herbalife's stock hit its highest point in a year last month and, closing at $58.20 Friday, remains considerably higher than when Ackman first went public with his claims against Herbalife a little more than three years ago.
"Betting on Zero" has not yet sold to a film distributor, though the company representing it, Cinetic Media, says it has fielded strong interest.
The battle over the film offers another layer to what has become a multi-tiered drama. Ackman and Herbalife/Icahn have fought over the company's legality. Now there is a battle over a movie that is itself about a battle. That narrative in a sense epitomizes the modern financial system, in which the fight is often as much for perception and positioning as it is for products.
"Betting on Zero" also offers a kind of documentary counterpoint to "The Big Short," which similarly thrust viewers into a spot where they might root for those with a short position.
Braun said he believed the film does play into a certain zeitgeist.
"I think the fact that 'The Big Short' was so popular confirmed a sense that this is a good time to be telling this story," he said. "It touched a nerve because there's a general interest in how financial markets work and affect daily life, which is something a lot of us don't really tend to think about."
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