Melnick Agrees to Merge With Carolco for $3 Million in Stock

Daniel Melnick, an independent Hollywood producer and former movie studio executive, has agreed to merge his IndieProd Co. into publicly traded Carolco Pictures for about $3 million worth of Carolco stock. He also agreed to make movies under Carolco’s banner.

According to a joint announcement Tuesday, the industry veteran will receive 400,000 shares of Carolco stock for his independent movie production entity.

Separately, Carolco said it is committed to lay out more than $7 million in overhead and development costs on Melnick’s movie operations.

Under a five-year agreement, Melnick is to receive more than 50% interest in feature films to be produced by IndieProd as a division of Carolco.

Melnick, whose most recent independent production in release is “Roxanne,” has produced such well-known films as “That’s Entertainment,” “All That Jazz,” “Altered States” and “Footloose.” Carolco is best known for its “Rambo” movies, the third of which began shooting last week.

Carolco President Peter Hoffman said in an interview that the primary purpose of making the Melnick deal is to send a message that the firm intends to make “studio-quality pictures in an independent framework.”

Melnick, 53, was an independent producer and then production head for Columbia Pictures in the mid-1970s, briefly replacing President David Begelman after he resigned in a 1978 embezzlement scandal. Melnick had been senior vice president and head of worldwide production at Metro-Goldwyn-Mayer between 1972 and 1976.

Melnick resumed being an independent producer for Columbia in October, 1978, and then moved to 20th Century-Fox Film Corp. in the same capacity in December, 1979. He left the Fox lot in July, 1982, and did “Footloose” for Paramount before turning to Columbia for a three-year production arrangement completed last June.

In a telephone interview Tuesday, Melnick acknowledged that he recently had been talking with Weintraub Entertainment Group about a deal similar to the one with Carolco.

His swap of assets for new shares of Carolco stock, he said, will have tax advantages over his past independent arrangments at major studios. He also will receive development money.

IndieProd assets going to Carolco in the deal include its gross profit participations in four movies: “Roxanne,” “Footloose,” “Quicksilver” and the as yet unreleased “Punchline,” starring Sally Field and Tom Hanks.

Carolco also will inherit 12 IndieProd projects awaiting production at several studios and five other projects in development.

Hoffman said Carolco expects to see more than $5 million in revenue from the four completed movies and the other existing film projects.

Carolco will continue its previous arrangement for certain foreign and home video rights to IndieProd pictures financed independently of Carolco.