What Next for MGM Without Ladd?

Times Staff Writer

In July, financier Kirk Kerkorian, majority owner of MGM/UA, decided to trim some overhead costs by canceling most of his company’s contracts with independent producers. Among those who got the ax was MGM’s Richard Zanuck, whose credits with former partner David Brown include “Jaws” and “The Sting.”

There was one big problem with that strategy: It was Zanuck who happened to be developing MGM’s big action film for the summer of ’89, “Blue Lightning.” No Zanuck, no big summer movie. MGM Chairman Alan Ladd Jr.-- angered by the terminations, studio insiders say--finally convinced Kerkorian to bring Zanuck back.

But last weekend, Ladd resigned--and he could well be followed out the door by Zanuck, as well as other MGM-affiliated producers whose contracts free them to follow Ladd. Once again, MGM could be looking at an empty plate for next summer.

Ladd, 50, resigned “because of the uncertainty that has been going on here for a long time,” he said in an interview Monday. He said he made his decision shortly after his plans to take over MGM in a leveraged buyout fell through. Ladd’s departure injects even more uncertainty into MGM’s future. It was Ladd who had brought name talent like Zanuck to MGM.


It was Ladd, who took over the studio two years ago, who appeared to finally be bringing some creative and box-office success to the troubled studio with releases like the Oscar-winning “Moonstruck” and this summer’s sleeper hit, “A Fish Called Wanda.”

“The one plus that Ladd brought to the studio were his taste buds,” said one studio insider.

Despite Ladd’s record, industry sources said Kerkorian had been searching for a replacement for Ladd in recent weeks. Among those unsuccessfully approached, industry sources said, were Disney’s Jeffrey Katzenberg and NBC’s Brandon Tartikoff.

Ladd had tried to resign once, in July, when Kerkorian attempted to spin off a 25% interest in MGM to an investor group made up of industrialist Burt Sugarman and producers Jon Peters and Peter Guber. Ladd made known to MGM/UA executives his plans to resign once that deal went through.


But the deal fell apart two weeks after it was announced, and Ladd stayed on. Kerkorian’s representatives have continued to make it clear that all or part of the company is still for sale. (Though owned by the same company, Kerkorian runs MGM and UA as separate studios.) Earlier in the summer, Kerkorian replaced MGM/UA chief executive officer Lee Rich with his own man, attorney Stephen D. Silbert. Silbert was the architect of the spinoff plan, as well as recent studio cost-cutting measures.

Ladd confirmed rumors that several weeks ago he attempted to put together his own deal to take over MGM, bringing in an outsider who would serve as a 50% partner with Kerkorian. Merrill Lynch would have been involved in financing the deal, which had a total value of about $200 million.

The deal fell apart, Ladd said, when he could not immediately obtain attractive financing.

“I hope that what MGM will do is stick with the people they have now and let them run the company,” Ladd said. “When you bring in someone from the outside they get rid of existing projects and existing advertising plans. It ends up costing the company millions and millions of dollars.”


Among potential successors to Ladd inside the company are production president Jay Kanter, a long-time Ladd associate, and executive vice president Richard Berger, who joined MGM from Disney several years ago.

MGM already has a slim production schedule for the coming year. Sources both in and out of the company say Ladd’s departure will make it more difficult to attract quality projects. The studio has enough new films in the works to take it through the spring, but after that the outlook is more questionable. “The studio is racing against the clock for the summer,” Ladd said.

Two major MGM films now in production include “Letters,” (formerly “Union Street), starring Jane Fonda and Robert De Niro, due out in the fall or Christmas; and “A Dry White Season,” starring Marlon Brando and scheduled for release next spring.

Ladd said that although he has had other offers, he has not decided what to do with his future. The son of actor Alan Ladd, he launched his Hollywood career as an agent, later moving into production. As an executive at 20th Century Fox in the 1970s, he was credited with pushing ahead on “Star Wars” over the objections of others at the studio. The movie later went on to become one of the biggest grossing films of all time, with box-office receipts alone topping $322 million.


He later formed the Ladd Co. with Kanter and Gareth Wigan, producing such films as “Chariots of Fire,” “Blade Runner,” “The Right Stuff,” “Once Upon a Time in America,” and the “Police Academy” series.