Is Kluge the Sugar Daddy Orion Needs?

In a town that’s long on movie and TV ideas and short on buyers, no one sneezes at new money. But they’re also quick to count it. So the $64,000 question this week is how much billionaire John Kluge ultimately will invest in Orion Pictures’ new production company.

The joint venture with Kluge’s Metromedia Co. was announced at Orion’s annual shareholders meeting in New York on Monday. Orion President Leonard White said the deal will put Orion back in the production and acquisition business, after spending last year in Chapter 11 limbo.

His pronouncement ended there, however. White said he doesn’t know if Kluge, Orion’s chairman and majority shareholder, will play the kind of sugar-daddy role required to re-establish Orion as a real player. His initial commitment of only $1 million suggests he will not, but White said that’s only seed money. “Metromedia and John Kluge are known as builders of companies,” White said. “And what we want to do is to grow this company.”

The creation of Orion Productions signals the biggest step yet in the company’s long-range revival strategy. While Orion remains in the distribution business, the company’s reorganization plan requires it to finance production off its balance sheet.

White said the new plan calls for raising money on a project-by-project basis--and from sources besides Kluge. Declining to be more specific, White said discussions are under way with several “financing entities.” Orion, based in Century City, appears to be playing it cautiously with Hollywood’s creative community as well. Sources said the company has yet to send out any smoke signals that it’s back in the production business, despite Monday’s announcement.

Orion had 40 to 50 projects in development when it tumbled into Chapter 11 last year. White called 17 of them “makeable projects” and said the company is especially high on 10 of them.

Skeptics question whether the company could still be sitting on any interesting projects. At the same time, agent Marty Bauer of United Talent Agency said it’s dangerous to underestimate Kluge.

“The man with a majority ownership of that company is one of the wealthiest men in the world,” Bauer said. “And anything he’s involved with has to be taken seriously.”

Metromedia declined comment on Orion on Monday. Kluge has recently upped his stake in the company from 50% to 56%, however. He also reached a tentative agreement to loan the company up to $2.35 million to pay the print and advertising costs associated with the distribution of “Boxing Helena,” according to a proxy statement filed last month.

That’s helped fuel investor interest in Orion’s stock, which gained 50 cents on Monday to close at $6 a share in NASDAQ trading, its highest price this year.

Sources close to Orion said Monday’s announcement follows months of failed efforts to merge or sell the company, best known as the distributor of such Academy Award-winning hits as “Dances With Wolves” and “Silence of the Lambs” before its financial problems surfaced. Kluge was said to be personally involved over the last six months in discussions that included companies such as Turner Entertainment and Metro-Goldwyn-Mayer.

“The problem was that no one was interested,” one source said. Analysts have speculated that one drawback is that Orion’s 800-title library is already too encumbered. Lisbeth R. Barron, an entertainment analyst with S.G. Warburg & Co. in New York, said Orion will need to line up a much bigger financial commitment.

“It takes hundreds of millions of dollars,” Baron said. “You can’t be serious about renovating this company unless you’re committed to making 15 to 20 films a year at a minimum of $25 million per film.”

Orion last week reported a first-quarter loss of $16.8 million. Revenue for the second quarter fell to $39.6 million from $80.8 million. The company still has several unreleased films in its vaults, including “Robocop3.” Orion also raised some eyebrows when it acquired distribution rights to the controversial “Boxing Helena,” which it plans to release in September.

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Henson Rumor: Rumors that Lisa Henson is headed for a top executive post at Columbia Pictures have heated up. Henson and Columbia Chairman Mark Canton were unavailable for comment. Henson, the daughter of Muppets creator Jim Henson, previously worked for Canton at Warner Bros.

MGM/UA Update: Metro-Goldwyn-Mayer and United Artists apparently remained unsold late Monday, despite persistent rumors of an impending deal. Sources insist that Credit Lyonnais, the French bank that owns the studios, is close to a decision. At the same time, there was continuing controversy over the source of the rumor concerning a possible secret bid by Cargill Inc., the Midwestern grain and commodities conglomerate.

Said one skeptic, drawing a parallel between MGM/UA’s financial straits and the Midwest floods: “The only thing MGM/UA and Cargill have in common is that both are under water.”