Company Town : Savoy’s Slim Pickings Annoy Investors
It has been a quiet summer for Savoy Pictures Entertainment Inc. Too quiet for some impatient investors, who are appalled that the cocky young company has only two movies scheduled for release before the end of the year.
“Go out and make movies or give us our money back. Or come up with a new game plan!” one large shareholder complained recently, speaking on condition of anonymity.
Savoy Chairman Victor A. Kaufman and President Lewis J. Korman are trying to address such concerns. They’ve got 10 movies in various stages of production and are casting about for other entertainment businesses that might provide a steady cash flow.
Sources said Monday that Savoy is on the verge of announcing a deal to distribute movies for Rysher Entertainment, a Cox Enterprises television producer and distributor that is branching into movie production.
Savoy is also pressing ahead with plans to acquire TV stations through a joint venture with Rupert Murdoch’s Fox Inc. Late last week, the SF Broadcasting venture said it will buy its first TV station, WLUK in Green Bay, Wis., for $38 million.
But those deals still leave Savoy with more than $200 million invested in Treasury bills--and a bigger reputation on Wall Street than in Hollywood. Savoy has been capitalized with nearly $500 million, including four public offerings in 1993 that raised nearly half that sum.
The game plan, Kaufman explained during a recent visit to Savoy’s Santa Monica office, is to “build a large, diversified entertainment company. You don’t do that necessarily overnight.”
Still, investors didn’t expect a six-month moratorium on the release of new films. Just last winter, the company vowed to distribute 10 to 12 movies this year and more than 20 in 1995. Instead--after the wide release of the critically acclaimed “Shadowlands"--it has distributed just three movies this year, all disappointments: “Lightning Jack,” “Serial Mom” and “No Escape.”
Now Savoy is sitting out the summer, with no release plans until the erotic comedy “Exit to Eden” opens Oct. 14. “Heaven’s Prisoners,” an action film starring Alec Baldwin, will be released at Christmas if completed in time.
In its first full year, Savoy lost $12.5 million; in the first quarter of 1994, it lost another $10.8 million.
Savoy executives defend their schedule, explaining that they simply did not have films capable of competing this summer against the likes of Disney’s animated “The Lion King,” big-budget action films such as “True Lies” and “The Client,” or the broad-appeal “Forrest Gump” starring Tom Hanks. Those four films captured 71% of the national box office receipts of $104.5 million on a recent July weekend--with nearly 50 other movies vying for the remainder.
“You get in the fight if you’ve got the guns,” said producer Frank Price, who has helped Savoy assemble its slate. As a founding shareholder and Savoy director, Price plays a pivotal role at the company, even though he holds no executive title.
Savoy has defenders outside the company. “If the overhead is still low and they’ve got films that are not ready, they don’t need to release a film to get cash flow,” said A.D. Murphy, the respected box office analyst for the Hollywood Reporter.
Still, Savoy’s temporary retreat from the marketplace has provided fresh fodder for Hollywood wags, who regard Kaufman and Korman with skepticism because they are New York-based businessmen with a mixed record as former executives of TriStar Pictures and Columbia Pictures Entertainment. In the late 1980s, their movie slates brought less success than their financial acumen: Kaufman and Korman cashed out handsomely when Columbia was sold to Sony Corp. five years ago.
In 1992, the two businessmen decided to launch Savoy with the backing of the powerful Allen & Co. investment firm, which had brokered Columbia’s sale to Sony. In a line repeated across town, one Hollywood executive quipped, “Their goal was to sell the company before they had to release any movies.”
But Kaufman insists Savoy is in business for the long run. “We think we can really build an incredibly strong value over a period of time.”
Kaufman has staunch backing from Savoy’s largest shareholder, GKH Partners, whose members include such well-known investors as Jay and Tom Pritzker and Dan W. Lufkin. “We’re not a seller,” said Melvyn N. Klein, a GKH general partner who also sits on the Savoy board and is married to the cousin of MCA President Sidney J. Sheinberg.
“I think it’s a credit to the prudence of our management that it’s going very cautiously,” Klein said. “With the exception of Sid Sheinberg, I don’t know anybody we’d rather have our money with than Victor, Lew, Frank and Herb Allen.”
Among Savoy’s other prominent investors: Time Warner’s Home Box Office unit, Mitsui & Co., Cecchi Gori Group Europa, Chargeurs and Cinergi Productions Chairman Andrew G. Vajna. Allen & Co. owns 6.4% of Savoy’s shares and Price has a 1.7% stake.
Savoy’s executives rely heavily on Price for product, and they solicit his opinions on the rest of the film slate. At 64, Price has few peers in Hollywood who can match his credits or experience. After a 28-year career in television, he has spent the last 16 in motion pictures. For 10 of those years, he was the top movie executive at MCA and Columbia Pictures when such hits as “Kramer vs. Kramer,” “Tootsie,” “Ghostbusters,” “Back to the Future,” “Out of Africa,” “Prince of Tides” and “Boyz ‘N the Hood” were produced.
Price Entertainment co-produced Savoy’s first two films (“A Bronx Tale” and “Shadowlands”) and will produce or co-produce five of the 16 movies on Savoy’s slate through 1995. His projects range from a low-budget “Walking Dead,” a Vietnam saga about black soldiers scripted by first-time director Preston A. Whitmore II, to an expensive, Joe Eszterhas-penned sexy drama called “Foreplay.”
“Frank’s got an incredible track record,” said Alan Greisman, president of Savoy’s motion picture unit, adding, “One would be a fool” not to solicit his views.
Savoy remains committed to its strategy of mixing big-budget films with an equal number of low-budget projects that often give a screenwriter, actor or producer a first opportunity to direct. Among such projects: Robert De Niro’s “A Bronx Tale,” “Walking Dead” and “Garden of Palms,” which is still in development for actress Sally Field.
Greisman said he is satisfied that Hollywood takes Savoy very seriously. “There isn’t one piece of material that we don’t have an opportunity to bid on at a time that is coincidental to the rest of the studios. So I don’t feel that we are getting the short shrift on anything,” he said. “People know that we’re serious players, and we have serious money to spend.”