After weeks of speculation about how they planned to finance their new film production company, producers Michael Douglas and Steve Reuther said Monday that their ambitious 12-picture, four-year deal will be backed by German entertainment tycoon Bodo Scriba.
In an interview at their new offices on the Paramount Pictures lot, the two added that Douglas has committed to star in three of the 12 films, with budgets averaging $35 million to $40 million. Close to $500 million in production funds will be arranged by the Hamburg-based Scriba.
Douglas added that he might also be interested in directing a film if the right project comes along. At least eight of the 12 pictures are expected to be financed solely by Douglas/Reuther Productions, with all of the films distributed by Paramount.
The deal represents a major departure for Paramount, which in the past was so cash rich that it almost always financed its pictures in-house to keep all of the rights. That changed in part because of the studio's $10-billion acquisition by Viacom Inc. and the debt levels that resulted.
Viacom Entertainment Group Chairman Jonathan Dolgen, who oversees the studio, has been receptive to such deals, which are becoming more common in Hollywood as studios seek to spread their risk, lower their average production costs and boost the number of films they distribute.
For producers such as Douglas and Reuther, independent financing offers freedom to make the kind of films they want and carries with it a huge upside financially if they have a major hit.
Douglas, as an actor and producer, and Reuther as a producer have been involved in a number of successes through their careers.
Douglas starred in "Basic Instinct," produced the Oscar-winning "One Flew Over the Cuckoo's Nest" and won an Oscar as best actor for his role in "Wall Street." As the former president of Regency Productions, Reuther was involved in such hits as "Pretty Woman," "The Client" and "Under Siege."
Douglas, one of Hollywood's top-paid stars, said he hopes to use the new venture to better mesh his careers as an actor and producer. "I have the opportunity to grow my two careers closer together. To control your own destiny and to call your own shots is an excellent opportunity," he said.
Douglas and Reuther dismissed recent talk that their deal had encountered troubles, including rumors that they were recently out soliciting bank financing. Indeed, Douglas said that he even assured Paramount that if all else failed, he would personally finance their first two projects, "Sabrina" and 'Stuart Smalley."
The two said that the financing environment remains tight internationally since there is so much competition, but Douglas' willingness to star in some of the films was an effective calling card. The two said they looked at three potential partners before settling on Scriba, declining to name the others.
Douglas and Reuther both said they chose Scriba in part because they are comfortable working with him. He is a former partner at Regency, but was replaced earlier this year by Australian billionaire Kerry Packer.