Red Light, Green Light

You might say that Donna Smith holds Courtney Love’s film career in the palm of her hand.

Smith runs a company called Entertainment Coalition, which coordinates bond and insurance coverage for movies, musical acts and other properties. Her background is in dry stuff like management and international banking. She shuns the limelight, sometimes answering a reporter’s questions with the minimally acceptable amount of information, and her firm conducts its affairs with similar discretion, out of public view.

Contrast this with Love, who’s worked hard to make sure no introduction is necessary. The flamboyant leader of the rock group Hole has all but bragged about her bad behavior over the years, from stripping at Jumbo’s Clown Room in Hollywood to (most notoriously) shooting heroin when she was pregnant.

But it was Smith’s company that prevailed upon Love to adopt possibly her unlikeliest role yet: that of dutiful and sober employee. For her upcoming film “The People vs. Larry Flynt,” in which she plays a stripper and drug addict, Love agreed to weekly drug tests throughout filming, a four-month period that ended last May. An emissary from the insurance company also followed her around every day on the set, a circumstance that could dampen just about anyone’s party mood. (“They tested her for everything,” confirms Love’s spokeswoman, Pat Kingsley.)

Of course, Love had little choice, because Entertainment Coalition’s underwriters, worried that drug problems could delay or halt production, wouldn’t have backed her casting otherwise (an earlier insurer had already rejected coverage for Love, according to a source close to the production). And without an insurer’s approval, Oliver Stone and the other producers almost certainly would have nixed the singer-actress, who tested negative every time.

“She is very serious about her film career,” Smith says of Love, whom she has never met, “and I don’t think she’s gonna muck it up.”

Love learned the hard way what others in Hollywood have long known: Insurance and bond companies may keep a low profile, but they exercise uncommon power over actors, directors and almost everyone else involved in a movie project.

And that power may be growing. Film budgets are spiraling ever upward, underscoring the need for insurance and bond coverage, and with complex international financing, even studios often look to bond companies for help. Those firms have risen to the occasion: After some dark years in the late ‘80s and early ‘90s, bond companies have gotten a lot savvier about structuring film deals. A number of recent movies have drawn attention to the issue by casting actors with highly publicized risk factors, including Love; Gary Busey, who has admitted to struggling with substance abuse over the years, and the late rapper Tupac Shakur, who had several brushes with the law. Robert Downey Jr. even worked on a picture--”One Night Stand”--between his widely reported drug arrests last summer.

Bonds are especially important in the independent arena, where producers lacking a studio’s deep pockets must find other ways to safeguard investors’ cash. In essence, a completion bond guarantees that a film will be completed and delivered to a distributor even if it runs over budget (insurance, meanwhile, covers specific items in case of loss or damage, such as costumes and props and actors’ services). In return for assuming that risk, the bond company signs off on the script, shooting schedule, budget, director and principal cast before any filming can start.

Company representatives may visit the set to make sure costs remain in line and the actors don’t stray too far from the script. If the film goes over budget, the firm can even take over the production, a right exercised in a small but significant number of cases including “The Adventures of Baron Munchausen” and “Malcolm X.”

Despite all that, many producers say they view insurance and bonds not as confining shackles but rather vital tools.

“If you’re working outside the studio system without [insurance and bonds], you cannot make your movie,” says Brad Krevoy, who with partner Steve Stabler has produced about 100 independent films, including “Dumb and Dumber” and the upcoming “Beverly Hills Ninja.” “The state of independent financing in motion pictures is so difficult and so complex that without bonding and insurance, the bank won’t give you money.”

Yet the very subject of insurance also heightens the tension level between the commercial and creative sides of filmmaking. One agent confided that directors, while reluctant to speak openly about the issue, often resent bond companies for interrupting the artistic process. Bond company representatives, for their part, cherish telling stories about how they tamed a wild-eyed director from spending millions on an extravagant set or foreign location.

Joan Stigliano, an executive at International Film Guarantors, which provided completion bonds for “Braveheart,” “Dead Man Walking” and “Judge Dredd,” acknowledges that bond companies, when forced to choose, go for the bottom line over creative rights.

“We’re held to a technical standard, not a creative one,” she says. “Most producers are afraid if a guarantor takes over. They’re afraid the quality of their vision will be diminished. That’s probably a real concern for them.”

What about the oft-quoted horror stories involving “armies of accountants” that commandeer troubled films? “I think [those stories] are great,” Stigliano says. “Fear is good.”

It was not always so. Prior to 1950, Hollywood studios usually self-insured movies, meaning that they assumed entire responsibility for each picture. But as the studio system began to decline, independent producers had to convince skeptical bankers that they could make good on loan commitments if the movie ran over budget.

For this they turned to companies like Film Finances, the grandfather of completion bond providers, which was founded 46 years ago and has so far backed more than 2,000 movies.

The process basically works like this:

The bond company reviews the script, shooting schedule and budget to see if the movie described can be made for the amount in question. Usually, there are meetings between the bond people and the producer and maybe the director, production accountant, art director and others. The bond company will also closely scrutinize the insurance policies and studio and location agreements.

Despite all the paperwork, it’s hardly an exact science. In considering a bond request, company officials say they often weigh personal factors, including the producer’s or director’s record of making movies on time and on budget. Contacts are also key. Producer Ed Pressman (“The Crow,” “Hoffa”) says he has made about 20 movies with help from Film Finances.

Even the price is negotiable. Most bond companies charge a fee that ranges from 2.5% to 6% of the approved budget, but they’ve been known to go lower.

But the intricacies don’t end once the bond company agrees to back the picture. Film Finances’ boilerplate contract runs 23 pages, including a lengthy list of legal definitions for “non-budget costs,” “secured sums” and other arcane terms.

There’s good reason for all the gobbledygook, though. Bond companies try to give themselves a cushion by demanding a “contingency,” a kind of deductible usually worth about 10% of the budget. But once costs really start soaring unexpectedly, catastrophe is just a reel or two away.

Completion Bond Co. found that out with “The Thief and the Cobbler.” Animator Richard Williams had labored over the film for years before cost overruns finally forced the bond company to seize the $28-million production in 1992. Animators hired by the company inserted scenes, dialogue and music after Williams had left the project.

Many analysts blamed cutthroat competition among bond agencies for driving down fees and making losses inevitable. In any case, the red ink from “The Thief and the Cobbler,” along with problems connected to a bond backing Spike Lee’s “Malcolm X,” led Transamerica Insurance, Completion Bond’s corporate parent, to dissolve the unit a year later. (Lee sought money to finish the picture from a cadre of wealthy friends, including Bill Cosby and Oprah Winfrey. Warner Bros. ultimately struck a deal with the bond company to assume the cost of coverage.) Miramax in 1995 finally released the animated picture, retitled “Arabian Knight,” which promptly bombed at the box office.

Even among experienced players, misunderstandings can arise. Faced with skyrocketing set and design costs, Film Finances took over Terry Gilliam’s fantasy epic “The Adventures of Baron Munchausen.”

“It ended up being almost 80% over budget,” recalls Film Finances President Richard Soames. “We had to contain [costs] as best we could. . . . The picture that we thought the director was going to make was not the picture he ended up making.” Soames adds that his company mistakenly assumed Gilliam, a former member of Monty Python, would follow the British comedy troupe’s formula of creative low-budget filmmaking.

Gilliam could not be reached for comment. But his agent, Jack Rapke at Creative Artists Agency, acknowledges that the controversy over “Munchausen” temporarily stalled Gilliam’s career. “He was in movie hell there for a while,” says Rapke, who began representing Gilliam after the film was shot. But he adds that many of the problems on “Munchausen” were beyond his client’s control. The movie “was produced during a difficult management change at Columbia,” Rapke says. “Terry directed a brilliant film.”

Film Finances has not worked with Gilliam since. But don’t feel bad for the iconoclastic director. Stigliano’s company backed his most recent effort, the 1995 sci-fi epic “12 Monkeys,” with what she considers good results. “With all the people surrounding Mr. Gilliam, we felt we could address whatever problems might arise,” Stigliano says.

Of course, the vast majority of actors and directors have no trouble being bonded or insured for movie work. And sometimes the seemingly risky prospects yield bonanzas.

Stigliano says her company was concerned about Mel Gibson’s “Braveheart,” mainly because it raised many of the warning flags associated with risky shoots: a long schedule, lots of fight and battle scenes, a director who was also the lead actor, overseas locations and a huge cast. The film went on to modest box-office success and the Academy Award for best picture. “It was a tremendous undertaking, and [Gibson] did an incredible job,” Stigliano says.

But even when problems arise, insurers emphasize that they can nearly always be worked out--for a price. Thus, they have teamed with producers to fashion increasingly creative approaches to risk assessment in recent years.

“There are artists out there who lead lifestyles that are somewhat disruptive” to filmmaking, says Tekla Morgan, an executive at Cinema Completions International, which is the completion bond wing of Entertainment Coalition. In those cases, she says, the company adopts certain strategies--for instance, withholding a larger-than-usual portion of an actor’s salary until shooting wraps--as an economic incentive for sobriety.

“We’ll say, ‘Half of [your salary] has been held back till you render service, and then you can go out and party,’ ” Morgan says. The same approach may work for chronically late directors: “It’s amazing what $1 million [in withheld paychecks] will do to get people to speed it up,” she notes wryly.

Producer Natan Zahavi was forced to improvise when actor Gary Busey was charged with drug possession after a May 1995 overdose. The arrest delayed shooting on Zahavi’s low-budget picture “The Chain,” in which Busey was starring. (The drug charges were dropped last August after Busey apologized to a judge for his behavior and spent some time in a drug treatment program.) Zahavi says he convinced the jittery insurance company to follow through on the project by promising not to file a claim for the expenses caused by the delay. When production finally commenced four months later, Zahavi says, Busey submitted to drug testing every other day.

The actor’s publicist, Jonathan Perry, affirms the frequent testing, and adds, “After [Busey] went through rehab, he was very amenable to showing everyone around him in a professional capacity that he was off drugs.”

Says Zahavi, whose film is scheduled to run on HBO in January, “We kept a very close watch on him. We saw he was making a real sincere effort to keep off drugs. Bottom line: He was a pleasure to work with and on his best behavior.”

Producer Krevoy took one look at Tupac Shakur’s lengthy arrest record and agonized, along with director Jim Kouf and others, whether to cast the volatile gangsta rapper in a movie called “Gang Related.”

“We were initially apprehensive and reticent” about casting Shakur because of his troubled background, Krevoy says. “We asked ourselves, ‘Can we make a movie with this gentleman?’ But during rehearsal, he was on time, optimistic, positive and into his part.”

Shakur got the role, and filming was completed just one week before the rap star was mortally wounded in a Las Vegas shooting. “Gang Related” is currently being edited.

Once they have a good experience with a besmirched actor or director, the bond people can even become cheerleaders for that person’s rehabilitation.

After all, Smith, of Entertainment Coalition, now endorses the notoriously headstrong Courtney Love, who according to Kingsley entered rehab for a Valium dependency several months after “The People vs. Larry Flynt” finished shooting. But considering how much influence the insurance and bond industries wield over Hollywood these days, Love’s acquiescence can be chalked up to good business sense more than anything else.

“We all know each other,” Smith says of her colleagues. “We have a tendency to ask each other, ‘So, how was so-and-so to work with?’ ”