A Tangled Web of Deal-Making

If the adage is true that the ultimate Hollywood art form is the deal, then the maneuvering to get “Spider-Man” to the big screen will never hang in the Louvre.

As the biggest superhero character left unfilmed since the blockbuster “Batman” made the genre popular again, “Spider-Man” has been widely touted as moviedom’s hottest property. Industry buzz says a movie featuring the web-spinning, wall-climbing crime fighter who has been a comic book mainstay for more than 35 years would be the event movie of the year for the studio that owns the rights.

If only anyone could figure out which studio that is.

The seven-year battle over the feature film rights to the Marvel Comics character has become Hollywood’s costliest and most convoluted legal spectacle. There are five lawsuits pending before Los Angeles Superior Court Judge Valerie Baker, with as many as 18 separate written agreements at issue. Last week, a Delaware judge overseeing Marvel’s bankruptcy cleared the California cases for trial, which could begin before the end of the year.

But that still leaves Baker confronted with a mess so tangled that one lawyer estimates that Spider-Man documents in his office already occupy 60 cardboard boxes.

“Spider-Man could be a movie, or it could be litigation,” said Howard Weg, an attorney who represents the liquidating trust of Carolco Pictures, which claims to have acquired the movie rights in 1989 but went bankrupt in 1995. “All the entities involved have elected not to make a movie, but litigation.”

But this is more than a story of dueling lawyers. The multimillion-dollar litigation parade provides a unique snapshot of recent Hollywood history. Along the way, “Spider-Man” has become the Hope diamond of the movie business, cursing many of those who have laid claim to it. Three studios that at one point or another claimed an interest in the movie rights have gone bankrupt waiting for a resolution; so too has Marvel Entertainment Group, the comic book publisher that owns the character. Indeed, it’s not clear whether the leading complainant today, the ailing studio MGM, would have the financial wherewithal to finance the “Spider-Man” movie if it wins the litigation.

The case traces the rise and fall of three independent film studios that briefly dominated Hollywood deal making until their shallow finances brought them down and unfolds against the backdrop of the industry’s blockbuster mentality and its preoccupation with big names, such as Arnold Schwarzenegger and superstar director James Cameron, whose association with the “Spider-Man” project helped drive it from a modest $15-million undertaking in 1985 to the predicted $200-million extravaganza it would be if made today.

And it shows to what length filmmakers will go to appease their own vanity: The whole brouhaha started when independent filmmaker Menahem Golan, who purchased the first five-year movie option on “Spider-Man” 13 years ago, filed a lawsuit to ensure that he would be listed as producer of any “Spider-Man” film, even if he never again lifts a finger to bring it to the screen.

The intensity of battle also illustrates how desperate studios are to develop “event movies”--priceless properties that can be exploited repeatedly over a decade or longer for sequels and spinoffs.

The potential return of such a franchise is so great that four major studios remain in the fight for “Spider-Man.” One is MGM, which claims to have bought up all the “Spider-Man” feature film rights once held by the defunct independent studios--Cannon Films and 21st Century Film (both operated by the irrepressible Golan) and Carolco Pictures.

Viacom Entertainment and Sony Pictures, meanwhile, say they own television and home video rights, respectively, to any “Spider-Man” feature film.

Waiting in the wings, finally, is Twentieth Century Fox, which is not part of the litigation but holds the most intriguing card of all--an exclusive contract with “Titanic” director Cameron, who in 1991 was paid $3 million by Carolco for a “Spider-Man” film treatment that sources say is brilliant.

These claims are all at issue because Marvel, which is just emerging from its own bankruptcy, contends that the movie options it sold three times over the last 13 years have all expired. Therefore, it claims, it has the exclusive right to sell them again.

Difficult Birth for Superhero

Like its hero, Peter Parker--who struggles to balance super powers bestowed by a radioactive spider’s bite with the worldly concerns of any average teenager--”Spider-Man” as a comic book concept at first got no respect.

The creator was Stan Lee. Today a vigorous 75-year-old who still holds the title of chairman at Marvel Comics and remains the enterprise’s creative soul, Lee by 1962 had provided Marvel with some of its quirkiest and most enduring characters, including the Fantastic Four and the Hulk--superheroes whose appeal lay in having to balance amazing powers with the pressures of sibling rivalry, job worries and physical repulsiveness.

“When I told my publisher my idea for Spider-Man,” Lee said in his memorabilia-filled Westwood office, “he said: ‘Here I draw the line. People hate spiders. Teenagers can only be sidekicks, not superheroes.’ ”

The publisher flatly refused to give Spider-Man his own comic book. Lee sneaked the character into a comic book Marvel was about to fold, “Amazing Fantasy.” In its final edition, August 1962, “The Amazing Spider-Man” made his first appearance.

In developing the character, Lee played off the cardboard personalities of Superman and his ilk of otherworldly superheroes.

“I tried to make them flesh-and-blood,” Lee said. Peter Parker was a high school kid with girl trouble and difficulty finding work. While competing characters fed into adolescent fantasies of unlimited power and control, Spider-Man’s abilities often seemed more of a burden than they were worth.

Within a couple of months, Marvel realized that Lee was on to something. The final edition of “Amazing Fantasy” outsold anything Marvel had published in years. The character spawned a newspaper comic strip and animated and live-action TV series.

Yet when it came time to sell the movie rights in 1985, Peter Parker again got no respect. The Superman franchise, launched to huge success in 1979, seemed to have breathed its last with the critically panned “Superman III” in 1983.

“Nobody believed anymore in features based on comic books,” Golan said.

Nobody, that is, but Golan, the voluble co-chief of independent Cannon Films.

10 Versions of Script in 4 Years

Golan liked to think of himself as a producer with one foot in the schlock house and the other in the art house--the mix gave his company “balance,” he would say. His first production had been the Oscar-nominated Israeli comedy “Sallah,” and he had bankrolled any number of other small foreign films. But he also bragged about having discovered Jean-Claude van Damme and produced the kickboxing star’s first three pictures.

Golan persuaded Marvel Entertainment to sell Cannon the feature film rights to Spider-Man, its premier character, for a fire-sale price of $225,000 (plus a percentage of the gross revenues).

Over the next four years, he nurtured the property through 10 screenplay versions, including some under his own pseudonym, Joseph Goldman. By 1989 interest in the genre was stirring again with “Batman’s” blockbuster opening in June. Other studios were coming to him with inquiries about “Spider-Man.” That was fortunate, because Golan no longer could make the picture on his own.

Cannon Group had been the quintessential 1980s independent film studio. Thinly capitalized and kept afloat by suspect accounting, it specialized in low-budget action fare with stars such as Chuck Norris and Charles Bronson--average cost: $5 million.

Cannon’s ambitions for “Spider-Man” were much greater; Golan pegged its budget at $15 million and dreamed of acquiring a big-name director. But before he could execute his master plan, time ran out for Cannon. As a string of flops such as the Sylvester Stallone arm-wrestling feature “Over the Top” drained Cannon’s capital, the Securities and Exchange Commission charged it with fraudulently misstating its finances. (The company eventually settled the SEC case without admitting or denying the allegations.)

On the verge of failure, Cannon was taken over in 1987 by Pathe Communications, a holding company controlled by Italian financier Giancarlo Parretti, who would cut a painful swath through Hollywood over the next few years--even acquiring the once-stellar MGM--before going bankrupt and being convicted on perjury and evidence-tampering charges. (He fled the United States before getting sentenced.)

Two years after that, Golan struck out on his own. As part of his severance package from Pathe, Golan took the rights deals for Spider-Man and Captain America, another Marvel character. Because Cannon’s original deal with Marvel gave it only until August 1990 to place a “Spider-Man” picture in production, or the rights would revert to Marvel, Golan’s new company, 21st Century Films, renegotiated the original deal with Marvel to buy more time.

Reprieve in hand, Golan again set about raising money for “Spider-Man.” On this side of the business he was an acknowledged pioneer: during the Cannon years Golan had supplemented his company’s modest finances through the extensive use of “pre-sales.” This entailed raising money by selling off overseas distribution rights, often territory by territory, while retaining the most lucrative U.S. rights.

In the case of “Spider-Man,” Golan further sold worldwide television rights to Viacom, and home video rights to Columbia Tri-Star.

But the most important deal was with Carolco, another independent studio.

At the 1990 Cannes film festival, Carolco wined and dined Golan on board its lavish chartered yacht. The studio was riding high on the strength of its hits “Aliens” and “The Terminator.” While Schwarzenegger lounged on deck nearby, Golan said, studio executives Mario Kassar and Peter Hoffman pitched a plan to produce a $50-million live-action “Spider-Man.”

“They wooed me for a whole day on that boat,” Golan said. The deal was inviting, and not only because he personally stood to gain a $1-million cut if he agreed. Carolco, he thought, might be able to avoid the financial problems that had stymied his own dreams for “Spider-Man” at Cannon. He signed the deal for $5 million, payable to 21st Century.

Golan’s only condition, as he recalls the negotiations, was that his role in spotting the property’s potential early and keeping the project alive be recognized: Any “Spider-Man” picture Carolco made was to bear his name as producer.

By late 1991 Carolco paid $3 million to Cameron, the director of “The Terminator” and “Terminator 2” to write and direct the picture.

Lee, who had become friendly with Cameron, got a look at his detailed treatment--a sort of stripped-down screenplay minus dialogue--and was thrilled.

“It was the Spider-Man we all know and love,” he said later, “yet it all somehow seemed fresh and new.”

Golan, however, was growing uneasy. Amid all the Carolco publicity for the project, his name had not been mentioned as producer even once--only Cameron’s. Finally he complained to the studio.

In response, according to court documents, Carolco executive Lynwood Spinks called one day on Golan’s assistant Ami Artzi.

“Ami, we have a certain problem,” Spinks said, according to Artzi’s later deposition.

“What is the problem?”

Spinks explained that in its haste to sign Cameron for the new picture, Carolco had simply copied the terms of his “Terminator 2” contract word for word, substituting “Spider-Man” for the name of the movie. But the old deal had given Cameron approval over every credit on the picture--and he would not approve Golan’s credit as producer.

Over the next several months, Golan claimed later, Carolco tried to pressure him into giving up his claim to the producer credit--even withholding part of the $5 million it owed 21st Century for the “Spider-Man” rights.

Legal Fight Over Screen Credit

Finally, in April 1993, Golan filed a lawsuit to rescind his contract with Carolco. What began as a fit of pique over a credit turned into the event that ended the pre-production period of “Spider-Man,” so to speak; the litigation phase had begun.

Within 16 months, Golan’s lawsuit was followed by five more, throwing the ownership of the “Spider-Man” movie rights into a seemingly impermeable snarl.

In February 1994, Carolco sued Viacom and Tri-Star separately to nullify their television and home video rights. Tri-Star and Viacom countersued Carolco, 21st Century, and Marvel. MGM, which as part of the Pathe Group considered itself the inheritor of Cannon’s old “Spider-Man” rights, sued Golan, Globus, Parretti, 21st Century, Viacom, Tri-Star, and Marvel for fraud (among other things). Within a year further complications arose: Carolco, 21st and Marvel had each filed for bankruptcy.

As a platoon of lawyers worked their way through the interlocking contracts and side deals that assigned and reassigned the “Spider-Man” movie rights, one curious fact emerged: Although millions of dollars in potential profits rode on the language of contracts written by high-priced lawyers for billion-dollar companies, the documents seemed to be drafted with remarkable carelessness--an indication, perhaps, of the seat-of-the-pants deal-making by which Hollywood conducts its frenetic business.

Take the Golan-Carolco deal. Carolco argued that rather than guarantee Golan a producer credit, the contract actually stated that Carolco could choose simply to pay him off. The so-called “pay-or-play” provision, Carolco maintained, was embodied in a contract addendum--which Golan insisted he had never received and which no one could prove had been attached to the original document.

The two sides even disputed the actual value of having one’s name on a movie. Golan insisted that attaching his name to an “event picture” like a Cameron-directed “Spider-Man” would give his company priceless credibility.

But a Carolco expert witness countered that no one in Hollywood would ever believe that Golan had played an important role in the production. The credit’s only value to Golan, he said, would be “to show the remainder of the entertainment industry that Golan has the bargaining power to obtain a credit for rendering no service.”

The biggest mess, however, involved 21st Century’s 1989 contract with Marvel. This was the deal that aimed to give Golan more time to complete a movie.

Although the original contract between Cannon and Marvel explicitly stated that rights would revert to Marvel unless Cannon started production by a certain date, the 1989 version no longer contained an explicit deadline. It stated only that if 21st failed to have a movie in U.S. distribution by Jan. 1, 1992, it could not distribute a movie without Marvel’s written approval. One could read it as giving 21st Century the movie rights to Spider-Man in perpetuity--a virtually unheard-of event in Hollywood.

Untold hours of testimony and reams of paper have since been expended on the question of how and whether Marvel might have sold permanent rights to its most valuable character for $450,000 and a percentage of the gross.

One possible answer is that Marvel lawyers confused critical provisions of the “Spider-Man” deal with a similar, but not identical, contract over Captain America, another Marvel character licensed to Golan’s company.

Wording of Contract Lost in Cyberspace

Testimony indicates that one lawyer may have dictated key language on the “Spider-Man” deal over the telephone during his vacation after Marvel’s word-processing computer crashed. Because the original contract was lost in cyberspace, court documents suggest, he had to reconstruct part of the agreement from memory, inadvertently reproducing some language from the Captain America language in the Marvel deal, where it did not apply.

The difference was important: The Captain America contract did not need as firm a reversion clause because that picture was already in production when the contract was negotiated, while the start of “Spider-Man” production was months, if not years, away.

MGM’s lawyers argue, however, that Marvel’s assignment of permanent rights to 21st Century was deliberate--and thus as 21st’s successor, MGM now owns those rights. Golan’s bankers had refused to finance a picture if there was any chance that Marvel would take the rights back, MGM contends. To get the movie made, therefore, Marvel had to agree to the permanent assignment.

Among the parties trying to wrest the rights away from Marvel, the common argument is that the contract is clear on its face: The rights do not expire until MGM makes a “Spider-Man” picture.

“It is what it is,” said Christopher Rudd of the Los Angeles firm Manatt, Phelps & Phillips, MGM’s attorneys. “I don’t know how to interpret a contract other than by looking at the plain language.”

Marvel’s position is that other contract provisions, not merely the disputed “reversion” clause, make clear that the film rights are temporary. In other words, Marvel maintains, MGM is simply trying to take advantage of an inadvertent ambiguity to obtain rights that would be almost unique in Hollywood history.

“It’s inconceivable that Marvel would have licensed its signature property in perpetuity to a new company like 21st Century,” said Carole Handler, the attorney for Marvel Entertainment Group.

What seems clear is that “Spider-Man’s” destiny lies in further litigation. Even if a court awards MGM the movie rights, it would be virtually impossible for the ailing studio to finance the picture unless it also owned the lucrative television and home video rights now claimed by Viacom and Sony. That ensures a further battle with Viacom and Sony.

And if Marvel is awarded clear title? It is possible that legal appeals might extend the battle well beyond the millennium.

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Character Sketch

Hollywood has taken several comic book characters and made them into profitable motion picture stars. A look at the top-grossing films that began as comic book icons:

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Domestic gross Rank Title Distributor in millions Opening date 1. Batman Warner Bros. $251.2 June 23, 1989 2. Batman Forever Warner Bros. $184.0 June 16, 1995 3. Batman Returns Warner Bros. $162.8 June 19 1992 4. Superman Warner Bros. $134.2 Dec. 15, 1978 5. Teenage Mutant Ninja Turtles New Line $133.0 March 9, 1990 6. The Mask New Line $120.0 July 29, 1994 7. Superman II Warner Bros. $108.2 June 19, 1981 8. Batman and Robin Warner Bros. $107.3 June 6, 1997 9. Dick Tracy Buena Vista $103.7 June 15, 1990 10. Casper Universal $100.3 May 26, 1995

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Source: Exhibitor Relations Co.

Researched by JENNIFER OLDHAM / Los Angeles Times