After Samaha's Bravura Opening, a Shaky 2nd Act

By JAMES BATES and CLAUDIA ELLER

March 25, 2001 12 AM PT

TIMES STAFF WRITERS

Like the race cars in his upcoming film “Driven,” Elie Samaha’s brief career as a movie producer is careening around hairpin turns.

The brash chief of Franchise Pictures, who captured the Hollywood spotlight just a year ago, has since chalked up a string of star-studded box-office stinkers, including “Battlefield Earth” with John Travolta, “Get Carter,” starring Sylvester Stallone, and the just-released “3000 Miles to Graceland” with Kevin Costner. In addition, Samaha is locked in a nasty public feud with German financial backer Intertainment, which accuses Samaha’s Franchise of bilking it out of $75 million.

Ever confident, Samaha denies the allegations and predicts his company will prevail in court.

Samaha’s Franchise has flown higher and fallen farther than the typical Hollywood overnight sensation, an echo of scores of previous Hollywood renegades such as Cannon Films and Carolco Pictures, which talked a good game but ultimately crashed and burned.

Still, it may be too soon to write off the nightclub impresario and former dry cleaner. He has deep-pocketed financial backers willing to gamble on Franchise, and an extended Warner Bros. distribution deal improves his company’s survival odds.

“You have to take a long-term view,” said Samaha’s longtime backer, Gerard Guez, a Los Angeles garment industry tycoon. Franchise “has the potential to become a very big business.”

Last spring, Samaha caught Hollywood’s attention when Franchise’s first major studio film, the Warner Bros. hit comedy “The Whole Nine Yards,” starring Bruce Willis, gave him near-instant credibility. After years spent lurking on Hollywood’s fringes, the B-level producer of such forgettable titles as “Scar City” suddenly was featured prominently in the Wall Street Journal, the New York Times and the Los Angeles Times. The charming Lebanese immigrant was THE GUY who could coax Hollywood’s biggest stars to make their pet projects with him.

“How many other guys do you know in Hollywood in the last 30 years who have delivered Willis, Travolta, Stallone, Costner, Kurt Russell, Nicholson, Jennifer Lopez, Sam Jackson, Danny DeVito, Kevin Spacey, Glenn Close? How many do you know?” Samaha said.

Turnaround Artist

Samaha works the Hollywood system with the same finesse with which he works his popular Sunset Room nightclub, seductively catering to stars.

He actively courted Stallone, a longtime friend eager to reignite a waning career with the action picture “Driven.”

Call it the Franchise formula: Adopt orphaned film projects--such as “Driven”--that big stars long to be in and shoot them cheap in Canada. Samaha leveraged the stars to entice overseas distributors to buy foreign rights to his movies. Even though the major Hollywood studios had once rejected these projects, Warner Bros. was all too happy to distribute movies that cost it nothing to produce because Franchise provided its own financing.

Samaha’s knack for getting scores of movies made quickly brought Hollywood agents, lawyers and managers to his door, eager to keep demanding clients in front of the cameras. Despite his company’s track record, those folks are still there. Privately, however, they say they are concerned about the dismal box office and the financial allegations.

“Elie was never anybody’s first port of call,” said one agent who has placed a top star in a Franchise film. “He’s a last resort,” said a top prominent attorney who represents another Franchise star.

The company’s track record prompted Warner Bros. to take a hands-on role recently in trying to reverse its slide. Rather than continue to allow Franchise to operate autonomously, the studio--which distributes its films domestically but doesn’t finance them--is guiding the company as it picks and develops projects. Samaha has agreed to the arrangement, although his company’s contract with the studio gives him the final say on what Franchise produces.

“We are working more closely on the creative side with Elie to try to get the best movie product we can,” said Warner Bros. President Alan Horn, who has instructed his production team to help Samaha read scripts, hire writers and critique projects. Samaha’s Elvis-themed “3000 Miles to Graceland,” Horn acknowledged, “is not my cup of tea.”

Born in Italy and raised in Lebanon, Samaha, 44, immigrated to the United States in 1979 and worked in the nightclub business, including a stint as a bouncer at the legendary New York hangout Studio 54. After moving to Los Angeles in the early 1980s, he bought a chain of dry cleaners, then opened a Sunset Strip nightclub, Roxbury, which became a favorite hangout of stars and wannabes.

In the mid-1990s he plunged into the low-budget film business with productions that often starred his then-wife, actress Tia Carrere, best known for her role in “Wayne’s World.” Cassian Elwes of William Morris Agency and Ken Stovitz of Creative Artists Agency hooked up with Samaha and started steering projects and stars his way.

Seed money fueling Franchise came from Guez. A Tunisian immigrant, Guez heads Tarrant Apparel Group, a major private-label clothing maker. Though he won’t talk much about his relationship with Samaha, Guez said he’s known him for more than 20 years and backed him as a business investment.

Guez confirmed that he holds an option to acquire as much as 25% of Franchise, which would leave Samaha with 50% and Franchise’s president, Andrew Stevens, a former actor, with the remaining 25%. Intertainment said Guez put $7 million, overall, into Franchise. Guez disputes that but won’t reveal the actual amount. Papers filed in 1999 in Samaha’s divorce from Carrere list Samaha as having a personal obligation to Guez of $1 million.

Among the first stars William Morris sent Samaha’s way was Travolta. Despite his marquee value, Travolta had tried and failed for more than a decade to launch a personal project, “Battlefield Earth,” based on Scientology founder L. Ron Hubbard’s 1982 sci-fi novel.

Stepping up to finance the long-languishing project during a phone call from Milan, Italy, Samaha earned the gratitude of Travolta’s manager-producer, Jonathan Krane. Krane said Travolta was so eager to do the project that he “substantially” cut his upfront fee, which sources put at $16 million--down from his usual $20 million. Krane said he slashed his producer fee in half. In return, the two were promised half of any profit the film would generate, according to Krane.

Intertainment, which distributes movies in Europe, signed on in 1999 as the single biggest financier of Franchise movies. For European rights, Intertainment would foot 47% of each budget.

Questioning Costs

The matchmaker between the two companies was a former Warner Bros. top business executive, Jim Miller, who sits on the board of Guez’s garment company. Miller, who declined to comment on Samaha, was so enthusiastic about the producer that he dashed off a glowing e-mail in 1999 to Gerald Levin, chief of what was then Time Warner Inc., describing the multi-picture deal.

“He’s made a believer out of me so far. And beyond his business skills, he is a great guy,” Miller wrote of Samaha in the e-mail, obtained by The Times.

Samaha planned to operate outside the traditional film industry economic models--way outside. Before the company had a single picture in theaters, he provided Intertainment documents that projected the value of Franchise to be at least $593 million and possibly as much as $1.7 billion.

The relationship between Samaha and Intertainment Chief Executive Ruediger “Barry” Baeres quickly soured as Intertainment began to question Franchise’s budgets. Both Baeres and Stephen Brown, who runs the company’s Los Angeles operation, said in an interview that they got their first whiff of trouble during a screening last fall of “Get Carter.”

“We looked at each other and said, ‘There’s no way this movie cost $63 million,’ ” Brown recalled. They contend “Get Carter” instead cost only $44.7 million, but they were billed at the higher price.

Baeres and Brown said they subsequently discovered conflicting budgets on Franchise films and suspect that as many as four versions existed for some. The way the alleged scheme worked, according to Intertainment, is analogous to the padding of an expense account by jacking up scores of line items. Because Intertainment agreed to cover 47% of each budget, Baeres and Brown claim, the inflated costs led it to overpay for each film.

For example, on Franchise’s forthcoming release “City by the Sea,” with Robert De Niro, Intertainment was informed that actors cost $18.5 million, but another document showed the amount to be $13.7 million. Building sets cost $1.2 million in Franchise’s budget, the company alleges, compared with $864,018 in other documents. The cost of the film’s music, $815,000 on Franchise’s documents, is just $300,000 on the separate, lower budget documents. The result: a $59-million budget on paper that Intertainment says is $39 million.

Intertainment, as a result, declined to finance the film, but it says it did unknowingly bankroll as many as 22 movies with inflated budgets and overpaid Franchise in excess of $75 million. Recently, Intertainment added Los Angeles-based Imperial Bank as a defendant, alleging it was in cahoots with Samaha, an allegation Samaha’s lawyer denies.

Intertainment sued Franchise in December in U.S. District Court in Los Angeles, alleging it was duped into overpaying the film company $75 million. Franchise sued Intertainment the same month in Los Angeles Superior Court, alleging Intertainment reneged on its deal with Samaha. The cases are pending.

Samaha disputes all the allegations made by Intertainment, saying its suit stems from his spurning overtures by Baeres to buy him out and Baeres’ jealousy that he found a new European backer, Epsilon.

At Arm’s Length

As for the film budgets, Samaha calls Intertainment’s numbers fiction and says film budgets naturally change as production moves forward. He also says Baeres is using the allegations as a smoke screen to deflect attention from his own problems, which include a drop of more than 90% in Intertainment’s stock value in the last year.

“This guy is making my life miserable,” Samaha said. “He is not performing. We don’t want to be in business with Intertainment. And if you have a cancer, what do you do with it? You cut it out.”

Nonetheless, reports of Samaha’s alleged financial wrongdoing are troublesome to Warner Bros.

“The problems he’s having are unfortunate and it’s not pleasing to read about it,” Horn said. “Our deal with him is strictly an arm’s-length relationship. . . . Of course, our image is very important to us and we are protective of it. Having said that, we have a deal with Elie Samaha’s company, and as long as he lives up to the terms of our deal, then we’ll honor it.”

Regardless, Warner is at no risk financially and still values the relationship with Franchise enough to have recently exercised an option extending the deal four more years. Under the Warner arrangement, Samaha must deliver the movies 100% financed. The studio advances him money for prints and advertising costs but recoups that immediately from its first box-office receipts. Franchise pays Warner a 15% distribution fee.

As a private company, Franchise keeps its numbers secret, but Samaha says his movies haven’t been the financial disasters they appear. He insists, for example, that “Battlefield Earth” may eventually earn a profit after DVD sales are counted. Still, he acknowledges, an independent like Franchise doesn’t have a lot of room for error.

“With a company of our size, if you take a hit two or three times at $5 million to $7 million each time, you would be out of business,” Samaha said.

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Samaha’s Films

Major releases since 2000 by Elie Samaha’s Franchise Pictures and each film’s domestic box-office results to date:

2001

“The Pledge,”: $19.6 million

“3000 Miles to Graceland,”: $15.3 million

“The Caveman’s Valentine,”: $48,138 (released March 2)

2000

“The Whole Nine Yards,”: $57.3 million

“The Art of War,”: $30.2 million

“Battlefield Earth,”: $21.5 million