Big-money dreamers

By Rachel Abramowitz

April 13, 2003 12 AM PT

Times Staff Writer

When high-tech demi-billionaire Roger Marino sold his beloved Pittsburgh Penguins hockey team in 1999 -- after losing more than $40 million -- he jokingly told the press that he was thinking about going into the movie business, “because I hear you can lose a lot of money doing that.”

Four years later, he is ensconced in a cavernous warehouse space in New York’s Chelsea district, which houses a raft of independent film companies, including his own Revere Pictures, named after his Massachusetts hometown. He looks like a benevolent grandfather in this beehive of trendy twentysomethings. The blunt-talking entrepreneur, who counts Vittorio De Sica’s neorealist masterpiece “The Bicycle Thief” as his favorite movie, is amused to find himself as a producer -- along with partner and indie director Michael Corrente -- of an upcoming slate of five promising pictures, including an adaptation of John Irving’s book “A Widow for One Year,” starring Jeff Bridges and Kim Basinger.

In just two years, the co-founder of high-tech giant EMC Corp. has already spent close to what he spent on the Penguins. “We’re in the ballpark,” he says, but at least, as the movies have not yet debuted, he has a chance of getting his money back. Money is not entirely his motivating force. Like many less-solvent Hollywood wannabes, his fantasy is to direct. “I’m learning, I’m learning,” he says in his blue-collar Boston accent. “Right now, I don’t know anything, but I think I can do it. Maybe tomorrow.”

Marino just happens to be one of the more forthright of a new wave of multimillionaires flooding into Hollywood. Unlike investors in the recent past -- the French, the Japanese, the Germans, many of whom have lost vast sums of marks and yen in Hollywood’s whirlpools -- this is home-grown talent, armed with their daddies’ fortunes or megabucks made in the stock-market boom of the 1990s. Some bear the name of their illustrious Forbes 400 families, such as Pritzker, Sturm and Pohlad. Others range from sports mogul Phil Anschutz, who has two separate movie companies, to Federal Express founder Fred Smith, EBay co-founder Jeff Skoll, Internet tycoons Todd Wagner and Mark Cuban (who also owns the Dallas Mavericks), Gateway computer co-founder Norm Waitt, Money Store entrepreneur Marc Turtletaub, Pollinex heir and theatrical producer Jim Stern, and real estate developer Bob Yari.

“There are a lot of financiers floating around whose principals have never made a movie in their life,” notes William Morris Independent co-head Rena Ronson, who keeps a rolling list of potential equity investors in her office.

For every rich guy with a million in his pocket, there’s a different plan for storming Hollywood, from longtime movie buffs dabbling in their dream profession, to entrepreneurs still hunting for the ever-elusive synergy between hardware and content, to strict bottom-liners hoping to exploit weaknesses in the cash-strapped studio system. With the stock market in the doldrums, investing in Hollywood seems comparatively less risky than it did five years ago, and certainly more fun.

The question is, do dilettantes, or at least neophytes, have the sharp elbows and obsessive focus necessary for playing in Hollywood’s sandbox? Will they kill or be killed?

WAIT FOR FAILURE

Artistic aspirations are practically contagious in the multimillionaire set. Real estate heir Steve Bing, better known for his paternity woes with Elizabeth Hurley, is fast making plans to direct his own script, “Why Men Shouldn’t Marry,” a comedy about an anti-marriage guru starring Nicolas Cage. It’s just one of eight films that Bing is personally financing and releasing through Warner Bros.

At the other end of the spectrum is Andrew Jarecki, co-founder of MovieFone (later sold to Yahoo for close to $400 million). He just won a prize at Sundance for “Capturing the Friedmans,” a documentary he directed and financed about a family of accused pedophiles. Alternately, mogul Ted Turner was paid $636 for his one-day cameo in “Gods and Generals,” a small rebate for the $90 million he shelled out to produce the Civil War flop. Turner is hardly the only savvy player who’s gambled big and stumbled.

When a casting dispute led Paramount to drop out as a domestic partner on a new version of Jules Verne’s classic “Around the World in 80 Days,” billionaire Anschutz was left holding the bag on the $100-million-plus production. What’s more, his company, Walden Media, was already obliged to give Jackie Chan $18 million in a pay-or-play contract. Even Disney, where Anschutz has a deal, doesn’t want the film, but the movie started shooting anyway, with hopes of finding studio distribution when it’s completed. If worst comes to worst, there’s always a fallback position: Anschutz owns 6,000 movie theaters in the U.S. and could theoretically self-distribute.

Although the studios miscalculate on a daily basis, Hollywood seems to expect outsiders to fail. The industry does its best to validate its own perception, historically treating multimillionaires as fatted calves there only to be fleeced, or worse.

“If you come to Hollywood and you have a big fat checkbook, you’re going to get a lot of attention. It’s a big vacuum for capital,” says Yari, who’s just started three film companies. Unlike some equity investors, the low-key Yari, who worked as a Hollywood assistant and movie director before bailing out to make a fortune in real estate, sounds as if he could give a dissertation on film finance. “If you don’t know what you’re doing, they’ll dry you out and throw you out.”

EBay co-founder Skoll says that when he was contemplating going into the film business, “I kept hearing the same story word for word from all these different people: ‘The streets of Hollywood are littered with the carcasses of people like you who think you’re going to come to this town and make money.’ ”

Skoll, whom Fortune last fall ranked as the third-richest man under 40 in America, seems more tickled than frightened by Hollywood’s haughty attitude, and recently launched Ovation Entertainment with producer Richard Lewis.

What’s different in today’s climate is that Hollywood is eager if not desperate for outside dollars, from the independent producers who can no longer count on hefty infusions of European TV money to pad their budgets to the studios hungry for partners to share the cost of almost all their films, except for the sure-fire blockbusters like “Spider-Man.”

“There’s an enormous cash shortage in the movie business worldwide,” says Mark Gill, former president of Miramax L.A. who just became partners with Yari. “It is partly a function of the German money drying up, partly a function of various large corporations curtailing the budgets of their movie divisions, and partly a function of the entire world pre-sale market being down between 20% and 40% and wiping out a lot of the marginal movies that used to get made more rapidly.”

When Gill was contemplating leaving Miramax six months ago, he met with five would-be equity investors, all eager to partner with an insider. Consequently, when he, Yari and partner Mark Gordon (a producer on “Saving Private Ryan”) announced their intention to finance or co-finance a slate of pictures in the $10-million-to-$60-million range, they met with a raft of studios. They plan to announce a distribution deal within the next two weeks.

Still, many Hollywood cognoscenti are skeptical about the reliability of the newest Daddy Warbucks. They roll their eyes as wealthy yahoos from the Midwest ogle starlets or bloviate with high-minded naivete; they also get frustrated by the patience occasionally required to manage high-maintenance millionaires with egos.

“I think the collapse of other kinds of alternative financing has made [these wealthy people] exciting and attractive to the business. The downside of doing movies with people outside the business is you often have to teach them about it. My experience is that a lot of the people are not in it for the long haul, and that makes them unreliable partners,” says United Talent Agency agent Howard Cohen. “You’re often dealing with a rich person with money making emotional decisions.”

MORE PHILANTHROPY

On a recent March afternoon, EBay’s Skoll is sitting outside a large Victorian house in the hills above Pasadena, where the Ray Romano-Debra Winger dark comedy “Eulogy” is being filmed. Skoll’s new Ovation Entertainment has supplied the completion financing for the $10-million Artisan release. For a man whose net worth hovers above $2 billion, the sandy-haired 38-year old appears unpretentious in a black suit and olive green shirt. He’s never visited a set before, but he hardly seems star-struck. He cheerfully admits that he doesn’t even particularly love movies.

Skoll’s interest in film stems from his philanthropic foundation, which helps social entrepreneurs breach the chasm between the haves and the have-nots.

“It struck me rather than just giving people money and helping them along the way, one of the best things we could do was actually help tell these people’s stories,” Skoll says. “People want to be inspired. They want to hear about good leaders doing good things from pure motives.” The idea is to develop medium-sized inspirational films for the studios and finance or co-finance smaller pictures under the aegis of his partner, Lewis; the foundation will bankroll the socially conscious films on which Skoll will be personally involved. “Ovation is a for-profit venture because it’s hard to get the message across in films that no one sees,” but, Skoll adds, “I also see it as an investment in good people doing good things. That for me really is the bottom line. If we can do films that affect a few people and make a difference, in a way, that will be just as good.”

Of course, part of the pleasure of having millions is not having to play by the usual Hollywood rules, or make the usual Hollywood schlock.

Microsoft co-founder Paul Allen might be better known for the more than $500 million he invested in DreamWorks, or the fabulous parties he throws in such far-flung spots as Helsinki, to which he invites a raft of Hollywood movers and shakers. Yet, for the last eight years, he’s also been playing benevolent sugar daddy to some of Hollywood’s riskiest filmmakers. His company, Vulcan Productions, run by his sister Jody Patton, has poured millions into such art-house fare as Julie Taymor’s “Titus” and Todd Haynes’ “Far From Heaven,” which with a gross of $15 million is perhaps his most successful film. While the company isn’t leaving the film business, it’s shifting its focus to be more in sync with Allen’s personal interests in music and science.

“Our primary focus these days is documentaries,” says Richard Hutton, vice president of media development, pointing to the company’s backing for the new PBS series on the history of the blues, which features documentaries by such well-known film directors as Martin Scorsese and Clint Eastwood.

“The important idea is if we weren’t involved, these things probably wouldn’t get done,” Hutton says. “In that sense, you could see it as a patron of arts, of science and education, but in another sense we’re fiscally responsible.”

Denver billionaire Anschutz’s interest in moviemaking may be just a small portion of his empire, which includes the Los Angeles Kings and majority ownership of Qwest Communications (now in the midst of an SEC accounting investigation), but Anschutz personally penned the mission statement for Crusader Entertainment, mandating the company to make “inspirational, historical, sports and adventure films that offer compelling, positive messages to our audiences.... We will make only films that are G-rated or, in some instances, PG or PG-13.”

Crusader is one of two film companies Anschutz recently backed; together they plan to release eight films a year, ranging in cost from $7 million to $100 million. A practicing evangelical Presbyterian, Anschutz has also endowed Crusader with an explicit spiritual division: Epiphany, which last year released its first film through Paramount, “Joshua,” about the second coming of Christ. His other company, Walden Media, is an ambitious attempt to meld popular entertainment with education.

This month, it debuts its first two films: “Holes,” based on the prominent children’s book, opening Friday, joins the recently opened “Ghosts of the Abyss,” a 3-D documentary by “Titanic” director James Cameron about his exploration of the real Titanic shipwreck. To show the Cameron picture, Walden has specially retrofitted 30 movie theaters in major cities and devised a plan to bus in schoolchildren. The company is also financing six more expeditions, with which they plan to make more 3-D films.

“We’re very focused on building a model where the product we’re creating becomes an ally to teachers and kids in schools, yet doesn’t take away from the overall commerciality of the piece,” says Walden President Cary Granat, who used to be president of Miramax’s Dimension division.

For all of Anschutz’s intention to make high-minded fare, there has been rampant speculation that the noted deal junkie’s ultimate goal is to prepare for the day when theaters are digitized and his own movies can be beamed rapid fire over his Qwest fiber-optic lines into his own cinemas. (Anschutz did not respond to interview requests.) Yet Granat, who consults regularly with Anschutz on all their business strategies, says, “Phil has been fantastic because he believes in the vision of our business. He did not invest in our company to fit us in as a cog in a larger company.”

ON TO COMICS

“With what’s going on in the world, people need a laugh,” comedian Eddie Griffin said at the recent Hollywood premiere of his Miramax concert documentary “DysFunktional Family.” The crowd included notorious rap mogul Marion “Suge” Knight. One who missed the event was the man who funded much of the movie’s reported $3-million budget, Omaha multimillionaire Norm Waitt Jr., best known for co-founding Gateway computers.

Waitt is famous for having struck gold in Hollywood. His film company, Gold Circle Films, half-financed the $5-million “My Big Fat Greek Wedding.” When all the domestic distributors passed, it then spent $30 million on releasing the film itself, with an ambitious strategy that allowed the Nia Vardalos comedy to become one of the most famous sleepers in Hollywood. The film went on to gross $350 million domestically, about $70 million of which is expected to drift back into Gold Circle’s coffers.

What’s kept out of the heady press releases, however, is the millions Waitt shelled out on a raft of bombs before “Greek Wedding” came along. Initially launched in 2000 when his martial arts instructor couldn’t sell his script to Hollywood, Waitt put a lawyer from his personal record label in charge. A slate of more than half a dozen pictures was quickly green-lighted, including “Double Whammy,” starring Elizabeth Hurley as a sexy chiropractor.

“It was more straight-to-video-based material, which wasn’t what Norm was looking for,” says Gold Circle President Paul Brooks, who brought in “My Big Fat Greek Wedding” as a producer and wound up taking over the company, as well as launching its recent, and perhaps most risky venture, a distribution company. “DysFunKtional Family” is one of the company’s few films to actually be released through a major studio, and has so far grossed just over $1 million dollars.

Although some Hollywood players applaud Waitt for sticking in the game long enough to make it worthwhile, one top agent, who declined to be named, notes that “it’s tricky to parlay an event that was genuinely lightning in a bottle into a whole business, and Paul knows that.”

Others have not had Waitt’s resilience. Bob Sturm, the fortysomething, film-loving son of telecom mogul Donald Sturm, financed five films that never secured distribution, then hired a bunch of Hollywood professionals and launched Catch 23 Entertainment in 2000. Almost immediately, Catch 23 boasted management clients such as Renee Zellweger and a hit film, Fox Searchlight’s Robin Williams thriller “One Hour Photo,” which grossed $40 million domestically. While a knowledgeable source say Sturm will earn between $15 million and $20 million on the film, the producer recently downscaled his operation, letting go of much of the staff and most of the management division, and abandoning his originally announced intention to make three to five films a year. While his film company did well, Sturm derives the bulk of his riches from the battered telecom industry. (His father, a primary investor in the bankrupt Worldcom/MCI, dropped off the Forbes 400 list in 2002 after losing billions.) “Because funds are limited right now, we’re going to do smaller-type films, more guerrilla filmmaking,” says the Denver-based Sturm, who adds that he’s keen to start making films with other people’s money. Former Penguins owner Marino is well aware of the pitfalls of the business, having started out by investing $5 million in the independent “Ciao America,” which hasn’t been able to find distribution. He did rent out a theater in Revere to show it to his 250 closest friends, and says, “We’re going to pay people to put it on the screen because I don’t want to give up on it.

“Our goal is to hit singles and doubles, break even and make a little money,” Marino says. “You know a lot of people love movies. I try to put them in my position. If you love movies and you have enough money to do what you want to do, why not be in the movie business?”

(BEGIN TEXT OF INFOBOX)

Meet some of the new big-money players in the film business

Paul Allen

Business: co-founder of Microsoft Corp, owner of the Portland Trail Blazers

Film companies: Vulcan Productions, largest shareholder in DreamWorks

Movies: “Far From Heaven,” “Titus,” “Men With Guns”

Phil Anschutz

Business: Staples Center, Qwest Communications, Los Angeles Kings.

Film companies: Crusader Entertainment, Walden Media

Movies: “Holes,” “Ghosts of the Abyss,” “Around the World in 80 Days,” “Swimming Upstream,” “Unchain My Heart”

Other: Anschutz also owns the Regal Entertainment Group, which has a fifth of all U.S. movie theaters.

Steve Bing

Business: Heir to family real-estate fortune

Film company: Shangri-la Entertainment

Movie: “The Big Bounce”

Other: Co-screenwriter of “Kangaroo Jack”

Mark Cuban and Todd Wagner

Business: Founders of Broadcast.com

Film company: 2929 Productions

Movies: “Searching for Debra Winger”

Other: Cuban and Wagner paid close to $300 million to buy the library of Rysher Entertainment Group, which owned “Star Search.” They are producers of the new CBS version of the show

Roger Marino

Business:

Co-founder of high-tech giant EMC Corp.

Film company: Revere Pictures

Movies: “Ciao America,” “The Door in the Floor,” “I’ll Sleep When I’m Dead,” “Corn”

Jeff Skoll

Business: Co-founder of EBay, Inc.

Film company: Ovation Entertainment

Movies: “Eulogy”

Fred Smith

Business: Chairman of FedEx Corp.

Film company: Alcon Entertainment