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A mogul returns to finish what he started

Times Staff Writer

His office looks more like it belongs to a New Age guru than a type-A chief executive crusading to save one of Hollywood’s most storied movie studios.

Dozens of crystals, an amethyst cluster as big as a boulder, an amber lion, running-water sculptures and other talismans populate his corner suite at Metro-Goldwyn-Mayer Inc.'s headquarters in Century City.

Shortly after becoming chairman and chief executive 18 months ago, Harry E. Sloan even changed his office phone number, replacing the 4s with 8s because they’re lucky, according to Chinese tradition.

“The whole idea of feng shui is to create good luck,” said Sloan, whose spiritual advisor is his Malaysian Chinese wife, Florence. “We all need good luck.”

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At the moment, the 56-year-old entrepreneur needs an extra-large dose.

He’s undertaken a colossal challenge: to rescue from near obscurity the historic studio behind such movie classics as “Gone With the Wind” and “The Wizard of Oz.”

After the 80-year-old studio was sold in 2005 by billionaire Kirk Kerkorian to a consortium of investors including Sony Corp., production and distribution of new movies was halted. MGM was reduced to a small film label under Sony Pictures.

Sloan has never run a major studio, an especially difficult feat today, when new technologies are upending the business and rising costs are forcing retrenchment.

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Moreover, he’s been absent from the Hollywood scene for the last 15 years, several time zones away, building a broadcasting business in Europe that he sold in 2005 for $2.6 billion.

He personally pocketed about $200 million from the sale, yet that fortune did not bring Sloan any fame back home. His name is absent from the power lists occupied by his Hollywood friends, a tightknit circle that includes CBS Chief Executive Leslie Moonves.

Now, this little-known media mogul, originally from Torrance, is looking for his own recognition.

“So, why am I doing this? Why here in Hollywood?” mused Sloan, who lives in an English Tudor mansion overlooking the 18th hole of the Bel-Air Country Club. “I want to pick up where I left off in my hometown.”

In the 1980s, Sloan tried to build the now-defunct New World Entertainment into a full-fledged studio, but it never rose above second-tier status. “It was an unfinished foray into the movie and TV business,” he said.

So 20 years later, Sloan is at it again. He has put MGM back in the movie business, enlisting an approach to movie economics that he hopes fixes what’s wrong with Hollywood’s “broken studio system.” Sloan’s strategy at MGM is based on the belief that studios excel at marketing and distributing movies but fail at developing and producing them cost-effectively.

So at MGM, Sloan is leaving the moviemaking to outside producers whose budgets are not burdened by unnecessary costs. MGM also operates without the enormous overhead and infrastructure big studios carry, with only a single building, no back lot or sound stages and only 400 employees. Sloan, who began his career as an entertainment attorney representing television stars, believes his best bet is to align MGM with talent -- even actors who may have fallen out of favor.

He recently struck a deal with Tom Cruise to revive MGM’s dormant sister label United Artists after the actor was fired by Paramount Pictures and snubbed by other studios.

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MGM also agreed to promote and release “Rocky Balboa” last December, the latest in the franchise, despite the view that its star, Sylvester Stallone, was box office poison.

“Selling me at that time was no easy task,” Stallone said. “You would have had better luck selling anthrax in a Pez dispenser.”

Though Stallone gives Sloan credit, there are plenty of doubters. Many question whether the man known as a shrewd salesman can actually pull off this ambitious plan to salvage MGM. In the eyes of some, he’s little more than bluster. But in typical Hollywood fashion, detractors were willing to talk behind his back but wouldn’t attach their name to derogatory remarks.

For Sloan, such skepticism only drives him harder.

“It’s exciting, the jeopardy that it can go either way,” said Sloan, who loves taking risks and finds gambling a thrill. “I’d always end up doing better in Vegas when I began the first day by losing. I like having to come from behind.”

Meager beginnings

Sloan grew up in a working-class Jewish family. His father worked in the parts department of Douglas Aircraft, and his mother was a substitute teacher.

“Harry grew up pretty close to poor, and he worked hard to get out of that,” said Larry Kuppin, Sloan’s former business partner. “It definitely affected him. He has a strong drive to succeed.”

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But Hollywood was far from his sights in his youth. Politics were his passion. He plastered his bicycle with “John F. Kennedy for President” stickers.

A self-described political junkie at UCLA, Sloan went to Loyola Law School at night and hoped to run for office or get a political appointment. But the Watergate scandal changed his mind. “Suddenly, 100% of the criminals were lawyers,” Sloan recalled.

So, in 1974, he instead became a lobbyist for the Screen Actors Guild.

Two years later, leveraging his relationships with agents and actors, he formed his own entertainment law firm with Kuppin. He represented such hot young TV stars as Ron Howard from “Happy Days,” Gary Coleman from “Diff’rent Strokes,” and John Schneider and Tom Wopat from “Dukes of Hazzard.”

He may not have invented the “sickout,” but Sloan routinely outmaneuvered the studios by instructing clients to walk off shows to get them raises.

Former Warner Bros. Chairman Bob Daly was angry for years after Sloan’s “Dukes of Hazzard” clients quit the popular CBS series and sued the studio for allegedly cheating them out of millions of dollars.

“He didn’t ask us for more money; he sued us for merchandising fraud the day of our annual meeting,” recalled Daly, who said it was an embarrassment to the company’s chief executive, the late Steve Ross.

The two stars eventually got a decent pay increase.

In 1983, the two lawyers traded in their careers and scraped together $2 million to buy New World from B-movie director Roger Corman.

The pair took full advantage of the go-go 1980s, when junk bonds were plentiful, to build New World into a leading supplier of prime-time TV shows, including “The Wonder Years.”

But the company almost went broke, Kuppin said. When the stock market crashed in 1987, New World’s glory days ended. “We were a little too anxious to expand and have bragging rights,” Kuppin said. “We were arrogant guys, full of ourselves.”

They still managed to sell the company to financier Ronald Perelman in 1989 for nearly $300 million, including debt. Sloan walked away with $25 million. He said he was so stressed out after the sale that he considered retiring to his beach house in the Malibu Colony. He was 39.

“It lasted seven minutes,” Sloan said. “I didn’t know what to do with myself.”

When he was running New World, he had marveled as the value of U.S. TV shows had soared internationally. When he learned that TV stations in Germany, France, and the United Kingdom had been snapped up as those countries privatized broadcasting, he identified less obvious opportunities in Scandinavia and then Eastern Europe.

He bought a national cable channel in Norway and a local station in Denmark. Scandinavian Broadcasting System was born with a $5-million investment by Sloan. It eventually grew to 16 TV stations, 21 premium pay channels and 11 radio networks in nine countries.

The company went public in 1993 and was sold in 2005 -- when its annual revenue topped $1.3 billion -- to two private equity firms: Kohlberg Kravis Roberts & Co. and Permira.

But Sloan was frustrated that he could never break into the big European markets. “It was almost a great company,” he said.

Returning to his roots

Back in Los Angeles, Sloan had become chairman of Lionsgate, an independent film and TV company SBS had invested in to supply content for its channels. Lionsgate’s mission was to take on the giants by being more cost-efficient. During his tenure, Lionsgate produced films, but as chairman, Sloan had no operational role.

Sloan stepped down from Lionsgate’s board, possibly sensing a chance to replicate that vision under the esteemed MGM banner. In the summer of 2005, after MGM was acquired by the group led by Sony Corp. and Providence Equity Partners, Sloan asked his friend Jonathan Nelson, who headed the private equity firm, to put him on MGM’s board. That fall, when the investors were looking to hire a new chief executive, Sloan pitched himself.

The owners bought it.

“We needed an entrepreneur who was going to try to do things differently,” Nelson said. “Harry is a guy who is always looking for solutions. He’ll never stop trying to find the answer.”

No sooner had Sloan taken over than he sucker-punched Sony by wresting control of MGM. After the buyout, Sony had dismantled MGM, slashing its staff from 1,500 to 250 and focused on selling DVDs of MGM’s vast library of 4,000 titles.

Sloan persuaded the MGM board to dump Sony as MGM’s distributor of DVDs and TV shows because of poor performance and cut a new deal with rival 20th Century Fox.

Sloan also reversed course by announcing that MGM would get back into theatrical distribution. To fill the pipeline, he made deals with outside producers such as Harvey Weinstein to supply finished movies.

But so far, nearly every release MGM has handled has flopped at the box office. Though the company gets a distribution fee no matter how a film performs, such unmemorable titles as “Blood and Chocolate” and “Material Girls” have led some to wonder whether the roaring lion logo is a kiss of death.

The one exception was a film MGM had a hand in helping finance: “Rocky Balboa,” a $24-million sequel that exceeded industry expectations by grossing nearly $70 million domestically.

Part of Sloan’s strategy is to continue capitalizing on other MGM franchises such as the lucrative “James Bond” and “Pink Panther” series. MGM also plans sequels to the popular caper movie “The Thomas Crown Affair” and to “Terminator.” Such recognizable titles give MGM more clout with theater owners, DVD retailers and international TV buyers. Increasing his leverage also drove Sloan’s aggressive play to bring Cruise aboard.

In November, shortly after Viacom Inc. Chairman Sumner Redstone had banished Cruise from his longtime home at Paramount Pictures for his off-screen antics, Sloan called the actor’s representatives.

“When there was all this controversy, Harry stepped up and very vocally said he’d love to be in business with Tom Cruise,” said the star’s longtime producing partner, Paula Wagner. “When we moved out of Paramount, he offered us office space.”

Cruise and Wagner quietly moved to MGM. While they were weighing their options, Sloan cooked up the idea of having the pair revive United Artists, offering them a 35% ownership stake and the chance to run a financially and creatively autonomous production company without interference from a big studio. Sloan is in the process of raising a $500-million fund to finance and market UA films.

Some wonder why a star of Cruise’s caliber would hitch his wagon to a man he didn’t know and whom many in Hollywood are still sizing up. “Harry offered us an opportunity to put into motion a dream we had to create a company that embraced the artist,” Wagner said.

Sloan’s end game? To double MGM’s nearly $5-billion value over the next few years and take the company public or sell it. He has more than $30 million of his own money at stake.

His penchant for deal-making has fueled rumors about some interim matchups for MGM. In part, that speculation stems from his deep friendships with other Hollywood figures.

Going back decades, Sloan has been part of an old-boys club of TV executives that, in addition to Moonves, includes Lionsgate Chief Executive Jon Feltheimer; Ted Harbert, chief executive of Comcast Entertainment Group, which includes channels such as E! and G4; and their mutual attorney Ernest Del, among others. They celebrate one another’s birthdays and vacation together.

“The group has been together for over 20 years, and we’re still as close today as we were then,” Moonves said. “We’ve grown up together, we’ve matured together and we compete with each other.”

Feltheimer and Sloan, who worked together at New World, have toyed with someday merging the two lions, MGM and Lionsgate. But Sloan acknowledges he first must make MGM matter again.

As for the naysayers, Moonves says it’s unwise to bet against someone as determined as Sloan: “Harry likes to win.”

claudia.eller@latimes.com

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(BEGIN TEXT OF INFOBOX)

Harry E. Sloan

Background

Born March 8, 1950, in Torrance. Father worked in the parts department at Douglas Aircraft; mother was a substitute teacher and helped found the first temple in the South Bay.

Family

Four children: two daughters from a former marriage who are 11 and 18; two sons, 17 and 20, who are the children of his current wife, Florence.

Education

1971: bachelor’s in political science from UCLA

1976: law degree from Loyola Law School

Career highlights

1976: Founded entertainment law firm with Larry Kuppin

1983: Acquired New World Entertainment for $2 million

1985: New World’s initial public offering

1986: Led New World’s acquisition of Marvel Entertainment Group

1989: Sold New World for nearly $300 million, including debt

1990: Founded Scandinavia Broadcasting System

1993: SBS’s initial public offering

1999: SBS became largest shareholder in Lionsgate

2005: Joined board of Metro-Goldwyn-Mayer Inc., sold SBS for $2.6 billion, including debt, and was named MGM’s chairman and chief executive.

Source: Los Angeles Times staff


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