If the Hollywood deals of 1992 are remembered in the years ahead, they’ll likely be remembered for what they weren’t.
There were no blockbuster deals on the order of the merger of Time Inc. and Warner Communications. That doesn’t mean there weren’t any memorable ventures in the past 12 months, successful or otherwise.
Here are 10 of the most notable deals of 1992, and another five that are best forgotten.
1. Cameron’s cash cow: Writer-director James Cameron guarded against being terminated by wrapping up a precedent-setting deal. His Lightstorm Entertainment inked an exclusive 12-picture financing and domestic distribution pact with 20th Century Fox and a network of foreign partners. Cameron will retain ownership of his negatives and will be able to greenlight his own films. In exchange, Fox coughs up a limited amount of dough in exchange for North American distribution rights, including theatrical, video and free and pay television.
The result: Worth a touted $ 500 million, the deal gives Fox the services of one of the most talented and commercial directors around and guarantees Cameron a means to make his high-budget, high-octane pix.
2. Hands across the water: Time Warner Inc. made good on its promise to find strategic global partners while slicing away at its mountainous debt. At least that’s how investors felt who financed some $ 1.2 billion in bonds offered by Time Warner Entertainment Co., a new limited partnership, this year.
At TWE’s core, TW bundled TW Cable, Warner Bros. and Home Box Office with $ 7 billion of its own debt and sold a stake to Japan’s C. Itoh & Co. and Toshiba Corp. for $ 1 billion. The proceeds quickly went to pay down debt at the parent company.
The result: TWE opens the way for Time Warner to set up a worldwide distribution network with a partner for each continent, starting with Asia.
3. Talent pact men: William Morris swallowed Triad Artists while Intertalent folded, with founding partner Bill Block going to International Creative Management and others off to United Talent. ICM, in turn, bought the majority ownership interest of chairman Marvin Josephson, and turned to Chase Manhattan Bank to reorganize its capital structure. The change was spurred by a bottom line with less dollars going around in the entertainment business. Fees for all but top-bracket talent have fallen, leaving agents less to skim off.
The result: Star power in the hands of fewer companies and layoffs of well over 100 agents and support staff.
4. Caravan cash-in: When negotiations between Fox topper Rupert Murdoch and 20th Century Fox chairman Joe Roth failed over money issues, Roth went the indie production route, setting up his new Caravan Pictures at Disney, which is giving him total autonomy.
The result: Roth gets to produce at least 25 films at any budget he chooses. One of his first recruits was a semi-exclusive multipicture deal with Julia Roberts. The Roberts alliance is unusual because talent normally signs these type of arrangements with studios rather than indie producers.
5. “Roseanne” redux: ABC brass signed the dotted line guaranteeing that Roseanne Arnold’s hit show, now in its fifth season, will be around for at least two more seasons, with at least 50 more episodes. At a $ 2 million per-episode pricetag, that comes out to roughly $ 100 million, much of which is bound to end up with the fax-happy star.
Money to be made
The result: ABC Entertainment prez Bob Iger said he expects ABC to make money on the program “barring the collapse of the economy.”
6. Music Moguls: Barbra Streisand, Madonna, Michael Jackson and Prince all signed megadeals, although some were more mega than others. Streisand signed for what seemed to be $ 40 million with Sony Entertainment, not as high as the $ 60 -plus million deals Warner Bros. signed with Madonna and Sony with Michael Jackson. And then there was Warner’s rumored $ 100 million deal with Prince, who actually got about $ 30 million for signing on the dotted line.
The result: Streisand’s may prove to be the most lucrative because there is more potential money in films than in records, and Streisand has the only proven track record of the four in movies. Prince’s deal comes in with a big question mark, since the total figure is based largely on projected revenue, not guaranteed income, and since his most recent album died quickly, the payoff may not be so impressive.
7. Diller goes shopping: Former Fox topper Barry Diller bought a $ 25 million stake in the QVC tele-shopping channel earlier this month, meaning he’s now in business with Tele-Communications Inc. president and Liberty Media Corp. chairman John Malone, arguably the most powerful man in cable TV. The next step: A possible merger between QVC and Home Shopping Network that would expand the home shopping concept into broader forms of entertainment, especially since TCI may offer a 500-channel capacity by 1994.
News and info
The result: When Diller becomes QVC chairman after current topper Joe Segel resigns in 1993, he’ll steer it into the news and information business, capitalizing on interactive technologies.
8. Stompin’ Savoy: Former Columbia Pictures toppers Victor Kaufman and Lewis Korman’s new Savoy Pictures Entertainment debuted last February as a domestic theatrical distribution company, with $ 100 million in backing. By June, it had inked a four-year pact with Home Box Office that put it on the map and as the year progressed the kitty climbed to $ 160 million. By December, Savoy was rumored to be ready to buy anything for sale, including Imagine Films Entertainment and MGM.
The result: Alan Greisman took the reins of the company’s movie operations and quickly made a deal with Spelling Intl. to jointly finance “Shadowlands,” one of the four movies it expects to release by late 1993.
9. Never say die: Carolco has ended up with yet another new major investor, MGM, which bought a 16% equity stake for $ 60 million. Under the five-year agreement, MGM becomes Carolco’s exclusive theatrical distributor in the U.S. and Canada for all films, beginning Jan. 1 1994, when Carolco’s pact with TriStar ends. Also, MGM advances $ 75 million a year in P&A money for Carolco’s films.
The move is just part of an overall restructuring aided by Carolco’s three foreign partners, Rizzoli, Pioneer and Canal Plus. The trio kicked in another $ 60 million in new cash, coupled with a $ 50 million co-production fund.
New lease on life
The result: Once the dust settles, the good news for MGM is that it will end up with an injection of high-end product. Carolco gets a new lease on life but is left with an ambivalent and potentially quarrelsome board of directors. And will there be a power clash between MGM’s Alan Ladd Jr. and Carolco’s Mario Kassar?
10. Branson’s balloon payment: British entertainment conglomerate Thorn-EMI bought entrepreneur/balloonist Richard Branson’s Virgin Music Group for roughly $ 1 billion in a deal that puts some of the world’s best-known recording artists–including Garth Brooks, Tina Turner, Janet Jackson and the Rolling Stones–under a single umbrella. In the process, it lifted Thorn into the ranks of Polygram, Sony and the Warner Music Group.
Branson wins big
The result: The big winner was Branson, who pocketed about $ 700 million for the company he started as a teenager. Losers were Virgin Music employees, with more than 150 staffers axed worldwide so far.
1. Peacock’s feathers ruffled: Rumored for sale by its parent, General Electric, NBC seems to be reeling. Wall Street, Madison Avenue and even NBC’s own affiliates view the loss of its flagship show “Cheers” and the expected departure of “Late Night with David Letterman” as two direct hits on the network , which has become a distant third in the ratings so far this season, after holding No. 1 for a good part of the 1980s. Now NBC top brass have to face a public relations nightmare, as the Jan. 15 deadline looms near for them to match a $ 16 million bid for Letterman to move to CBS.
The result: An expensive outcome, no matter what. If Letterman lands in Jay Leno’s slot, the network would reportedly have to fork over about $ 10 million to the outgoing “Tonight” host for breaking its commitment to him. If Letterman goes to CBS, he might hurt “Tonight” ratings.
2. Bad bet: Even Bill Cosby hosting didn’t guarantee “You Bet Your Life” hit status. Producers Carsey-Warner had pitched advertisers that the show could deliver a 10 Nielsen national syndication household rating, but in the end, “Bet” had delivered a disappointing 4.6, meaning lower revenues for the independent production and distribution company, and lots of angry customers.
2 blurbs for 1
The result: Unlike Paramount or King World, C-W doesn’t have other shows as leverage for make-goods, leaving it in the unenviable position of offering advertisers who bought spots in the upfront market other costly options, such as providing two blurbs for the price of one or refunds.
3. A Goofy deal, so far: Mickey Mouse hasn’t taken the French by storm, with EuroDisneyland reporting a loss of $ 35 million for its 1992 fiscal year, and more red ink likely to flow next year. The giant theme park, though brilliantly conceived, has been hit by everything from a worldwide recession to negative press coverage and a blockade of its gates by angry French farmers. Of particular concern is that the French, who are key to the vital repeat business, are not showing up in expected numbers.
The result: The park has launched a major ad campaign to draw in Gallic tourists. Losers include EuroDisney stockholders, whose share holdings are worth less than when they bought them. And the Walt Disney Co., whose expected $ 21 million in EuroDisney management fees in 1992 have been deferred until at least 1994. But don’t count this theme park out of the money in the long term.
4. Is Penta spenta?: The company formed by Italian producers Vittorio and Mario Cecchi Gori and Euro cable mogul Silvio Berlusconi to take Hollywood by storm with a free-spending policy instead burned a hole in its not-so-deep pockets. PentAmerica Pictures took a major bath on the $ 30 million “Man Trouble ,” the non-romantic, non-comedy starring Jack Nicholson and Ellen Barkin, its second flop after the Tom Selleck vehicle “Folks.”
The result: The film performed so poorly that distributor 20th Century Fox stopped tracking its grosses after less than three weeks in release, when they stood at just $ 3.9 million. Fox probably won’t have an easy time recouping its marketing expenditure of around $ 8 million either.
Penta, which fully financed the film through its European parent Penta Entertainment and foreign presales, is likely to lose at least half its negative cost.
5. Music mayhem: First, Motown dropped its MCA contract in 1991 and moved distribution of its records to a unit of PolyGram. That prompted a series of lawsuits that actually began with Motown filing suit against MCA in May of that year. In subsequent escalating countersuits this year, Motown alleged that MCA tried to interfere with its distribution agreement with PolyGram and destroyed evidence pertinent to the case. MCA maintains that Motown’s union with Polygram is illegal and charges Polygram with inducing Motown to breach its distribution agreement. Motown has filed additional claims for more than $ 60 million. MCA’s damage claims have escalated to $ 75 million.
The result: The two will continue to slug it out next year, lining their lawyers’ pockets with fat fees.