Arnon Milchan describes his company’s strategy in the terms of a high roller.
“You have to realize that you are going to a casino and sitting at a table, and for some reason the guys with more chips have more staying power,” he says in a phone interview from Paris. “When you are short of chips, you are making short-term decisions. You are betraying what it is all about.”
ShoWest’s producer of the year — one of the most prolific in the business — scored with “A Time to Kill” and “Tin Cup” in the past year, but the news from his New Regency outfit in the past year also has been about lining up new investors, making a foray into music and even athletic shoes, and making a much-publicized, albeit aborted, bid for MGM.
And now, his New Regency Prods. is at a crossroads as it tries not only to self-finance and develop more of its own movies, but also to renegotiate its deal with Warner Bros., its home for much of this decade. Come May, Milchan will have the right to talk to others.
“We are in a stage like in a peace agreement,” Milchan says. “There has been a declaration of intention that has been made. Now you have to go to the stage of the nitty-gritty, what that peace treaty is all about.”
Execs at Warner Bros. concur. Says Terry Semel, chairman and co-CEO: “If the question is do I think we will stay together, yes. Do I think he wants to stay together? Yes.”
Neither side will say much about what changes would be made under a renewed deal. “We are very happy there,” Milchan says. “We feel that the value has grown to a level of partnership, rather than a perception that this is just a company that takes producing fees.”
If they come to terms, it will continue what has been the most prolific relationship on the Warner Bros. lot, producing a slate of pictures that includes “Under Siege,” “Falling Down,” “Sommersby,” “Heat,” “JFK,” “A Time to Kill” and “Tin Cup.”
Still to come this year are the co-financed “Devil’s Advocate,” starring Al Pacino and Keanu Reeves, the third “Free Willy” movie and the Wesley Snipes-Diane Lane pic “Murder at 1600.”
“There is a lot of positive energy coming from Warner Bros. right now,” Milchan says.
What Milchan has done in the past year is line up a parade of new investors, including Germany’s Kirch Group and Korea’s Samsung, adding to Australia media mogul Kerry Packer. He bought Restless Records, his first foray into the recording business. They also signed a deal with TriStar Television, including a series starring David Caruso. He even bought a major stake in athletic-shoe manufacturer Puma.
“I always wanted to be in sports, but I realized to build a sports company would take 20 years,” he says.
But perhaps his highest-profile move was a bid for MGM, a move that was backed by Warner Bros. As it became apparent that the price was going out of reach, the bid was aborted.
“I am disappointed that it didn’t work,” he says. “…I am not blaming anyone, but I wish I could have foreseen it before. (Warner Bros.) had their own problems. They were in the middle of the merger with Turner.”
Warner Bros. also backed a bid by Jim Robinson’s Morgan Creek. As the price rose, that offer also was not enough to win the bidding for the Lion.
Says Semel: “They absolutely came to the same conclusion, that they wouldn’t go past that line.
“I am sure (Milchan) was disappointed, but at the end of the day it was really and truly a decision that he made.”
Milchan still has his eye on buying another film library, although his immediate attention seems to be on the renewal of the Warner Bros. deal.
“This is about deals, and MGM’s situation is past for the time being,” he says. “We have to make product and move forward rather than cry over a library.”
In fact, both parties say their relationship has been remarkably fruitful over the years, given the rough-and-tumble world of Hollywood.
For instance, outsiders might see Milchan’s investment in Restless Records as an affront to the deal with Warner Bros. After all, Milchan’s label is being released through BMG Distribution, not Warner Bros. Records.
However, Semel and other top Warner Bros. execs insist that Milchan made the investment with their knowledge. “I don’t think either of us has done anything that would surprise us,” Semel says.
“There was more synergy between our current plans and BMG’s current plans than with Warner Bros.,” Milchan says. “Because you do movies with a company doesn’t mean that you have to do everything with the company. You have to break up the pieces on the agreement and see that movies are movies and soundtracks are soundtracks.”
ShoWest has honored producers of varied backgrounds, but Milchan may be the most unusual.
Born in Israel, he played soccer for the Israeli team, was educated in business and economics in London and Geneva, and parlayed his father’s fertilizer business into Milchan Bros., a chemical giant in Israel. Often billed as an “international entrepreneur,” he retained a passion for the arts, and in the 1970s in Europe began to carve out a niche as a stage producer. Among his productions: a stage version of “Amadeus,” starring Roman Polanski.
A meeting with Sydney Pollack led to a partnership and Milchan’s permanent entry into the movie business. Among their earliest productions was the TV miniseries “Masada” in 1981. Later in the 1980s, he produced the feature films “The King of Comedy,” “Once Upon a Time in America” and “Brazil.”
But the turning point came in 1991, when Milchan linked up with Warner Bros., France’s Canal Plus and Germany’s Scriba & Deyhle in a 20-picture production and distribution agreement valued at $900 million.
It was a departure for Milchan: He had until then been involved in the pre-selling of majority rights to his films. That could have landed him a much larger loot for such megahits as “Pretty Woman.”
And now, Milchan continues to head in that same direction, with an eye toward fully financing more of his movies as well as increasing his output a tad, to about a dozen pics a year.
“Part of what you do with a company is financial engineering,” he says. “Part of it is a short-term inherent problem. You have to show results every year. The dream is to not do financial engineering anymore.”
And that, he says, will give him more chances to take a crack at risky projects, films like “Brazil,” “The King of Comedy” and “Natural Born Killers.” It will also increase his ability to say no.
“You have to realize that you don’t have to make every bet at the table,” he says. “Sometimes you have to watch others play roulette.”