Franchise CEO explains 'secret deal' on phony budgets
Intertainment got down to business in a Santa Ana federal courtroom Tuesday, grilling Franchise Pictures CEO Elie Samaha about his alleged oral agreement with Intertainment CEO Barry Baeres.
That agreement allegedly was to concoct inflated budgets on a slate of pictures the German distributor was partially financing.
Intertainment attorney Scott Edelman asked Samaha if there was any evidence, “any letter, any email, any note on a napkin” reflecting the oral deal. Samaha conceded there was nothing, claiming it was because Baeres didn’t want him to put any reference to inflated budgets in writing because he was the head of a public company.
Intertainment is suing Franchise for $100 million, claiming it was defrauded into paying for distribution rights based on vastly inflated budgets for a slate of pics including “Get Carter” and “The Whole Nine Yards.”
Franchise’s defense is that it had a secret agreement with Baeres under which Intertainment would pay what was needed on a given picture, even though its distribution agreement with Franchise called for it to pay just 47% of the budget on each film.
Samaha testified that the way the secret agreement worked was that he and Baeres would estimate what a picture would cost and then “we would back into a budget.” Samaha explained: At the end of every film market, he and Baeres would “go into my office and lock the door” and look at other foreign pre-sales and figure out how much Baeres would really have to put in to get the movie made.
With the inflated budgets, Baeres actually put up 70%-90% of the film budgets instead of 47% for distribution rights to most of Europe.
Samaha described Franchise as virtually a service company for Intertainment, where Baeres was greenlighting films at a rapid clip because he needed star vehicles to keep up the stock price of his public company.
“I was shocked,” testified Samaha, when Baeres bought all the European rights to “Battlefield Earth,” John Travolta’s pet project, which ultimately did disastrously at the box office. Samaha testified that after he told Baeres the movie wasn’t going to get made because no one would finance it because of the Scientology connection, Baeres said he would put up $23 million because it had to get made.
“We made these movies because Barry wanted them,” said Samaha. “He wanted star movies, studio distribution — which we had through Warners — and he wanted them fast and cheap. He wouldn’t even give me my $1 or $2 million producer fee.”
Trial continues today in U.S. District Court in Santa Ana with Samaha still on the stand.