One of the first decisions made by Giancarlo Parretti after acquiring MGM in 1990 for $1.2 billion was to appoint his 21-year-old daughter, Valentina, as the studio’s chief financial officer. When I asked him for an explanation, the Oracle from Orvieto, as he was facetiously called, said he’d prefer she spend her time signing studio checks than shopping on Rodeo Drive.
I thought of Parretti this week as I reviewed the continued hand-wringing over Ryan Kavanaugh’s bankruptcy struggles at Relativity. The town’s power players are watching with morbid fascination as the 40-year-old Kavanaugh tries to martial enough capital to salvage his film unit while spinning off other fragments of his company. Kavanaugh’s hyper-caffeinated management style has offended the sensibilities of his hedge fund backers as he’s run up liabilities of $1.18 billion, twice his assets.
And this is why Parretti comes to mind: In screwing up Relativity, Kavanaugh has earned a place on the elite list of Hollywood’s pirate patriarchs — one that includes the likes of Kirk Kerkorian, Dino de Laurentiis, Christopher Skase and even Charlie Chaplin. All exhibited a mastery at engineering failure — overspending on deals, assembling and dismembering corporate assets and upsetting, if not betraying, stockholders.
To be sure, Kavanaugh has managed to eviscerate only one company to date. During Kerkorian’s four-decade career, he played havoc not only with MGM and United Artists (he bought and sold them three times) but also conducted disruptive raids on Columbia Pictures and even Disney. Ted Turner, while frantically pursuing MGM, tried to sell a film slate to Viacom that he didn’t own. Skase, meanwhile, outbid none other than Rupert Murdoch in a manic campaign to acquire Kerkorian’s holdings, only to confess that he never had the money to begin with (Murdoch stalked off in a rage).
|“In screwing up Relativity, Kavanaugh
has earned a place on the elite list of Hollywood’s pirate patriarchs.”
The fabled Chaplin double-crossed his partners, Mary Pickford and Douglas Fairbanks, sabotaging a legitimate acquisition of their company, then going off to fund his indie pictures with what his partners considered “funny money.”
As for De Laurentiis, he once boasted to me that no one would ever shut him down because he owed too much money, labeling himself the first “too big to fail” film producer. His De Laurentiis Entertainment Group went bankrupt in 1988, before he and Parretti formed production and distribution company Dino De Laurentiis Communications in 1990.
To complete his transition, I think Kavanaugh would do well to visit that unofficial museum of movie chicanery, Credit Lyonnais. Through the 1990s, the French bank provided financing for a rogues gallery of film producers. In so doing, the bank accumulated $30 billion in bad loans, and a stash of thousands of repossessed film libraries representing names like Hemdale, Gladden, Epic and Trans World. No one from the state-owned bank ever explained its curious love affair with movie miscreants, but since it was government owned, no one ever had to.
Surveying all this, Kavanaugh clearly has many role models to study and perhaps emulate. I have no doubt that he will put his lessons into play.