Divine Rapture was to have been producer Barry Navidi's first feature. He had it all—$13 million to play with and Marlon Brando, Debra Winger, Johnny Depp and John Hurt signed. Yet the picture folded two weeks into the shoot. What went wrong? Welcome to Hollywood Accounting 101.
Los Angeles Times ⎢ Calendar ⎢ December 17, 1995 ⎢ First of Two Parts
Frank Rose, the New York-based author of The Agency: William Morris and the Hidden History of Show Business, writes frequently about Hollywood.
Johnny Depp, Debra Winger and Marlon Brando were to have starred in the film.
BARRY NAVIDI IS STILL TRYING TO FIGURE OUT just what happened. Last July he was on location in Ballycotton, Ireland, making a $13-million movie—modest by Hollywood standards but impressive for a fledgling producer from London, especially since it starred Marlon Brando and Debra Winger and had Johnny Depp and John Hurt in supporting roles. A month later he was hoofing it in Beverly Hills—no hotel suite, staying with a friend, having lost his home, his money, his partner's money, his partner's father's money, an outside backer's money and seven years of work on a picture that folded after two weeks of shooting.
That's $2.85 million with nothing to show for it but 29 minutes of film in a closet in his rented flat in North London—29 minutes of film and the knowledge that, for a while at least, he'd marshaled the incredible array of forces required to produce a major motion picture. Before he got the phone call from Los Angeles. Before his backers disappeared. Before the promises they'd made dissolved into a dizzying maze of claim and counterclaim only the lawyers can untangle.
"If I'd gone to a casino," he says ruefully, sipping black coffee outside a Beverly Hills patisserie, "at least I would have enjoyed it."
Solidly built, with olive skin and salt-and-pepper hair in a modish cut, Navidi is one of thousands of filmmakers and filmmaker wannabes who have come to Los Angeles, lured from Spain or Italy or France or Israel by the romance and the market potential of Hollywood. He fell in love with the movies as a small boy in Iran, when he would sit in front of the movie screen in his parents' house for hours and lose himself in Hollywood make-believe. As a vice president of the National Iranian Oil Co., his father could arrange for private screenings of all the latest releases. The first one Navidi remembers is The Sound of Music, with Julie Andrews yodeling Rodgers & Hammerstein through the Austrian Alps. After that came sterner stuff—Kelly's Heroes, Where Eagles Dare. Then he was sent to boarding school in England, and when he asked to go to film school after graduation, his father didn't object. Which is why, at 35, Navidi is in Beverly Hills right now.
There's nothing new about Hollywood's appeal to foreign filmmakers: Hitchcock succumbed in 1939. But as European cinema has languished, the victim of rising costs and tightened funds and a language barrier that shackles its commercial potential, people like Navidi find themselves with fewer and fewer options.
In the meantime, paradoxically, a worldwide boom in multiplex theaters and cable and satellite TV has led the Hollywood studios to look overseas more and more for their profits. The combination has put Hollywood at the vortex of a global entertainment industry, with cash and talent funneled in from all quarters but everyone playing by Hollywood's rules. The Divine Rapture story shows what can happen to a picture that challenges those rules—that flouts studio conventions for the uncertainties of high-wire financing.
Divine Rapture was to have been Navidi's first feature film, a black comedy about a young woman who seemingly rises from the dead, only to be seized upon by an elderly priest who needs a miracle to redeem his faith. The script was quirky, trafficking in taboos (death, religion) that made it off-limits to the major studios.
But with the film a low-budget, independent production, those same qualities gave it the makings of a left-field hit—something on the order of The Crying Game or Driving Miss Daisy, neither of which had been viewed as having much box-office potential when they were in development. A longshot, to be sure—but in this business, what isn't?
THE TRADE-OFF FOR FREEDOM from second-guessing by studio executives is a scramble to secure independent financing. The standard route is to lock in a North American distribution deal, sell off foreign rights—territory by territory—and take the whole package to a bank, which will use the distribution guarantees to secure a loan to cover the cost of production. There's plenty of room for disaster, but once the cameras start rolling on a picture with major stars, it's highly unusual for the picture to collapse.
"This is something I've never heard of happening," says Ed Limato, Brando's agent, in his corner office at International Creative Management. "I've heard of problems, grave problems, at the last minute but always something fixable. This is extraordinary."
Navidi had a deal with a Paris-based company known as CineFin, which had a domestic distribution agreement with Orion Pictures, the troubled studio controlled by billionaire John Kluge. CineFin, headed by an international entertainment lawyer named David Lowe, was supposed to provide Orion with four or more pictures a year for three years and the money to market them, a total commitment of some $600 million. But announcements of the CineFin-Orion deal had failed to mention where the money was coming from, just as they failed to mention two other principals in the firm: Frederick and Richard Greenberg, sharp operators whose previous venture, a satellite-broadcasting company known as SkyPix, had just gone down in flames with a loss of some $45 million, including $10 million from Microsoft co-founder Paul Allen.
"Maybe there was a reason for this not to happen," Navidi says, grasping for some cosmic explanation. His voice has the precise tones of an English schooling, but his costume—blue jeans and blue denim shirt, freshly pressed, with cowboy boots and western belt—is pure Hollywood. "Seriously. Because I don't know why it didn't happen."
But he does know, of course. And the question he keeps asking is: When should he have figured it out? In Los Angeles last March, when, unable even with Brando attached to get backing from the Hollywood studios, he signed a deal with CineFin that seemed almost too good to be true? In April, when he and his partner agreed to fund pre-production themselves—eight to 10 weeks of scouting locations, building sets, hiring a crew—while CineFin arranged its bank financing? In May, when they agreed to defer their $500,000 producers' fee so CineFin could make the budget work? In June, when they decided to start shooting July 10 without the bank loan in place because some final paperwork remained to be done and they'd lose Brando if they delayed? The week of July 10, when CineFin's money failed to materialize and they started talking with an outside investor as the cameras rolled? The week of July 17, when Navidi mortgaged his house to keep the production going a few more days while the outside investor went through CineFin's books?
"It's a point of no return," Navidi says. "And when you're cornered and you're on location, it's like it's your baby and there's nothing you wouldn't do to save it."
But Navidi wasn't the only one who tried too hard to save this picture. Divine Rapture went so far on so little because it held out some special promise to everyone involved: Navidi had never produced a feature film, director Thom Eberhardt had been stuck making formula comedies for Walt Disney, screenwriter Glenda Ganis had never had a film script produced, Debra Winger and Johnny Depp were eager to work with Brando, CineFin hadn't launched a single project a year after announcing the Orion pact, and Orion needed product to fill its distribution pipeline as the company emerged from bankruptcy.
"Everybody was projecting their own needs onto this movie," says a knowledgeable Hollywood source. "It's always like that, of course. It's just that this one was a particularly strange convergence."
CINEFIN'S OFFICES ARE ABANDONED NOW, an empty warren behind an unmarked wooden door on the sixth floor of Orion's sleek high-rise in Century City. Odd pieces of telephone equipment and months-old trade papers are scattered about, pictures have been ripped from the walls. Virtually the only thing left intact is a Rodney Dangerfield poster in the reception area, his screwball face peering out wildly across the room. Easy Money, the poster proclaims. The fine print reads, "Copyright Easy Money Associates—a Greenberg Brothers Partnership."
The Greenberg brothers, Fred and Richard, go back a long way with Orion. In the early '80s, shortly after Orion was formed, the Greenbergs provided P&A money—prints and advertising, the ante it takes to market a film—for a number of Orion pictures. Some, like Easy Money, were made by Orion itself; others, like The Terminator, the low-budget 1984 sci-fi epic that made Arnold Schwarzenegger a superstar, were made by Hemdale Film Corp., a high-flying independent that distributed its pictures through Orion.
It was easy money to raise: Not only are P&A funds "last in, first out," in industry parlance, but federal law allowed investors to take steep tax deductions. Even after Congress eliminated such tax shelters in 1986, the Greenbergs were able to sell limited partnerships investing in films, in real estate, even in a Massachusetts car dealership. One of their prime sources of cash was a small but well-connected brokerage firm in Seattle.
During the '80s, while the Greenbergs were funneling hundreds of millions of dollars to Orion and Hemdale and similar companies, CineFin's future president, David Lowe, served as Hemdale's outside counsel. Lowe, then based in London, was a charmingly international man who spoke fluent French and maintained a villa in the south of France. He also had a reputation as a ferocious negotiator who had put together enormous deals involving such companies as Credit du Nord, the French pay-TV company Canal + and, of course, Hemdale.
But behind Hemdale's impressive slate of films lay an operation that was questionable at best. In July 1992, the company was sued by the Screen Actors Guild and the Directors Guild of America for allegedly failing to pay residuals on 27 of its films; two months later, it was forced into bankruptcy by angry creditors, among them Lowe himself, who claimed debts of nearly $600,000. None of these suits has yet been resolved.
THE GREENBERG BROTHERS WERE HAVING THEIR OWN PROBLEMS. In 1989, federal authorities had shut down a New York bank they owned amid charges that it had made improper loans to partnerships the Greenbergs controlled. Two years later, the U.S. Office of the Comptroller of the Currency, which oversees nationally chartered banks, had barred them from the banking industry after concluding that they had reaped some $2.28 million in a series of illegal transactions. By 1992, they were in hot water in Seattle, where reports of a New York grand jury probe into their banking activities were hindering their ability to launch SkyPix—even though no indictments were ever issued.
Using an advanced digital compression technology licensed from a Silicon Valley start-up, SkyPix had planned to sell receiver sets at $1,000 apiece and beam down programming on a pay-per-view basis. But the launch was months behind schedule, and with their investors being subpoenaed, their assets frozen by the courts and the Federal Deposit Insurance Corp. suing them for $1.8 million allegedly owed to the Bank of New England, the Greenbergs were in no position to beam anything to anybody.
In the spring of 1992, as they grappled for control of the company with Allen, the billionaire Microsoft magnate, the cash crunch cost them all but one of the 10 Hughes satellite transponders they'd leased. The Securities and Exchange Commission launched its own investigation in June as lawsuits from former employees and business partners mounted.
The Greenbergs were unbowed: "We're going to launch the system," Richard Greenberg told Forbes defiantly, "we're going to launch it correctly, and then we're going to sit back and watch the 21st century unfold." Two months later, a federal judge declared SkyPix bankrupt.
BACK IN LOS ANGELES, ORION WAS having problems as well. Despite its success with Dances with Wolves and The Silence of the Lambs, the studio had hit the same wall that shattered Hemdale and other independents in the early '90s—rising production costs coupled with faltering sales in the home video and TV syndication markets. Orion filed for bankruptcy protection in December 1991, and with its top executives gone, Leonard White, who had headed its home video subsidiary, was named president. It was barred under the terms of its reorganization plan from going back into production, but it held onto its distribution operation and its library—some 750 films, including such prizes as the Kevin Costner hit Bull Durham, Oliver Stone's Platoon and Salvador, Milos Forman's Amadeus and Woody Allen pictures like Broadway Danny Rose The Purple Rose of Cairo.
Meanwhile, in London, Lowe had tired of putting together deals for other people and decided to do something for himself—like buy a film library, perhaps, and use it as collateral to launch his own production studio. Through Mark Crowdy, a well-connected London actor who was likewise interested in producing, he met with English bankers and pitched them on a plan to acquire the Hemdale catalog. Hemdale wanted too much, so Lowe moved to Paris, set up offices on the rue de Rivoli, and started a lucrative business arranging international financing for French filmmakers. But his ambition to run a studio didn't die.
Early in 1994 he emerged as president of CineFin, a loan syndicate that was being run out of the Greenbergs' headquarters in a down-at-the-heels Manhattan office building, a cavernous loft filled with unused partners' desks from their failed bank. Shortly afterward, with backing from Smith Barney Shearson and Oppenheimer & Co., CineFin made a bid to buy Orion. Those discussions ended when the banking consortium collapsed a few months later, but CineFin soon made another deal—two deals, actually.
The first, announced in July 1994, was the $600-million agreement to finance pictures for Orion—the money, according to Lowe, to come from financing institutions and rich investors lined up by the Greenbergs. The quid pro quo, announced two months later, was an understanding that allowed CineFin to sell Orion's films—its existing catalog as well as future releases—overseas.
ONE MAY WONDER WHY ORION, a reputable if troubled company controlled by one of the richest men in America, would hand over its crown jewels to the Greenbergs. Orion doesn't see it that way.
"It seemed like a wonderful way to pick up some pictures and keep our operation fed," says Len White, a portly man flanked by aides. "It was a completely risk-free situation from the company's standpoint."
In the words of one Hollywood executive: "If you only did business with people who were pure in this town, you'd never make another movie."
But could CineFin deliver? Some had their doubts. Peter Bart, editorial director of Variety, had lunch with White shortly before the deal was announced and was told that Lowe would be financing a slate of pictures. Incredulous, he went back to his office and had his assistant track down Lowe.
As Bart tells it, they found him on a yacht on the Riviera. It was close to midnight, but a party was evidently in progress; Bart could hear laughter and music and glasses clinking in the background. Was it true that CineFin was going to come up with $200 million a year for three years to finance these pictures? Lowe laughed and asked where he'd gotten that number. In the press release you're sending out, Bart replied. Was it true?
"Whatever it says," Lowe is said to have responded, laughing as if someone had just told him the funniest joke of his life.
Six months later, CineFin still had not demonstrated to Orion's satisfaction its ability to fund a picture. It was reportedly in danger of defaulting on the deal when Mark Crowdy, who divides his time between a garden flat off King's Road in Chelsea and a house in Benedict Canyon, phoned Lowe with an idea: Barry Navidi's Divine Rapture. ■
Next Sunday: How Navidi attracted top-flight talent to Divine Rapture, only to discover that CineFin was a house of cards.