 Starring: John Travolta, Uma Thurman, Vince Vaughn, Dwayne Johnson, Harvey Keitel Christina Milian
Director: F. Gary Gray
Year Of Release: 2005
Plot: Chili Palmer is fed up with the movie industry and decides to try the music biz. Finding a struggling singer, he teams up with the widow of a music exec. to launch her career. However those who had the singer under contract aren’t pleased about this, which leads to Chili tangling with seedy managers, gangsta rappers, the Russian mob and even Steven Tyler. |
I’ve been having difficulty thinking what to write about Be Cool, other than it isn’t very good, and that if John Travolta thought that re-teaming with Uma Thurman would create another Pulp Fiction, he was sadly mistaken. However with the news in the last couple of days that MGM, the studio behind Be Cool (and its prequel, Get Shorty), is likely to be broken up and sold off in the next few weeks – as it’s on the verge of bankruptcy – it’s a good excuse to look at what went wrong for what was once the biggest studio on the planet – especially as it’s MGM’s policy of making movies like Be Cool that’s part of the current problem.
The studio was born in 1924, when cinema owner Marcus Loew bought Metro Pictures Corporation, Goldwyn Pictures and Mayer Pictures, and merged them all together. From the beginning of the sound era, MGM was a major force in cinema and became absolutely dominant in the 30s, releasing movie like Gone With The Wind and The Wizard Of Oz, as well as having over 60 top-name stars under exclusive contract, including Joan Crawford, Clark Gable, Greta Garbo, Norma Shearer, Jean Harlow, Judy Garland, Mickey Rooney, Katharine Hepburn, Spencer Tracy and James Stewart. While it retained its power through the 40s and 50s, it was hit hard by the end of the studio system in the 60s.
After a series of big-budget flops, MGM was in dire straits and ended up being sold Edgar Bronfman (whose son later bought Universal) in 1967, only to be sold on to Kirk Kerkorian two years later. While the studio was already having difficulties, it was Kerkorian who started hammering the nails into MGM’s coffin, as all he was really interested in was the real estate value of the studio’s Culver City backlot, as well as being able to attach the MGM name to his Vegas Hotel.
He sold off all of MGM’s historical props and memorabilia – from Ben-Hur’s chariots to Dorothy’s Ruby Slippers – as well as 40-acres of the backlot (before selling off even more of it five years later). He also scaled back production (in terms of both budgets and the number of films made), which ensured that MGM was no longer competing with the big boys, and it never has since. In fact it got to the point in 1979, where Kerkorian declared that rather than a movie company, MGM was now primarily in the hotel business.
Although Kerkorian was busily ensuring MGM would never again be the powerhouse it once was, he did at least buy United Artists in 1981, which brought with it things like James Bond and a huge catalogue of films – but he only did that because he got it at a firesale price, due to the fact UA was pretty much broke after Heaven’s Gate flopped.
However, the real disaster for the company struck in 1986 when Ted Turner bought MGM. Due to worries about the amount of debt Turner’s companies were in, he was forced to sell much of the studio back to Kirk Kerkorian only 74 days later. However the one thing Turner kept hold of was the vast majority of the studio’s back catalogue of movies, which didn’t only include everything MGM had ever produced up to that point and many of United Artists old pictures, but also various other things the studio had picked up over time, including the RKO catalogue and the movies Warner Bros. made before 1950. It was also at this time that the rest of the studio backlot was sold off (initially to Lorimar Telepictures, although it’s now occupied by Sony/Columbia Pictures).
These two actions, both caused by Ted Turner’s abortive 74-day ownership of the studio, are the biggest problems MGM has had ever since. The backlot and film catalogue were the two biggest assets MGM owned, not purely because of their intrinsic value to borrow against, but the studio also lost the revenue streams they generated through video, DVD and TV rights sale, as well as from renting out studio space. As the back catalogue and real estate is the financial bedrock on which most studios sit, it was a vast blow to MGM that it’s never recovered from, and ensured that it’s difficult for it to ever be more than a few flops away from disaster, because it simply doesn’t have the assets to cover major losses.
Pretty much the only genuinely valuable films it kept were the James Bond and Pink Panther movies. While it’s tried to bolster its film catalogue over the years, buying up movies when they came up for sale, compared to the films MGM has made, the movies it now owns look rather pathetic in comparison. In fact it’s almost certain that if it still owned its own classic films – which now make hundreds of millions a year for Warner – MGM wouldn’t be in the position it’s in now.
Things weren’t helped when Kerkorian sold the studio again, this time to Giancarlo Paretti, who merged it with his Pathe Pictures. However once again everything went to ruin, when a few months later Paretti was indicted on securities fraud in both the US and Europe. As a result the bank Credit Lyonnais took control of MGM, but completely failed to find a way to make it profitable.
Then, in the mid-90s, Kirk Kerkorian, who seemingly couldn’t stay away from MGM, bought it for a third time. While he was the architect of its initial dismantling, he realised the only way to save MGM was to aggressively try and build the studio back up. However while the revived company had a few hits and tried to bolster its film catalogue (purchasing a few hits, but largely hoovering up films of comparatively little value), it was always struggling, to the point where some say if it weren’t for the international success of the syndicated TV series Stargate SG-1, it may have gone bankrupt in the late 90s.
As a result of its continued difficulties, MGM found itself up for sale again in 2001. Initially it looked like it would be bought by Time Warner, which made sense as Ted Turner was a major stock-holder in both companies and it would reunite MGM with its old back catalogue (just as Turner’s companies merging with Warner had brought that studio’s pre-1950 movies back into the fold). However Sony and a consortium of other companies swooped in to purchase MGM for $5 billion. There were already murmurings that all was not well, because many suspected the reason Sony bought MGM and kept it completely separate from their Columbia Pictures studio, was because they wanted to ensure MGM supported its Blu-ray format, rather than that they were genuinely interested in the future of the studio itself and its continuing health.
Despite this, MGM expanded after the takeover, signing deals to distribute movies from the likes of The Weinstein Company and Lakeshore, reinvigorating United Artists with Tom Cruise and his producing partners at the helm and seeking new ways to exploit its back catalogue of films through TV, DVD and the Internet. However, it’s had a bit of a problem. In order to do all this, it borrowed heavily, with its debts now standing at $3.7 billion. While in the pre-Credit Crunch days it is believed it was earning $500 million a year from its back catalogue, it’s now making far less. Nevertheless, it’s still got to pay $250 million a year in interest payments on its debt, and also find the cash to fund new movies.
The studio might have been able to get around this if it was producing a string of big hits, however the company’s own films, like Be Cool, have tended to have lukewarm receptions at best, while the deals it signed to distribute other companies’ movies have largely resulted in a string of duds. Part of the reason MGM has struggled is that rather than trying to find new hits, they’ve tended to rely on trying to revive titles and franchises from their back catalogue, while anything genuinely new was relatively low budget and unlikely to become a breakout success.
As a result of this strategy, we’ve ended up with films like Be Cool, a sequel to the medium sized success of Get Shorty, but a full decade on from that film. In fact the belated sequel has become a bit of a MGM specialty, as it co-produced Basic Instinct 2, 14 years after the original, made a straight-to-DVD Road House 2, which came a full 17 years after the first one, helped resurrect Rocky Balboa 16 years after Rocky V, and is now working on a new Bill & Ted movie.
The studio has also invested in numerous remakes, such as Steve Martin’s attempt to breathe new life into The Pink Panther, a disastrous redo of Rollerball, as well as new takes on The Amityville Horror and Fame, while their Poltergeist remake is currently delayed, probably because they don’t want to push forward with it when they’ve got no cash.
What’s distinguished most of these movies is the fact while some made money and some didn’t, there have been no genuine smash hits, and therefore little to really help MGM’s dwindling coffers (partly because most of the titles MGM owns and which it can do sequels and remakes for, aren’t that strong to begin with). The theory was that by delving into the back catalogue they’d not only make money on the new films, but they’d also increase the value and revenues from the originals, but it hasn’t worked half as well as MGM hoped.
Even the value of James Bond to MGM has been blunted, as when Sony bought the studio, they took part of the 007 copyright, as they knew MGM couldn’t afford to make the likes of Casino Royale and Quantum Of Solace on its own. As a result, Bond movies are now co-productions with Columbia, and they take a big chunk of the profits.
The crippling debt-load and lack of hits has meant that MGM hasn’t made any in-roads into earning back the money it borrowed, and when the recession hit the value of its back catalogue, it was left in the crippled position of already releasing relatively few films each year with which to generate new profits, while earning much less money from its older films, but still having to make such enormous interest payments to cover its debts. It got to the point last month where it was in the position that it wouldn’t have been able to pay its staff wage bill, let alone be able to afford to make new films, if it hadn’t got the interest payments deferred.
It’s now got the point where MGM is due to repay $1 billion in 2011 and another $2.7 billion in 2012. With its current slate of films, it has no chance of making that sort of cash, and so would need to extend the terms of its loans. However, with the value of its back catalogue shrinking due to the recession and its revenues drying up (not to mention the fact that it has never hit any of the financial targets it promised when it took out the loans), nobody is prepared to consider backing an extended loan, as at the moment it seems like it would only help MGM sink further into debt.
MGM hired a corporate restructuring specialist in May, and not long afterwards he came to the conclusion that MGM was so deeply in debt, that it was only owned by Sony and its partners in name, and the real people who had control of the studio were the creditors. Although the company tried to struggle on, it looks like they may now have realised that with Sony and co. having already written off their investments and the creditors seeing little hope of getting their money back, the best way forward is to split it all up and sell off the assets.
While a studio like Time Warner may swoop in and buy the whole lot, most people expect that in order to get maximum value, the brand name and logo will be sold separately from the film catalogue, while the United Artists name might be split off as well. Despite the catalogue being the single biggest asset, because it contains relatively few consistently high-earning hit movies and franchises (other than 007), whatever way they divide the assets, MGM is only likely to sell for about half of what it owes (which is about a third of what Sony and co. paid for it), but the creditors would prefer to get at least this cash, rather than than lose everything.
There’s also a good chance Bond may be separated out, as with Sony already a co-producer on those films, they may want to take control of the whole thing. There’s also The Hobbit movies, which MGM was meant to be producing with Warner (due to the fact MGM has a long-standing first-look deal on any movies made of Tolkien’s novels). Warner has already taken steps to shield the films from MGMs woes, by signing a deal to cover the smaller studio’s part of the production expenses, with MGM able to buy back in if it gets the cash, but Warner soldiering on alone if it doesn’t.
Although we’re still likely to see the MGM name in future, this may well be the end of it as a independent studio, bringing to a close a 75 year era of filmmaking, where it’s gone from being the biggest studio on the planet, to a cash-strapped also-ran that’s been in constant financial turmoil for the past 25 years, and is now utterly crippled by debt.
It’s certainly not all down to Be Cool that MGM is now in this beleaguered position, but it’s part of a strategy that certainly hasn’t helped. However if you really want to blame someone for the fact MGM has had so many problems over the years, point your finger at Ted Turner for taking the back catalogue, and Kerkorian for selling off the backlot, as those are the two things that it’s never really been able to recover from.
We’ll now just have to wait and see what happens to MGM next.
TIM ISAAC
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