THEY EPITOMIZED the entrepreneurial spirit of the 1980s, riding a wave of optimism about the economy and what has been called "the Hollywood glitz factor" to overnight prosperity. Between 1985 and 1986, more than half a dozen small film-makers, including Dino De Laurentiis and the Israeli cousins Golam and Globus, collectively raised tens of millions of dollars for their production companies by selling stock on Wall Street. They presented themselves as dynamic alternatives to the major studios, promising blockbuster movies, quick profits, and the chance to own a piece of a mini-Hollywood dream factory.
But their fund-raising success created unanticipated problems. With millions more dollars suddenly injected into the industry, the number of movies grew far more rapidly than theater space. Independents soon found themselves fighting each other for the same handful of distributors and the attentions of ever-pickier theater owners. And unlike the well-capitalized studios, which can afford a few bombs between hits, the tiny independents can be devastated by the failures of even two or three movies in a row.
Many have been devastated. The Cannon Group, the De Laurentiis Entertainment Group and New World Entertainment collectively lost more than $110 million in 1987, for instance. To make matters worse, many independents have spent the money they earned from their big stock sales, and the Wall Street crash has cut them off from further funds. Says Harold Vogel, entertainment analyst for Merrill Lynch: "The window of opportunity has been nailed shut."
The experiences of Stephen J. Friedman, the 50-year-old founder of Kings Road Entertainment, epitomize the independents' rise and struggle. What follows, pieced together from interviews and public financial records, is the story of how one studio's exciting debut fizzled into a cautionary tale of great expectations and harsh reality in Hollywood.
IN THE EARLY 1960s, Steve Friedman was an entertainment lawyer at Columbia Pictures in Manhattan. But his ambition was to make movies, and he got his first opportunity in 1969, when he found himself inspired by a Larry McMurtry novel about coming of age in Texas--a novel called "The Last Picture Show."
"McMurtry had had a prior hit called 'Hud' but nobody wanted this book," Friedman recalls, sitting in his Kings Road office overlooking Avenue of the Stars in Century City. "I optioned it for $5,000 a year, got a legal job at Paramount Pictures in Hollywood and tried to talk the studios into financing the movie. It took two years."
The persistent Friedman reminded film producer Gordon Carroll of "a classic hustler--except with Steve there was a sense of absolute faith and trust in what he was selling." Harry Colomby, a screenwriter and producer who later worked with Friedman, says: "He was a lot like that Zero Mostel character in 'The Producers'. He was a little disorganized and comically hysterical, but he was making something he loved."
Friedman's commitment paid off in 1971, when he persuaded Columbia to put up $1 million to make "The Last Picture Show." Directed by Peter Bogdanovich, the spare, black-and-white drama earned Academy Awards for best supporting actress and supporting actor, critical acclaim and more than $30 million at the box office.
Friedman was able to set up shop as a full-time producer with a tiny staff, reading hundreds of scripts and books a year in search of material to film. His string of successes in subsequent years included "Slap Shot" in 1977, "Little Darlings" in 1980 and "Eye of the Needle" in 1981. Almost all his movies were financed by the studios, with Friedman taking a standard producer's fee and a percentage of the profits. But he craved greater independence. If he could come up with production money himself, he reasoned, he could not only exert complete creative control but also keep some of the so-called "ancillary rights"--home video, pay television, TV syndication--and sell them to the highest bidder. They weren't worth much at the time, but Friedman, with his lawyer's background, sensed that they could be.
Still, he acknowledged the impossibility of achieving total self-reliance. The big problem was distribution, which the major studios dominated. They had the multipicture deals with theater chains such as Loew's, General Cinema, and U.A. Communications. They had regional offices around the country feeding movies to 1,000 theaters simultaneously. They had huge marketing staffs plotting multimillion-dollar TV and newspaper campaigns. Against such a juggernaut, an independent such as Friedman had to make a deal with a major studio to get his movies into the theaters. Otherwise, his work might be condemned to languish on a shelf or find itelf condemned to art-house purgatory.