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The 'Talking' at MCEG Is Now About What's Next


With an impressive $127 million in box office grosses, the sleeper hit movie "Look Who's Talking" has helped a little-known independent film company in more ways than one.

The film proved that Management Co. Entertainment Group, the movie's producer, was capable of more than art-house fare. It resuscitated the career of John Travolta, a key MCEG client and the film's star.

And it established the credibility of MCEG's chief executive, a flamboyant young lawyer named Jonathan D. Krane, who arranged the production deal with the film's owner-distributor, Tri-Star Pictures.

For MCEG, now comes the hard part.

Four months after the success that put it on the map, the Santa Monica concern is looking for follow-up hits, hustling to refinance a pile of debt and trying to quiet persistent industry talk that with rapid growth has come internal dissension and disarray.

"This is a critical time for them," says Dennis McAlpine, analyst with the Oppenheimer & Co. investment bank in New York. "They've got a hit behind them, and a lot of questions ahead."

In some ways, MCEG's story illustrates the predicament now faced by most independent movie companies. After booming growth through much of the 1980s, Hollywood's smaller film production and distribution companies have been forced to make a crash adjustment to a world where financing is hard to come by and the major studios have increased their financial muscle and reach.

Krane's efforts to put together the company also illustrate the irresistible lure many feel for building a small film company, against lengthening odds.

Krane, 37, has expanded MCEG in seven years from a tiny talent management agency to a diversified concern with production, distribution and finance arms and with revenue that may approach $200 million this year. His most ambitious step was last July's $83-million acquisition of a much larger foreign distribution company, Virgin Vision, from Richard Branson, the British entertainment and airline entrepreneur.

As he has built the company, Krane, who graduated from Hollywood High at 15 and studied law at Yale, has earned a reputation as inspired, hard working, abrasive and domineering.

"It wasn't easy making all this stuff happen," says Krane, who is married to actress Sally Kellerman. "I have to say 'no' to a lot of people. . . . I'm sure at times I come off like a jerk."

Contributing to the appearance of disarray at MCEG has been the departure over the past several months of a series of top managers. Among them were Al Newman, marketing chief; Glen Shipley, chief financial officer; Michael Lauer, head of business affairs, and Beth Cannon, at one time head of the talent management operations. Last month, Charles Weber, who had been MCEG president for 10 months, abruptly gave up the post to become a consultant to the company.

Company officials describe the turnover as growing pains, brought on in part by its efforts to eliminate overlap after the acquisition of Virgin Vision. "We outgrew some people, and some people outgrew us," says Krane.

Yet company officials also acknowledge that there is lingering bitterness among some who have left the company. "Some people have been spreading nasty things about Jonathan," says William J. Rouhana Jr., MCEG's vice chairman and co-founder. "Hollywood is a jealous place."

MCEG faces a lawsuit from producer Simon Lewis, who contends that Krane fired him without cause as producer of "Look Who's Talking" during the filming of the movie. Lewis says Krane later slandered him by telling a reporter for the trade paper Daily Variety that Lewis was never the film's producer but only Krane's production assistant. Krane says the suit has no merit.

Meanwhile, people close to the company say the investment firm of Kidder, Peabody & Co., which loaned $67 million to MCEG for the Virgin Vision acquisition and is also its investment banker, is keeping a watchful eye on the company. Kidder has been influential in a number of key moves recently, including the appointment and departure of key executives, these people say.

Krane, the company's controlling shareholder, has been intimately involved in every aspect of the MCEG's operations, from talent management and casting to film editing, although he has recently relinquished some role in production.

"Jonathan is the sun, and the rest of the company revolves around him," says a former insider.

The son of a Los Angeles auto leasing executive, Krane founded MCEG in 1982 and worked as chief executive of Blake Edwards Entertainment from 1983 until 1987. He says he met Kellerman, who is 16 years his senior, at a group therapy session.

Krane is known for a taste for expensive Italian clothing, Rolls-Royce sedans and books on advanced physics. He and Kellerman live in a home perched above Laurel Canyon that has drawn wide attention for an addition designed by the architect Frank O. Gehry.

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