Hollywood doesn't always embrace aspiring film moguls, and many were skeptical when Giancarlo Parretti came to town in 1987 with a bankroll and an ambition to build the next important film company.
In 1988, the Italian financier won control of Cannon Group, a struggling mini-studio, and on Wednesday his Pathe Communications announced plans to buy MGM/UA Communications for $1 billion. With these and other purchases, Parretti has assembled a diversified international entertainment empire of film libraries, TV and movie studios, and theaters.
But he hasn't convinced the skeptics.
Parretti, 48, a one-time waiter with a cheerful manner and a murky past, still must persuade Hollywood and Wall Street that he can complete the deal and rebuild a frail MGM to the kind of health that will make the studio worthy of its great name.
"He said he'd announce a deal, and now he has," said one Hollywood film executive, who asked to remain unidentified. "But will it close?"
Pathe's ability to finance such a deal "is not apparent from its balance sheet," says analyst Jeffrey Logsdon, of the Crowell, Weedon & Co. investment firm. "You've got to wonder."
And others on Wall Street apparently shared Logsdon's view, for MGM's stock closed Wednesday at $17.75 a share, significantly below the company's offering price of $20.
Parretti, who was said to be flying to Europe on Wednesday and unavailable for comment, has in recent years faced questions not only about his business prospects but also about the sources of his funds and his past business practices. He has been accused in publications here and abroad of money laundering and Mafia ties and has successfully brought a series of libel suits in Europe to defend himself.
The son of an olive merchant from the Umbrian hill town of Orvieto, Italy, Parretti is a short, chunky man who began trying to speak English only two years ago. But if he hasn't yet mastered the language, he appears to have quickly learned the life style of Hollywood magnates.
Last year, he bought an $8.9-million Beverly Hills mansion, which he decorated with paintings by Goya, Picasso and Miro. He has a taste for Rolls-Royce sedans and fine cigars, and he owns a mahogany desk once used by MGM boss L. B. Mayer.
Questions about the extent of his financial resources have been raised as he has bid several times without success for Hollywood properties.
After paying $200 million for control of Cannon, Parretti last year bid unsuccessfully for three struggling independent studios: New World Entertainment, De Laurentiis Entertainment Group and Kings Road Entertainment. Also last year, Parretti was among a long line of companies that bid unsuccessfully for MGM/UA.
But though the first MGM bid failed, Parretti made an important alliance when he hired Alan Ladd Jr., MGM's former production boss, to head his newly formed U.S. production company, which he had named Pathe Communications. While Parretti's abilities as a studio head are open to question, Ladd knows MGM, has Hollywood's respect and presumably the kind of relationships that Pathe will need to turn MGM around.
Pathe itself controls a film library of more than 1,200 titles, a theater network with more than 1,000 screens in five countries, film studios in Italy and a film laboratory in France. Much of these assets came from Parretti's 1989 acquisition of Pathe Cinema, France's oldest film company, for $160 million.
For the nine months that ended last Sept. 30, Pathe reported a loss of $54.6 million on revenue of $276 million.
As Parretti became more visible in Hollywood, he has repeatedly been forced to deny allegations about his past.
Last March, Parretti issued a statement to denounce a story in Business Week magazine that said he had indirect ties to at least one Mafia family and that accused him and Pathe Chairman Florio Fiorini of money laundering through a network of private foreign holding companies. Fiorini, a partner on a number of deals, has become well known in Italy for quickly buying and selling companies in the manner of some American corporate raiders.
The Business Week story, which Parretti denounced as "riddled with false statements," said the pair had been implicated in a series of financial scandals in France and Italy, and it quoted business associates and government officials as saying that they had built their fortune "from business deals arranged by high-ranking government officials."
The story said that early in his career, Parretti had been forced to take a job as a waiter on a transatlantic liner after he was accused of falsifying balance sheets at an Italian hotel he managed.
In interviews, Parretti has ridiculed accusations that his wealth was derived from the Mafia, saying such charges reflected only jealousy.