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Hollywood's Billion-Dollar Man : Competing studios aren't exactly thrilled with Carolco Pictures' big-spending ways, but Mario Kassar says, hey, it works for him

September 23, 1990|NINA J. EASTON

Carolco Pictures chairman Mario Kassar paid Arnold Schwarzenegger nearly $10 million upfront, plus a hefty chunk of ticket sales, to star in this summer's blockbuster "Total Recall." He threw an elaborate premiere party at the Griffith Park Observatory when "Total Recall" opened--and an even glitzier one celebrating Schwarzenegger at Hollywood's Roxbury Club once the movie topped $100 million in ticket sales.

Even before the success of 'Total Recall" Kassar showered Schwarzenegger with unusual gifts. And when the actor needed to traverse the country to promote the President's Council on Physical Fitness and Sports, Kassar lent him the corporate jet.

"Mario's very generous," Schwarzenegger says. "And he thinks big. There's no limit in his mind. Like 'Terminator 2,' he had to buy the rights (which carried an exorbitant price tag). Anyone else would have said, 'This is a little steep for me.' "

Not Mario. His company paid an estimated $5 million to secure the sequel rights to "Terminator" from Hemdale, according to industry sources. And when Schwarzenegger asked Kassar to buy him his own plane in lieu of his salary on the film, the Carolco chairman pulled out his checkbook. Today Schwarzenegger is the proud new owner of a slightly used but still luxurious Gulfstream G-III, worth about $14 million--care of Carolco Pictures and Mario Kassar.

The Billion Dollar Man. That's what associates dubbed Kassar at last May's Cannes Film Festival, as he stood on his yacht in the Cote d'Azur, in the cool Mediterranean breeze, surrounded by his stable of loyal--and very expensive--stars and filmmakers. It was a long way from the days when Kassar and his former partner Andrew Vajna sat under umbrellas at an outdoor stand along the Croisette, patiently peddling foreign rights to low-grade movies with dozens of others sales agents. That was before the "Rambo" series gave the duo the cash to play in the big leagues.

Now Kassar is a big-time roller, and not just inside the casinos. His willingness to bet on stars and filmmakers by offering huge salaries has made him one of the most popular executives in the creative community. But in the cliquish world of Hollywood executives--where the Lebanese-born maverick has always been an outsider--his free spending ways are being blamed in part for the hyperinflation that has gripped the movie industry for the past three years, pushing moviemaking costs to record heights.

Executives at competing studios grouse that Kassar--and to a lesser degree Vajna, who now runs a tiny production company called Cinergi--are paying prices that the majors have to meet. "They took the tack of paying a lot more money. So when it comes time for the studios to get the same talent, the quotes are a lot higher," says Joe Roth, chairman of 20th Century Fox.

Carolco's high salaries aren't just reserved for stars. With dollar signs flashing in their eyes, directors and screenwriters have signed deals with Kassar that nearly doubled their salaries overnight. "We asked for what was then a staggeringly large amount of money on 'Total Recall,' " says Tom Hansen, director Paul Verhoeven's attorney. "And Mario said 'yes' without a blink. Now 'Total Recall' is a hit, so it turned out to be a good deal for both of them."

Over the past two years, Kassar, who owns 63% of Carolco, has skimmed off some of the top talent in Hollywood: Action directors James Cameron, Verhoeven, Renny Harlin, Ridley Scott, Walter Hill and George Cosmatos. Mass market favorites Adrian Lyne and John Hughes. Critical darlings Alan J. Pakula, Oliver Stone and Robert Redford. He sets them up in nice offices, lends them staff support to develop projects, and then pays them fat fees on the films he does produce--a benefit that Kassar calls "the Carolco premium."

"I'm creating a stable of directors," explains the long-haired, 38-year-old Kassar, whose Lebanese complexion and droopy eyelids combine to create an uncanny resemblance to actor Raul Julia. "The directors attract the good material, and the good material attracts the good talent."

Carolco can afford to pay more than its major studio competitors. "These guys aren't reckless," says Daniel Melnick, whose IndieProd company is now a subsidiary of Carolco. For one, the smaller Carolco operates with lower overhead expenses than the studios. More importantly, Carolco limits its risk on each movie by pre-selling distribution rights to Tri-Star Pictures in the United States and to independent foreign distributors abroad.

By the time the cameras rolled on "Total Recall"--with a budget that inside sources put at more than $60 million--Carolco had covered two-thirds of its cost from overseas sales. The rest was covered by Tri-Star and by American TV and video sales. Analysts estimated that even if the movie flopped, Carolco would lose only about $16 million. (Carolco still has to foot the bill for its own overhead, interest costs and budget overruns.)

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