Another lawyer for Kavanaugh, Martin D. Singer, said in a letter to The Times that his client mistakenly believed he had a UCLA degree and "found out later that several credits had not transferred over from UC Santa Barbara to UCLA and thus he had not officially 'graduated.' "
A few years after his setbacks as a venture capitalist, Kavanaugh emerged as a Hollywood deal maker.
For The Record
Los Angeles Times Wednesday, March 19, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 63 words Type of Material: Correction
Studio financing: An article in Section A on Feb. 16 about hedge-fund financing of Hollywood movies said studio projections for films in an investment pool known as Gun Hill Road I indicated that "Doom," "The Holiday" and "Stranger Than Fiction" might lose a combined $100 million over seven to 10 years. The projected losses for those three films are actually about $84 million.
For The Record
Los Angeles Times Friday, March 21, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 45 words Type of Material: Correction
Studio financing: An article in Section A on Feb. 16 about hedge-fund financing of Hollywood movies incorrectly identified Och-Ziff Capital Management as an investor in a slate of films known as Gun Hill Road I. Och-Ziff was not an investor in Gun Hill Road I.
By 2006, Details magazine's "Power 50" list of big shots under 42 lauded him for "saving Hollywood's ass, a couple billion dollars at a time." Vanity Fair listed him among a cadre of media up-and-comers under 40. A profile in the inaugural issue of Conde Nast's Portfolio in May called him "quick-witted and relentless."
One of the first movie transactions Kavanaugh helped broker was a $528-million fund called Virtual Studios, through which Stark Investments, the Milwaukee hedge fund, co-financed a slate of films at Warner Bros. beginning in 2005. The second picture in the package, the would-be blockbuster "Poseidon," bombed.
"Poseidon" cost more than $150 million, eating up a sizable portion of the fund's capital. As a result, the other films in the slate would have to do better than originally projected for the package as a whole to generate the desired returns.
Disappointments such as "Poseidon" prompted some slate investors to take a closer look at the structure of the deals. Some concluded that the terms tended to favor the studios at their expense.
The studios, for instance, typically were permitted to recoup their marketing costs up-front. They also collected distribution fees of as much as 15% of revenue before investors started to see any payback. These provisions reduced the incentive for the studios to control their costs.
The studios could also choose which films to put in the slates. They customarily gave the funds their most uncertain projects -- such as costly films lacking overseas appeal -- while keeping the surest blockbusters to themselves.
The slate funds were essentially "risk management vehicles," said entertainment industry analyst Harold L. Vogel of Vogel Capital Management in New York. "The studios are pushing the risk to the investors."
This came into focus as the tide ran out on the DVD boom. After years of 10% to 15% annual growth, sales and rentals flattened beginning in 2005. This sharply reduced the profitability of movies. Nevertheless, studio spending on production and marketing kept rising.
