How two out-of-control Hollywood suits took Sony for a $3.2 billion ride
By LAWRENCE DIETZ
Photo courtesy of Jon PetersMarlene Dietrich once said, "There is a gigantic difference between earning a great deal of money and being rich." It's a lesson never learned by many in the movie business.
Certainly not by the two protagonists of "Hit & Run," a fascinating new book by Nancy Griffin and Kim Masters (Simon & Schuster, $25) that explores in painstaking and sometimes painful detail the repellent careers of Peter Guber and Jon Peters, who between 1989 and 1994 managed (or, more accurately, mismanaged) Columbia Pictures to a cumulative $3.2 billion dollar loss. Its parent owner, Sony Corporation, was forced to write off the loss, one of the largest and most humiliating beatings a Japanese corporation had ever endured.
The two men -- Peters a hairdresser turned producer, Guber a producer turned studio executive -- achieved their dubious place in corporate and entertainment history by squandering much of their time and energy showering themselves (and to an extent, favored subordinates) with money and perks, overseeing extravagant and costly renovations of company buildings and individual offices, while the studio they headed turned out a series of expensive flops.
Their story violates one of the first rules of Hollywood, the one that demands that in every story there be some main character to root for. Not here. Peters' penchant for violence -- his idea of the way to win an argument with an underling was to tear the shirt off the man's back -- finally overwhelms whatever sympathy a reader may have for his suffering the death of his father when he was 10.
Guber came from a middle-class home, and while ambition and downright greed have never been detriments in American success stories, his managerial style (withdrawn where decisions had to be made, sexually forward with women), willingness to sacrifice principles and, ultimately, friendship (he tired of his partner's antics and allowed Sony to fire Peters), make him as unsympathetic a character as could be drawn this side of Dickens. To be fair, when Guber wasn't talking dirty to women, he was known to have a golden tongue -- a screenwriter friend told me with a chuckle that 20 years ago Guber, then a mere studio exec, crawled across his office on his knees, professing his love of the writer's script, after delivering the news that the studio had decided not to make the movie from it.
Nor do we commiserate with the people who wrote the checks. Akio Morita, the legendary founder of Sony, had it in his head that his beloved Betamax videotape system would have survived had Sony owned the source of software, as if consumers could have been bludgeoned away from VHS by some hit movies being available only on Betamax. Morita was ready to buy a studio, and didn't bother with such mundane details as the dubious strength of Columbia's existing management -- the equivalent of buying a used car without asking about that dark, smelly puddle underneath.
Morita and Sony were encouraged to make the deal by the head of CBS Records in the United States, Walter Yetnikoff, who had flourished when Sony bought the record company from Larry Tisch, the penurious new owner of CBS. Yetnikoff, famously temperamental and profane, dreamed that he would be the man chosen to run the combined studio-record company division of Sony, a fantasy that has to be measured against the fact that he checked into a detox center as the deal was going down.
Morita's main man in the U.S., Mickey Schulhof, oversaw the making of the deal to buy the studio, as well as to hire Guber and Peters to run it, even though they were under contract to Warner Brothers. No one bothered to clear their hiring with Steve Ross, the head of Warners (itself in the midst of merger negotiations with Time Inc.), a mistake that enraged Ross, who forced a lawsuit that wound up costing Sony about $500 million to settle, above the $3 billion-plus it was paying for the studio, and $200 million to purchase Guber and Peters' production company.
One keeps waiting for Schulhof to come to his senses, but the authors speculate that he was seduced by Guber's glib salesmanship, the constant travel in the company's private jets and the thrill of proximity to all those movie stars.
The supporting cast doesn't fare much better. Mike Medavoy, hired to run Columbia's Tri-Star division, paid too much attention to national politics, which allowed his enemies to undermine him with Guber. Medavoy's wife, Patricia Duff Medavoy, complained that overseeing the renovation of their house gave her chronic fatigue syndrome. As her husband's fortunes at the studio waned, she managed to recover enough from her illness to have an affair with billionaire financier Ronald Perelman (for whom she left Medavoy).
Medavoy's counterpart at Columbia, Frank Price, is characterized as being too lethargic about putting films into production -- Price liked to read scripts and work with the writers to improve them, a time-consuming exercise which made him vulnerable to being replaced by Mark Canton, a wildly ambitious executive who importuned filmmakers to give him credit for work done by his predecessor.
Where was the press when all of this was going on? The Los Angeles Times did manage to publish a piece about problems with the finished version of "The Last Action Hero," but the freelance writer it used somehow got snookered by unreliable sources into reporting an extremely unfavorable public screening that never occurred, rather than the even worse one which had. Later, the Times editor in charge of movie coverage killed an item about a disastrous preview of James Brooks' musical "I'll Do Anything" in exchange for access to upcoming screenings of the film, and an interview with Brooks.
Variety editor Peter Bart, an old friend of Guber, sat on investigative pieces by one of his reporters who had gotten his hands on some internal Columbia documents. When the writer finally produced a single story that he thought would please Bart, he found that his copy had been watered down without his knowledge. (Even without Bart's friendship with Guber, entertainment trade papers are rarely brutal to the studios, which provide the lion's share of their advertising revenues.)
Two people do emerge from the book relatively unscathed. Heidi Fleiss ran the call girls who serviced Columbia executives, but even after her arrest, Fleiss kept her mouth shut and didn't name names.
The other paragon of what can be called virtue and good sense is Arnold Schwarzenegger. He helped energize the morale of the Columbia workers by appearing at a company event, and worked mightily to promote "The Last Action Hero." After the movie reaped bad press, and then failed to live up to the studio's expectations, Schwarzenegger didn't distance himself from it, but calmly analyzed what had gone wrong (his fans don't want to see him in a PG-13 movie, where there isn't a serious body count). He refused to blame the studio: "I [could] sit here and say, 'Those motherfuckers, they didn't come through with the promise -- the ad campaign was shitty, [director] John McTiernan is a low-forehead, never again -- boom.' [But] Everyone did their best, and no one shortchanged anyone."
Schwarzenegger certainly knows how to deal with the press. Columbia executives went ballistic after the L.A. Times report about the bad screening, and threatened to pull all the studio's advertising, some $5 million-worth, from the paper. After much huffing and puffing, Columbia backed down. But when Peter Bart wrote a column giving Schwarzenegger some suggestions on how to repair his "image whiplash" (which the authors report set studio executive Mark Canton "into yet another rage") the movie star sent Bart a letter: "Dear Dr. Bart," Schwarzenegger wrote by hand, enclosing a picture of himself wearing a huge neck brace and being ministered to by a doctor in a white coat, "Took your prescription and am feeling better already. Arnold."
One caveat: although the authors write that the book has been exhaustively researched, in the first chapter they have Peters styling hair in "the venerable Nanduskins department store" in Philadelphia. I grew up in Philadephia, and Nan Duskin was no more a department store than Henri Bendel. I mention this only because in a book that paints so many dark pictures of so many people, any factual mistakes can be devastating, and the one I happen to know about makes me wonder if there are others I didn't catch.
Peters and, especially, Guber, were surely unaware of Dietrich's idea of the difference between a lot of money and being truly rich. (In Philly, old money in the imposing houses I visited as a kid meant crystal decanters on the bar -- filled with mid-price brands.) No doubt they thought they were only acting like others in Hollywood, where financial excess and self-indulgence are the order of business even during what are thought of as hard times. No doubt they never heard Calvin Coolidge's admonition, either: "Prosperity is only an instrument to be used, not a deity to be worshipped."
Lawrence S. Dietz is a regular contributor to Media Circus.