Mgm Is Becoming A Little Shop Of Financial Horrorsby
By the early 1960s, Roger Corman was entrenched as Hollywood's king of "B" movies. A young Jack Nicholson debuted in Corman's 1958 cheapie Cry Baby Killer and went on to star in seven more Corman flicks. Martin Scorsese worked for Corman, as did Francis Ford Coppola and Peter Bogdanovich. Of Corman's 300-odd horror and sci-fi films, the ending he says he likes best came in his 1961 work Creature from the Haunted Sea. An undersea monster devours a mobster, then takes his chest of gold to the bottom of the sea. "That's it," he writes in his autobiography, How I Made a Hundred Movies in Hollywood and Never Lost a Dime. "The monster wins."
Winning for the 65-year-old Corman these days has become distinctly more personal. Along with five smaller creditors, Corman's tiny Concorde-New Horizons Pictures Corp. on Mar. 29 filed a petition in Los Angeles federal bankruptcy court seeking to throw MGM-Pathe Communications Co. into involuntary bankruptcy.
The bankruptcy petition is the latest threat to the once-mighty MGM. And it once more casts doubt on the financial viability of Giancarlo Parretti, the mysterious Italian financier who bought the studio for $1.3 billion last November (table). Parretti declined to comment.
MGM-Pathe has been dogged for months by rumors that it was in a cash bind, crushed under $730 million in debt and reeling from box-office bombs such as Quigley Down Under and Not Without My Daughter. Lately, Hollywood has been abuzz that MGM postponed release of the John Candy film Delirious because it lacked the scratch for TV ads.
Left with nearly $50 million in unpaid bills from Kirk Kerkorian, MGM/UA's previous controlling shareholder, MGM-Pathe fell behind in payments to its vendors. "They were always saying, 'The check is in the mail,' " complains Robert Gouldstone, the owner of Hauppauge Video Manufacturing, a Hauppauge (N. Y.) video duplicator that MGM owed $2 million. Gouldstone says he started getting small monthly payments only after going public with his story in Variety and hiring a lawyer to pressure MGM. The studio says it is rapidly paying its vendors.
Corman, it turned out, wasn't so lucky. Claiming that he is owed $6.1 million under a 1985 agreement with MGM/UA to distribute his films on video, Corman tried unsuccessfully to get his bills paid. "I was getting paid just fine until Mr. Parretti arrived," says Corman. "Then, nothing."
COMING ATTRACTIONS. The Corman-MGM story took a curious twist on Mar. 26, when a state judge ordered MGM-Pathe to set aside assets to cover the $6.1 million. Those assets were to be a London-based chain of theaters that Parretti controls. The only problem, claims Concorde lawyer Edward G. Reilly, is that MGM wouldn't produce documents validating the chain's value. MGM disputes the charges, saying that it didn't provide the data because Concorde didn't file a $2 million bond it says the court ordered Corman to secure. Moreover, the studio says, it disputes the $6.1 million bill.
MGM is resisting the bankruptcy petition and says it has the money to pay its creditors. But Parretti since early February has been talking with Credit Lyonnais about an extension on a $250 million loan. In addition, MGM says it has been told by Credit Lyonnais that it "has the full support of the bank to fund MGM-Pathe's existing payables and to provide support for its ongoing operations."
Inside the studio's Beverly Hills offices, executives are working to keep the cameras rolling. The company stresses that more than a dozen films are in production, as are several TV shows. Delayed for two months, both Delirious and Thelma and Louise, starring Geena Davis and Susan Sarandon, now are scheduled to be released in May. But Corman's bankruptcy lawyers, who say they're worried that the company's assets will be eroded, may yet ask the court to place the studio in the hands of a trustee. Oh boy! This Hollywood fight could offer as many thrills as one of Corman's best horror flicks.
PATHE AND MGM: A TORTURED DANCE MARCH, 1990
Parretti's Pathe Communications agrees to buy MGM/UA Communications for $1.27
Time Warner agrees to help Pathe by providing financing for a portion of the
As deal totters, MGM extends closing, and Pathe lifts bid to $1.31 billion.
Time Warner pulls out, sues Pathe
Backed primarily by financing from Credit Lyonnais, Pathe manages to complete
With cash dwindling, MGM-Pathe postpones release of two films, delays
production of others
MAR. 29, 1991
Six creditors file involuntary-bankruptcy petition against MGM-Pathe in Los