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

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.)

In contrast, the major studios have their own distribution operations overseas--there’s nowhere to lay off the risk. They collect a bigger share of the spoils with hit movies, but a big-budget bomb can do serious damage to the bottom line. Moreover, the studios have to cover the enormous expense of marketing their movies--costs that sometimes run as high as the productions themselves. Carolco leaves most of that tab to the distributors.

Carolco’s pre-sale strategy depends on attracting big-name stars--and, increasingly, directors--who are proven box-office draws around the world. Otherwise, foreign distributors are less likely to kick in the upfront money.

In contrast, more than one lesser-known actor has walked away from negotiations with Carolco disappointed that the company wouldn’t boost his going rate. “They only reach for someone in that price range when they know they can cover (the salary) with guarantees,” Melnick says.

Battling the Giants

Kassar’s philosophy is that splurging on salaries is one of the few ways they can compete against the majors. “I have to go for it,” Kassar says. “I have to battle the giant studios and some independents. Whether I pay a little more doesn’t really concern me much.”

Carolco generally sticks to movies with mass market appeal, and is best known for hard-core action pictures like the “Rambo” series, “Red Heat” and “Total Recall.” When Kassar has strayed into more serious territory, the results have been mixed.

“Music Box,” directed by international favorite Costa-Gavras, earned Jessica Lange an Oscar nomination last spring, but the box-office results were not impressive. Another critically supported film released last spring, Bob Rafelson’s “Mountains of the Moon,” the story of two British explorers, flopped both here and abroad.

“It was a big disappointment,” concedes Carolco chief executive Peter Hoffman. “It’s probably the best movie we’ve made, as a movie, and it did nothing. Which is a lesson. They want crap. Every time people tell you they don’t, it’s bull. They want crap.”

The cost of making this “crap” has escalated sharply--largely because of stars and directors’ salary demands. Summer action pictures now range from about $40 million to well over $60 million. Last year, the average cost of making a movie jumped from $18 million to nearly $24 million. This year, some analysts predict it will reach $30 million.

That makes it more difficult for movies--most of which lose money--to break even. But the high salaries also create some thorny public relations problems for Hollywood. In baseball, blue-collar fans have been known to boo millionaire players who don’t perform. “It’s a p.r. nightmare,” Sylvester Stallone says. “If I weren’t on the receiving end, I’d be skeptical, too, even antagonistic. But the nature of the business is that big stars sell in foreign territories.”

Hoffman concedes he was concerned that talk of budgets and salaries would hurt the business of “Total Recall.” (It didn’t, he adds.) He still believes that publicity about Stallone’s $16 million salary for “Rambo III” hurt that film at the box office.

After much criticism, Stallone publicly said at the time that he was going to give up his “Rambo III” salary in favor of a percentage of gross profits. In fact, the star ended up taking his $16 million, plus a percentage of gross profits, according to the company’s 1989 proxy statement. (According to Hoffman, the star will be paid “in the same range” for “Rambo IV,” though he stresses that Stallone’s salary on non-Rambo movies is set by what Warner Bros. pays the actor.)

In this environment, Fox’s Roth argues, “It’s ironic that the independents are becoming the major spenders and the major companies have become the minor spenders.”

That, however, may be overstating the case. While Carolco can be accused of setting the pace, its competitors are doing an impressive job of keeping up. The budgets on Fox’s “Die Hard 2” and Paramount’s “Days of Thunder” were in the same league as “Total Recall.” Warner Bros. has figured prominently in a number of the recent high-profile bidding wars for material and is paying Bruce Willis a Schwarzennegger-level salary for “The Last Boy Scout.”

The deal that Schwarzenegger, Danny DeVito and director Ivan Reitman made on Universal’s “Twins” (they deferred salaries for percentages of film rentals) was so lucrative that Schwarzenegger says he made more money from that film than he has from “Total Recall.”

Columbia recently paid Richard Donner an estimated $5 million to direct “Radio Flyer,” which many in the industry say could be produced for not much more than that. And Disney--which has carefully cultivated a Scrooge image for itself--has now gone into business with Vajna’s Cinergi, and reportedly is footing the bill for some of the company’s hefty production costs as well as distributing its pictures.

As Carolco’s Hoffman put it: “Let me assure you, there is a tremendous amount of hypocrisy among the studios on this issue.”

Hoffman says it is absurd to blame his company for rising costs. “I just wish the studios wouldn’t bid so high so I wouldn’t have to pay so much for the talent. When Warner Bros. President Terry Semel complains about it, that’s exactly what I say: ‘Terry, stop bidding so I can get it cheaper.’ Since he ain’t stopping, I ain’t stopping. Look, Carolco only does a few movies. We’re not responsible for the general price levels in this market, and anyone who suggests so is full of soup as far as I’m concerned. We get a lot of flak because we’re the outsider.”

Setting the Standards

But Carolco’s status as the outsider is not the only reason that competitors are pointing the finger. While it’s true that Carolco only makes four to five films a year, its deals have become standards among agents seeking heftier salaries for their clients. “They have continued to set new benchmark prices for talent,” says Jeffrey Logsdon, an analyst at Seidler, Amdec Securities.

Carolco is probably best remembered for paying Stallone the then-unheard-of salary of $16 million for “Rambo III”--$2 million more than the entire budget of “First Blood,” the movie that launched Stallone in that role. Kassar continues to pay his stars huge salaries--Michael Douglas, for example, is being paid $10.5 million with a guarantee of another $4.5 million for a psychological thriller, “Basic Instinct.”

But while the major studios may not pay Rambo-level salaries, they do ante up for their biggest stars. The place where Carolco has most directly set the pace in Hollywood is in its deals with directors and screenwriters. Almost a year after it occurred, talent agents still talk in awe about Kassar’s decision to pay director Renny Harlin $3 million to direct the upcoming film “Gale Force.”

There is no question that Harlin was hot. The 31-year-old Finnish immigrant directed “Nightmare on Elm Street IV,” the most profitable entry in that long series. 20th Century Fox liked Harlin’s “The Adventures of Ford Fairlane” enough to give him that studio’s most important summer picture--the sequel to “Die Hard.” Still, even major directors with strings of hits behind them weren’t earning the kind of money that Kassar agreed to pay Harlin.

But Kassar wanted Harlin badly. He invited the director and his agent, William Morris’ David Goldman, to his Beverly Hills home on a Saturday and said he didn’t want them to leave until they had made a deal. Goldman took his cue. “My agent said if you pay enough, we can make a deal,” Harlin recalls. The director also demanded creative control over “Gale Force,” a project he hopes will become a “modern-day ‘Key Largo.’ ”

Since word of the Carolco-Harlin deal leaked out, salaries of more established directors--like John McTiernan, Richard Donner, Walter Hill, Paul Verhoeven, Tim Burton, James Cameron and Adrian Lyne--have shot up dramatically, an escalation that agents and lawyers in Hollywood say was a direct result. If the less-experienced Harlin was getting $3 million, these guys wanted $4 million, $5 million and even $6 million.

“It opened up a floodgate,” says John Burnham, co-chairman of William Morris’ motion picture department. Adds Bill Block, co-founder of Intertalent Agency: “That deal was precedent setting.”

“It changed everything,” Harlin says. “People started questioning their fees. I’m very happy about it. Directors are the ones behind the movies; they are as important as the stars.”

Kassar has been similarly generous with writers. And while the trickle-down hasn’t been as dramatic yet, agents and lawyers say Carolco’s fees have escalated prices and encouraged top writers to complete scripts on speculation and put them out for bid, rather than work under development contracts with studios.

When a spec script by “Lethal Weapon” writer Shane Black went out for bid early this year, attention focused on the David Geffen Co.’s staggering $1.75 million winning bid. But Carolco actually offered $500,000 more; Black opted to go with Geffen because Joel Silver was producing that project.

Kassar emerged as the winner in the next record-breaking bidding war, paying Joe Eszterhas (“Jagged Edge,” “Music Box”) $3 million for “Basic Instinct” and agreeing to a $1 million producers’ fee for Irwin Winkler. (Later, Eszterhas and Winkler left the project after a creative dispute with director Paul Verhoeven, but Kassar let them keep their full fees.)

According to sources familiar with the deal, the bidding on “Basic Instinct” opened with talent agent Guy McElwaine of International Creative Management taking offers from Kassar and his former partner, Cinergi’s Vajna, of about $2.6 million for both the script and Winkler’s services. The bidding escalated quickly, and other companies joined in. At the end of the day, Carolco narrowly topped bids by Cinergi and Warner Bros.

There’s a story going around Hollywood that Kassar is so competitive with Vajna that during last May’s Cannes Film Festival he found out how long Vajna’s yacht was and immediately traded in his own for a bigger one. The real story isn’t that far off: Kassar was intent on having the biggest yacht in the Mediterranean for this year’s festival--and he rented it. Vajna took out the same yacht that Carolco used the previous year--and, yes, it was a few feet shorter.

Regardless of the relations between the two men since Kassar bought out Vajna last November, some Hollywood agents appear to be betting that a spirit of competition exists.

When a script called “The Stand”--written by Oscar-winner Tom Schulman (“Dead Poets Society”) and with director John McTiernan and actor Sean Connery attached--went out for bid, the Creative Artists Agency, which represents Schulman, made sure that Carolco, Cinergi and Larry Gordon’s Largo Entertainment were among the bidders. By the end of the day, Cinergi had topped Carolco, agreeing to pay nearly $20 million for the project, including the salaries of McTiernan, Connery, Schulman as producer and Donna Dubrow as executive producer.

‘Love of the Show’

Of the original duo who founded Carolco, the Beirut-born Kassar is by far the more flamboyant. “He loves spectacle, as we mean it in French,” says Samona Benzakein, an international public relations consultant based in Paris. “He has a true love of the show.”

Kassar’s show at last May’s Cannes Film Festival was probably the most elaborate party ever staged at that seaside affair. He threw a party at the Grand Hotel du Cap--perhaps the most luxurious hotel on the French Riviera--and flew in his favorite musicians, the Gipsy Kings, for entertainment. As guests mingled with Carolco’s star actors and directors (and a few who haven’t signed on yet, like Mick Jagger and Jerry Hall), a massive fireworks display across the bay lit up the sky with the titles and cast of Carolco’s upcoming movies.

Schwarzenegger danced with Stallone. Kassar beamed. And the photos were beamed to media around the world. “The distributors were thrilled,” Benzakein recalled.

So were Carolco’s Hollywood guests. In Los Angeles, Kassar had loaded up the company jet with Michael Douglas, Schwarzenegger (followed by wife Maria Shriver, the baby and the nanny), and most of the company’s filmmakers, and flew them to France. When they got off the plane they were greeted by a string of black Mercedes limousines--and police escorts. As sirens wailed, Carolco’s guests were escorted through the streets of Nice and on to the Hotel du Cap on a bluff high above the Cote d’Azur.

“When you get to a certain point and you know you can get your movies made, what counts is personal relationships,” Harlin says. “Mario knows how to make people feel special.”

Kassar enjoys the kind of lavish lifestyle so often found among entrepreneurs who have made quick fortunes in Hollywood. The cigar-smoking executive is shuttled around Los Angeles in a stretch limousine with “Carolco” license plates and lives in a Beverly Hills home that guests say is surrounded by walkie-talkie-wielding security guards. “He loves good food and wine,” says Harlin, who still raves about the case of 1970 Chateau Cantemerle that Kassar bought him.

Kassar also has a love for the baccarat tables. “He’s a big-time gambler,” Stallone says. “I’ve seen him take an amazing amount of money, throw it on the table and lose. When there’s only $50,000 left, he’ll take that to the roulette table, put it on a 32-1 odds and hit. Then he pockets the money and goes back to the baccarat table. That guy has brass cojones. He doesn’t even sweat.”

Gambler’s Instincts

That penchant for gambling is a trait that associates say he carries over into his business life. “He’s very, very shrewd,” Stallone says. “He’ll shoot from the hip. He’ll take a chance.” Says Oliver Stone, who is directing “The Doors” for Carolco, a film based on the life of rock star Jim Morrison: “Mario’s attitude is that of a gambler. He plays big. But once he commits to you, he lets you go.” Stone adds that Kassar, like an experienced gambler, knows how to walk away from a lost deal--or a movie that flops.

Directors and producers who work for Kassar insist that their loyalty stems not just from the hefty salaries he pays, or the parties he throws them, or the personal gifts he so carefully chooses for them (Schwarzenegger recalls complimenting Kassar on his briefcase and then opening up a box at Christmastime to find the same one).

“Maybe it was the money in the beginning,” conceded “Rambo II” director George Cosmatos. Now, he says, filmmakers are drawn to the company in part because Kassar has assembled such an impressive roster of directors. “He loves movies, and he respects creative people.”

“He’s instinctual,” says Adrian Lyne, who directed “Fatal Attraction” and the upcoming Carolco film “Jacob’s Ladder.” “He’s a man who has hunches and the balls to follow up on them.”

Adds Schwarzenegger: “He has instinctive feelings about what works. He’s not afraid to make a decision in a minute.”

Filmmakers say they also value the ability to deal with one person, rather than the series of executives that make up the chain of command at a studio. “Mario gives you a straight answer,” Stone says. “You never see a bureaucracy or an entourage.”

Family Connections

Kassar’s career in movies dates back to his years as a teen-ager, when he broke into the film distribution business by convincing European producers to let him sell the Middle East and Far East rights to their movies for a 5% commission. Kassar, whose father was a film distributor, grew up in several European cities--he speaks five languages--but had also maintained family connections outside the continent.

When the young Kassar found out that his distributor and producer clients were meeting behind his back--cutting deals themselves to avoid Kassar’s commission--he decided to invest the money to buy the foreign rights himself. He made his first acquisition with a $5,000 investment, borrowed from his godfather, a banker named Josef El Khoury who would later foot the bill for Carolco’s first major movie--”First Blood.”

In 1975, Kassar met Vajna, and the two decided to go into business together in Hollywood--figuring that if they could make a decent living selling the rights to foreign films, there must be a goldmine in selling the foreign rights to Hollywood films.

Vajna’s career up to that point had been more circuitous. As a 12-year-old, he escaped from Hungary to Canada after the 1956 Soviet crackdown, and eventually reunited with his parents in Los Angeles. He graduated from UCLA and went into the wig styling business here, and then manufactured wigs in Hong Kong. After selling his wig business, he stayed in Hong Kong and started a film distribution and acquisition company called Panasia Films Ltd.

When Vajna and Kassar teamed up in the mid-70s, the foreign distribution scene in Hollywood was full of mavericks who played by few rules. “It was like the Wild West,” recalls one distributor.

They were used car dealers--only the beat-up Chevrolet was a B movie, the customer was a distributor from Taiwan, and the window sticker was a hastily pulled together “press kit” with a overwrought synopsis of the plot and a list of unfamiliar credits for its unknown star (who, of course, was about to become the next Clint Eastwood).

When Kassar and Vajna tired of peddling movies that they had no control over, they got involved in the financing of some Canadian films used as tax shelters by their investors. Then came Rambo.

The project had been languishing on Warner Bros.’ shelf for the better part of a decade. Several attempts to turn David Morrell’s book “First Blood” into a movie had failed. “A psychotic Vietnam vet was not exactly hero material,” Stallone recalls.

But the Carolco duo was convinced there was a commercial movie in that book. Backed by Kassar’s godfather, they bought the rights, and hired Stallone and Kirk Douglas. It was Douglas, not Stallone--whose career was on the rocks at the time--that Carolco was counting on to sell the movie overseas.

It seemed an ill-fated investment. Douglas quit. Production problems on the Canadian shoot mounted (“On some days there were only three hours of sunlight,” Kassar recounts). And the pair couldn’t convince foreign distributors to invest.

First, they knocked on doors at the Milan film festival. No one nibbled. “I heard every story in the world,” Kassar recalls. “Here I was, $14 million in the red, and nothing was sold. Everyone was nervous.”

A few months later came the American Film Market. Desperate, Kassar and Vajna decided to spend even more money and splice together 55 minutes of the unfinished film--four times as long as the usual preview given distributors. Even today, distributors remember the buzz that film clip generated. Within hours, rights to “First Blood,” directed by Ted Kotcheff, were sold out.

Rambo hit America at precisely the right time. With President Reagan ushered into office by a rising conservative sentiment, the gun-toting Rambo character became a hero to millions of young men, grossing $120 million worldwide. “Rambo: First Blood Part 2” was even bigger, drawing $270 million in ticket sales worldwide.

Meanwhile, Stallone got red-carpet treatment. The company paid $1 million for the actor’s fleet of bodyguards and home security, gave him a seat on the board of directors, and dramatically escalated his salary. When Stallone, weary of the business side of making movies, decided to end a 1986 partnership between Carolco and his production company, White Eagle, Carolco bought him out. “He made a nice piece of change,” Hoffman says. Only one film, “Lock Up” came out of that partnership, and it opened to disappointing ticket sales in the United States.

Now Carolco is trying to accommodate Stallone’s creative desire to break out of action roles. After he finishes the action-packed “Dead Reckoning” for Carolco, Stallone is scheduled to start a John Hughes comedy opposite John Candy. “Rambo IV,” expected to start shooting in early 1992, will probably reflect Stallone’s interest in the environment, and may even take place in the Brazilian rain forest.

With the success of the first two Rambo movies, Carolco executives quickly set out to diversify their company as a buffer against movies that flopped. Analysts say that the company’s moves into the more stable video market through its 54% ownership of LIVE Entertainment and into TV syndication through the subsidiary Orbis have prevented Carolco from going the way of other failed independents in the 1980s. In addition, unlike failed independents that had used pre-sales, Carolco requires its distributors to back up their promised advances with a letter of credit.

Even a company that can cover its movie budgets through pre-sales still has to pay overhead and interest costs. “The brilliance was that they used the Rambo movies as a platform to very quickly put together a company with solid assets behind them,” says veteran film producer and distributor John Hyde. “A lot of that was Peter Hoffman.”

Hoffman was a tax attorney at Gipson Hoffman & Pancione, and before that, Irell & Manella, before he took over at Carolco in 1986. He was one of an elite corps of lawyers in town who helped producers structure tax-sheltered movies. Now, with his beard and stylishly casual clothes, Hoffman looks more like a Hollywood producer than a tax lawyer. It’s been said by many that Hoffman--who gets most of the credit for building the company--is either the most brilliant man in town, or the most foolish: Carolco’s future will decide which is right.

Meanwhile, Hoffman is using his arcane tax skills to take advantage of a 28-year-old clause in the U.S. tax code that enables American corporations operating overseas to shelter much of their foreign income through subsidiaries set up in places like the Netherlands Antilles.

Carolco’s focus on the foreign markets has enabled the company to make money even on movies that look like flops when they open here. “Rambo III” was a big disappointment in the United States--$55 million in ticket sales on a movie that cost about that much to make--but overseas it enjoyed twice as much business, combining with “Red Heat” to boost the company’s net income by nearly 150% in 1988. This summer, “Air America” did lackluster business here, but Carolco is banking on Mel Gibson’s name to generate huge ticket sales at foreign theaters.

Carolco is riding high now, with the success of “Total Recall” which has grossed $117.5 million in the U.S. alone. This follows an unimpressive year in 1989 during which Carolco had no major summer releases and a string of disappointing performers: “Deepstar Six,” “Lock Up,” “Johnny Handsome,” “Music Box” and “Mountains of the Moon.”

But Carolco’s current and future prospects were strong enough to convince Japan’s Pioneer Electronics and France’s Canal Plus Productions, a pay-TV company, to invest a total of $90 million in the company last spring.

While Carolco’s pre-sale strategy has worked well in the past--keeping both Carolco and its foreign distributors well in the black--it’s not clear that this strategy will remain viable if movie budgets continue to skyrocket.

Foreign distributors may have been wowed by Kassar’s party at Cannes, but few of them were thrilled by the price tag on the package of movies Carolco was peddling, which included Stone’s “The Doors”; Schwarzenegger’s “Terminator 2,” written and directed by James Cameron; “Universal Soldier” starring Jean Claude Van Damme and Dolph Lundgren; Stallone’s “Dead Reckoning”; a Steve Martin comedy called “L.A. Story”; “Dangerous Passion,” a TV movie; and “Blood Moon,” an Australian pickup. Some distributors grumbled that the package was too expensive and a couple of the films were too risky.

Carolco ended up selling rights for Australia, France, Scandinavia, Spain and Latin America to Columbia/Tri-Star, rather than to the independent companies that usually handle its films.

“Carolco projects are always high-ticket,” says Kathryn Cass, executive vice president of Australia’s Village Roadshow, an independent distributor that passed on the last package. “We’ve bought every other package. But we felt these were far too expensive given the current marketplace conditions.” She noted that the country’s TV networks are in poor financial health and can’t be counted on to help pick up the costs.

Hoffman responds that the foreign distributors always plead poverty in order to squeeze a better deal out of Carolco. “Our biggest problem is getting a fair deal, not killing these guys,” he says.

Some analysts say the international markets are maturing, and can’t be counted on for much growth. But when Hoffman looks across the globe, he sees the French homes that are just beginning to enjoy a diversity of TV stations, the German theaters that are scheduled for refurbishing, the Far East households that still don’t have VCRs. In Hoffman’s view, there are dollars to be mined all over the world.

If Carolco is to continue paying big salaries, its future depends on Hoffman’s scenario being the correct one. “As they continue in this high-budget, roll-of-the-dice game, the real question will be whether the international marketplace can support it,” says Eddie Kalish, president of the international Kalish/Davidson Marketing Inc.