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[HOLLYWOOD] MGM's Harry Sloan - Works w/Producers w/o Needless Costs

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  • madchinaman
    A mogul returns to finish what he started Harry E. Sloan left Hollywood and got rich in Europe. Now he s back, trying to revive MGM s faded fortunes. By
    Message 1 of 1 , Mar 4, 2007
      A mogul returns to finish what he started
      Harry E. Sloan left Hollywood and got rich in Europe. Now he's back,
      trying to revive MGM's faded fortunes.
      By Claudia Eller, Times Staff Writer

      His office looks more like it belongs to a New Age guru than a type-A
      chief executive crusading to save one of Hollywood's most storied
      movie studios.

      Dozens of crystals, an amethyst cluster as big as a boulder, an amber
      lion, running-water sculptures and other talismans populate his
      corner suite at Metro-Goldwyn-Mayer Inc.'s headquarters in Century

      Shortly after becoming chairman and chief executive 18 months ago,
      Harry E. Sloan even changed his office phone number, replacing the 4s
      with 8s because they're lucky, according to Chinese tradition.

      "The whole idea of feng shui is to create good luck," said Sloan,
      whose spiritual advisor is his Malaysian Chinese wife, Florence. "We
      all need good luck."

      At the moment, the 56-year-old entrepreneur needs an extra-large dose.

      He's undertaken a colossal challenge: to rescue from near obscurity
      the historic studio behind such movie classics as "Gone With the
      Wind" and "The Wizard of Oz."

      After the 80-year-old studio was sold in 2005 by billionaire Kirk
      Kerkorian to a consortium of investors including Sony Corp.,
      production and distribution of new movies was halted. MGM was reduced
      to a small film label under Sony Pictures.

      Sloan has never run a major studio, an especially difficult feat
      today, when new technologies are upending the business and rising
      costs are forcing retrenchment.

      Moreover, he's been absent from the Hollywood scene for the last 15
      years, several time zones away, building a broadcasting business in
      Europe that he sold in 2005 for $2.6 billion.

      He personally pocketed about $200 million from the sale, yet that
      fortune did not bring Sloan any fame back home. His name is absent
      from the power lists occupied by his Hollywood friends, a tightknit
      circle that includes CBS Chief Executive Leslie Moonves.

      Now, this little-known media mogul, originally from Torrance, is
      looking for his own recognition.

      "So, why am I doing this? Why here in Hollywood?" mused Sloan, who
      lives in an English Tudor mansion overlooking the 18th hole of the
      Bel-Air Country Club. "I want to pick up where I left off in my

      In the 1980s, Sloan tried to build the now-defunct New World
      Entertainment into a full-fledged studio, but it never rose above
      second-tier status. "It was an unfinished foray into the movie and TV
      business," he said.

      So 20 years later, Sloan is at it again. He has put MGM back in the
      movie business, enlisting an approach to movie economics that he
      hopes fixes what's wrong with Hollywood's "broken studio system."
      Sloan's strategy at MGM is based on the belief that studios excel at
      marketing and distributing movies but fail at developing and
      producing them cost-effectively.

      So at MGM, Sloan is leaving the moviemaking to outside producers
      whose budgets are not burdened by unnecessary costs. MGM also
      operates without the enormous overhead and infrastructure big studios
      carry, with only a single building, no back lot or sound stages and
      only 400 employees. Sloan, who began his career as an entertainment
      attorney representing television stars, believes his best bet is to
      align MGM with talent — even actors who may have fallen out of favor.

      He recently struck a deal with Tom Cruise to revive MGM's dormant
      sister label United Artists after the actor was fired by Paramount
      Pictures and snubbed by other studios.

      MGM also agreed to promote and release "Rocky Balboa" last December,
      the latest in the franchise, despite the view that its star,
      Sylvester Stallone, was box office poison.

      "Selling me at that time was no easy task," Stallone said. "You would
      have had better luck selling anthrax in a Pez dispenser."

      Though Stallone gives Sloan credit, there are plenty of doubters.
      Many question whether the man known as a shrewd salesman can actually
      pull off this ambitious plan to salvage MGM. In the eyes of some,
      he's little more than bluster. But in typical Hollywood fashion,
      detractors were willing to talk behind his back but wouldn't attach
      their name to derogatory remarks.

      For Sloan, such skepticism only drives him harder.

      "It's exciting, the jeopardy that it can go either way," said Sloan,
      who loves taking risks and finds gambling a thrill. "I'd always end
      up doing better in Vegas when I began the first day by losing. I like
      having to come from behind."

      Meager beginnings

      Sloan grew up in a working-class Jewish family. His father worked in
      the parts department of Douglas Aircraft, and his mother was a
      substitute teacher.

      "Harry grew up pretty close to poor, and he worked hard to get out of
      that," said Larry Kuppin, Sloan's former business partner. "It
      definitely affected him. He has a strong drive to succeed."

      But Hollywood was far from his sights in his youth. Politics were his
      passion. He plastered his bicycle with "John F. Kennedy for
      President" stickers.

      A self-described political junkie at UCLA, Sloan went to Loyola Law
      School at night and hoped to run for office or get a political
      appointment. But the Watergate scandal changed his mind. "Suddenly,
      100% of the criminals were lawyers," Sloan recalled.

      So, in 1974, he instead became a lobbyist for the Screen Actors Guild.

      Two years later, leveraging his relationships with agents and actors,
      he formed his own entertainment law firm with Kuppin. He represented
      such hot young TV stars as Ron Howard from "Happy Days," Gary Coleman
      from "Diff'rent Strokes," and John Schneider and Tom Wopat
      from "Dukes of Hazzard."

      He may not have invented the "sickout," but Sloan routinely
      outmaneuvered the studios by instructing clients to walk off shows to
      get them raises.

      Former Warner Bros. Chairman Bob Daly was angry for years after
      Sloan's "Dukes of Hazzard" clients quit the popular CBS series and
      sued the studio for allegedly cheating them out of millions of

      "He didn't ask us for more money; he sued us for merchandising fraud
      the day of our annual meeting," recalled Daly, who said it was an
      embarrassment to the company's chief executive, the late Steve Ross.

      The two stars eventually got a decent pay increase.

      In 1983, the two lawyers traded in their careers and scraped together
      $2 million to buy New World from B-movie director Roger Corman.

      The pair took full advantage of the go-go 1980s, when junk bonds were
      plentiful, to build New World into a leading supplier of prime-time
      TV shows, including "The Wonder Years."

      But the company almost went broke, Kuppin said. When the stock market
      crashed in 1987, New World's glory days ended. "We were a little too
      anxious to expand and have bragging rights," Kuppin said. "We were
      arrogant guys, full of ourselves."

      They still managed to sell the company to financier Ronald Perelman
      in 1989 for nearly $300 million, including debt. Sloan walked away
      with $25 million. He said he was so stressed out after the sale that
      he considered retiring to his beach house in the Malibu Colony. He
      was 39.

      "It lasted seven minutes," Sloan said. "I didn't know what to do with

      When he was running New World, he had marveled as the value of U.S.
      TV shows had soared internationally. When he learned that TV stations
      in Germany, France, and the United Kingdom had been snapped up as
      those countries privatized broadcasting, he identified less obvious
      opportunities in Scandinavia and then Eastern Europe.

      He bought a national cable channel in Norway and a local station in
      Denmark. Scandinavian Broadcasting System was born with a $5-million
      investment by Sloan. It eventually grew to 16 TV stations, 21 premium
      pay channels and 11 radio networks in nine countries.

      The company went public in 1993 and was sold in 2005 — when its
      annual revenue topped $1.3 billion — to two private equity firms:
      Kohlberg Kravis Roberts & Co. and Permira.

      But Sloan was frustrated that he could never break into the big
      European markets. "It was almost a great company," he said.

      Returning to his roots

      Back in Los Angeles, Sloan had become chairman of Lionsgate, an
      independent film and TV company SBS had invested in to supply content
      for its channels. Lionsgate's mission was to take on the giants by
      being more cost-efficient. During his tenure, Lionsgate produced
      films, but as chairman, Sloan had no operational role.

      Sloan stepped down from Lionsgate's board, possibly sensing a chance
      to replicate that vision under the esteemed MGM banner. In the summer
      of 2005, after MGM was acquired by the group led by Sony Corp. and
      Providence Equity Partners, Sloan asked his friend Jonathan Nelson,
      who headed the private equity firm, to put him on MGM's board. That
      fall, when the investors were looking to hire a new chief executive,
      Sloan pitched himself.

      The owners bought it.

      "We needed an entrepreneur who was going to try to do things
      differently," Nelson said. "Harry is a guy who is always looking for
      solutions. He'll never stop trying to find the answer."

      No sooner had Sloan taken over than he sucker-punched Sony by
      wresting control of MGM. After the buyout, Sony had dismantled MGM,
      slashing its staff from 1,500 to 250 and focused on selling DVDs of
      MGM's vast library of 4,000 titles.

      Sloan persuaded the MGM board to dump Sony as MGM's distributor of
      DVDs and TV shows because of poor performance and cut a new deal with
      rival 20th Century Fox.

      Sloan also reversed course by announcing that MGM would get back into
      theatrical distribution. To fill the pipeline, he made deals with
      outside producers such as Harvey Weinstein to supply finished movies.

      But so far, nearly every release MGM has handled has flopped at the
      box office. Though the company gets a distribution fee no matter how
      a film performs, such unmemorable titles as "Blood and Chocolate"
      and "Material Girls" have led some to wonder whether the roaring lion
      logo is a kiss of death.

      The one exception was a film MGM had a hand in helping
      finance: "Rocky Balboa," a $24-million sequel that exceeded industry
      expectations by grossing nearly $70 million domestically.

      Part of Sloan's strategy is to continue capitalizing on other MGM
      franchises such as the lucrative "James Bond" and "Pink Panther"
      series. MGM also plans sequels to the popular caper movie "The Thomas
      Crown Affair" and to "Terminator." Such recognizable titles give MGM
      more clout with theater owners, DVD retailers and international TV
      buyers. Increasing his leverage also drove Sloan's aggressive play to
      bring Cruise aboard.

      In November, shortly after Viacom Inc. Chairman Sumner Redstone had
      banished Cruise from his longtime home at Paramount Pictures for his
      off-screen antics, Sloan called the actor's representatives.

      "When there was all this controversy, Harry stepped up and very
      vocally said he'd love to be in business with Tom Cruise," said the
      star's longtime producing partner, Paula Wagner. "When we moved out
      of Paramount, he offered us office space."

      Cruise and Wagner quietly moved to MGM. While they were weighing
      their options, Sloan cooked up the idea of having the pair revive
      United Artists, offering them a 35% ownership stake and the chance to
      run a financially and creatively autonomous production company
      without interference from a big studio. Sloan is in the process of
      raising a $500-million fund to finance and market UA films.

      Some wonder why a star of Cruise's caliber would hitch his wagon to a
      man he didn't know and whom many in Hollywood are still sizing
      up. "Harry offered us an opportunity to put into motion a dream we
      had to create a company that embraced the artist," Wagner said.

      Sloan's end game? To double MGM's nearly $5-billion value over the
      next few years and take the company public or sell it. He has more
      than $30 million of his own money at stake.

      His penchant for deal-making has fueled rumors about some interim
      matchups for MGM. In part, that speculation stems from his deep
      friendships with other Hollywood figures.

      Going back decades, Sloan has been part of an old-boys club of TV
      executives that, in addition to Moonves, includes Lionsgate Chief
      Executive Jon Feltheimer; Ted Harbert, chief executive of Comcast
      Entertainment Group, which includes channels such as E! and G4; and
      their mutual attorney Ernest Del, among others. They celebrate one
      another's birthdays and vacation together.

      "The group has been together for over 20 years, and we're still as
      close today as we were then," Moonves said. "We've grown up together,
      we've matured together and we compete with each other."

      Feltheimer and Sloan, who worked together at New World, have toyed
      with someday merging the two lions, MGM and Lionsgate. But Sloan
      acknowledges he first must make MGM matter again.

      As for the naysayers, Moonves says it's unwise to bet against someone
      as determined as Sloan: "Harry likes to win."




      Harry E. Sloan


      Born March 8, 1950, in Torrance. Father worked in the parts
      department at Douglas Aircraft; mother was a substitute teacher and
      helped found the first temple in the South Bay.


      Four children: two daughters from a former marriage who are 11 and
      18; two sons, 17 and 20, who are the children of his current wife,


      1971: bachelor's in political science from UCLA

      1976: law degree from Loyola Law School

      Career highlights

      1976: Founded entertainment law firm with Larry Kuppin

      1983: Acquired New World Entertainment for $2 million

      1985: New World's initial public offering

      1986: Led New World's acquisition of Marvel Entertainment Group

      1989: Sold New World for nearly $300 million, including debt

      1990: Founded Scandinavia Broadcasting System

      1993: SBS's initial public offering

      1999: SBS became largest shareholder in Lionsgate

      2005: Joined board of Metro-Goldwyn-Mayer Inc., sold SBS for $2.6
      billion, including debt, and was named MGM's chairman and chief

      Source: Los Angeles Times staff
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