Carolco Pictures


Carolco Pictures, Inc. was an American independent film studio that was founded by Mario Kassar and Andrew G. Vajna in 1976. Kassar and Vajna ran Carolco together until 1989, when Vajna left to form Cinergi Pictures. Carolco hit its peak in the 1980s and early 1990s, with blockbuster successes including the first three films of the Rambo franchise, Field of Dreams, Total Recall, Terminator 2: Judgment Day, Basic Instinct, Universal Soldier, Cliffhanger and Stargate. Nevertheless, Carolco was losing money overall, requiring a corporate restructuring in 1992. The film Cutthroat Island was produced as a resurgence for Carolco, but it instead lost them $147 million, and Carolco eventually went bankrupt in 1995.

History

Studio formation and early years

Carolco Pictures was founded through the partnership of two film investors, Mario Kassar and Andrew Vajna. The two were hailed by Newsweek as some of the most successful independent producers. By the age of 25, Vajna went from wig-maker to the owner of two Hong Kong theaters. Then, Vajna ventured into the production and distribution of feature films. One of Vajna's early productions was a 1973 martial-arts film entitled The Deadly China Doll which made $3.7 million worldwide from a $100,000 budget.
Their goal was to focus on film sales, with their first venture being The Sicilian Cross; eventually it went into financing low-budget films. Their earliest films were produced by American International Pictures and ITC Entertainment with Carolco's financial support, and co-produced with Canadian theater magnate Garth Drabinsky. The name "Carolco" was purchased from a defunct company based in Panama, and according to Kassar, "it has no meaning."

1980s success boom

Carolco's first major success was First Blood, an adaptation of David Morrell's novel of the same name. Kassar and Vajna took a great risk buying the film rights to the novel and used the help of European bank loans to cast Sylvester Stallone as the lead character, Vietnam War veteran John Rambo, after having worked with him on the John Huston film Escape to Victory. The risk paid off after First Blood made $120 million worldwide, and placed Carolco among the major players in Hollywood.
On May 15, 1984, Carolco Pictures signed an agreement with then-up-and-coming film distributor and fledging studio Tri-Star Pictures, with Tri-Star distributing Carolco's films in North America; HBO handled pay cable television rights, and Thorn EMI Video handled North American home video distribution rights. The first film to be released under the agreement was Rambo: First Blood Part II.
The First Blood sequel was timed for the 10th anniversary of the United States' exit from the Vietnam War; that event garnered publicity for the new film, which also became a hit. Tri-Star and Carolco quickly renewed their partnership in 1986, which called for Tri-Star to distribute upcoming Carolco productions, including Rambo III, in a new multi-feature agreement. TriStar would release the majority of Carolco's films from that point on in the United States and some other countries until 1994.
The release of the two Rambo sequels were so instrumental to Carolco's financial success that the studio began to focus more on big-budget action films, with major stars such as Stallone and Arnold Schwarzenegger attached. These films, aimed at appealing to a worldwide audience, were financed using a strategy known as "pre-sales", in which domestic and foreign distributors invested in these marketable films in exchange for local releasing rights.
In January 1986, Carolco attempted to acquire troubled studio Orion Pictures—which had distributed First Blood for Carolco—via a corporate raid by Vajna and Kassar for control of their board. The takeover failed by May, when Metromedia acquired a controlling interest in Orion. That same year, Carolco hired tax attorney Peter Hoffman as their newest president and CEO, and he opted to provide financial backing to assist Carolco's growth.
Also in the same year, Carolco entered the home video distribution business; they purchased independent video distributor International Video Entertainment, which was in financial distress and nearly bankrupt, and Carolco intended to reorient the company. The transaction was finalized in 1987. This resulted in Carolco paying $43 million to HBO/Cannon Video in exchange for the video rights to two of Carolco's upcoming releases, Angel Heart and Extreme Prejudice, allowing Carolco to relicense the pictures to IVE. IVE merged with another distributor, Lieberman, and became LIVE Entertainment in 1988. In addition to IVE, Carolco was also rumored to have been interested in acquiring Media Home Entertainment from Heron Communications, but the sale fell through.
Throughout the remainder of the 1980s, Carolco expanded into various other business sectors to further capitalize on the Rambo films and their other offerings. This included video retail holdings, licensing of their IP, an international division, and television production and distribution via the buyout of independent syndicator Orbis Communications. In addition to its own library, Carolco also held the television rights to the films of Hemdale Film Corporation, Alive Films, HBO Premiere Films, and future subsidiary The Vista Organization.
In 1989, they purchased some assets from the bankrupt De Laurentiis Entertainment Group, including their production facility in Wilmington, North Carolina. In doing so, Carolco also obtained the production rights to Total Recall—an adaptation of Philip K. Dick's novelette, We Can Remember It for You Wholesale—which had been in development limbo for a number of years, and Schwarzenegger convinced Kassar and Vajna to pursue the project while letting him star and obtain creative influence. The resulting film, directed by Paul Verhoeven, was later released in 1990, grossing $261.4 million on a $48–80 million budget.
By late 1989, disagreements between Vajna and Kassar had grown over the direction of Carolco; Kassar and Hoffman desired to further expand the company into a larger studio, while Vajna felt their expansion had become overly rapid. In November, Vajna formed his own studio, Cinergi Pictures, with The Walt Disney Company's Hollywood Pictures as a distribution partner. The following month, Vajna sold his shares of Carolco to Kassar for $106 million, increasing the latter's ownership of Carolco to 62%.

Early 1990s

In 1990, Pioneer Electric Corporation of Japan acquired a share in Carolco. The following year, Carolco formed a joint venture with New Line Cinema to form Seven Arts, a distribution company which primarily released much of Carolco's low-budget output. In 1991, syndicator Orbis Communications was renamed to Carolco Television, to better emphasize Carolco's connection. Also around this time, Carolco Home Video was established, with LIVE Entertainment as an output partner.
In 1990, amidst the successful release of Total Recall, Arnold Schwarzenegger convinced Carolco to purchase the film rights to The Terminator from producer Gale Anne Hurd and the struggling Hemdale Corporation; Carolco already held the television rights to the film courtesy of its television distribution deal with Hemdale. Carolco obtaining the rights ended a long-term rights dispute between Hemdale and director James Cameron, and since Cameron and Schwarzenegger had already been in talks of producing a sequel, Carolco opted to push forward with it to recoup their $17 million acquisition. Terminator 2: Judgment Day was then produced in a collaboration between Carolco, Cameron's Lightstorm Entertainment, Hurd's Pacific Western Productions, and Le Studio Canal + of France. With a budget of $102 million, Terminator 2 was the most expensive film ever made at the time; its budget involved a fast-paced pre-production phase, the lengthy and large-scale principal photography, the special effects, and mass marketing. Terminator 2 was released in July 1991, and it grossed $519–520.9 million, making it the highest-grossing film of the year and the highest-grossing film Carolco ever produced.
In 1988, Carolco purchased the theatrical film rights to Spider-Man from producer Menahem Golan via his studio, 21st Century Film Corporation, on the basis that he would serve as an executive producer. Golan had previously tried and failed to produce a Spider-Man film for his bankrupt studio, the Cannon Group, and selling the theatrical rights to Carolco—along with the home video rights to Columbia Pictures, and the television rights to Viacom—was his way of raising funds to revive production. By 1991, Carolco began pre-production on the Spider-Man film, and James Cameron was quickly hired as the writer and director. In 1993, towards the end of filming True Lies, Variety carried the announcement that Carolco received a completed screenplay from Cameron. This script bore the names of Cameron, John Brancato, Ted Newsom, Barry Cohen and "Joseph Goldmari"—a typographical scrambling of Menahem Golan's pen name, "Joseph Goldman"—with Marvel executive Joseph Calimari. Cameron stalwart Arnold Schwarzenegger was frequently linked to the project as the director's choice for Doctor Octopus, and future Titanic star Leonardo DiCaprio was considered for the titular role, Peter Parker.
Carolco also attempted to make Bartholomew vs. Neff, a comedy film that was to have been written and directed by John Hughes and would have starred Sylvester Stallone and John Candy, and entered into a deal with actor and filmmaker Robert Redford to make three pictures that would be released through Seven Arts; only one of them, The Dark Wind, would be released through Seven Arts as part of the deal, while the other two would be released by other distributors amidst Carolco's financial troubles.