The rise and fall of Carolco
In the late 80s, Carolco was one of the biggest studios in Hollywood, but by 1995, it was gone. Ryan charts its dramatic rise and fall...
Paul Verhoeven is not a happy man. It's 1994, and the Dutch director of (among other things) RoboCop and Total Recall is in a pivotal meeting with executives at Carolco Pictures. They're in the boardroom to discuss Crusade: a lavish, $100m historical drama described as Spartacus meets Conan.
With a script by Walon Green (The Wild Bunch, WarGames), and a cast headed up by Arnold Schwarzenegger, it sounds like the kind of star-filled, opulent film Carolco Pictures is famous for making. The supporting cast includes Jennifer Connelly and Robert Duvall. The script is vibrant and brash. There are massive sets being built in rural Spain. But privately, Carolco's bosses are anxious; they have another hugely expensive project in the works - the pirate action picture Cutthroat Island - and with debts mounting, they can ill-afford to finance one film, and certainly not both at the same time.
When Carolco's executives tell Verhoeven they want guarantees that Crusade won't drift over its agreed budget, the director is outraged. His previous films with the studio, Total Recall and Basic Instinct, had made them millions. With he and Schwarzenegger at the helm, Crusade would surely follow suit. And they wanted guarantees?
Arnold Schwarzenegger was sitting next to Verhoeven at the time, and as he later told Empire magazine, could only observe as the director vented his fury.
"There's no such thing as guarantees!" Verhoeven raged. "Guarantees don't happen and if anyone promises you guarantees, they're lying! We don't even know that if you walk out of the building here you won't get hit by a truck. There's no guarantee that we're going to make it 'til tomorrow! I cannot have control over God – I don't even believe in God, why am I talking about God? But someone, nature, could just rain for three months and then what do we do? How can I give you a guarantee? This is ludicrous!"
And with that, Crusade was dead. Desperate to save itself by turning out what it hoped was a sure-fire hit, Carolco ditched the blood-and-thunder Verhoeven picture and put its money on the more upbeat, crowd-pleasing Cutthroat Island instead. Except, as history now recalls, Cutthroat Island didn't please crowds, and instead became one of the most infamous financial misfires in Hollywood history.
Cutthroat Island represented the final roll of the dice for Carolco, a company that was once one of the biggest independent production companies of the 1980s and early 90s. In its heyday, the names of its founders, Mario Kassar and Andrew Vajna, were a familiar sight on posters, and the pair's extravagant deals resulted in some of the era's most expensive and successful movies.
Yet even at the peak of its powers in 1991, the cracks in Carolco's edifice were already beginning to show, and by 1996, the company was bankrupt. To find out what went wrong, we have to head back to the company's beginnings in the 1970s.
Kassar and Vajna: the early years
Before Carolco, Mario F Kassar and Andrew G Vajna were two young outsiders with big ideas. Mario Kassar was born in Beirut in 1951, and caught the filmmaking bug from his father, an independent movie producer. By 18, Kassar had already established himself as a miniature mogul, having purchased several Italian and French films for distribution in the Far East.
Andrew Vajna, meanwhile, took a rather more circuitous route into the film industry. Born in Budapest in 1944, Vajna moved with his parents to America when he was 12. He was greatly interested in music and later studied photography, but by the time Vajna was in his early 20s, he was living in Hong Kong and the proprietor of a large and profitable wig-making factory.
It was in Hong Kong that Vajna began to move into the film business, first by purchasing a pair of cinemas, and then by producing a kung-fu movie - Deadly China Doll (1973), starring martial arts star Carter Wong. Made for a snip at $100,000, the movie was a hit, and earned $2.5m worldwide.
Vajna and Kassar met at the Cannes Film Festival in 1975, and bonded over their mutual ability to successfully market films in foreign markets. With a long term aim to finance their own movies, the pair formed Carolco in 1976 - a name they'd taken from a long-dead company based in Panama.
"We just bought the name," Kassar later told Entertainment Weekly. "It means nothing."
The pair's first venture together was The Sicilian Cross (1976), a best-forgotten Roger Moore thriller shot in Italy. Despite its suspect quality, Vajna and Kassar managed to buy the rights for $130,000 and sell it on for a profit. By the early 1980s, Vajna and Kassar had bought an office in Hollywood, and had served as executive producers on The Changeling (1979), The Amateur, and Escape To Victory (both 1981).
The first two movies were well-received but financially less successful. World War II football drama Escape To Victory, however, was a minor hit, and marked the first time the producers would cross paths with Sylvester Stallone - a star who would play a key role in Carolco's future growth.
Hunting around for a project they could produce together, Kassar and Vajna settled on First Blood, a novel written by David Morrell in 1972 about a returning Vietnam war veteran's mistreatment and subsequent psychological meltdown in small town America. Warner Bros had been trying to get a film adaptation of the book off the ground for years, and having cycled through several major stars and dozens of scripts, they decided to wash their hands of it.
Kassar and Vajna gamely paid Warner $385,000 for the rights to First Blood in 1980, and settled on Stallone as their star. After a fair amount of back-and-forth negotiation over Sly's fee, a hefty seven-figure salary was agreed on. Carolco didn't yet have the finances to even make the movie, much less pay Stallone, but the producers knew that Stallone's star status could be used to secure the requisite investment.
Having acquired the funds to make the film from a European bank, First Blood went into production, where its filming overran and its budget quickly crept over the $11m originally earmarked. Then Kirk Douglas quit the role of Colonel Trautman in the middle of filming - he disliked the alteration of the book's ending - and Richard Crenna had to be rushed in as a replacement.
Yet despite the bumpy production, First Blood was a major hit in October 1982, and eventually made $125m on its $14m investment. Carolco was now a major Hollywood production company.
The 80s boom years
Kirk Douglas may have strongly disliked Sylvester Stallone's altered ending for First Blood, but Carolco would soon reap the rewards from the actor’s decision. The source novel saw Rambo die at the hands of his superior, Colonel Trautman, but Stallone was determined to make Rambo more sympathetic and less violent in the movie. Above all, Stallone wanted Rambo to survive to fight another day.
That decision led to Rambo: First Blood Part II, a $25m action film that would focus on the more upbeat aspects of the first picture - action, helicopters, Sly's rippling muscles - and less on fascist cops and damaged psyches. This time, Rambo would go back to Vietnam and win the war all by himself.
A young James Cameron wrote the script, and Italian filmmaker George P Cosmatos was the headlining director. (Legend has it, however, that Stallone was secretly at the helm, and dominated the film's direction even more than he reportedly did on the set of First Blood.)
The release of First Blood Part II was (cynically, you could argue) timed to coincide with the anniversary of America's withdrawal from Vietnam ten years earlier, and critics largely hated it. Yet the sequel captured a feel-good, patriotic mood among the American public, and it was a huge success, making $150m in the US alone. First Blood Part II also demonstrated Kassar and Vajna's understanding of the global market, since the film made the same figure again overseas, pulling in a grand total of just over $300m in worldwide receipts.
Carolco continued to expand in the wake of First Blood Part II's success, and would soon become known for its high-profile movies led by major Hollywood stars. Those stars came with a price tag, however, and the company quickly became infamous in trade magazines for its huge payouts to actors like Sylvester Stallone and Arnold Schwarzenegger. As British producer David Puttnam noted in Stephen Prince's book, A New Pot Of Gold, "Carolco in particular became an instant 'major' by offering the stars more money than the established studios offered."
After First Blood Part II, Carolco produced such movies as Angel Heart and Extreme Prejudice, which weren't huge hits, but were well received and made by respected filmmakers - Alan Parker in the case of Angel Heart, and Walter Hill in the case of Extreme Prejudice. But what Carolco really wanted was another Rambo - and they were willing to pay just about anything to see it made.
To this end, Stallone was handed $16m to reprise his starring role - a startling amount of money for the time - and the resulting sequel wound up costing around $62m. The excess spilled into a film itself, which arrived in a dervish of explosions, gunfire and even more helicopters than First Blood Part II.
Although Rambo III fell short of the domestic grosses enjoyed by the previous movie, its success abroad pretty much guaranteed a profit - and then there were all the videogames, toys and other bits of lucrative merchandising to consider.
Bolstered by the financial cunning of tax attorney Peter Hoffman, who'd become president in 1986, the late 80s saw Carolco climb to the heights of its success. The company's deep pockets funded the likes of Red Heat, a buddy-cop movie that earned Arnold Schwarzenegger an $8m pay packet. Films of the late 80s and early 90s like Lock Up (starring Stallone), Jacob's Ladder, King Of New York and Mountains Of The Moon were more low-key, but all Carolco needed, the thinking went, was one major hit each year to bankroll those lesser performers.
The peak years
Stories of Carolco's extravagant spending became common during the late 1980s. According to Entertainment Weekly, there were parties, private jets, generous dividends, the names of new movies deals lit up in fireworks, and stretch limos prowling around Bel Air with the company's name proudly emblazoned on the number plates. Back at Carolco HQ, big names including James Cameron, Paul Verhoeven and Oliver Stone were all working away on movie projects.
For Andrew Vajna, however, Carolco's growth was all too much. "After Rambo, we were trying to become a major studio. I felt that was the wrong direction," Vajna told Entertainment Weekly. "My feelings were very negative and it caused a lot of friction between Mario, myself, and Peter, who was by then Mario's right hand. I disagreed with where they wanted to go, and Peter played our egos against each other. He wanted to be a partner."
Kassar and Vajna's partnership had fallen apart by 1989, and Vajna was paid approximately $100m for his share in the company. Kassar and Hoffman carried on regardless, and the massive international success of Total Recall in 1990 (box office: $262m) seemed to indicate that Vajna was wrong and that Carolco was on the right track.
Yet as the 90s dawned, it seemed as though Carolco's expenditure was beginning to spiral out of control. Millions were being spent on scripts and multi-picture deals with actors. When Schwarzenegger signed up to make Terminator 2 (Carolco having bought the Terminator rights from Hemdale for $5m in 1990), he was given a $17m jet as a gift - on top of the $14m salary he'd already been awarded for reprising his role as the T-800.
Behind the scenes, the company was beginning to struggle, hastened in part by a recession that made borrowing huge sums of cash less easy than it was in the 1980s. Its TV and home video label was also faltering, causing Carolco's stock value to fluctuate wildly throughout the start of the 90s. One banker damningly summed up Carolco's situation as "A disaster waiting to happen."
Carolco's problems were such that, even when Terminator 2: Judgment Day made a phenomenal $520m at the box office in 1991, Carolco still posted a loss of $91m in the first nine months of that year. The films following Terminator 2's release did little to brighten the studio's fortunes - Rambling Rose, Defenseless and The Dark Wind all failed to make much of a financial impact.
The erotic thriller Basic Instinct, directed by Paul Verhoeven, was a big success the following year, having made $352m. (Interestingly, Andrew Vajna had originally planned to produce the film under his new Cinergi Pictures banner, but Kassar, perhaps keen to get back at his old partner, purchased Joe Esterhas' Basic Instinct script for $3m after a furious bout of bidding.)
After Basic Instinct, Carolco's other 1992 releases all struggled. Aces: Iron Eagle III was a flop in cinemas, Universal Soldiers was only a modest hit, while even the critically-acclaimed Chaplin failed to make more than a third of its $30m budget at the box office.
When Carolco made plans to produce Cliffhanger in 1992, it was forced to make a drastically unfavourable deal to get the $60m it needed. This involved giving up the US distribution rights, both in cinemas and on video, in exchange for half of the project's budget. As a result, relatively little of the Stallone action vehicle’s $255m profits went to Carolco.
The films that came after Cliffhanger faced mixed fortunes. Sci-fi epic Stargate (1994) was a hit, yet John Candy's last film, Wagons East! was a widely-forgotten miss. As the mid-90s approached, Carolco was forced to sell off the rights to some of its own projects, not least Showgirls, a Paul Verhoeven-Joe Esterhas reunion that would later become a critical and financial misfire.
All of this led back to that fateful meeting with Verhoeven in 1994, where Carolco felt compelled to drop the Dutch director's lavish Crusade in favour of Cutthroat Island. Yet ironically, the studio that had once prided itself on making huge deals with Hollywood's biggest stars found itself unable to secure a major actor.
Michael Douglas was initially interested, yet left the project when director Renny Harlin refused to increase the size of Douglas' role - instead, Harlin was fixed on making his wife Geena Davis the movie's lead. Other stars, including Keanu Reeves, Ralph Fiennes and Liam Neeson, were all approached, and all passed. Perhaps in its late 80s pomp, Carolco could have afforded to make one of those big names an offer they couldn't refuse. In 1994, they had to settle for the less bankable Matthew Modine.
The production was not a happy one, with illnesses on set, a full-size replica pirate ship accidentally set on fire and huge cost overruns - which at this point, Carolco was less than able to afford. Faced with certain doom if they didn't press ahead with the film regardless of cost, the studio battled on.
"We knew from that point if we lost Cutthroat Island as well bankruptcy would be inevitable," a former executive told the Independent in 1996. "If we made the film, there was at least some chance we could survive."
By the time Cutthroat Island came out in US cinemas in December 1992, Carolco had already filed for Chapter 11 bankruptcy protection, and if there were hopes that the pirate movie could save the studio, they would soon be dashed - the $98m Cutthroat Island sailed quietly in and out of theatres with little more than $10m to its name that winter. Carolco's assets were duly flogged to the highest bidder, and today, the rights to its catalogue of films are owned by StudioCanal.
In the wake of Carolco's collapse, Mario Kassar moved to Paramount, before forming a new studio - C2 Pictures - with his old partner Andrew Vajna in 2002. Their new partnership brought mixed fortunes, however; Terminator 3: Rise Of The Machines provided an echo of Carolco's glory days, and made $433m in 2003. The lambasted Basic Instinct 2 (2006) failed to follow suit.
For some, Carolco's turbulent history will always be associated with lavish blockbusters, outrageous deals and the spiralling costs of filmmaking in the 80s and 90s, and its demise was often regarded as hubris by rivals who blamed the studio for grossly inflating the earning potential of Hollywood’s biggest stars. But while Carolco’s most famous hits were loud and over-the-top, it was also responsible for producing some of the era's most interesting American films, too. First Blood Part II, Red Heat and Total Recall may have been among the defining action movies of the period, but they were joined by quieter, superbly-made films such as Angel Heart, Jacob's Ladder and L.A. Story.
Like another major independent production company of the time, Cannon Films, Carolco understood the importance of the overseas market - something the rest of Hollywood wouldn’t latch onto for several years. It's also possible that, had its business decisions been a little different, Carolco could have survived its mid-90s struggles, and perhaps even flourished.
"Think about it," Stargate producer Dean Devlin said to Entertainment Weekly. "Had they been able to keep Carolco going a little bit longer, the next two movies would have been Independence Day and Titanic. [Nearly] 3 billion dollars in worldwide box office."
With the benefit of hindsight, we can only wonder what would have happened had Carolco decided to make Crusade instead. Would Crusade have succeeded where Cutthroat Island failed, and saved the studio from oblivion? Or would its greater cost and violent, earthy subject matter have led Carolco down the exact same road to bankruptcy?
Ultimately, the story of Carolco is one of high-stakes gambles. The canny deals and big-budget film took the studio from obscurity to the top of the Hollywood power list in just a few years, before it fell, Icarus-like, in the 1990s. But for all the failings that would ultimately become its undoing in its final years, Carolco remained an independent studio from beginning to end.
"We always work outside the studio system, and the studio for us just means a method of distribution for the product," Andrew Vajna told the BBC a few years after Carolco's collapse. "We like to creatively do the projects ourselves, and not do it by committee. Independence is the only way we work."