Saturday, August 29, 1998
Los Angeles Times
Copyright © 1998, The Los Angeles Times
A Tangled Web of Deal-Making
'Spider-Man' is mired in costly and complex lawsuits that form a cautionary tale about
Hollywood filmmaking.
By MICHAEL A. HILTZIK, Times Staff Writer
If the adage is true that the ultimate Hollywood art form is the
deal, then the maneuvering to get "Spider-Man" to the big screen will never hang
in the Louvre.
As the biggest superhero character left unfilmed since the
blockbuster "Batman" made the genre popular again, "Spider-Man" has
been widely touted as moviedom's hottest property. Industry buzz says a movie featuring
the web-spinning, wall-climbing crime fighter who has been a comic book mainstay for more
than 35 years would be the event movie of the year for the studio that owns the rights.
If only anyone could figure out which studio that is.
The seven-year battle over the feature film rights to the
Marvel Comics character has become Hollywood's costliest and most convoluted legal
spectacle. There are five lawsuits pending before Los Angeles Superior Court Judge Valerie
Baker, with as many as 18 separate written agreements at issue. Last week, a Delaware
judge overseeing Marvel's bankruptcy cleared the California cases for trial, which could
begin before the end of the year.
But that still leaves Baker confronted with a mess so
tangled that one lawyer estimates that Spider-Man documents in his office already occupy
60 cardboard boxes.
"Spider-Man could be a movie, or it could be
litigation," said Howard Weg, an attorney who represents the liquidating trust of
Carolco Pictures, which claims to have acquired the movie rights in 1989 but went bankrupt
in 1995. "All the entities involved have elected not to make a movie, but
litigation."
But this is more than a story of dueling lawyers. The
multimillion-dollar litigation parade provides a unique snapshot of recent Hollywood
history. Along the way, "Spider-Man" has become the Hope diamond of the movie
business, cursing many of those who have laid claim to it. Three studios that at one point
or another claimed an interest in the movie rights have gone bankrupt waiting for a
resolution; so too has Marvel Entertainment Group, the comic book publisher that owns the
character. Indeed, it's not clear whether the leading complainant today, the ailing studio
MGM, would have the financial wherewithal to finance the "Spider-Man" movie if
it wins the litigation.
The case traces the rise and fall of three independent film
studios that briefly dominated Hollywood deal making until their shallow finances brought
them down and unfolds against the backdrop of the industry's blockbuster mentality and its
preoccupation with big names, such as Arnold Schwarzenegger and superstar director James
Cameron, whose association with the "Spider-Man" project helped drive it from a
modest $15-million undertaking in 1985 to the predicted $200-million extravaganza it would
be if made today.
And it shows to what length filmmakers will go to appease
their own vanity: The whole brouhaha started when independent filmmaker Menahem Golan, who
purchased the first five-year movie option on "Spider-Man" 13 years ago, filed a
lawsuit to ensure that he would be listed as producer of any "Spider-Man" film,
even if he never again lifts a finger to bring it to the screen.
The intensity of battle also illustrates how desperate
studios are to develop "event movies"--priceless properties that can be
exploited repeatedly over a decade or longer for sequels and spinoffs.
The potential return of such a franchise is so great that
four major studios remain in the fight for "Spider-Man." One is MGM, which
claims to have bought up all the "Spider-Man" feature film rights once held by
the defunct independent studios--Cannon Films and 21st Century Film (both operated by the
irrepressible Golan) and Carolco Pictures.
Viacom Entertainment and Sony Pictures, meanwhile, say they
own television and home video rights, respectively, to any "Spider-Man" feature
film.
Waiting in the wings, finally, is Twentieth Century Fox,
which is not part of the litigation but holds the most intriguing card of all--an
exclusive contract with "Titanic" director Cameron, who in 1991 was paid $3
million by Carolco for a "Spider-Man" film treatment that sources say is
brilliant.
These claims are all at issue because Marvel, which is just
emerging from its own bankruptcy, contends that the movie options it sold three times over
the last 13 years have all expired. Therefore, it claims, it has the exclusive right to
sell them again.
Difficult Birth for Superhero
Like its hero, Peter Parker--who struggles to balance super
powers bestowed by a radioactive spider's bite with the worldly concerns of any average
teenager--"Spider-Man" as a comic book concept at first got no respect.
The creator was Stan Lee. Today a vigorous 75-year-old who
still holds the title of chairman at Marvel Comics and remains the enterprise's creative
soul, Lee by 1962 had provided Marvel with some of its quirkiest and most enduring
characters, including the Fantastic Four and the Hulk--superheroes whose appeal lay in
having to balance amazing powers with the pressures of sibling rivalry, job worries and
physical repulsiveness.
"When I told my publisher my idea for Spider-Man,"
Lee said in his memorabilia-filled Westwood office, "he said: 'Here I draw the line.
People hate spiders. Teenagers can only be sidekicks, not superheroes.' "
The publisher flatly refused to give Spider-Man his own
comic book. Lee sneaked the character into a comic book Marvel was about to fold,
"Amazing Fantasy." In its final edition, August 1962, "The Amazing
Spider-Man" made his first appearance.
In developing the character, Lee played off the cardboard
personalities of Superman and his ilk of otherworldly superheroes.
"I tried to make them flesh-and-blood," Lee said.
Peter Parker was a high school kid with girl trouble and difficulty finding work. While
competing characters fed into adolescent fantasies of unlimited power and control,
Spider-Man's abilities often seemed more of a burden than they were worth.
Within a couple of months, Marvel realized that Lee was on
to something. The final edition of "Amazing Fantasy" outsold anything Marvel had
published in years. The character spawned a newspaper comic strip and animated and
live-action TV series.
Yet when it came time to sell the movie rights in 1985,
Peter Parker again got no respect. The Superman franchise, launched to huge success in
1979, seemed to have breathed its last with the critically panned "Superman III"
in 1983.
"Nobody believed anymore in features based on comic
books," Golan said.
Nobody, that is, but Golan, the voluble co-chief of
independent Cannon Films.
10 Versions of Script in 4 Years
Golan liked to think of himself as a producer with one foot
in the schlock house and the other in the art house--the mix gave his company
"balance," he would say. His first production had been the Oscar-nominated
Israeli comedy "Sallah," and he had bankrolled any number of other small foreign
films. But he also bragged about having discovered Jean-Claude van Damme and produced the
kickboxing star's first three pictures.
Golan persuaded Marvel Entertainment to sell Cannon the
feature film rights to Spider-Man, its premier character, for a fire-sale price of
$225,000 (plus a percentage of the gross revenues).
Over the next four years, he nurtured the property through
10 screenplay versions, including some under his own pseudonym, Joseph Goldman. By 1989
interest in the genre was stirring again with "Batman's" blockbuster opening in
June. Other studios were coming to him with inquiries about "Spider-Man." That
was fortunate, because Golan no longer could make the picture on his own.
Cannon Group had been the quintessential 1980s independent
film studio. Thinly capitalized and kept afloat by suspect accounting, it specialized in
low-budget action fare with stars such as Chuck Norris and Charles Bronson--average cost:
$5 million.
Cannon's ambitions for "Spider-Man" were much
greater; Golan pegged its budget at $15 million and dreamed of acquiring a big-name
director. But before he could execute his master plan, time ran out for Cannon. As a
string of flops such as the Sylvester Stallone arm-wrestling feature "Over the
Top" drained Cannon's capital, the Securities and Exchange Commission charged it with
fraudulently misstating its finances. (The company eventually settled the SEC case without
admitting or denying the allegations.)
On the verge of failure, Cannon was taken over in 1987 by
Pathe Communications, a holding company controlled by Italian financier Giancarlo
Parretti, who would cut a painful swath through Hollywood over the next few years--even
acquiring the once-stellar MGM--before going bankrupt and being convicted on perjury and
evidence-tampering charges. (He fled the United States before getting sentenced.)
Two years after that, Golan struck out on his own. As part
of his severance package from Pathe, Golan took the rights deals for Spider-Man and
Captain America, another Marvel character. Because Cannon's original deal with Marvel gave
it only until August 1990 to place a "Spider-Man" picture in production, or the
rights would revert to Marvel, Golan's new company, 21st Century Films, renegotiated the
original deal with Marvel to buy more time.
Reprieve in hand, Golan again set about raising money for
"Spider-Man." On this side of the business he was an acknowledged pioneer:
during the Cannon years Golan had supplemented his company's modest finances through the
extensive use of "pre-sales." This entailed raising money by selling off
overseas distribution rights, often territory by territory, while retaining the most
lucrative U.S. rights.
In the case of "Spider-Man," Golan further sold
worldwide television rights to Viacom, and home video rights to Columbia Tri-Star.
But the most important deal was with Carolco, another
independent studio.
At the 1990 Cannes film festival, Carolco wined and dined
Golan on board its lavish chartered yacht. The studio was riding high on the strength of
its hits "Aliens" and "The Terminator." While Schwarzenegger lounged
on deck nearby, Golan said, studio executives Mario Kassar and Peter Hoffman pitched a
plan to produce a $50-million live-action "Spider-Man."
"They wooed me for a whole day on that boat,"
Golan said. The deal was inviting, and not only because he personally stood to gain a
$1-million cut if he agreed. Carolco, he thought, might be able to avoid the financial
problems that had stymied his own dreams for "Spider-Man" at Cannon. He signed
the deal for $5 million, payable to 21st Century.
Golan's only condition, as he recalls the negotiations, was
that his role in spotting the property's potential early and keeping the project alive be
recognized: Any "Spider-Man" picture Carolco made was to bear his name as
producer.
By late 1991 Carolco paid $3 million to Cameron, the
director of "The Terminator" and "Terminator 2" to write and direct
the picture.
Lee, who had become friendly with Cameron, got a look at his
detailed treatment--a sort of stripped-down screenplay minus dialogue--and was thrilled.
"It was the Spider-Man we all know and love," he
said later, "yet it all somehow seemed fresh and new."
Golan, however, was growing uneasy. Amid all the Carolco
publicity for the project, his name had not been mentioned as producer even once--only
Cameron's. Finally he complained to the studio.
In response, according to court documents, Carolco executive
Lynwood Spinks called one day on Golan's assistant Ami Artzi.
"Ami, we have a certain problem," Spinks said,
according to Artzi's later deposition.
"What is the problem?"
Spinks explained that in its haste to sign Cameron for the
new picture, Carolco had simply copied the terms of his "Terminator 2" contract
word for word, substituting "Spider-Man" for the name of the movie. But the old
deal had given Cameron approval over every credit on the picture--and he would not approve
Golan's credit as producer.
Over the next several months, Golan claimed later, Carolco
tried to pressure him into giving up his claim to the producer credit--even withholding
part of the $5 million it owed 21st Century for the "Spider-Man" rights.
Legal Fight Over Screen Credit
Finally, in April 1993, Golan filed a lawsuit to rescind his
contract with Carolco. What began as a fit of pique over a credit turned into the event
that ended the pre-production period of "Spider-Man," so to speak; the
litigation phase had begun.
Within 16 months, Golan's lawsuit was followed by five more,
throwing the ownership of the "Spider-Man" movie rights into a seemingly
impermeable snarl.
In February 1994, Carolco sued Viacom and Tri-Star
separately to nullify their television and home video rights. Tri-Star and Viacom
countersued Carolco, 21st Century, and Marvel. MGM, which as part of the Pathe Group
considered itself the inheritor of Cannon's old "Spider-Man" rights, sued Golan,
Globus, Parretti, 21st Century, Viacom, Tri-Star, and Marvel for fraud (among other
things). Within a year further complications arose: Carolco, 21st and Marvel had each
filed for bankruptcy.
As a platoon of lawyers worked their way through the
interlocking contracts and side deals that assigned and reassigned the
"Spider-Man" movie rights, one curious fact emerged: Although millions of
dollars in potential profits rode on the language of contracts written by high-priced
lawyers for billion-dollar companies, the documents seemed to be drafted with remarkable
carelessness--an indication, perhaps, of the seat-of-the-pants deal-making by which
Hollywood conducts its frenetic business.
Take the Golan-Carolco deal. Carolco argued that rather than
guarantee Golan a producer credit, the contract actually stated that Carolco could choose
simply to pay him off. The so-called "pay-or-play" provision, Carolco
maintained, was embodied in a contract addendum--which Golan insisted he had never
received and which no one could prove had been attached to the original document.
The two sides even disputed the actual value of having one's
name on a movie. Golan insisted that attaching his name to an "event picture"
like a Cameron-directed "Spider-Man" would give his company priceless
credibility.
But a Carolco expert witness countered that no one in
Hollywood would ever believe that Golan had played an important role in the production.
The credit's only value to Golan, he said, would be "to show the remainder of the
entertainment industry that Golan has the bargaining power to obtain a credit for
rendering no service."
The biggest mess, however, involved 21st Century's 1989
contract with Marvel. This was the deal that aimed to give Golan more time to complete a
movie.
Although the original contract between Cannon and Marvel
explicitly stated that rights would revert to Marvel unless Cannon started production by a
certain date, the 1989 version no longer contained an explicit deadline. It stated only
that if 21st failed to have a movie in U.S. distribution by Jan. 1, 1992, it could not
distribute a movie without Marvel's written approval. One could read it as giving 21st
Century the movie rights to Spider-Man in perpetuity--a virtually unheard-of event in
Hollywood.
Untold hours of testimony and reams of paper have since been
expended on the question of how and whether Marvel might have sold permanent rights to its
most valuable character for $450,000 and a percentage of the gross.
One possible answer is that Marvel lawyers confused critical
provisions of the "Spider-Man" deal with a similar, but not identical, contract
over Captain America, another Marvel character licensed to Golan's company.
Wording of Contract Lost in Cyberspace
Testimony indicates that one lawyer may have dictated key
language on the "Spider-Man" deal over the telephone during his vacation after
Marvel's word-processing computer crashed. Because the original contract was lost in
cyberspace, court documents suggest, he had to reconstruct part of the agreement from
memory, inadvertently reproducing some language from the Captain America language in the
Marvel deal, where it did not apply.
The difference was important: The Captain America contract
did not need as firm a reversion clause because that picture was already in production
when the contract was negotiated, while the start of "Spider-Man" production was
months, if not years, away.
MGM's lawyers argue, however, that Marvel's assignment of
permanent rights to 21st Century was deliberate--and thus as 21st's successor, MGM now
owns those rights. Golan's bankers had refused to finance a picture if there was any
chance that Marvel would take the rights back, MGM contends. To get the movie made,
therefore, Marvel had to agree to the permanent assignment.
Among the parties trying to wrest the rights away from
Marvel, the common argument is that the contract is clear on its face: The rights do not
expire until MGM makes a "Spider-Man" picture.
"It is what it is," said Christopher Rudd of the
Los Angeles firm Manatt, Phelps & Phillips, MGM's attorneys. "I don't know how to
interpret a contract other than by looking at the plain language."
Marvel's position is that other contract provisions, not
merely the disputed "reversion" clause, make clear that the film rights are
temporary. In other words, Marvel maintains, MGM is simply trying to take advantage of an
inadvertent ambiguity to obtain rights that would be almost unique in Hollywood history.
"It's inconceivable that Marvel would have licensed its
signature property in perpetuity to a new company like 21st Century," said Carole
Handler, the attorney for Marvel Entertainment Group.
What seems clear is that "Spider-Man's" destiny
lies in further litigation. Even if a court awards MGM the movie rights, it would be
virtually impossible for the ailing studio to finance the picture unless it also owned the
lucrative television and home video rights now claimed by Viacom and Sony. That ensures a
further battle with Viacom and Sony.
And if Marvel is awarded clear title? It is possible that
legal appeals might extend the battle well beyond the millennium.
* * *
Character Sketch
Hollywood has taken several comic book characters and made
them into profitable motion picture stars. A look at the top-grossing films that began as
comic book icons:
Domestic gross
Rank Title Distributor in millions Opening date
1. Batman Warner Bros. $251.2 June 23, 1989
2. Batman Forever Warner Bros. $184.0 June 16, 1995
3. Batman Returns Warner Bros. $162.8 June 19 1992
4. Superman Warner Bros. $134.2 Dec. 15, 1978
5. Teenage Mutant
Ninja Turtles New Line $133.0 March 9, 1990
6. The Mask New Line $120.0 July 29, 1994
7. Superman II Warner Bros. $108.2 June 19, 1981
8. Batman
and Robin Warner Bros. $107.3 June 6, 1997
9. Dick Tracy Buena Vista $103.7 June 15, 1990
10. Casper Universal $100.3 May 26, 1995