Once it was derided as the house that “Rambo” built, but today Carolco is pushing its way to respectability–and big profits. Buoyed by the success of “Total Recall,” the first of the summer blockbusters to gross $100 million, the independent is aggressively challenging the major studios for scripts, talent and visibility. While other “indies” like New Line Cinema have specialized in low-budget sleepers, Carolco “is promulgating the thesis that it’s less risky to spend more money,” says Martin Grove, an analyst for The Hollywood Reporter. Arnold Schwarzenegger got $10 million for “Total Recall.” Carolco’s next release, “Air America,” a CIA “action comedy” starring Mel Gibson, cost about $36 million, as did Oliver Stone’s upcoming “The Doors,” about the legendary rock band. Some studio rivals are griping that Carolco spends so much on talent it jacks up already inflated prices. “We have had to pay a premium to get the talent,” says president Peter Hoffman. Yet the studio thinks the strategy is paying off. Carolco expects to double revenues from $143 million to about $300 million this year.
How can the indies afford to spend so much? Industry experts say Carolco founders Andrew Vajna and Mario Kassar perfected the art of preselling distribution rights to overseas “territories.” Kassar who is half Lebanese and half Italian, started out as a European distributor and broke into production in 1982 with “First Blood,” the initial Sylvestor-Stallone Rambo movie. In 1985 Carolco signed a long-term distribution arrangement with Tri-Star and in 1986 went public. Thanks to the Tri-Star deal and foreign guarantees, the company is assured plenty of theaters and most production money by the time Carolco goes to Bankers Trust or Credit Lyonnais for cash. “When we ‘green lights a movie, we are in a total no-risk situation, or very close,” says Kassar. (Vajna sold out to Kassar for $113 million in 1989.)
Kassar has increased Carolco’s slate to five films this year and has recruited widely known directors like Adrian Lyne (“Fatal Attraction”) and producers like Daniel Melnick (“Roxanne”) who’s making “L.A. Story,” a Steve Martin comedy. “[Kassar] is the idealization of an old studio head, except that he doesn’t interfere,” says Oliver Stone. And the company has hardly abandoned its action roots: in October it begins shooting “Terminator II” with Schwarzenegger. Carolco’s formula isn’t foolproof: it’s had some U.S. duds, including “Mountains of the Moon,” and could hit rocky times if a few big movies bomb.
For now, Carolco continues to attract big investors and gain control of “ancillary” rights. The company owns a TV syndication outfit, Orbis Communications, and a 49 percent stake in Live Entertainment, whose assets include an important independent video distributor. Last June the Japanese electronics firm Pioneer, seeking “software” for its laser discs, agreed to buy a 10 percent stake in Carolco for $60 million. The cash will allow Carolco to pay down its debt and keep Hollywood’s powers on edge. “We think we are a major studio,” says Hoffman. Maybe not–but Carolco has shed its Rambo image for good.
