George Clooney Wants to School Hedge Fund Boss

Source: Deadline.com

George Clooney, who yesterday sent his Smokehouse Pictures partner Grant Heslov to Hollywood to show Sony and Fox a first cut of their Oscar-season period film The Monuments Men, has spent most of his career navigating the challenge of making provocative movies at studios obsessed with tentpoles. While he’s won Oscars — the latest the Best Picture prize he shared with Heslov and producer-director Ben Affleck for Argo — Clooney is also the guy who kept a photo of himself as Batman prominently displayed on his office wall, as a cautionary reminder of what can happen when you make movies solely for commercial reasons. Working on post-production for his latest directing effort in Italy to ready for Sony’s December 18 release, Clooney spoke to me about his new movie and how it’s getting harder to make films like Monuments, Argo and the Smokehouse-produced August: Osage County.

The discussion turned toward recent critical comments made by Third Point LLC hedge fund head Daniel Loeb and the pressure he is placing on Sony Pictures chiefs Michael Lynton and Amy Pascal, centered around the under-performing back to back summer films After Earth and White House Down.

Loeb, whose fund controls 7% of Sony stock, is pressing for Sony to spin off its entertainment assets and likened those misfires to historic flops Waterworld and Ishtar. Though Clooney and Heslov base their Smokehouse Pictures banner at Sony, and Loeb’s influence is growing there, Clooney has never been shy about standing up to what he feels is wrong. So, buckle up.

Said Clooney: “I’ve been reading a lot about Daniel Loeb, a hedge fund guy who describes himself as an activist but who knows nothing about our business, and he is looking to take scalps at Sony because two movies in a row underperformed? When does the clock stop and start for him at Sony?

Why didn’t he include Skyfall, the 007 movie that grossed a billion dollars, or Zero Dark Thirty or Django Unchained? And what about the rest of a year that includes Elysium, Captain Phillips, American Hustle and The Monuments Men? You can’t cherry pick a small time period and point to two films that didn’t do great. It makes me crazy. Fortunately, this business is run by people who understand that the movie business ebbs and flows and the good news is they are ignoring his calls to spin off the entertainment assets.

How any hedge fund guy can call for responsibility is beyond me, because if you look at those guys, there is no conscience at work. It is a business that is only about creating wealth, where when they fail, they get bailed out and where nobody gets fired. A guy from a hedge fund entity is the single least qualified person to be making these kinds of judgments, and he is dangerous to our industry.”

Why is he dangerous?
“[Loeb] calls himself an activist investor, and I would call him a carpet bagger, and one who is trying to spread a climate of fear that pushes studios to want to make only tent poles,” Clooney said. “Films like Michael Clayton, Out of Sight, Good Night, And Good Luck, The Descendants and O, Brother Where Art Though?, none of these are movies studios are inclined to make. What he’s doing is scaring studios and pushing them to make decisions from a place of fear. Why is he buying stock like crazy if he’s so down on things? He’s trying to manipulate the market. I am no apologist for the studios, but these people know what they are doing. If you look at the industry track record, this business has made a lot of money. It creates a lot of jobs and is still one of the largest exporters in the world. To have this guy portraying it that Sony management is the bad stepchild and doesn’t know what it is doing and he’s going to fix it? That is like Walmart saying, let me fix your town, putting in their store, strangling all the small shops and getting everyone who worked in them to work for minimum wage with no health insurance.

“It’s crazy he has weight in this conversation at all,” Clooney continued. “If guys like this are given any weight because they’ve bought stock and suddenly feel they can tell us how to do our business — one he knows nothing about — this does great damage than trickles down. The board of directors starts saying, ‘Wait a minute. What guarantee do you have that this movie makes money?’

Well, there are no guarantees, but if you average out the films Will Smith and Channing Tatum have made, you will take that bet every time, even if sometimes it just doesn’t work out.” Clooney also said he believes that down the line both films have a chance to be a wash.

Clooney was particularly sensitive on the subject of job creation.

“Hedge fund guys do not create jobs, and we do,” he said. “On the movie we just made, we put 300 people to work every day. I’m talking about nice, regular people, and when we shot in a town, we’d put another 300 people to work. This is an industry that thrives; there are thousands of workers who make films. You want to see what happens if outside forces start to scare the industry and studios just make tent poles out of fear? You will see a lot of crap coming out.”

Phew! Despite the Loeb rant, Clooney was in a good mood after completing a WWII period drama he said went well, despite what he called “the worst winter weather that Germany had in about 150 years”. Clooney and Heslov wrote the script for a fact-based film about how a crew of art historians and museum curators united in a race to uncover renowned art works that were looted by the Nazis. The ticking clock was, Hitler was going to destroy them as the Third Reich tried to cover the tracks of a murderous regime during the final chapter of Germany’s rule. Clooney and Heslov (both of whom produced) got a killer cast. Besides Clooney, the film stars Cate Blanchett, Matt Damon, Bill Murray, John Goodman and Jean Dujardin. Daniel Craig was going to make the film, but it turned out he spent so much time making and promoting Skyfall that he told Clooney his wife, actress Rachel Weisz, would kill him if he didn’t go home. So he was a scratch.

“After we wrapped The Ides Of March, we were going through our slate to find what’s next and I asked Grant, what do we have that is not so cynical, and not questioning the rights and wrongs of the world,” Clooney said. “He said, we don’t have anything like that. But he’d read this book The Monuments Men at the airport. We thought it could be a really great old fashioned number where you put a gang together to go after the greatest art archives in the world, these six million pieces stolen by Hitler, who serves as the ultimate bad guy. It was an untold story of World War II, and those don’t come around often. We pitched it to Sony and they came aboard right away, and everything along the way went smoothly, which never happens. It will come out two years after we first pitched it.”

The film has a $75 million budget, and Clooney said it came in $5 million under and five days early. “That means more money for music and CGI, because in post you always get surprised,” he said. There was plenty of good will on the set, and even pranks that are part and parcel of movie sets where Clooney and Damon dwell together.
“Matt was rushing to lose weight, and I’d have the wardrobe people take in his uniform every day, so that no matter how much he was losing, the clothes felt tight on him,” Clooney said. “There was a real family feeling. I have known John Goodman since I was the seventh banana on Roseanne and to have him come over, and to work for the first time with Bill Murray, who’s a close friend, and Cate and Matt, was incredible. Jean Dujardin was great. I’d only met him at awards shows, when I told him early on that he might win the Oscar for The Artist if he learned English, which maybe I shouldn’t have said [Clooney lost to Dujardin for his perf in The Descendants]. Matt, Bill and John would often come to the set even when they weren’t shooting and when we had a snowstorm, they were right there, picking up camera cases and helping to move craft services.”

Even though Clooney acknowledges that $75 million is generous for a studio-made film that isn’t based on a comic book, he feels they got a lot of bang for the buck with star power and staging a period film in Europe. Part of that is because he hasn’t taken an upfront salary forever, something that has become commonplace in the business and is evidence that Loeb’s criticism of fiscal irresponsibility at Sony isn’t recognizing the whole picture.

“The last time I got paid full freight was The Perfect Storm, when I had no back end,” he said. “From then on, I’ve taken a minor partial upfront payment and gambled on the back end on all my movies. Some have underperformed, but they have never been designed for huge grosses. I’ve gambled and invested as much as a studio; if they’re making a film for $15 million and I put my $7.5 million in the pot, we’re all investors who are staked in its performance. I’m comfortable with that.”
Clooney noted how well that strategy worked for his pal Steven Soderbergh, who teamed with Channing Tatum to personally underwrite the budget of Magic Mike. The film was a big hit, a sequel is in the works, and so is a Broadway musical. Soderbergh told me at Cannes that his wager should result in the biggest payday of his career.

“What a way for Steven to go out, at the end of his movie career he hits the jackpot,” Clooney said. “I watched so many times as he gave back money and percentages to get actors. I applaud both Steven and Channing.”

I reached out to Third Point, and if there is any response by Loeb to Clooney’s assessment, I will add it after Third Point has a chance to absorb the story. Loeb, by the way, is an investor in Variety with Deadline’s parent company PMC.

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