Losing $100 million at the box office in 1994, the laughingstock that wasCutthroat Islandleft the pirate genre toxic for many years and marked the death of one of the most discerning film studios ever.
Immigrants Andrew J. Vajna and Mario F. Kassar lived the American dream, quietly building up a treasure chest of IP as the leaders of the now-defunct Carolco Pictures. In their heyday, the little independent studio shaped pop culture and perfected the blockbuster formula, pumping outtheRambofranchise(films 1-3),They Live,Total Recall,Terminator 2: Judgment Day,BasicInstinct,Cliffhanger,Universal Soldier, andStargatein their 13-year peak.
Thanks to talent in scouting slam-dunk scripts and cultivating relationships with great directors and stars like Sylvester Stallone and Arnold Schwarzenegger, by 1994 the studioaveraged $115 million per film. That mind-blowing level of consistency a testament to the fan appeal that their movies tapped into. Nobody knew what people wanted better than Carolco. They didn’t shy away from making deeper, arty movies either, producingChaplin,Jacob’s Ladder, andAngel Heart, Robert Downey Jr. winning a BAFTA Award for his portrayal as Charlie Chaplin.
So, how did the studio behind some of the greatest action films of the 80s and early-90s quietly die off with a pathetic whimper? As easy as it would be to blame pirate and stripper movies, they were doomed all along through years of knuckle-headed financial planning. Carolco is the only company that ever overdosed on blockbusters.
The Blockbuster Gamble
The go-big-or-go-home mentality has gripped the entertainment industry the last 40 years. In the mid-70s,Jaws,Superman, andStar Warspopularized the blockbuster, lending credence to the “blockbuster strategy.” Thanks to a funding strategy called “pre-selling,” Vajna and Kassar limited their own personal financial liabilities upfront by luring in foreign investors with star-billing that they guaranteed would result in a windfall on the back end. They were correct more often than not. The two businessmen were selling an elevator pitch and a cast, not a finished product. Their success the result of their impressive track record, which fed into their hype machine loop, allowing them to court more celebrities, attracting more investors.
Cut to a 1989-summer-blockbuster lineup that included a James Bond Sequel, aLethal Weaponsequel, anIndiana Jonessequel, and the hotly anticipatedBatman, and it was plain to see the trend was taking over. Carolco bought into the idea, churning out massive film after film in the early-90s.
Despite this, they still were losing money. Nobody threw a party like Carolco, lobbing stacks ofcash around on private jetslike a rapper in a music video. A lot of the development deals they funded went nowhere, the cash running so short, that as soon as they wrapped one humongous financial success they would immediately dump all the proceeds into the next film. As in the case ofCliffhanger, they still could not pay to complete the film, selling a share of the profits to TriStar Pictures, who then made a killing at Carolco’s expense.
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A Shot Across the Bow
The environment that spawnedCutthroat Islandwas one of absolute desperation. The chinks in the armor were already showing long before it was even green lighted. In 1992, the year Carolco unleashed what could be the textbook-summer blockbuster,Terminator 2, the studio was in the bizarre position of having tosell off its propertiesto pay the bills. No amount of 32 oz. “thirst terminator” collectible cups from Subway were going to bail them out.
As incredible as it sounds, the greatest flop of all time (as designated byGuiness World Records) was made knowing it had absolutely no chance of succeeding. This wasn’t a train wreck. This was a crash-test-dummy accident, where the only mystery was how mangled the plastic mannequins would be after plowing straight into a brick wall.
The film was made specifically to bank on Michael Douglas’ adventure-hero persona, and on IMDb you can see some promotional material prematurely churned out, in line with the pre-established pre-selling sales concept. But when he quit, everyone waited for the pirate epic to officially get canceled. It never did. Geena Davis felt compelled to stick around as her husband, Renny Harlin, was directing it. Principal photography started with no completed script, sets built for a story that wasn’t more than a hazy collection of set-pieces at that point. The proverbial vultures were circling the shoot from beginning to end. Carolco had a lot to gain if the film succeeded but nothing to lose if it failed. And fail it certainly did. However, as grisly as the aftermath was, there was one more unlikely twist, as the ones who actually lost the most money were the foreign investors and bondholders.
Davis didn’t run from the truth, admitting the film was doomed from the start. “The company was dead,” she told the press. “Everyone knew that, one way or another, this was their last movie.” Carolco was playing a game of hide and seek with their creditors. Years of dodging Chapter 11 by producing money-making, generation-defining films failed to alleviate their financial shortfall.
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The Walls Come Down
The pair, before parting ways, developed the reputation for wasting the company’s resources on private yachts. As Carolco’s proverbial boat sank, Kassar jumped into the open arms of Paramount Pictures, while Canal Plus and Foxgobbled up IPthat wasn’t already picked off in earlier fire sales.
Carolco officially dissolved in 1996, the year afterCutthroat Islanddebuted, the company’s remaining assets sold off for $90 million to pay off its creditors. Which so happened to be around the same time founders Kassar and Vajna (the latter who had left the company years prior) were bothinvestigated by federal grand juriesfor tax fraud. For years, the duo had danced a dangerous tango with the feds, always one step ahead of the tax regulators by clever use of offshore tax havens. But no amount of maneuvering could save the studio. The golden-age of Carolco was definitively dead, Sly Stallone’s all-expenses-paid, yearly yacht sightseeing tour of the Riviera sadly coming to an end.
The execs shrugged off the collapse, the fans were left with a lot of great films, the stars got to work on their tans, directors got rich, and every other company got the IP for cheap. Considering the sheer ratio of classics to duds, maybe it was all worth it … as long as you weren’t an investor, that is. Just don’t blameCutthroat Island.
