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Illuminations: Mel and Me
by Cameron Stauth
Originally published in American Film April 1990
With more curiosity then intent, a Seattle stockbroker sat down
recently to hear Mel Brooks make a pitch for $15 million. Around the
broker was a bevy of colleagues, many of them skeptical that Brooks'
production company, Brooksfilms, merited the kind of cash Brooks was
trying to raise on his "road show," a tour of Oppenheimer & Co.
brokerage houses scattered throughout America and Europe. Brooks, in a
sover, dark-brown suit, took the floor to explain why he was taking his
company public. "At least, he's not dressed up like Yogurt in Spaceballs," the broker said.
Brooks, in a real-life fish-out-of-water scenario, began his address to
the dour bottom-liners with-naturally- a joke. He told the brokers a
couple of Hollywood anecdotes but then segued quickly to business nuts
and bolts. His intent was deadly serious: to change the way Hollywood
has been doing business.
He quickly got to the foreboding issue confronting his venture; why the
stock he is trying to sell was priced at 65 times in 1989 earnings.
Last year, Brooksfilms made $323,000, but Brooks collected a $4 million
salary. How come?
Brooks had offered his explanation before. "Taxes! Why the hell should
I produce revenues and pay taxes on them when I own the company? I took
the money and pait it to Mel Brooks to avoid double taxation. By going
public, I'm taking a 1,000 percent drop in salary. How can I ask the
public to invest in a company that produces annual revenues of only
$323,000 ? I mean, that's ridiculous!"
As Brooks continued, the broker who'd been skeptical warmed to him. "My
attitude changed over the course of hte meeting," the broker said
later. He quickly came to believe that Brooks was "interested not just
in being entertaining, but" - how endearing! - "in making a buck."
Robert Manning, an Oppenheimer executive who helped shepherd Brooks
through much of his road show - with stops in Seattle, Houston,
Atlanta, Chicago, New York, Boston and Portland - believes that "Brooks
is first and foremost a businessman. He's a serious man who is also
very funny. But life is not a joke to Mel Brooks. That's been borne out
in the meetings."
Brooks has denied that this venture is, as some have called it, "a
vanity offering." "I want to make movies," Brooks says. "I'm an
energetic guy." So far, Brooks has been involved in 18 movies,
including well-known comedies like Blazing Saddles and serious movies
like The Elephant Man.
When Oppenheimer entertainment experts first explored raising capital
for Brooksfilms, they were advised not to go public and to look instead
for a major investor. The recent history of celebrity-driven public
offerings has been bloody. About five years ago, TV tycoon Aaron
Spelling and Italian filmmaker Dino De Laurentiis sponsored
high-profile ventures that were, respectively, so-so and disastrous.
Their lack of success
, as well as changes in the tax laws, helped kill investor enthusiasm
for celebrity production companies. For a time, it seemed as if Wall
Street's
interest in independent production companies was extinct.
But, according to Brooks, "I didn't want a single rich man to call me
on the phone to tell me his niece had just graduated from drama school.
The public, the shareholder, whon't do that."
If Brooks succeeds, the public spigot of cash may again flow into
Hollywood's independent production companies. But Brooks' timing may be
off. With an estimated 40 percent of the offering sold, the company
halted sales indefinitely, due to what it called "general market
skittishness."
Brooks, for one, is hungry for the freedom afforded by outside
financing. "I'm not good at handling people," he admits. "A lady from
Omaha
will say, 'I bought a share of your stock at eight, and now it's at 7
3/4. And I want...' And I'll say, 'Here's your money! Get out of the
meeting!''"
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