American Film April 1990
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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