EXCLUSIVE
Plenty of Hollywood veterans raised their eyebrows when Abu Dhabi announced its plans to head hard-core into the movie business by launching a $1 billion film fund two and a half years ago.
Now the strategy appears to be in meltdown. The CEO of the Abu Dhabi Media Company (ADMC) and its film fund, Imagenation, Edward Borgerding, is out on his keester along with his number two Stefan Brunner. Meanwhile a pair of new bottom-line executives – Michael Garin and former CFO Frank Mooty – have come in to lay down the law.
Imagenation doled out hundreds of millions in film deals over the past two years – to National Geographic, Participant, Hyde Park Entertainment and Walter Parkes, among others.
They’ve made a half-dozen movies and, according to one knowledgeable insider, have lost more than $100 million on them thus far. Danielle Perissi, a spokeswoman for ADMC, said she could not verify the number, but noted,
“This is a long term investment on the part of Imagenation. You don’t look at capital gain immediately.”
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Those losses came home to roost in a sudden decision by the board of directors two weeks ago to terminate Borgerding. He’s been trying to get himself reinstated, so far without success.
Instead last Friday Garin – a member of the Abu Dhabi Media Company’s executive committee and former TV executive – got the job.
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Borgerding is not the only one ousted: Mohamed Khalaf al Mazrouei – Abu Khalaf to those who know him – was recently removed as chairman of the Abu Dhabi Media Company. He was replaced by a close adviser to the emirate’s ruler, Mohamed Mubarak al Mazrouei.
The math of Borgerding’s slate was what led to his and Abu Khalaf’s ouster.
Among the films that have lost money include Participant’s “Fair Game” (cost: $22 million, worldwide box office: $20 million) and the animal farce “Furry Vengeance” (cost: $35 million, worldwide box office: $35.9 million).
The recently released Peter Weir film “The Way Back” has lost the fund more than $12 million, according to the insider, and another $15 million was lost on the Robert Rodriguez movie, “Shorts.”
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Scarier still: Imagenation just threw in with Participant on a new Matt Damon-Steven Soderbergh movie, “Contagion,” which one source told me has a production cost of $80 million. Participant did not return calls to confirm the information.
One exception among the deals may be the mid-budget projects at Ashok Armitraj’s Hyde Park – “Ghost Rider 2” cofinanced at Sony and the upcoming “The Double” starring Richard Gere, which benefits from huge rebates in Michigan. No films have been released yet through the Hyde Park deal.
The worry from the start was that Abu Dhabi was wading into territory the emirate knew little about. Hollywood is always eager to hoover up cash from any source that offers it, and this ambitious spit of a nation was no exception.
Even Walter Parkes managed to nab $10 million from the fund – just for development.
There was always ego involved in this venture. The tiny, absurdly rich emirate has been seeking to invent itself as a global media and entertainment hub for the 21st century. And part of the appeal was the desire to build a native film industry.
Imagenation gave green-lights to two Arab films, the first one a low-budget affair at $1 million. But the second one has a $4 million budget and hired the long-receded talent Tobe Hooper (1974’s “Texas Chain Saw Massacre”? Really?) to direct it.
I have met Borgerding – a London-based former TV executive – many times in the past two years and questioned him about his ambitions for the fund as well as rumors that it was not doing well. He always repeated that the fund was aimed at making commercial, profitable films.
“I’m looking for movies that will make money. We’re going to try to make commercial movies,” he told me in the fall of 2008.
Then in the summer of 2009 he batted down rumors that Imagenation’s deals were not going anywhere – though the Warner Brothers deal evaporated after the Robert Rodriguez “Shorts” came out that year.
“We’re stronger today than we were a year ago,” he said at the time. “It’s all happening.”
Borgerding did not return requests for comment before publication.
But in fact things were not moving in the intended direction. Borgerding, according to one knowledgeable person, was “completely blindsided” by the board’s decision to remove him.
Word is he’s on his way to moving back to London, while still trying to get back in the good graces of the emiratis.
And what will happen to all those high-priced deals with American movie companies?
They are all worried, but Perissi says they should not be.
“Imagenation Abu Dhabi remains deeply committed to both our international partnerships and our aggressive slate of local productions,” she said. “We’re not losing momentum; it’s business as usual.”