David Bergstein may be one of the most reviled people in Hollywood. He faces litigation and bankruptcy in two countries, and has a court-appointed trustee crawling over his assets at the request of more than a dozen creditors, which include most of the major guilds. He also is spearheading an attempt to buy Miramax from the […]
David Bergstein may be one of the most reviled people in Hollywood. He faces litigation and bankruptcy in two countries, and has a court-appointed trustee crawling over his assets at the request of more than a dozen creditors, which include most of the major guilds.
He also is spearheading an attempt to buy Miramax from the Walt Disney Company on behalf of unnamed bidders. Unexpectedly, the financier and producer agreed to be grilled by TheWrap’s Sharon Waxman.
© 2008 Los Angeles Times photo by Gary Friedman. Reprinted with permission.
Why are you willing to talk to us?
I’d like to clear up a few things. You reported that I owe Comerica $70 million. We owe Comerica zero; we have an excellent relationship with Comerica. We have $350 million of loans with them over the past five years. None of the entities which Aramid [a creditor] has tried to put into bankruptcy owes Comerica any money.
OK, we’ll fix that if true. But what do you have to say about these supposed shell companies, and the dozens of creditors who are after you? And the court trustee?
They provided an illusion to the judge that we have hundreds of investors and I’m pilfering the company. Five companies have been petitioned to be put into bankruptcy: R2D2, CT-1, Capitol Films, ThinkFilm and Capco. They have no assets whatsoever. If I want to take money out of those companies, I’m entitled to do it.
My family of entities is less than 50 companies. Every independent company that makes a lot of films has an entity for each film they finance. I own over 1,300 films. The fact that I have 50 entities is making something out of nothing. My structure is uncomplicated compared to Miramax or New Regency.
And what about all the creditors?
There are seven creditors; the rest are fake.
Didn’t you stiff Taylor Hackford?
Taylor Hackford was paid in full. The guild filed misleading declarations, which they’ll have to answer to later. We paid him off in October. The guild filed a very tricky piece of paper to mislead the court, and I’m going to take care of them for having done that. They wield a lot of power and abuse the power. The guild didn’t say he wasn’t paid. They said it’s old arbitrations without telling the truth.
Well, you don’t seem to have a lot of friends around town.
I don’t have a lot of friends around town because most of the films I acquired, I acquired through foreclosure. The producers who got stiffed think I should pay them. This is an industry run by lawers and agents. What I’m doing is not popular. That’s why I don’t have a lot of friends around town.
But you have friends in Saudi Arabia?
I don’t have a Saudi Arabian investor; that’s misinformation.
Then who are your backers for Miramax?
It’s an offshore entity with three parties – Ron Tutor, and two other parties. Neither are Saudi Arabian and never were. The Saudi Arabian thing pissed off the people I’m with. I’m not saying they’re Arabs or not. But I didn’t go to any Mideast country to put this thing together.
And Deutsche Bank?
We have offers from two banks. I’m not saying Deutsche Bank is or isn’t. Most of our purchase price is all cash. Our offer is very clean to Disney — all cash offer, and internally, laying off receivables with a bank.
What’s your part in this?
I put the business plan together. I put the financing together, but my role is an advisory role. If we’re successful in buying the asset, it’s got a management team in mind which I had suggested back in December. If the asset is purchased, that team would come into place. I’m not part of that management team, but I would sit on a board.
And the financing?
To the extent there are receivables, it could be financed by any bank. Our offer is very clean to Disney — all cash offer, and laying off the receivables with a bank.
So what was the bid?
Our bid was in fact $650 million, all cash. We said we would increase our price, slightly at the terms. I told them I might be able to. I didn’t say absolutely. But for me, and for the group, it’s not an emotional decision. I won’t die if we don’t get the asset.
What do they, and you, want with Miramax?
I think the business is changing. Entertainment assets were inflated for a long period of time. Now entertainment assets are going down for the next couple of years. You'll see value investors like me who are not interested in the movie business. I’ve financed 60 movies — I’ve never been to the set of a movie. The movie business is more interested in me than I’m interested in it.
What would you do with Miramax?
It would be a distribution company focused on the nonphysical aspects of distribution – television, VOD, internet etc. The hard part of the business — DVD — would be licensed out to other companies, because we don’t believe there’s much of a future in hard goods.
The Gores [the Gores brothers, Alec and Tom] had a very different business plan. They were considering buying other assets domestically — buy Anchor Bay — more of traditional movie studio plan which we don’t think works anymore.
Isn’t Disney asking too much money?
Of all the things I’m accused of, it’s not overpaying for library assets.
I tried to buy libraries that didn’t have distress on them. But the price was so high compared to value, I couldn’t.
I don’t care for the movie business. I love movies. But the movie business itself is not a nice business in general. A lot of forces are trying to inflate the price of things because they get 5 percent or 10 percent. That’s not healthy. If people made movies for the right amount of money, it would be much healthier industry, and wouldn’t have suffered all this damage.