"Before I start our presentation." Hirschfield said from the podium, "I'd like to say a few words about our recent problems. All in all, they constitute a tragedy for a man I still consider a friend—David
Begelman
. Hopefully, it's behind us. The nature of his acts and the enormous media attention have implied that there was more wrong than we found, and that's not the case. But my decision to bring him back proved to be wrong, and we had to move ahead."
Hirschfield then described the various business activities of Columbia Pictures Industries and reported that operating earnings for the second quarter and first half of the June 30 fiscal year had risen more than 300 per
cent from like periods a year earlier. The results included only three weeks of revenues from
Close Encounters
which, said Hirschfield, "as of today, has achieved a box-office gross of approximately $72 million. The retention to Columbia has been approximately $51 million. As of next week, it will be the seventh-largest-grossing picture in the history of motion pictures in the United States. Our foreign prospects on the movie look extraordinarily promising. We expect by the time we're through
Close Encounters
at the very least will be the third- or fourth-highest-grossing picture in the history of motion pictures."
There were many questions from the audience.
"Can you run down your new films and where you might see a blockbuster within those—what names in particular?"
"Eyes,
scheduled for releas
e this summer, stars Faye Dunawa
y and is produced by Jon Peters. It's a thriller that has really good upside. We've got a sleeper called
Midnight Express,
which I hear is absolutely sensational. It's in the genre of
Taxi Driver,
which has grossed $20 million for us. Our current biggest-budget picture is
California Suite
from the Neil Simon play. This should be a knockout of a movie. It's produced by Ray Stark and has one of the biggest casts ever assembled, for a picture: Walter Matthau, Jane Fonda, Alan Alda, Michael Caine, Richard Pryor, Bill Cosby, and Maggie Smith. We just started a picture tentatively called
Eyewitness
with Jane Fon
da, Michael Douglas, and Jack Le
mmon, which deals with a nuclear-power-plant cover-up story.*
Nightwing,
which is about vampire bats, is directed by Arthur Hiller, with Marty Ransohoff producing. It has an enormous shot at being a breakaway thriller mov
ie. We also have a new Norman Je
wison picture called
And Justice for All,
which is a people-against-t
he-system kind of movie with great potential. We have
Sinbad Goes to Mars
in production. You can laugh, but the last Sinbad movie did $15 million and it's still going strong.
"The three especially big movies that we have on the boards are
*
Eventually entitled
T
he China Synd
rome.
Electric Horseman,
which is the new Redford-Pollack picture in partnership with Universal. The next Steven Spielberg movie is tentatively titled
1941.
John Milius is writing and producing. It's a broad farce, special-effects comedy in the genre of
Mad, Mad World
and could be an enormous picture. It's a big-budget movie and likely will be partnered with Universal. We have the new Paddy Chayevsky book, the movie of which will go into production late in the year or the beginning of 1979. It portends to be a big breakaway movie. It's a cross between reality and science fiction with a very commercial theme, one that's never been done on the screen before."
With the aid of charts and graphs projected on a large screen, Hirschfield explained in detail the financing of
Close Encounters,
as well as the projected financing of
Annie
and other aspects of Columbia's financial structure. He convinced just about everyone in the room that the corporation was in robust financial health and had a very bright future. "We believe we understand more about our basic business and its nuances than any company in our industry," he asserted.
Surprisingly, and to his great relief, there were no difficult questions about the
Begelman
scandal or the
rift within the company. He sat down to warm applause.
David and Gladyce
Begelman
flew to the Far East Wednesday. They would vacation in Hong Kong and Japan, and on Friday, February 25, David would represent Columbia Pictures at the Tokyo premiere of
Close Encounters.
Late on the Sunday evening he resigned, David's last request had been that he be permitted to attend the two principal foreign premieres of
Close Encounters—
-in London and Tokyo—even though he would no longer be president of the studio. Joe Fischer had been shocked by the request, but Hirschfield, who was exhausted and apathetic by that point, gave his assent.
Since the Queen was expected at the London premiere, all guests had to be cleared by Buckingham Palace. The palace rejected David
Begelman
; it seemed inappropriate for the Queen to receive an admitted check forger who was at the center of a major American business scandal.
Begelman
, therefore, had to settle for Tokyo only.
* * *
Still angry at the press, Ray Stark dispatched a lengthy telegram to Liz Smith accusing her of being "curt" and assailing her for not seeking his comment on an item in her column.
...
Of course, Liz, you could call me and even reverse the charges. . . . I'm surprised and shocked at your lack of professionalism and friendship in not calling me. . . . You are a nice lady, a good reporter and I hope you are not letting yourself get caught up in the vicious, irresponsible media circus. Again, please feel free to call me anytime, whenever you wish. My home number is in the phone book.
Smith replied with a letter.
Dearest Ray,
...
I could not wait any longer to take a tougher stance on the Begelman affair.
I did let Sue [Me
ngers] talk me out of a tough line for many weeks. And I am aware of your pro-
Begelman
interest.
...
I
don't e
ven know him, I have no personal animus, and I
understand he is a very nice guy.
But this was an important story. When we talked when you were off skiing, I knew you were trying to be helpful and you did not make any secret of your feelings. I kept all that
off the record. In fact, Ray, I
guess you simply have no idea of how much I have kept out of my column and off the record. I have omitted you from story after story on
Begelman
.
I know I can call you and would have called you more on all of this, but I did NOT WANT TO PUT YOU ON THE SPO
T. So Ray, I feel if anything, I
have been protective of you in this matter. As much as I could be. I like you very much. I admire your work. I think of us as friends, and I appreciate your kind words. . . .
. . . Anyway, Ray, I wasn't asking you for gossip nor meaning to be curt. I was trying to explain why I had to come down harder on the
Begelman
affair than you might want me to, considering your friendship. All these items on my desk saying he owes you $600,000 and you had a deal with him to take all your worthless as well as good projects for Columbia, and on and on. All that has been kept out of my column.
I
consider that friendship, Ray. . . .*
Hirschfield coasted through the rest of the week and flew with his family to Vail, Colorado, on Friday evening for a week of skiing. The first day on the slopes, trying to avoid colliding with his son, Hirschfield fell and broke his right thumb. It was set, and his entire hand and forearm were put in a cast so that he could continue to ski. While dining in Vail, he and his party spotted Cliff Robertson with a group of people across the restaurant. Someone suggested that Alan should get Cliff to autograph his cast. Cliff cordially agreed, and while he was signing his name,
Hirschfield
said, "I don't know why I'm having you do this, Cliff. I should get David to sign it."
*Smith handled Stark skillfully—by flattering him and making him feel powerful, the only way one realistically could handle Stark if one needed his goodwill. Of course, the "items" about a S600,000 debt and Begelman's buying Stark's "worthless" projects for Columbia were omitted from Smith's column not because of friendship but because she could not verify them as anything more than unfounded rumors.
FORTY-SIX
Sir James Goldsmith and investment banker Ira Harris sat with Herbert Allen in Allen's office and talked about the possibility of Goldsmith's buying control of Columbia Pictures.
Goldsmith assured Allen that he did not intend to "act aggressively"; he came as a friend and was interested in buying only if the
Allens
and Matty Rosenhaus were genuinely interested in selling. There was no pressure.
Herbert was tempted. Over the past month, the stock had dropped from around twenty dollars a share to around fifteen. He knew Goldsmith could be induced to pay well in excess of twenty dollars a share—six or seven times what the
Allens
had paid for the stock in 1973. Apart from the financial incentive, Herbert had to admit to himself that he was sick of the long fight with
Hirschfield
, sick of the frustrating search for a solution, and pessimistic about ever finding one. (Actually, Jimmy Goldsmith was not the only potential buyer who had approached Herbert. Other opportunists, seeing the dissension in the company, had made less explicit overtures. They included Kirk Kerkorian, the controlling shareholder of MGM, who less than a year later would purchase a major interest in Columbia.)
Though he acknowledged to Jimmy Goldsmith that there had been tension between Hirschfield and the rest of the board, Herbert did not mention that Hirschfield's approach to Goldsmith in December had been made without Herbert's knowledge, and that it had made him very angry at both Hirschfield and at Ira Harris. There was no need to get i
nto
that. Since no one but
Hirschfield
, Harris, and perhaps David Karr and John Tunney, knew that Hirschfield had initiated the contact behind Herbert's back, it easily could be made to appear to everyone else that the investment by Goldsmith had been Herbert's idea, either as an initiator or as the recipient of a proposal directly from Goldsmith. Alan Hirschfield need not be perceived as having had anything to do with it. It could be portrayed as a victorious exit from the company by the
Allens
and Matty Rosenhaus with an enormous profit in their stock, having nothing to do with the strife in the company, nothing to do with
Hirschfield
, nothing to do with anything except an economic opportunity that was too good to pass up.
Herbert told Jimmy Goldsmith that he would think seriously about it, and be in touch Wednesday or Thursday.
Ira Harris telephoned Hirschfield in Vail Wednesday morning to tell him that Goldsmith was in New York and that his talks with Herbert looked promising. A few minutes later Goldsmith himself called
Hirschfield
essentially to confirm what Harris had said, and to add that he hoped
Hirschfield
and his management team would remain at Columbia if Goldsmith, indeed, did take control of the company. Hirschfield was joyous.
In accord with the board of directors' decision, Herbert Allen also began talking early in the week with Alan
Hirschfield
's lawyer, Robert Haines, about a new long-term contract for
Hirschfield
. They made some progress, although Herbert made no promises.
* * *
With the press coverage hurtling onward—each major article seeming more sensational than the last—the principals in the Columbia drama anticipated with trepidation the impending article in
The New York Times
Sunday magazine by Lucian Truscott, IV. Truscott had interviewed Alan Hirschfield, Herbert Allen, and many others. Liz Smith had reported in early February that the Truscott piece would "pop Hollywood open because it would go all the way back to Meyer Lansky. . . ." On Wednesday, February 23, Smith ran a longer item about the
Times
article and said that it would appear that Sunday.
Through his cousin, theatrical producer Terry Allen Kramer, who knew a Broadway press agent with contacts at the
Times,
Herbert Allen obtained a copy of the article on Wednesday. He was devastated by what he saw. Reduced to its essence, the article, entitled "Hollywood's Wall Street Con
nection," suggested that the All
ens' controlling interest in Columbia Pictures had been secretly for sale for some time, that Herbert Allen and others had tried to "hush up" the
Begelman
scandal in order to keep the market value of the stock from declining, and that Allen's actions were consistent with a history of dealing with disreputable people, including criminals. Charles Allen was labeled "The Godfather of the New Hollywood." He was said to have been a "mystery power behind the Hollywood set ever since" the early fifties and
to have business links to a num
ber of criminals, the most prominent of whom was Meyer Lansky, the boss of organized crime in America. The article was accompanied by photographs of Meyer Lansky and other shady characters, and also by a large candid shot of Charlie Allen, taken ambush-style
as he was dining at the Carlyle
Hotel.