A Tangled Web of Deal-Making
Link to this page : www.cannon.org.uk/spiderman.htm
Copyright © 1998
A Tangled Web of Deal-Making
mired in costly and complex lawsuits that form a cautionary tale about
By MICHAEL A. HILTZIK, Times Staff Writer
If the adage is
true that the ultimate
Man" to the big screen will never hang in the Louvre.
As the biggest superhero character left unfilmed since the blockbuster "Batman" made the genre popular
again, "Spider-Man" has been widely touted as moviedom's hottest property. Industry buzz says a movie
featuring the web-spinning, wall-climbing crime fighter who has been a comic book mainstay for more
than 35 years would be the event movie of the year for the studio that owns the rights.
If only anyone could figure out which studio that is.
The seven-year battle over the feature film rights to the Marvel Comics character has become
Angeles Superior Court Judge Valerie Baker, with as many as 18 separate written agreements at issue. Last
begin before the end of the year.
But that still leaves Baker confronted with a mess so tangled that one lawyer estimates that Spider-Man
documents in his office already occupy 60 cardboard boxes.
"Spider-Man could be a movie, or it could be litigation," said Howard Weg, an attorney who represents
the liquidating trust of Carolco Pictures, which claims to have acquired the movie rights in 1989 but went
bankrupt in 1995. "All the entities involved have elected not to make a movie, but litigation."
But this is more than a story of dueling lawyers. The multimillion-dollar litigation parade provides a
unique snapshot of recent
of the movie business, cursing many of those who have laid claim to it. Three studios that at one point or
another claimed an interest in the movie rights have gone bankrupt waiting for a resolution; so too has
Marvel Entertainment Group, the comic book publisher that owns the character. Indeed, it's not clear
whether the leading complainant today, the ailing studio MGM, would have the financial wherewithal to
finance the "Spider-Man" movie if it wins the litigation.
The case traces
the rise and fall of three independent film studios that briefly dominated
making until their shallow finances brought them down and unfolds against the backdrop of the industry's
blockbuster mentality and its preoccupation with big names, such as Arnold Schwarzenegger and superstar
director James Cameron, whose association with the "Spider-Man" project helped drive it from a modest
$15-million undertaking in 1985 to the predicted $200-million extravaganza it would be if made today.
And it shows to what length filmmakers will go to appease their own vanity: The whole brouhaha
started when independent filmmaker Menahem Golan, who purchased the first five-year movie option on
"Spider-Man" 13 years ago, filed a lawsuit to ensure that he would be listed as producer of any "Spider-
Man" film, even if he never again lifts a finger to bring it to the screen.
The intensity of battle also illustrates how desperate studios are to develop "event movies"--priceless
properties that can be exploited repeatedly over a decade or longer for sequels and spinoffs.
The potential return of such a franchise is so great that four major studios remain in the fight for
"Spider-Man." One is MGM, which claims to have bought up all the "Spider-Man" feature film rights once
held by the defunct independent studios--Cannon Films and 21st Century Film (both operated by the
irrepressible Golan) and Carolco Pictures.
Viacom Entertainment and Sony Pictures, meanwhile, say they own television and home video rights,
respectively, to any "Spider-Man" feature film.
Waiting in the wings, finally, is Twentieth Century Fox, which is not part of the litigation but holds the
most intriguing card of all--an exclusive contract with "Titanic" director Cameron, who in 1991 was paid
$3 million by Carolco for a "Spider-Man" film treatment that sources say is brilliant.
These claims are all at issue because Marvel, which is just emerging from its own bankruptcy, contends
that the movie options it sold three times over the last 13 years have all expired. Therefore, it claims, it has
the exclusive right to sell them again.
Difficult Birth for Superhero
Like its hero, Peter Parker--who struggles to balance super powers bestowed by a radioactive spider's
bite with the worldly concerns of any average teenager--"Spider-Man" as a comic book concept at first got
The creator was Stan Lee. Today a vigorous 75-year-old who still holds the title of chairman at Marvel
Comics and remains the enterprise's creative soul, Lee by 1962 had provided Marvel with some of its
quirkiest and most enduring characters, including the Fantastic Four and the Hulk--superheroes whose
appeal lay in having to balance amazing powers with the pressures of sibling rivalry, job worries and
"When I told my publisher my idea for Spider-Man," Lee said in his memorabilia-filled Westwood
office, "he said: 'Here I draw the line. People hate spiders. Teenagers can only be sidekicks, not
The publisher flatly refused to give Spider-Man his own comic book. Lee sneaked the character into a
comic book Marvel was about to fold, "Amazing Fantasy." In its final edition, August 1962, "The Amazing
Spider-Man" made his first appearance.
In developing the character, Lee played off the cardboard personalities of Superman and his ilk of
"I tried to make them flesh-and-blood," Lee said. Peter Parker was a high school kid with girl trouble
and difficulty finding work. While competing characters fed into adolescent fantasies of unlimited power
and control, Spider-Man's abilities often seemed more of a burden than they were worth.
Within a couple of months, Marvel realized that Lee was on to something. The final edition of
"Amazing Fantasy" outsold anything Marvel had published in years. The character spawned a newspaper
comic strip and animated and live-action TV series.
Yet when it came time to sell the movie rights in 1985, Peter Parker again got no respect. The Superman
franchise, launched to huge success in 1979, seemed to have breathed its last with the critically panned
"Superman III" in 1983.
"Nobody believed anymore in features based on comic books," Golan said.
Nobody, that is, but Golan, the voluble co-chief of independent Cannon Films.
10 Versions of Script in 4 Years Golan liked to think of himself as a producer with one foot in the
schlock house and the other in the art house--the mix gave his company "balance," he would say. His
first production had been the Oscar- nominated Israeli comedy "Sallah," and he had bankrolled any number
of other small foreign films. But he also bragged about having discovered Jean-Claude van Damme and
produced the kickboxing star's firstthree pictures.
Golan persuaded Marvel Entertainment to sell Cannon the feature film rights to Spider-Man, its premier
character, for a fire-sale price of $225,000 (plus a percentage of the gross revenues).
Over the next four years, he nurtured the property through 10 screenplay versions, including some under
his own pseudonym, Joseph Goldman. By 1989 interest in the genre was stirring again with "Batman's"
blockbuster opening in June. Other studios were coming to him with inquiries about "Spider-Man." That
was fortunate, because Golan no longer could make the picture on his own.
Cannon Group had been the quintessential 1980s independent film studio. Thinly capitalized and kept
afloat by suspect accounting, it specialized in low-budget action fare with stars such as Chuck Norris and
Charles Bronson--average cost: $5 million.
Cannon's ambitions for "Spider-Man" were much greater; Golan pegged its budget at $15 million and
dreamed of acquiring a big-name director. But before he could execute his master plan, time ran out for
Cannon. As a string of flops such as the Sylvester Stallone arm-wrestling feature "Over the Top" drained
Cannon's capital, the Securities and Exchange Commission charged it with fraudulently misstating its
finances. (The company eventually settled the SEC case without admitting or denying the allegations.)
On the verge of failure, Cannon was taken over in 1987 by Pathe Communications, a holding company
Italian financier Giancarlo Parretti, who would cut a painful swath through
the next few years--even acquiring the once-stellar MGM--before going bankrupt and being convicted on
perjury and evidence-tampering charges. (He fled
Two years after that, Golan struck out on his own. As part of his severance package from Pathe, Golan
took the rights deals for Spider-Man and
original deal with Marvel gave it only until August 1990 to place a "Spider-Man" picture in production, or
the rights would revert to Marvel, Golan's new company, 21st Century Films, renegotiated the original deal
with Marvel to buy more time.
Reprieve in hand, Golan again set about raising money for "Spider-Man." On this side of the business he
was an acknowledged pioneer: during the Cannon years Golan had supplemented his company's modest
finances through the extensive use of "pre-sales." This entailed raising money by selling off overseas
distribution rights, often territory by territory, while
retaining the most lucrative
In the case of "Spider-Man," Golan further sold worldwide television rights to Viacom, and home video
rights to Columbia Tri-Star.
But the most important deal was with Carolco, another independent studio.
At the 1990
The studio was riding high on the strength of its hits "Aliens" and "The Terminator." While
Schwarzenegger lounged on deck nearby, Golan said, studio executives Mario Kassar and Peter Hoffman
pitched a plan to produce a $50-million live-action "Spider-Man."
"They wooed me for a whole day on that boat," Golan said. The deal was inviting, and not only because
he personally stood to gain a $1-million cut if he agreed. Carolco, he thought, might be able to avoid the
financial problems that had stymied his own dreams for "Spider-Man" at Cannon. He signed the deal for $5
million, payable to 21st Century.
Golan's only condition, as he recalls the negotiations, was that his role in spotting the property's
potential early and keeping the project alive be recognized: Any "Spider-Man" picture Carolco made was to
bear his name as producer.
By late 1991 Carolco paid $3 million to Cameron, the director of "The Terminator" and "Terminator 2"
to write and direct the picture.
Lee, who had become friendly with Cameron, got a look at his detailed treatment--a sort of stripped-
down screenplay minus dialogue--and was thrilled.
"It was the Spider-Man we all know and love," he said later, "yet it all somehow seemed fresh and new."
Golan, however, was growing uneasy. Amid all the Carolco publicity for the project, his name had not
been mentioned as producer even once--only Cameron's. Finally he complained to the studio.
In response, according to court documents, Carolco executive Lynwood Spinks called one day on
Golan's assistant Ami Artzi. "Ami, we have a certain problem," Spinks said, according to Artzi's later deposition.
"What is the problem?"
Spinks explained that in its haste to sign Cameron for the new picture, Carolco had simply copied the
terms of his "Terminator 2" contract word for word, substituting "Spider-Man" for the name of the movie.
But the old deal had given Cameron approval over every credit on the picture--and he would not approve
Golan's credit as producer.
Over the next several months, Golan claimed later, Carolco tried to pressure him into giving up his
claim to the producer credit--even withholding part of the $5 million it owed 21st Century for the "Spider-
Legal Fight Over Screen Credit
Finally, in April 1993, Golan filed a lawsuit to rescind his contract with Carolco. What began as a fit of
pique over a credit turned into the event that ended the pre-production period of "Spider-Man," so to speak;
the litigation phase had begun.
Within 16 months, Golan's lawsuit was followed by five more, throwing the ownership of the "Spider-
Man" movie rights into a seemingly impermeable snarl.
In February 1994, Carolco sued Viacom and Tri-Star separately to nullify their television and home
video rights. Tri-Star and Viacom countersued Carolco, 21st Century, and Marvel. MGM, which as part of
the Pathe Group considered itself the inheritor of Cannon's old "Spider-Man" rights, sued Golan, Globus,
Parretti, 21st Century, Viacom, Tri-Star, and Marvel for fraud (among other things). Within a year further
complications arose: Carolco, 21st and Marvel had each filed for bankruptcy.
As a platoon of lawyers worked their way through the interlocking contracts and side deals that assigned
and reassigned the "Spider-Man" movie rights, one curious fact emerged: Although millions of dollars in
potential profits rode on the language of contracts written by high-priced lawyers for billion-dollar
companies, the documents seemed to be drafted with remarkable carelessness--an indication, perhaps, of
the seat-of-the-pants deal-making by which
Take the Golan-Carolco deal. Carolco argued that rather than guarantee Golan a producer credit, the
contract actually stated that Carolco could choose simply to pay him off. The so-called "pay-or-play"
provision, Carolco maintained, was embodied in a contract addendum--which Golan insisted he had never
received and which no one could prove had been attached to the original document.
The two sides even disputed the actual value of having one's name on a movie. Golan insisted that
attaching his name to an "event picture" like a Cameron-directed "Spider-Man" would give his company
But a Carolco
expert witness countered that no one in
played an important role in the production. The credit's only value to Golan, he said, would be "to show the
remainder of the entertainment industry that Golan has the bargaining power to obtain a credit for rendering
The biggest mess, however, involved 21st Century's 1989 contract with Marvel. This was the deal that
aimed to give Golan more time to complete a movie.
Although the original contract between Cannon and Marvel explicitly stated that rights would revert to
Marvel unless Cannon started production by a certain date, the 1989 version no longer contained an explicit
deadline. It stated only that if 21st failed to
have a movie in
distribute a movie without Marvel's written approval. One could read it as giving 21st Century the movie
rights to Spider-Man in perpetuity--a virtually
unheard-of event in
Untold hours of testimony and reams of paper have since been expended on the question of how and
whether Marvel might have sold permanent rights to its most valuable character for $450,000 and a
percentage of the gross.
One possible answer is that Marvel lawyers confused critical provisions of the "Spider-Man" deal with a
similar, but not
identical, contract over Captain
Wording of Contract Lost in Cyberspace
Testimony indicates that one lawyer may have dictated key language on the "Spider-Man" deal over the
telephone during his vacation after Marvel's word-processing computer crashed. Because the original
contract was lost in cyberspace, court documents suggest, he had to reconstruct part of the agreement from
memory, inadvertently reproducing some language from the Captain America language in the Marvel deal,
where it did not apply.
The difference was important: The Captain America contract did not need as firm a reversion clause
because that picture was already in production when the contract was negotiated, while the start of "Spider-
Man" production was months, if not years, away.
MGM's lawyers argue, however, that Marvel's assignment of permanent rights to 21st Century was
deliberate--and thus as 21st's successor, MGM now owns those rights. Golan's bankers had refused to
finance a picture if there was any chance that Marvel would take the rights back, MGM contends. To get
the movie made, therefore, Marvel had to agree to the permanent assignment.
Among the parties trying to wrest the rights away from Marvel, the common argument is that the
contract is clear on its face: The rights do not expire until MGM makes a "Spider-Man" picture.
"It is what
it is," said Christopher Rudd of the
attorneys. "I don't know how to interpret a contract other than by looking at the plain language."
Marvel's position is that other contract provisions, not merely the disputed "reversion" clause, make
clear that the film rights are temporary. In other words, Marvel maintains, MGM is simply trying to take
advantage of an inadvertent ambiguity to obtain
rights that would be almost unique in
"It's inconceivable that Marvel would have licensed its signature property in perpetuity to a new
company like 21st Century," said Carole Handler, the attorney for Marvel Entertainment Group.
What seems clear is that "Spider-Man's" destiny lies in further litigation. Even if a court awards MGM
the movie rights, it would be virtually impossible for the ailing studio to finance the picture unless it also
owned the lucrative television and home video rights now claimed by Viacom and Sony. That ensures a
further battle with Viacom and Sony.
And if Marvel is awarded clear title? It is possible that legal appeals might extend the battle well beyond
By MICHAEL A. HILTZIK
Copyright © 1998
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