Indecent Exposure (71 page)

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Authors: David McClintick

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BOOK: Indecent Exposure
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    • Alan sighed and shrugged.
    • Since Columbia Pictures Industries'
      fiscal year extended from July 1 through June 30,
      the most important of the quart
      erly budget reviews they would f
      it into Columbia Pictures Industries, and how the combined entity would be even stronger than the separate companies. Everyone was impressed, including Rosenhaus and Allen. Though there were no commitments, the Columbia group agreed to think it over seriously.
    • In a taxi on the way back to Columbia, Leo Jaffe remarked that it appeared that Sy Weintraub would become a member of the board of directors at the meeting the next day. Allen Adler lost his temper.
    • "This is ridiculous!" Adle
      r said. "When are you people going to learn to say no?"
    • "Don't yell at me!" Jaffe
      retorted, but Adler went on.
    • "When do you people learn
      to say 'This is just wrong, and we will not support it.' I never heard of a situation in a big publicly owned company where a guy who owns seven percent of the stock just says 'This is what I want.' and even if it's wrong, you guys agree."
    • "We don't agree,"
      Hirschfield
      said, "and we're going to try to stop it."
    • Three hours later, at 7
      p.m
      .. Art Spear, Alan Hirschfield, and Dan Lufkin were seated at a comer table at Quo Vadis. They talked about how impressive the Mattel presentation had been and how much they wanted to make the deal. Then Lufkin said, "Look, I think I can get Herbert and even Matty to do this deal. It's a deal that should be done for the sake of both companies, especially Columbia. Aside from all the obvious benefits, it's a chance for us at Columbia to get our minds on some big important issues and off of the divisive things we've been going through. So I think I can convince Herbert and Matty, but on one condition: that I would become chairman and chief executive officer of the combined company. Art, you would be president, and Alan, you would be executive vice president."
    • Hirschfield and Spear were nonplussed. They looked at each other and at Lufkin. No one spoke for a few moments. Then Art Spear said, "Dan, let me make it easy for you. I like you very much. You're a very capable person. But let me make it very clear that the only way this deal is going to get done is if I'm chairman and chief executive officer and Alan is president and chief operating officer. We've worked that out ourselves
      . Alan is willing to defer to me
      because I'm several years older but am not yet at the point in my life where I'm ready to step down. If you want to be chairman of the executive committee, or vice chairman, or something along those lines, maybe it could be worked out. I'm not hung up on titles, and neither is Alan, but he and I would have to have the executive and operating authority for running the company. That's the only way it will work."
    • For the remainder of the meal the three men groped unsuccessfully for a compromise. Spear pointed out that Lufkin had had virtually no experience in running a large corporation. Lufkin finally left, and
      Hirschfield
      walked Spear the four blocks to the Plaza Hotel where Spear was staying.
    • Spear said, "That was really one of the most extraordinary propositions I've ever heard in my business life."
    • "Look, Art," said Hirschfield, "this is a demonstration of the kind of people we're dealing with. I'm sure they mean what they say."
    • "Well, it's a great deal for Columbia and it's a great deal for Mattel, but you know and I know that it would never work that way."
    • "You're right."
    • Hirschfield met Joe Fischer for breakfast at the Sher
      ry Net
      herland at eight the next morning. Fischer was a furious and desperate man. He reported that Irwin Kramer was "running rampant" over him and his staff in an effort to ferret out possible embezzlements in the company.
    • "I can't live with this!" Fischer said. "They're killing me. They're killing my department. How can we know something's suspicious until we investigate. In the ordinary course of a week, there could be ten things. A check doesn't come in or go out. An account doesn't jibe in some foreign
      country. We
      make inquiries. Ninety-nine per
      cent of the time it's a bookkeeping error. But Kramer demands that he know everything the moment
      I
      do, before I know whether it's serious or not. It's impossible. They're running roughshod over us."
    • "Just tell them to go to hell," Hirschfield said. "We're not going to stand for it. If you have any problems, just go to the lawyers."
    • Hirschfield
      and Fischer walked down Fifth to the Columbia building to keep an appointment with Irwin Kramer, and the meeting immediately deteriorated into invective.
    • "This is an absolute outrage."
      Hirschfield
      shouted. "I'm backing
      Joe. If you don't like it, let's have it out right now. If you want to get rid of Joe, then you'll have to get rid of me at the same time. It's an outrage for you to accuse us of covering up and not cooperating. You've created a circumstance which is a totally bizarre, Catch-22 kin
      d of situation, where you say we
      have to let you know whether a
      situation is a problem before we
      know whether it's a problem. We're willing to cooperate with any reasonable requ
      est. You knew about Audrey Lisne
      r
      before I knew about Audrey Lisne
      r. We're bending over backwards to do a proper job, and I regard this as
      just baiting Joe, and baiting me
      , in an effort to discredit everybody."
    • Kramer staunchly defended his right to challenge Fischer and vehemently denied doing anything improper. Nothing was settled and the meeting had to be adjourned. It was time for the regular monthly meeting of the Columbia board of directors.
      Herbert Allen informed the board of Sy Weintraub's purchase of 250,000 shares of stock and suggested that it might be "appropriate" if Weintraub were made a director of the corporation. Allen gave a brief campaign speech, which was enthusiastically seconded by Matty Rosenhaus, who said he had "met Sy a couple of times and he's a great guy."
    • So as not to inflame the meeting any sooner than necessary,
      Hirschfield
      did not respond immed
      iately but deferred to Leo Jaffe
      .
    • "Sy is a fine person," Jaffe
      said, "but putting him on the board now would be a disaster for the company. He would be viewed as David Begelman's surrogate in the eyes of the public and the SEC. Perhaps in the future we could reconsider, but there's no worse time than now."
    • Todd Lang was asked to explain the "potential legal ramifications" of Weintraub's election to the board. "It would be the worst possible thing the company could do at the present time," Lang said. "It would only exacerbate the SEC situation and the company's posture with regard to pending lawsuits. The company has the
      right
      to do it, of course, but in terms of legal posture, it would be a terrible mistake."*
    • Hirschfield then added his opposition, whereupon Herbert Allen suggested that the matter be dropped until a future board meeting.
    • *
      The S
      EC's investigation of Columbia was proceeding apace. And other stockholders
      had begun
      lawsuits
      agains
      t the company al
      leging various violations of fed
      eral securit
      ies laws in connection with the Begelman affair and other ma
      tters.
    • However, Allen asked that We
      intraub, who was waiting in the Allen & Company offices for the board's decision, at least be invited to join the board for lunch.
    • Of all of the awkward moments in the Columbia boardroom, none was more awkward than when Herbert Allen, who was having difficulty hiding his anger and embarrassment, ushered in Sy Weintraub, who was having difficulty hiding his anger and disappointment, and introduced him around the table. The directors' reactions varied from jarring warmth and cordiality on the part of Matty Rosenhaus, to politeness on the part of Leo Jaffc, to neutral civilit
      y on the part of most others. We
      intraub's stock purchase and potential board membership were not mentioned and the conversation was strained.
    • When the meal was cleared away and the meeting resumed, Weintraub surprised a number of those present by remaining in the boardroom. Though corporate board meetings generally are confidential, Herbert Allen permitted Weintraub to listen to the board's discussion of motion pictures, television. Arista, Gottlieb, pay
      TV, and other matters. After We
      intraub left, Herbert again suggested that Sy be elected to the board. "If we're going to do it eventually, why not now?" Jaffe and Hirschfield again expressed vehement opposition, and Allen angrily retreated without trying to force a vote.
      At one point during the afternoon, Dan Lufkin scrawled something on a yellow legal pad and slid it in front of Herbert, who nodded his agreement. The words on the pad were "This company is out of control."
    • Even though Hirschfield had known the resumption of hostilities was inevitable, and even though he had been hardened by the traumas of the previous autumn and winter, he was bewildered and shaken by the spasmodic nature and sequence of the new events that suddenly had buffeted the company in recent weeks, some of them in just the last couple of days. Audrey Lisner, the very model of the conscientious, trusted employee, is revealed as the embezzler of a quarter of a million dollars. A distressing event, to be sure, but certainly manageable by the corporation's existing control systems which indeed had caught her. And yet Irwin Kramer, the belligerent chairman of the audit committee, leaps on the case as if it were a Brink's job and maligns the integrity of Joe Fischer, one of the most capable financial executives in the entertainment industry. For good were those held in June, when the budgets for the fiscal year about to begin were examined, refined, and approved. In contrast to the procedure at some companies, where top officers merely give
      pro forma
      approval to budgets developed by underlings, Alan Hirschfield and Joe Fischer actively managed the Columbia budget process. The quarterly sessions were arduous, as
      Hirschfield
      and Fischer questioned, challenged, and prodded the motion-picture and television executives through three and sometimes four long days in Hirschfield's bungalow. Hirschfield normally displayed a light heart and a sense of humor through the tedious meetings, knowing that Fischer would supply the sober, relentless attention to each detail that both men felt was required when hundreds of millions of dollars were being spent on things as ephemeral as movies and TV shows.
    • A year earlier, in 1977, the motion-picture and television meetings had been held during the week of Monday, June 6. The company had look
      ed forward to the release of
      Th
      e
      Deep
      and
      Close Encounters of the Third Kind.
      Everybody had been in a good mood, and Fischer and
      Hirschfield
      had nearly forgotten that they had learned the previous Friday that Cliff Robertson had raised questions about an odd check for $10,000.
    • On Monday, June 12, 1978, however, it was very difficult for Hirschfield, Fischer, and their top movie and TV aides to concentrate on budgets. Everyone knew the company was still at war, and the questions enshrouding the meeting were: Will
      Hirschfield
      be fired? and Can anything be done to prevent it? There was some loose talk of cabals against the board, but most of those present felt there was little they could do to influence events.
    • During a break on Monday,
      Hirschfield
      telephoned Herbert Allen and said that he had decided definitely not to hire Robert Stone.
    • There were a few moments of humor during the budget meetings, despite the gloom. With everyone assembled, Dan
      Melnick
      , having assumed the studio presidency only the previous week, strode into the conference room attired in riding breeches, boots, tunic, and helmet, carrying a riding crop, and looking very much like General Patton.
      Slamming the crop onto the conference table, he bellowed: "All right! This company has been accused of being out of control! We're going to shape up and get some discipline into the organization! And furthermore, I'll countenance no more talk around here about inflated egos!"
    • After a moment of startled silence the group was convulsed by laughter.
    • Hours later, torpor again cloaking the meeting, studio marketing czar Norman Levy was estimating that an upcoming film called
      The Fifth Musketeer
      would attract about $3 million in box office admissions domestically. Alan
      Hirschfield
      , depressed and preoccupied, snapped:

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