Hollywood’s Epic Rise and Fall: The Untold Story of Carolco’s Blockbuster Gamble

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Carolco executive Peter Hoffman once expressed, “They crave mediocrity,” to the Los Angeles Times. “When they claim otherwise, it’s deceitful. They want mediocre content.” Hoffman was voicing his thoughts on the underwhelming audience reception towards the Oscar-nominated film Music Box (1989), while sci-fi action blockbusters like Total Recall (1990) were raking in money at an astonishing rate.

Prior to the emergence of production companies such as Skydance, A24, and Blumhouse, who have been making significant impacts alongside major studios, Carolco gained fame in Hollywood by financing grandiose action movies like the Rambo series, Terminator 2: Judgment Day (1991) and Cliffhanger (1993). The journey of Carolco, from its rise to its fall, was as dramatic and thrilling as their popular action blockbusters.

Known as “The Carolco Premium,” this term referred to Carolco’s unique approach that set them apart from competitors like TriStar and Orion during their time. While these rivals had some notable projects, Carolco spearheaded the growth of independent studios by establishing and consistently delivering a blockbuster label for producing the era’s most spectacular action movies. This extravagance wasn’t limited to what audiences saw on screen; it extended to generous salaries, personal aircraft, and even a yacht moored at Cannes during the festival for exclusive parties.

For several years, the company built a robust image for producing landmark action movies during the initial phase of this genre. However, it ceased operations around 1995. As an autonomous entity, Carolco primarily targeted films that had broad audience appeal to reduce risk and maintain high budgets. Throughout its existence, Carolco attracted innovative and daring directors such as Walter Hill, James Cameron, Paul Verhoeven, Oliver Stone, Roland Emmerich, and Adrian Lyne, who directed movies like “Extreme Prejudice”, “Terminator 2”, “Total Recall” and “Basic Instinct”, “The Doors”, “Universal Soldier” and “Stargate”, “Jacob’s Ladder” respectively.

In 1976, wealthy immigrant entrepreneurs Mario Kassar and Andrew G. Vajna established Carolco as a company focused on distributing American movies overseas. In 1978, Carolco financed half of the budget for the movie “The Silent Partner,” utilizing the recently introduced Canadian tax incentives to film in Canada. In 1979, Kassar and Vajna signed an agreement worth over a million dollars to distribute six films in Italy. With this international backing, they decided to produce larger films featuring prominent actors. By 1980, they began financing their own movie productions.

Corolco’s significant rule in the movie industry commenced with the release of “First Blood” (1982), a film adaptation from David Morell’s book featuring the iconic and tormented Vietnam veteran, John Rambo. Although Sylvester Stallone is forever linked to the Rambo character, various other actors were considered for the role, as reported by the New York Times, such as Paul Newman, Al Pacino, Robert DeNiro, Steve McQueen, Nick Nolte, John Travolta, Powers Boothe, and Michael Douglas.

In an exhilarating turn of events, I found myself, as a passionate fan, being part of the creation of a film that was reminiscent of “Rocky”. It was a tale about an underdog, battered and abused, struggling for survival against all odds. As the story goes, Carolco had obtained this property from Warner Bros., and swiftly cast Sylvester Stallone in the lead role.

Reflecting on those times, I remember Vanja describing it as follows: “This was an underdog who was mistreated and manhandled, fighting for the right to survive.” The selection process for the title role was extensive, with a diverse pool of talent and personalities under consideration. However, it was Stallone who ultimately shaped the character – whether he would be a psychopath or an underdog antihero.

In an interview with the Los Angeles Times in 1985, Stallone himself explained his approach: “What I did with Rambo was try to keep one foot in the establishment and one food in the outlaw or frontier image.” Interestingly, there were no initial plans for a sequel. But the movie’s remarkable success, generating $125 million on a budget of just $15 million, left Carolco with no choice but to quickly greenlight a sequel.

Kassar and Vajna had a specific property, namely a popular star, which served as their foundation for establishing their public image. The release of “Rambo: First Blood Part II” in 1985 coincided with the tenth anniversary of America’s withdrawal from Vietnam and an increasing wave of patriotism that often reached extreme levels during the Reagan era. Rambo was a key property for Carolco, and the immense profit made by its sequel – $300 million on a budget of just $25 million – laid the groundwork not only for future Carolco productions but also set a precedent in the industry that allowed other independent studios like Orion Pictures to produce successful films such as “Platoon” and “Robocop”.

In the late 1980s, when studios were rapidly increasing in popularity, Carolco also acquired distribution rights for John Carpenter’s unique horror films, namely “Prince of Darkness” (1987) and “They Live” (1988). Additionally, they secured Arnold Schwarzenegger as a major action star for the late Cold War action-buddy-cop film “Red Heat” (1988), directed by Walter Hill. This movie topped the box office charts while Sylvester Stallone’s “Lock Up” (1989) ended up losing money during its release. Expansion efforts, such as purchasing Orion Studios, however, did not materialize.

In 1989, Vajna departed the company, and by the following year, Kassar had earned the nickname “the billion-dollar man” for his knack of recruiting elite talent with extravagant salaries and incentives. Speaking to the Los Angeles Times in 1990, Kassar explained, “I’m building a team of directors… these directors attract quality material, and good material draws in top-tier talent.” Having well-known screenwriters, actors, and filmmakers associated with a project makes it simpler for international distributors to invest money upfront. The concept of a dependable directorial team was also common practice during Hollywood’s Golden Age. Just like how certain directors were synonymous with their studio during a specific era – Frank Capra with Columbia, John Ford with Fox, or Billy Wilder with Paramount.

In 1990, Carolco thrived with blockbusters like Total Recall (earning around $200 million) alongside less successful films such as Narrow Margin and Jacob’s Ladder. To cover the debt from these less profitable films and fund upcoming expensive projects, Carolco sold numerous shares to the Japanese electronics company Pioneer. This move was necessary, considering the lavish expenses like the $14 million private jet gifted to Arnold Schwarzenegger. Critics at The New York Times wrote in 1991 that Carolco raised costs for the entire industry and that their Wall Street reputation wasn’t great either, as stocks suffered due to their ‘big-budget gamble.’ Yet, it was this risky approach that made Carolco a notable name initially. Maintaining such an extravagant image over time became increasingly challenging, as asserted by Peter Hoffmann who defended their position as Hollywood’s untouchables.

In 1991, the release of “Terminator 2: Judgment Day” earned approximately $500 million on a production budget of $100 million, which seemed to validate Hoffman’s predictions. The movie was not just a box office hit, but its apocalyptic human versus machine storyline is frequently cited as the greatest action film ever made and undeniably ranks among the best sequels in cinema history. Following this success, Carolco once again racked up costs, shelling out an unprecedented $3 million for Joe Eszterhas’ “Basic Instinct” (1992) screenplay.

Once more, the investment proved to be fruitful, raking in an impressive $350 million at the box office compared to a production budget of just $50 million. Moreover, it dared to innovate within the genre of sexual thrillers under the bold leadership of Paul Verhoeven. Interestingly, another sci-fi action film, “Universal Soldier” (1992), featuring Jean-Claude Van Damme and Dolph Lundgren, managed to turn a profit, in stark contrast to the critically acclaimed and Oscar-winning “Chaplin” (1992) starring Robert Downey Jr., which ended up losing approximately $20 million.

Pushed forward by the action-packed film “Cliffhanger” (1993), which featured Stallone and was directed by Renny Harlin, Carolco’s kingpin continued with a gripping tale of man battling nature and his past. Yet, budget issues piled up on top of an already heavy debt load, causing anxiety. The banks once more extended loans, keeping Carolco afloat as they sought additional funding for their next blockbuster to prevent bankruptcy, given the missed debt payments. Global screenings delayed bankruptcy, and Roland Emmerich’s sci-fi adventure “Stargate” (1994) offered a glimmer of hope while preserving Carolco’s signature action-oriented Hollywood style.

The outcome for Paul Verhoeven’s “Showgirls” (1995) was largely predictable, given its explicit nature and the controversial casting of Elizabeth Berkley, who had just come off a teen sitcom called “Saved by the Bell.” This film earned an NC-17 rating, which limited its distribution. Today, it is recognized as a cult classic in certain groups, but it failed to impress critics due to its exploitative style.

The film Showgirls didn’t earn any profits until its home video release, which left Carolco Pictures in a tight spot and compelled them to invest in the next big project – the swashbuckling high seas adventure Cutthroat Island (1995). According to industry reports, Carolco sold distribution rights for Showgirls as a final effort to generate funds for the production of Cutthroat Island, in an attempt to escape from their mounting financial difficulties.

Creditor Jeremy Bloomer explained to The Hollywood Reporter in August 1995 that they needed to generate income from their library (to stay financially stable), as the current income source was not enough to cover their existing debt of $14 million.

Prior to the filming of Cutthroat Island, its lead actor, Michael Douglas, departed from the project. Potential replacements included Keanu Reeves, Michael Keaton, and Kurt Russell. Eventually, Matthew Modine was secured to star alongside Renny Harlin’s wife, Geena Davis. The production encountered one mishap after another, with a cinematographer getting injured, crew members leaving, and sets catching fire.

In November 1995, just a month before its release, Carolco declared bankruptcy. Most investors had already accepted their investment was a complete loss, according to The Hollywood Reporter. The bad press about Carolco giving Harlin $500,000 for his wedding to Davis didn’t help matters either. Previously, high salaries reportedly affected box office performance, but the details of the payment to Harlin were difficult to overlook given they were part of the “Carolco premium.

Eventually, Carolco Pictures met its demise. The movie “Cutthroat Island” earned just $16 million despite a budget exceeding $100 million. As a result, Carolco was dismantled and its assets were auctioned off in 1996. Vajna had left the company six years prior, while Kassar stayed until his contract ended. The rights to the Rambo films also became available. The remnants of Carolco found themselves in legal battles over debt for a considerable period, including allegations of tax evasion against Peter Hoffman. In 1997, Hoffman testified before a grand jury, asserting that certain parts of his income were loans and not earnings, denying accusations of being dishonest.

Lately, Hoffman admitted to submitting falsified tax returns to the IRS. Nonetheless, several prominent actors and directors linked with Carolco persisted in their careers. Among them were Sylvester Stallone and Arnold Schwarzenegger, who were major figures of the late ’90s. Filmmakers like Oliver Stone and Roland Emmerich went on to create even more significant productions post-Carolco, while James Cameron directed what became the biggest movie ever made (Titanic, 1997).

Carolco Productions, though not always successful at the box office, made a significant impact on cinema when it succeeded. Despite its eventual downfall, Carolco will forever be remembered in entertainment lore. It was Carolco that showed ’80s children what it meant for something to be truly epic on the silver screen. The influence of Carolco is almost impossible to quantify. Movies like “Aliens” (1986), “Predator” (1987), “Robocop” (1987), and “True Lies” (1994) might never have been made without Carolco pioneering the way for large-scale films that dominated the 80s and early 90s. The tradition of blockbuster movies was carried on by figures such as Jerry Bruckheimer and Michael Bay.

Carolco may be long gone, but the modern action genre remains irrefutably in its debt.

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2025-03-30 19:25