Tom Laughlin has set out to do for videocassettes what Amway did for household products and Domino's did for pizza
Tom Laughlin has set out to do for videocassettes what Amway did for household products and Domino's did for pizza
TONIGHT, SOME 20 EARNEST CITIZENS have filled the folding chairs in the living room of this house on a quiet side street in Hartford. Among them are a truck driver, a retired owner of an automobile dealership, a high-school teacher, an educational consultant, a secretary, and a retired music teacher. All in all, with pizza and soda in the kitchen, it is the kind of congenial gathering favored by neighborhood-improvement associations. And it is precisely this impression that makes the assembly's true purpose all the more incredible.
It is not trash collection or canine litter control tht they have on their minds this night, but rather revolution and profit. The insurgency is aimed at overthrowing the American motion-picture establishment, some 3,000 miles away in Hollywood. And to accomplish that, they contemplate an innovation that could transform the $7.2-billion-a-year videocassette industry, whose growth has been called "the largest unforeseen ascending curve in the history of visual entertainment."
With us tonight, freshly arrived from Los Angeles, is the creator of this grand ambition. "Whoever controls distribution in the video industry," he is saying, "will also control the film industry." As he speaks, a vision of new economic possibilities begins to take shape, and at its center is a vertically integrated corporation featuring an assortment of business activities that will include motion-picture production, videocassette distribution, wholesaling, a chain of video and electronic equipment superstores, catalog sales, and television home shopping.
Nor is that all of it -- or even the best of it.
The real secret of this new company's success, he is saying, shall be found in a network of 300,000 independent distributors who will do for videocassettes more or less what Amway did for household products and Domino's did for pizza -- namely, they will deliver them to your house. And it is through this process that a direct link will be forged from the corporation through the distributor to the consumer, creating a system that finally harnesses the power of the home-video explosion in ways that would make any workaday movie mogul absolutely delirious. "The reason I'm running around the country meeting in living rooms," our speaker says, "is because I want to build a new studio that's bigger than a Paramount or a Twentieth Century-Fox." And what lies behind this driving ambition? "So I can make films my way."
At this point you might begin to think him a bit unusual, this visionary egotist who has traveled across the country to spout what would normally be considered outrageous blather at people he's never even met. And you would be right.
Do you remember Billy Jack?
In the early 1970s, Billy Jack intruded on the American consciousness as the hero in a movie of the same name. He was a singular character -- a mystical, half-Indian Vietnam veteran capable of unleashing devastating karate kicks when provoked. In his better moods, Billy liked to wander around practicing enigmatic facial expressions often suggesting pained existential foreboding. It was a character type later to be cloned in such Billy-come-lately heroes as Dirty Harry and John Rambo.
Billy, you may recall, wore jeans, a black T-shirt, and a signature black Navaho hat with a wide, round brim and a rounded crown circled by a beaded band. Thus attired, and armed with kick and grimace, Billy appeared in the Southwest near an Indian reservation to protect the Freedom School, its headmistress, Jean, and its student body of disadvantaged youths from the mindless persecution of local rednecks and lunatics. In his own way, Billy preached the Golden Rule, but he gave it some bite. He did not put up with any crap -- kick, chop, kick.
The film, arriving as it did during a turbulent period in our history, found a young and enthusiastic audience who themselves wanted to kick a few butts and who saw Billy as a champion of their own discontent. Billy Jack became a cult hero, and Tom Laughlin, who wrote, produced, and directed the movie and starred as Billy, became a multimillionaire and an authentic Hollywood celebrity who once had to be escorted out of Disneyland under guard because of the surging crowd around him and his family.
And that's who stands before us now -- Tom Laughlin, the Billy Jack of old.
Well . . . almost of old.
Unfortunately, Billy's been a little down on his luck recently.
The early summer of 1987 has not gone as planned. Superficially, Laughlin's circumstances still suggest the life of the successful Hollywood celebrity. His estate in the affluent Los Angeles community of Brentwood hints after Thomas Jefferson's Monticello and features such show biz accoutrements as swimming pool, tennis court, ice-cream bar, indoor gym, and, of course, screening room. And Laughlin himself is sitting at his familiar spot behind the narrow, 30-foot-long conference table he uses as a desk.
But appearances deceive.
Laughlin is unhappy, pensive, and fretful. He is contemplating the gravity of his situation. For nearly a year and a half now, he has been struggling to make a comeback with The Return of Billy Jack, a reprise of his former glory and his first film in nearly a decade. But a series of sudden reversals has temporarily scuttled his ambitions, leaving the picture stalled in mid-production for want of financing. Laughlin, too, is broke. Worse yet, the bank has been trying to foreclose on his house, and he's been fighting it in court.
Of course, Laughlin knows that such predicaments are not at all uncommon in the lives of independent filmmakers like himself, and that this is not the first time he's had his back to the wall. But he is desperate to find a way out of his mess. He thinks and he thinks. Maybe he should keep looking for investors for his film. Or maybe he should have accepted an offer from Paramount even if it meant giving up final control over the film. No, he couldn't do that -- even the thought makes him sick.
But then it comes to him. . . .
The idea to revolutionize the videocassette industry, finance his own studio, and get his film made that way. . . .
If you can't beat the industry, you can always become the industry.
It was the long way around, true -- kind of like a man who, because he wanted a room for the night, had to build the Waldorf-Astoria first. But tapping into the mother lode of videocassette dollars promised a far more lasting financial freedom to make his films his way then any one picture could ever hope to provide. What's more, he was one of the few people around who could actually walk in off the street, propose to renovate an entire industry, and still merit serious attention. After all, he'd developed the techniques to do it before -- not just once, but twice.
More than just making films, Laughlin has always wanted to transform the way Hollywood does business. During his career, he has demonstrated an extraordinary ability to introduce innovative business techniques in motion-picture financing, marketing, and distribution. Fully 20 years ago, Laughlin set out on a quest to build a studio of his own based on what he claims is a new economic model -- one that could free the industry of the boom-or-bust mentality and persistent management purges so often associated with the business practices of the major Hollywood studios. That journey has been anything but smooth. Along the way, Laughlin has, at various times, found it necessary to question the motives and integrity of the Hollywood establishment, both in the pages of the industry press and in the California courts. As a result, and depending on who is speaking, Laughlin is either an imaginative, resourceful, occasionally heroic maverick unafraid to confront the powers that be, or he is a combative, litigious, and eccentric loner with a huge chip on his shoulder.
In retrospect, it seems that the Fates had never intended him to rise smoothly to eminence. Time and again, progress toward his dream studio was set upon by wind shears of unexpected turbulence.
"Tom's been up and down all his life," says William Wellman Jr., an actor, writer, and free-lance producer who has known Laughlin for 30 years. "It's a big, giant yo-yo world he lives in."
Most of the agony and ecstasy since transcribed as Laughlin's public profile now fills four manila folders with newspaper and magazine clips at the Academy of Motion Picture Arts and Sciences. In the earliest entries Laughlin leaves Milwaukee, where he grew up, and arrives in Hollywood during the late 1950s with his pregnant wife, Delores, and $100 and change. From there and well into the '60s, Laughlin's career followed the usual path traveled by aspiring actors, including relatively obscure supporting roles in several motion pictures. But Laughlin was not merely an actor; he was a student of industry economics and a theoretician with simmering entrepreneurial inclinations of his own. It was a side of Laughlin that first saw the light of day when, in 1965, he favored each of the major Hollywood studios with a copy of a report he had written entitled "Corporate Organization in the Film Industry." In this 84-page analysis, Laughlin ranged widely, considering industry problems and recommending specific solutions in management technique and corporate structure. It was not at all the kind of thing usually expected of a supporting actor, and apparently it fell on deaf ears. Only one studio executive responded with a brief chat over a sandwich in his office. Laughlin -- young, aggressive, not without an awareness of his own destiny -- was not discouraged.
By 1971, Laughlin was considerably less obscure, and if you looked closely he could be spotted scrabbling along the slopes directly beneath the stormy peaks of Hollywood notoriety. Laughlin the actor had become Laughlin the producer, a promising filmmaker who had managed to turn out a few moderately successful, very low-budget movies. Those early efforts, in turn, enabled him to raise nearly $750,000 for yet another movie, the one he seems to have been born to make.
Laughlin had waited a long time to produce Billy Jack. The idea for the character actually first occurred to him nearly 15 years earlier during a visit to Delores's hometown of Winner, S.D. There, on the edge of the Rosebud Indian Reservation, Laughlin saw one too many examples of whites abusing Indians. Not only was Billy Jack the embodiment of his own outrage over that particular experience, but the character also came very close to expressing the elemental stuff of Laughlin's own considerable personality. "A man or woman," Laughlin says, "who does not go his or her own way in life is nothing."
What that philosophy actually meant to Laughlin in practice was about to become apparent. For no sooner was Billy Jack released than Laughlin was in court suing its distributor, Warner Bros., for "dumping" the film at drive-ins and obscure neighborhood theaters rather than booking it in the better venues as had been promised. For two years, the lawsuit churned in its own bile until Laughlin proposed an alternate solution: if the studio would provide advertising support, he would distribute the picture himself. If the arrangement succeeded, Laughlin and Warner would split the profits. But if he failed, Laughlin would agree to give up not only all the profits he had already earned on the film, but all future profits as well. Warner, in effect, would then own the movie outright.
At the time, anyone familiar with the economics of motion-picture distribution would have said that Laughlin had just thrown away a picture. After all, he would be trying to resurrect a film that was already two years old and that had already exhausted its potential, having earned $6 million in film rentals -- not bad, but not great, either. But Laughlin had other ideas. He intended to rewrite the book on motionpicture distribution. And he set out to prove the value of his approach with the help of Max E. Youngstein, a Hollywood veteran whom he had hired to direct the refurbished distribution campaign.
Youngstein, a shrewd and exacting businessman, was the perfect complement to the more conceptually oriented Laughlin. A former executive of United Artists and one of the three original owners of that studio when it was acquired from Charlie Chaplin and Mary Pickford, Youngstein had seen over the years just about everything there was to see in the motion-picture business. So when Laughlin learned that exhibitors simply did not want to screen a two-year-old played-out picture, Youngstein was ready with a solution -- a little-used distribution technique known as "four-walling" that he had learned from some of its pioneering practitioners in Salt Lake City.
In the more traditional method, a movie house and a distributor split the proceeds from the box office according to one of any number of standard formulas. Risks and rewards are thus shared by both parties. In four-walling, there is no sharing -- the producer/distributor pays the movie theater a flat weekly rental fee, provides his own staff of ushers and operators, and keeps the box-office receipts entirely to himself. The less likely a movie is to be a hit, the more willing a theater would be to accept a fourwall arrangement. Billy Jack looked like just such a flop, so exhibitors willingly agreed to four-walling. Laughlin, however, intended to add his own twist to Youngstein's plan.
It was at this moment that Laughlin unveiled the first of his industry-transforming ideas. Interestingly, Laughlin had first spotted its raw potential in, of all places, a less than grade-B movie, appropriately called Poor White Trash.
"That movie was so bad," Laughlin recalls, "it was unreleasable. But a guy came here with it anyhow and he had to pay the theaters to play it. In those days, a big picture spent $45,000 on television ads -- they didn't believe in advertising. But this guy spent $150,000, and he had these terrible ads made where he is hidden behind a acreen claiming his life is in danger from the Ku Klux Klan, and the police are after him because this film is so controversial. And he went out and did $250,000. After a week, the theaters threw him out because it was so bad, but for that week he really drove them in there. I never forgot that. And I often wondered after that why somebody doesn't try that with a good picture."
In Laughlin's hands, the untapped power of television advertising became, in true Hollywood style, "supersaturation advertising." In a radical departure from existing practices, Laughlin spent more than $300,000 to develop and air nearly a dozen local television spots. Laughlin recalls that Warner Bros. went "totally crazy" over the expenditure, but the results were spectacular: Billy Jack opened that spring in more than 50 theaters in southern California and during the first week grossed $1.2 million, breaking the previous box-office record set by The Godfather. It was merely the opening shot in a distribution campaign that would leave Hollywood flabbergasted.
Nor was it as easy, mind you, as simply buying TV time and watching the money roll in. Unlike the major studios, which are able to plug their pictures into distribution channels that are already highly developed and well oiled, Laughlin and Youngstein had to grub out their play dates with their bare hands, state by state, theater by theater. They put together teams of five or six people; trained them as hosts, ticket collectors, and cashiers; got them a headquarters in the local Ramada Inn; and sent them out to introduce their rented theaters to the righteous wonders of Billy Jack. Powered by the teams and an advertising expenditure that eventually totaled $7 million, it took 18 months to march Billy Jack across the country. And when it was all over, the two-year-old played-out film had racked up an additional $42 million in domestic film rentals, which Laughlin and Warner Bros. split down the middle.
"Tom gets dismissed by a lot of people because he has the reputation for being a pretty hard nut to deal with," says Youngstein, who himself once sued Laughlin in a dispute over money, "but he ought to be given a lot more credit than he's getting. He's a man who does not believe that the method that was used yesterday is necessarily the best way to reach a maximum audience and get the maximum income from a picture. The establishment has a tendency to be so rigid in its approaches that he is constantly looking for different ways of reaching more people."
Indeed, no sooner had Billy Jack been taken out of circulation than Laughlin unveiled his second audience-grabbing, industry-rattling masterstroke, which he called, again in proper Hollywood style, the "megamultiple release." The occasion for this felicitous phrasing was the November 1974 premiere of the sequel film The Trial of Billy Jack. Laughlin had abandoned his four-walling technique because in later analysis he had determined that it was simply too expensive to finance the supporting logistics. But even though he now turned to a more traditional form of distribution, his modifications would permanently alter its substance and application. At a time when the major studios usually opened even a big film at only 65 locations, Laughlin opened his new picture at 1,200 theaters. Then he amplified the power of this megamultiple with a souped-up version of supersaturation. The ads for Billy Jack had been local and regional, but with Trial Laughlin used national television -- more than $3 million of it in the first week alone. Ultimately, says Laughlin, the film that cost him $3.5 million to make earned $32 million in domestic rentals in the first 30 days. Although opinion varies, there is considerable evidence that it was Laughlin's use of the megamultiple that caused the industry to adopt it as a standard practice, one that has since added millions to its revenues. At the time, Variety itself assessed the impact of Laughlin's combined innovations with a headline that read: "Tom Laughlin Stuns Old Film Biz Pros."
Interestingly, both Billy Jack and Trial indicated that, in addition to innovative ideas, Laughlin also possessed an awareness of his own shortcomings as a businessman. To achieve such successful distribution, he had relied on an alter ego -- a "conscientious, nit-picking son of a bitch," as he would later call it -- to attend to administration and management and translate his vision into hard reality. At critical points in the future, Laughlin's failure to recreate similar partnerships would become an important factor in his undoing.
Although The Trial of Billy Jack once again demonstrated Laughlin's aptitude for innovation, it did not do much for his public relations. The critics, it seems, were not overly impressed with the film, which featured several windy monologues in which Billy expounded on the tragedy at Kent State University and other related issues of the day. In April 1975, Laughlin countered with a full-page ad in the trade journal Hollywood Reporter, announcing a "Billy Jack versus the Critics" contest and offering a $25,000 first prize for the best essay to show, in effect, that movie critics would not recognize a hit picture if it bit them in the foot.
While all this was going on, Billy Jack Productions, the company Laughlin had founded to develop his film projects, continued to accumulate capital and people, both of which were trained on a growing list of new opportunities. An article in the Los Angeles Times, for example, announced that the enterprise had been "reorganized into five different companies covering all aspects of the entertainment industry," including family and children's films, records, and TV programming. Based on this report and others, an informed reader might well have concluded that Laughlin was indeed about to consolidate his new Hollywood economics into the studio of the future. But even then, in the fullness of his success, the job was easier described than done. Unfortunately, before Laughlin could perfect his technique any further, he was in court with Warner Bros. once again. In a $94-million lawsuit filed in September 1976, Laughlin charged that Warner Bros., NBC-TV, and then-Warner president Frank Wells had collaborated illegally to sell the television rights to Billy Jack. Laughlin also alleged that the various actions of the defendants were all part of a conspiracy to put him out of business. The efforts of the defendants, Laughlin charged, had seriously impaired his ability to raise funds to finance the production of future motion pictures, including Billy Jack Goes to Washington, a second sequel then nearing completion. In a later filing, Laughlin would further add that Wells and Warner Bros. had even pressured Laughlin's bank to withdraw financing for the new film.
"At that point," Laughlin says, "I was fully extended. I had this picture going and the bank pulled the plug. I couldn't even meet my payroll. I was in a fight for my life. So I closed down the offices in one weekend and got ready to go to war."
Whether there was, indeed, a conspiracy to put Tom Laughlin out of business will never be known. In August 1978, the Hollywood Reporter announced that Laughlin had signed a truce with his adversaries, settling the dispute out of court. Although the exact amount of the settlement was not revealed, industry observers claim that Laughlin walked away with a sum in the millions -- a speculation that he does not deny.
At this point, Laughlin found himself at a strange juncture. A series of successes seemed to corroborate his claims that he could transform industries and that his ideas were both revolutionary and realistic. But it was also apparent that these successes had been won at a price. He had lost an opportunity to distribute his latest movie, Billy Jack Goes to Washington, which was consigned to his personal film library, where it sits to this day. And as a result of the lawsuit and its attendant publicity, Laughlin found that he had greatly extended his reputation in the industry for being ornery and litigious. Whether Laughlin actually deserves that reputation no longer is at issue. Regardless of the facts, it seems to have become a permanent part of Hollywood lore.
In Laughlin's line of work, this situation is more than merely frustrating. It has become a threat to his very survival. On many occasions, Laughlin claims, studios and independent dealmakers have used his vaunted litigiousness to scare potential investors away from his projects. "After all," he says, "they want that money for their own clients. Why should they let some bigbucks guy come through and go to Tom Laughlin? And it's very easy to kill me. There's this feat of me, so it's easy to put a little poison in that well. And it works."
From 1978 to 1982, little was heard from Laughlin. It was rumored at the time that he had become a recluse embittered by his confrontations with the Hollywood establishment. But according to Laughlin himself, he had become wholly consumed with his studies of the work of psychologist Carl Jung. He wrote a book on the subject and lectured widely at various institutions and universities on Jung's model of the psyche. At the same time, he also began counseling terminally ill cancer patients, a personal charity in which he has since become even more involved. Those years off the set and out of the courts treated laughlin the student and teacher to a satisfying respite from the Hollywood battlefront. But in the fall of 1981, Tom Laughlin the filmmaker began to reappear, bringing with him the studio revolution still waiting to happen.
Encouraged by private investors, Laughlin set out by negotiating to acquire various and struggling minor studios with the intent of restructuring them according to his own economic model. But after two years, he still had no studio, and rather abruptly decided to abandon this approach altogether. "It just didn't make sense to buy someone else's problems," he says. A new studio, and a new industry structure, had to be built from scratch, he concluded. And true to form, he found a novel way to let the rest of the world know about his plans.
It was in the spring of 1984 when the series of full-page ads, densely filled with text, began appearing in Variety. Taken together, the 12 ads presented nothing less than the Laughlin Cosmology of Hollywood -- his conclusions about why this particular universe was seriously out of whack and his prescriptions for the cure. It was a far-flung indictment of Hollywood and its moribund practices, concluding with a comprehensive program of reorganization and rejuvenation along distinctly entrepreneurial lines. And to heighten the drama of its conclusions, Laughlin left the first 10 installments unsigned. It was only with publication of the final installments that Laughlin was revealed as "the best-kept secret in the motion-picture industry."
As it turned out, the mystery man had a lot to say, but the main line of his reasoning saw the studio system -- a generic expression usually taken to include the activities of Warner Bros., Paramount, Columbia, Universal, United Artists, Twentieth Century-Fox, and Walt Disney -- as "synonymous with economic mismanagement and crisis" and characterized by monolithic, overly centralized corporate structures. Just as the railroads were once criticized for failing to see that they were in the "transportation" business -- an oversight that ultimately caused them to lose markets to a rapidly growing trucking industry -- so too did Laughlin fault the studios for thinking they were solely in the business of making motion pictures rather than the "creation of mass-appeal visual entertainment." That error, he claims, caused the studios to cede gargantuan business opportunities, first to network television and later to cable television and videocassette distributors. As a result, he said, hundreds of newly formed cassette and television-syndication companies were getting rich distributing the studios' own product.
To remedy their shortcomings, Laughlin said that studios must realign their priorities and radically decentralize their operations an an effort to cut down on the "massive overhead" that was the source of so many of the industry's financial woes. In his ideal studio, each business activity -- financing, production, distribution, promotion, and syndication -- would be established as a separate, fully autonomous business with its own staff, its own business imperatives, and its own profits and losses. Perhaps the highest expression of Laughlin's decentralization strategy would come in the production division, which he thought could be further atomized into dozens of independent production companies, each with its own profits and losses and each headed by a name producer with a demonstrated "nose" for what audiences wanted to see. Such a scheme, Laughlin promised, would produce "tight fiscal control and total creative freedom" and abort the rapid and seemingly inexorable rise of motion-picture production costs.
During their anonymous run in Variety, Laughlin's ads produced widely different reactions within the Hollywood community. One Laughlin acquaintance whispered to him at a dinner party that the unsigned ads were actually the work of a well-known studio executive who was plotting to stage a power play for control of his studio. But in addition to unsolicited opinions, there were also serious inquiries made of the unknown author, none more memorable than the one from the studio official who wrote to learn more about the distribution strategies mentioned in the ads. When, in response, Laughlin aide Robin Hutton telephoned the executive and identified her affiliation, the man refused to come to the phone and insisted, through his secretary, that the letter was a forgery.
More than likely there were many more movie moguls who would have liked to dismiss Laughlin's entire analysis with equal aplomb. That, however, would have been very difficult. For one thing, Laughlin carried some persuasive credentials, to wit: a hit picture, supersaturation, and the megamultiple. And for another, the moguls and their lieutenants knew in their guts that on many points he was absolutely right. After all, the major studios were about to enter a turbulent period in which their financial performance and their responses to crucial changes within the industry would be found wanting. Furthermore, many of Laughlin's observations would soon be confirmed by the success of several smaller, independent studios that had been recently established by some of the industry's most celebrated producers. And finally, even as he wrote, the major studios were trying frantically to fashion a belated response that could give them a more lucrative participation in the burgeoning videocassette industry.
Laughlin was so sure of the money-making potential of his grand design that he charged forward with his usual flair. On a Wednesday in November 1985, nearly one year to the day after the final ad appeared in Variety, Laughlin convened a press conference at the Cineplex Odeon Showcase Theater, in Hollywood. Together with his wife, Laughlin stepped to a lectern surrounded by 13 see-through Plexiglas cylinders, each reputedly containing $1 million in cash and each protected by an armed security guard. Against this backdrop, Laughlin announced that filming was about to begin on The Return of Billy Jack, his first film in nearly a decade. The cylinders around him, he said, represented the amount that would be spent on marketing the new film. He then favored the crowd with a recitation of the several and various breakthroughs he had achieved over the years. "Laughlin and his wife," reported Variety, "treated the announcement of The Return of Billy Jack as if it were a religious experience."
But Laughlin had good reason for his fervor. A lot had happened in a year's time. He had convinced 41 private investors to finance not one but three films he had planned. And to their $3.5 million he had added a handshake deal to sell rights to Return, representing another $4.2 million, to a videocassette company. He had rented offices in San Vincente, staffed his production crew, and hired nearly 70 people.
But for all this, there was one thing he had not done. He had not found that "money-conscious, detailed, meticulous" associate he had relied on in the past -- although it was not for lack of trying. For five months before shooting began, Laughlin, through New York City headhunters, searched for his alter ego. One candidate, formerly with Rupert Murdoch's organization, looked especially promising, but negotiations fell apart. "The guy made inquiries about me," Laughlin says, "and heard I was crazy and too difficult to work with. He got nervous and ran away." Laughlin, in the venerable tradition of Greek tragedy, decided to proceed anyway. Trouble was not far behind.
Even a gifted screenwriter would have had a hard time crafting a more appropriate or symbolic plot point to signal the onset of Laughlin's reversals than that which actually occurred.
It is January 30, 1986. Laughlin's crew is filming in a deserted amusement park on the outskirts of Toronto. Laughlin himself, as Billy Jack, of course, is fighting off underworld thugs. Laughlin is punching, karate kicking; bodies fly through the air. A thug grabs him and whacks him on the head with a bottle. Laughlin falls, gets up, staggers around. Cut. It was a great shot -- except for one thing. As everyone on the set soon learned, Laughlin was not acting. The breakaway bottle had not broken away, and the next day Laughlin was flown back to California and hospitalized with a concussion. Although Laughlin recovered satisfactorily, he would soon be facing even larger headaches.
Shortly after he was released from the hospital, Laughlin, who had originally intended to distribute the film himself, decided instead simply to sell the film to a major studio that would handle distribution in its own way. To this end, he held screenings of the partially completed picture for executives from four studios. Laughlin claims they were all interested. Indeed, a later article in Variety confirms that Laughlin was in "serious negotiations" with Paramount Pictures and that "consummation is considered not far off." Although no figures were quoted in the article, Laughlin says Paramount had offered him $12.5 million for the picture.
Laughlin was ecstatic.
But not for long.
One day he received a telegram from Credit Lyonnais stating that because the necessary documents had not arrived at the bank, the deal with the videocassette company could not be completed. In short, good-bye $4.2 million.
Although Laughlin explains that the lawyers entrusted with this task failed him, he admits that he was ultimately responsible for the oversight. Had it not been for this minor, yet at the same time crucial, detail of processing paperwork, Laughlin most likely would not be facing his current embarrassing predicament. More than anything else, Laughlin accepts this one instance as indicating a serious professional weakness. "I would be the last guy in the world to make chief executive," he says. "I have no skill at that whatsoever."
From this point on, Laughlin, like a hard-luck Tarzan swinging through the Hollywood jungle, kept grabbing for new vines as one handhold after another broke away from his grip. Even though the videocassette-company deal was dead, Laughlin still felt he had a way to make himself whole by landing one of the major studios. He chose to pursue the Paramount Pictures offer. But no sooner had he opened negotiations with the studio than dark rumors began to appear in the press. Laughlin, it was said, had never really been hurt. An insurance investigation was launched, and although Laughlin did manage to dispel the rumors, it took time, and in the process his project lost valuable momentum. The worst casualty was the Paramount deal, which soon snarled hopelessly in a tangle of contractual details. Good-bye $12.5 million.
But again, Laughlin thought salvation was in sight. A financial angel from New Jersey appeared, offering $3.5 million from money made in the real-estate business, but when it came time to sign the check, the guy backed off. Good-bye $3.5 million.
And so it went. Several times during the ensuing months, interested investors shuttled through Laughlin's Brentwood workroom, all promising the moon but delivering only disappointment. To hear it from Laughlin, the ersatz financiers were all aware of his past successes, impressed by his nearly completed picture, and intrigued by his unconventional ideas about reaching audiences and attaining larger profits for the motion-picture industry. And then nothing: no calls, no explanations, no money.
Anyone who studies Laughlin's career might well ask at this point how it is that a successful filmmaker, who had made millions from earlier movies, now found himself so thoroughly broke. Laughlin, however, says this should not be all that hard to understand. He then proceeds to inventory a long list of expenses, among which he includes the $5 million per year it cost him to operate his production company; the $3.5 million he invested in his non-Billy Jack film, The Master Gunfighter, which was a box-office hit but not a financial success; and the $7.5 million he put into Billy Jack Goes to Washington, which was never released at all; and additional millions in film-print costs, advertising costs, distribution fees, and legal fees. Even though Laughlin's analysis seems to fit the end result well enough, the overarching impression upon hearing it is that while this man's conceptual skills are of a very high order, his financial-management abilities are rather poorly developed.
Whatever the actual blend of personal limitations and just plain hard luck, it was enough to beach Laughlin in his Brentwood workroom -- broke, his comeback stalled, his film stillborn, his house in jeopardy, and forced to ponder the mercurial vicissitudes of filmmaking.
So, the early summer of 1987 had not gone as planned. But the Lord works in mysterious ways. After all, it was dealing with the difficulties of the moment that now led him to the idea for what he hoped might finally allow him to realize his revolutionary and commercial dream of a new studio.
Laughlin's first acquaintance with the home-video industry came during negotiations for the sale of the videocassette rights to The Return of Billy Jack. He was amazed by what he found. Here was a socioeconomic phenomenon, a riot of growth and profit the likes of which had seldom been seen in the history of film entertainment. In 1980, only 2.4% of households owning televisions also owned a videocassette recorder, but by late 1987 the figure had grown to 54%. During the same period, according to Video Marketing, a newsletter publisher and research group, rentals and sales of prerecorded videocassettes had increased from $264 million to an estimated $7.2 billion -- almost twice the size of the total domestic box-office take of the motion-picture industry. Not surprisingly, people were falling all over themselves trying to get in on the action. In addition to some 27,500 specially videocassette retail outlets, racks of cassettes were also turning up in all sorts of odd places, including convenience-store chains, florists, card shops, dry cleaners, and liquor stores. Indeed, many observers had come to think that the whole thing had gotten a little top heavy and that soon the business was going to slow down and shake out.
Superficially, the obvious clutter within the industry did seem to suggest that the window of entrepreneurial opportunity had long since slammed shut. Laughlin, however, did not see it that way. Although the industry's growth had been explosive, it had also been haphazard, pulled forward more by a seemingly insatiable consumer demand than by any comprehensive planning or forethought on the part of manufacturers, distributors, and retailers. As a result, the landscape was littered with thousands of uncoordinated free-lance initiatives. Laughlin felt certain that the first dedicated and vertically integrated production and marketing company with a nationally recognizable name and its own retail outlets was almost guaranteed to capture a hefty market share.
In addition, recent studies had identified a growing interest among consumers to buy rather than rent cassettes, particularly if retail prices continued to drop from $60 to $80 per tape to less than $20. Retailers had, as a group, been somewhat reluctant to sell tapes because rentals were far more profitable. But their reluctance had particularly severe reprecussions for the motion-picture producers, who, under current arrangements, receive a cut of the sales proceeds but not a dime from the rentals that now account for 63% of the industry's revenues. On several occasions, the studios had tried to correct this stupendous irony, and on several occasions they had failed. If a company could be established that offered a way around the video stores so that tapes could be sold to consumers directly, Laughlin believed that the studios would adopt that company instantly.
There were also indications that the video retailers were vulnerable from other directions. Laughlin's studies, for example, indicated that 85% of the people going into a video store cannot get the title they prefer to rent and leave the store with nothing or take a title they really don't want. These same studies showed that 70% of new VCR owners rent only occasionally after the first six months because they find the hunt for tapes too inconvenient.
In Laughlin's opinion, the home-video industry was about as creative in reaching its potential audience as the movie industry had been when he took over the distribution of Billy Jack. The similarities were unmistakable, and to Laughlin's mind, so was the cure. He had spent two decades developing his techniques for transforming the motion-picture industry. But each technique was merely a distinct outcropping of a more generic concept -- namely, that movies could be more profitable if the industry would make it more convenient for people to watch them. From that simple premise, it did not take Laughlin long to identify the ultimate convenience in home video: home delivery of cassettes through anational network of independent distributors.
It is, certainly, an ambitious scheme. If Laughlin has his way, Billy Jack Video will, in the space of three years, become one of the modern wonders of capitalism, a paradise of fully integrated harmony. A motion-picture studio at least equal to any of today's major studios will finance and produce its own films -- "good films," Laughlin promises, "films that make you feel good about life, not the kind of garbage we've been getting recently." Then, as one of the world's largest wholesalers, the company will market not only its own tapes but also those acquired from other studios through 1,500 company-owned warehouse superstores that will offer records, compact discs, and other electronic equipment, as well as 10,000 movie titles.
Meanwhile, 300,000 independent distributors will be signed up at the current price of $295 apiece (to cover the cost of training and sample inventory), and it is they who will be out working the neighborhoods of America. They may sell or rent out of their own inventories, or they may rely on the stocks of the nearby warehouse/superstore. The actual home deliveries and pickups -- $5 per delivery, 99? per tape for two days' use -- could be accomplished, Laughlin figures, by high-school students and a few full-time employees.
There is, of course, a good bit of ground to cover before the vision becomes a reality. In fact, most of what Laughlin has at the moment is wholly vision. Not one warehouse/superstore exists, nor does he currently plan to have actual product available to his sales force until 10,000 distributors have signed up -- a number he expects to reach by March 1988. By late September, however, Laughlin had signed up only 125 distributors after roughly two months of work. And although he admits that the process was much slower than he had originally anticipated, he expects things to shift into high gear once he completes negotiations with a well-known national chain of record stores and begins advertising his company's potential on national television.
Then, too, there is the matter of Laughlin's management team. Still without his watchdog, Laughlin is launching his latest assault on the motion-picture industry with the help of his wife, Delores, his son, Frank, and his longtime aide-de-camp, Robin Hutton. Nor, it appears, does he have any ongoing professional advice about the tangle of overlapping regulations may or may not apply to his new scheme, which he says is neither a franchise nor a multilevel marketing organization.
But as in any Laughlin enterprise, there is at the core of Billy Jack Video both sound analysis and a good idea. Laughlin is on to something -- even the experts agree that the future of movie-making lies with video distribution, and that home delivery is likely to be the industry's new frontier. Indeed, there are those who have already staked out a claim, albeit on a much smaller scale than Laughlin has in mind. Duke Kreps, for example, co-owner of The Video Room, in New York City, has been serving the Upper East Side of Manhattan with home delivery for nearly five years now, and with great success. He points out, however, that he was able to exploit two built-in advantages: first, his customers are per force packed into a tight geography; and second, the ubiquitous New York City doorman has proven to be an invaluable intermediary for tape pickup and delivery. And unlike Kreps, Laughlin intends to build a national network, and it is simply too early to tell whether his specific approach to the opportunity will catch on -- whether the Laughlin formula for revolutionizing industries still has its magic.
Everyone's left the meeting now and Laughlin himself is gathering up his papers and charts. It's been a long night. Altogether, Laughlin's been talking for about four hours and only one distributor has signed up -- although there are hopes that others will think it over and call in tomorrow. Over the next few days, Laughlin will make similar presentations in several other cities -- Chicago, Sioux Falls, Milwaukee, Detroit, Minneapolis. Mostly he drives between destinations because it's those shorter flights that are so expensive. Indeed, when this particular trip ends, he will have driven 1,091 miles in a rented car.
He pauses at the door to exchange a few last-minute pleasantries with an acquaintance. He jokes that once he played Billy Jack and now he's playing Willy Loman. Then a presentiment of the long, tiring journey ahead seems to overtake him unexpectedly.
"You know," Laughlin says, obviously weary, "people say a lot of different things about me, but there's one thing you can't say -- nobody ever gave me nothing."