The Death of Cinergi Pictures

0:02 [Music] In the late 1980s, the Disney company and its film studio were thriving like never before. The company had faced many challenges over the previous decade, including nosediving revenues and multiple stock takeover attempts. But in the mid 1980s, a new regime of leadership took over, successfully resurrecting the company and setting it on the path for success. Disney's film studio formed a new division called Touchstone Films in 1984, which was

0:49 designed to broaden the company's scope by releasing films for an adult audience. The new label released a string of box office hits and by 1987 Disney had become the second highest grossing film studio in Hollywood. The following year, Disney formed yet another distribution label, Hollywood Pictures. And between Touchstone, Hollywood Pictures, and its flagship Walt Disney Pictures label, the company set a lofty goal of releasing 24 films per year. At the same time that Disney was expanding, independent film producer Andrew Vajna was in a period of transition. In the 1970s, Vajna had partnered with fellow producer Mario Casar to establish an indie production company called CarolCo, which would produce films, then sell them to larger studios for distribution. In the 1980s,

1:37 the duo had achieved massive commercial success with the release of First Blood, an action film starring Sylvester Stallone, which kickstarted the popular Rambo franchise. But beyond Rambo, the company had struggled to produce another hit. And in 1989, Andrew Vajna sold his stake in Carol Co. to Casar for $100 million, opting to venture out on his own and form a new production company. The new company would be named Synergy. And over the summer of 1990, it was announced that Synergy had signed an exclusive deal with the Walt Disney Company with Disney committing to distribute 25 of their films. Under the arrangement, Disney would finance about 1/3 of the budget for each film in exchange for the film's distribution rights in North and South America. To

2:23 raise the remaining production funds, Synergy would pre-ell the film's international rights to other companies. Thanks to Vajna's experience with Carol Co., The producer was well acquainted with the international marketplace, able to broker savvy deals that would give Synergy all the money it needed to produce its films. But Carol Co. had mostly produced smaller films with modest budgets. Whereas Synergy would be producing event films, big budget movies with big stars that had serious blockbuster potential. After signing the deal, Synergy wasted no time in putting high-profile projects into development. In August of 1990, Synergy paid $2.5 million for a script entitled The Stand from Screenwriter Tom Schulman, who had won an Oscar for Dead Poet Society. Soon after, Synergy nabbed the rights to

3:09 develop a script from screenwriter Joe Essterhouse entitled Original Sin for $1.5 million. Through these hefty investments, Vajna and his company were going to great lengths to establish themselves and get the ball rolling. But the film industry was rapidly changing in the early 1990s. Salaries for stars, writers, and directors had increased significantly since the 1980s as bidding wars over talent were driving up film budgets. Consequently, profits for major studios were declining, falling from 1.2 billion in 1989 to 800 million in 1991, and the big studios were taking notice. In January of 1991, Disney studio chairman Jeffrey Katzenberg sent out an internal memo urging the studio to avoid what he

3:55 called the blockbuster mentality. Disney's highbudget 1990 film Dick Tracy had been a financial disappointment and Katsenberg had become hesitant to take another risk of this magnitude. However, Katzenberg suggested that Disney could still profit from a business that we don't want to directly be in ourselves. Rather than having Disney directly produce big event films, Katzenberg sought to make co-inancing and distribution deals with smaller companies, allowing Disney to lessen its risk while reaping the benefits of blockbuster success. This opportunity seemed like the perfect foot in the door for Synergy. But the company's development process was slow, and it wasn't until February of 1992 that Synergy released its first film through Hollywood Pictures. The $2.5 million

4:41 script for The Stand had been developed into Medicine Man, an adventure drama film following the exploits of a medical researcher living in the Amazon rainforest. The film cost a bloated $40 million to produce thanks to a high salary for its star Shan Connory. While Medicine Man hit the number one spot on its opening weekend, its success quickly faded, barely recouping its budget at the domestic box office. Synergy had plenty more projects in the pipeline, paying $40 million to acquire the rights to Super Mario Brothers, a film adaptation of the popular video game franchise. But the company was still far behind in its ambitions. In nearly 3 years of existence, Synergy had purchased a number of expensive scripts, but had only produced one film. And by

5:27 mid 1992, it was reported that they would be downsizing their operation, laying off 20 employees. Meanwhile, Vajna's previous company, Carol Co., was thriving without him, having finally broken into the blockbuster market with three huge hits. But Andrew Vajna's ambition was unbridled as he sought to produce big event films that would bring his company financial success. One such opportunity came in summer of 1992 when Synergy and Disney worked out a deal to co-inance a new film in the popular Die Hard action franchise. 20th Century Fox had released Die Hard, starring Bruce Willis in 1988 to huge financial success, and its 1990 sequel proved to be even bigger, grossing over $200 million worldwide. A third installment seemed

6:14 inevitable, but it was reported that Bruce Willis had had a falling out with Die Hard's producers after collaborating with them on several other films. Additionally, Willis was asking for a $17 million payday for Die Hard 3. And with the project carrying a projected budget of $60 to $70 million, Fox executives were concerned about taking such a high risk. As a solution, Fox studio chairman Joe Roth suggested a co-inancing deal to Andrew Vajna, which would allow Fox, Disney, and Synergy to split the cost of production. After years of developing various projects, the company had two high-profile films on the schedule. Super Mario Brothers was slated for a May release, while The Western Tombstone would be released in December. Mario seemed like a surefire

7:00 hit due to the popularity of the video game it was based on. But the film was a failure upon its release, being critically panned and grossing significantly less than its production budget. Having only released two films since its inception in 1989, Synergy had already reportedly lost $27 million. Fortunately, the company would experience a reprieve with the release of Tombstone through Hollywood Pictures. The star-studded film received decent reviews and became a moderate box office success, but Synergy had a production slate of big, expensive films lined up and it would need a high amount of capital to continue operating at this scale. In spring of 1994, Synergy announced that it would be going public in order to raise the funds necessary to

7:45 continue operations. The company's alliance with Disney and the success of Tombstone were touted to potential investors, but many on Wall Street were skeptical of Synergy's chances. The 1980s had seen the failure of multiple high-profile film companies after going public. And by the early 1990s, selling investors on an indie film company was becoming much harder. While the company wasn't thriving, Synergy had reported positive first quarter earnings for 1994, netting a $2.3 million profit thanks to Tombstone's box office. And this minor success provided leverage to attract investors during their initial public offering. Synergy offered up 3 million shares of stock with Disney buying 10% of the shares and Vagna retaining 60%

8:30 ownership of the company. With tens of millions of dollars raised, the company's goal was to release two to four event films every year, each with a minimum budget of $40 million. The first release after the IPO was the Danny Devito comedy Renaissance Man, a Touchstone Pictures release. Despite the impressive resumes of Devito and director Penny Marshall, the film was a flop, receiving dismal reviews and low box office returns. Synergy's next film, a mystery thriller entitled The Color of Night starring Bruce Willis, had faced numerous problems during its production, as Vajna and the film's director, Richard Rush, reportedly battled fiercely over the film's editing. With a soaring budget and delays pushing back the film's release by several months, The Color of Night finally made its way

9:16 into theaters in August of 1994 via Hollywood Pictures. But the film failed to find commercial or critical success, winning a Golden Raspberry Award for the worst film of 1994. The company would limp forward thanks to impressive home video sales for Tombstone along with revenues from foreign distribution and pay-per-view. Ultimately, Synergy could not exist off of the moderate success of one feature. If the company was to survive, it would need a huge hit and very fast. In April of 1995, Synergy decided to sell 3 million shares of its common stock. The sale brought in $23.5 million for the company, which it vowed to use for production, development, and general overhead costs. Around this time,

10:02 Synergy also acquired a special effects company based in Massachusetts, which it renamed Mass Illusion. Having an in-house visual effects division would be conducive to Synergy's operation as Mass Illusion went to work on Judge Dread, a high-budget science fiction action film starring Sylvester Stallone. Based on the comic book of the same name, Judge Dread appeared to be a safe bet, as Andrew Vagna and Stallone had previously collaborated on the enormously successful Rambo film series. With two big budget films slated for release in 1995, both costing $90 million each, Synergy was finally ready to soar. The company's sacrifices would pay off in May of that year when the long-awaited Die Hard sequel, Die Hard with a Vengeance, was finally released

10:48 by 20th Century Fox. The film was a smash, earning $22 million in North America its opening weekend and totaling out at $366 million worldwide. Die Hard was even crowned as the highest grossing film of the year, a huge achievement for an independent company like Synergy. Unfortunately, the film's monumental success was clouded by equally monumental failures. Judge Dread made its way into theaters a month later, released by Hollywood Pictures. The film was pulverized by critics, with one reviewer calling it a thunderous, unoriginal futuristic hardware show for teenage boys. And due to its massive budget and high marketing costs, the film disappointed commercially, drawing in just over $und00 million worldwide.

11:33 The fallout was felt heavily by Synergy. Despite high profits from Die Hard 3, the company posted an $18 million loss for the first 9 months of 1995. And while Synergy's stock had neared $11 per share earlier in the year, by October it had dropped to just $4 per share. Worse yet, some in the press were beginning to draw parallels between Synergy and the many failed film companies of the 1980s. Fajna brushed off these concerns, stating that unlike companies like DEEG and Orion, he was keeping a low payroll of just 30 employees and limiting the risk on each project by pre-selling rights for foreign and ancillary markets. But blockbuster film budgets had nearly doubled since the 1980s. And with

12:19 marketing costs also increasing, it seemed unlikely that this model of pre-selling could translate into the 1990s. Still, Vajna displayed only confidence in public, vowing to make four to five successful event films per year. Late 1995 saw the release of Synergy's next two films. The Scarlet Letter, an adaptation of Nathaniel Hawthorne's classic 1850 novel starring Demei Moore, was destroyed by critics, grossing only $35 million on a $46 million budget. Their next release was Nixon, Oliver Stone's ambitious three-hour biopic of President Richard Nixon. The film received a decent response critically with star Anthony Hopkins receiving both a Golden Globe and Oscar nomination. Commercially,

13:05 however, the film was a bomb, grossing only a fraction of its $44 million budget. A spokesperson for Synergy downplayed these flops to the press, claiming that Synergy's losses on each film would be minimal thanks to strong overseas pre-sales. But Vajna's optimism would soon be put to the test, as Synergy faced an increasing number of challenges that would ultimately lead to its downfall. In January of 1996, it was reported that a federal grand jury was investigating Andrew Vajna in regards to his federal tax returns. The investigation trailed back to Vajna's days at Carco. Vajna and his partner Mario Casar had set up a complex system of offshore companies to handle the profits from films like Rambo, which allowed them to avoid

13:51 paying taxes in the US. The investigation was speculated to be one of the biggest IRS tax cases involving Hollywood executives, with the IRS claiming that Vajna and his wife owed $41 million in back taxes and penalties. While the investigation only involved Vajna's personal finances and was not related to Synergy, the company's stock fell by 32% after the story went public. Vagna said very little publicly about the charges, but told the LA Times that the case was without merit. Vajna instead diverted his attention to Synergy's next big feature, Avita, a musical biopic of Ava Peron starring Madonna as the title character. With a reported budget of $55 million, Evita was looking like a makeorb breakak film

14:37 for Synergy. As usual, Fajna was confident about the film's prospects, premiering a short clip at the Con Film Festival and telling the press, "It's important for Synergy to have a success, and this will be a success." But by June of 1996, Synergy's luck took a turn for the worse as Disney, its lifeline, announced plans to significantly cut back its live-action production slate. The film studio had suffered a series of flops through its various labels over the previous year, losing $25 million in the first 3 months of 1996. Reports stated that Disney was even planning to phase out Hollywood Pictures entirely, a blow to Synergy, as the label had distributed many of their films. Shortly after this announcement, Synergy

15:22 said it was exploring putting itself up for sale, putting its future in limbo. By this time, Synergy's stock had dropped to just $2 per share. And it was reported that Disney was considering acquiring Synergy as a full subsidiary. But despite these announcements, the company continued operations. The mass illusion division began taking jobs for outside productions, contributing special effects sequences to the 1996 action film Eraser, and Synergy continued developing films, putting a Joe Essouse project called an Alan Smithy film, Burn Hollywood Burn, into production and setting up a new project for Bruce Willis, a romantic comedy entitled The Broadway Brawler. Synergy was down but not out. And with several big projects

16:09 in the pipeline, it was looking like the company might survive in one form or another, if not as an independent entity, than as a subsidiary of Disney. However, the series of events that followed would seal the company's fate. The musical drama Eva was finally released in December of 1996, starting off successfully in limited release and slowly expanding to more theaters. While critical reviews were mixed, the film received numerous award nominations, winning three Golden Globes and an Oscar for best original song. Evita's soundtrack, boosted by Madonna, also performed well, selling over 2 million copies in the US. On a $55 million budget, the film reportedly grossed around $150 million worldwide, becoming

16:56 Synergy's second highest grossing film. But Ivida's success would not be able to save Synergy from the mountains of problems it faced. In March of 1997, it was revealed that Synergy's next film, Broadway Brawler, which was to be distributed by Disney, had halted production and shut down. The film was shooting for just 20 days until a dispute arose between its star Bruce Willis and its director, Lee Grant. In addition to starring, Willis was serving as a producer on the film. So he used his power to abruptly fire the director along with several other crew members over creative disagreements. A new director was called in as a replacement, but his involvement lasted only one day before production was shut down indefinitely. A film of this magnitude

17:41 shutting down during filming was highly unusual and having already invested $17 million into the film, Synergy was left in a huge predicament. Ultimately, a resolution was reached between Disney, Synergy, and Bruce Willis. Disney would pay off Synergy's $17 million investment, and Bruce Willis would agree to star in several films for Disney at a significantly reduced rate. While one crisis had been averted, Synergy was still in deep trouble. Their latest release, Shadow Conspiracy, had been a huge commercial flop, grossing just $2 million on a $45 million budget. And while Vajna had previously claimed that he was keeping overhead costs low, the company was under heat for its excessive executive pay. Vagna reportedly owned

18:27 the office building that Synergy occupied, and the company was paying him $38,000 a month to rent it. Vajna had also received $5 million in fees from Synergy for air charter services along with a $1 million per year salary, plus a fee of $125,000 for each film that the company produced. Vajna defended himself against the allegations, claiming that his salary was actually low compared to other top producers. But regardless of whether this was true or not, Synergy owed Disney $38 million and had no feasible way to pay the company back. To settle the debt, Synergy surrendered its entire film library to Disney while it sold its stake in Die Hard 3 to 20th Century

19:13 Fox. While several companies had expressed interest in purchasing Synergy, a deal never came to fruition. So, the only option left was to liquidate and dissolve with Mass Illusion and the rest of the company's assets being sold off. As for the investors who took a chance on an independent film company, each shareholder received a buyout of only $2.30 per share, a major drop from its $11 peak. In early 1998, Synergy's last two films were released by Hollywood Pictures action horror film Deep Rising and the mockumentary and Alan Smithy film Burn Hollywood Burn. Both of the films were major commercial flops and achieved mediocre reviews. And with that, Synergy was officially dead. The company had failed to meet its lofty

19:58 ambitions, only delivering 13 films in the 25 picture contract with Disney. And while it had produced one of the highest grossing films of the 1990s, the indie film company was no match for high expectations, inflated budgets, and overall industry consolidation. But the legacy of the company would live beyond its demise. In 1998, Massillusion was renamed Manx Visual Effects by its new owners. And the following year, the firm provided special effects for the Warner Brothers film The Matrix, creating bullet sequences that would go on to become a legendary part of film history. After Bruce Willis cut the deal with Disney following the cancellation of Broadway Brawler, the actor was cast in a Michael Bay film entitled Armageddon

20:44 for Disney's Touchstone Pictures. The high-budget disaster film turned out to be a smash hit, grossing over $500 million worldwide and becoming that year's highest grossing film. The following year, Willis would return to theaters as the star of might Shyamalan's The Six Sense, released by Disney through its Hollywood Pictures label. The psychological thriller was a huge sleeper hit driven by positive word of mouth thanks to an unexpected twist ending. The film went on to gross $672 million worldwide, meaning that in part thanks to the disastrous cancellation of Broadway Brawler, Disney had attained its highest liveaction gross ever. However, Disney would continue with its strategy of reducing live-action film production, shutting down Hollywood Pictures in the 2000s and redirecting

21:30 its efforts toward big budget event films and sequels. Fajna's tax case with the IRS would drag on until 2001 when he agreed to pay 6.5 million in back taxes. And with his legal troubles behind him, Vajna reunited with his former Carol co-artner Mario Casar to form a new production company called C2 Pictures, which produced Terminator 3: Rise of the Machines. The company made four films in total before dissolving in 2008 with Vajna passing away in 2019. In many ways, Synergy entered into the game at the worst possible time. The 1980s had been a fruitful era for indie film companies thanks to increasing box office revenues and a bullish stock market. But with film budgets soaring

22:16 and revenues leveling off by the early '90s, the risk of making films had increased while the rewards had diminished. Despite the business savvy of Andrew Vajna, his strategies were ultimately not compatible with the morphing film industry of the 1990s. Perhaps Synergy could have succeeded with a better choice of films. It could also be argued that if Synergy had spent less on overhead and had a faster development process, the company could have been salvaged. In any case, during Synergy's short existence, it did produce some films that made their mark on the popular culture. Movies that are remembered to this day for better or for worse. If anything, Synergy will likely be remembered for its role within the Disney company, for being a part of the era that created a corporate empire which continues to dominate the industry

23:01 to this day. If you enjoyed this video, please hit the like and subscribe buttons. And if you'd like to support me on Patreon, you can find the link in the description. [Music]