Ron Tutor: The Lawsuits, Losses and Private Struggles of the Man Behind Miramax
A marble-appointed 737, a 258-foot yacht, a $32 million mansion and a $3 billion-a-year construction business. The charmed (and controversy-plagued) tycoon has succeeded everywhere but Hollywood, where his $700 million Miramax gamble has the town whispering: Was it worth it?
At the Cannes Film Festival last May, Ron Tutor announced himself as Hollywood’s newest movie mogul. Tutor, the construction magnate who only months earlier had led a group that acquired the storied independent film company Miramax from the Walt Disney Co. for $663 million, hosted a lavish party aboard his $65 million yacht Pegasus II, which has six suites, a gym and a screening room. At the black-tie soiree, guests including Rob Lowe and actress Jamie-Lynn Sigler slipped on boat shoes, danced under the stars and guzzled champagne provided by sponsor Moet & Chandon.
One night earlier, Tutor had joined his new partners — Miramax chairman Richard Nanula, Colony Capital Llc. chairman Thomas Barrack and Lowe — in hosting a private dinner for about 50 guests on the grounds of a villa in the hills above the Palais des Festivals. As Lowe offered a toast to the rebooted company, some of the film industry’s top insiders dived into a lavish truffle-laden, seafood-centric menu accompanied by wine pairings. “It was a wonderfully intimate affair,” recalls an attendee who rubbed shoulders with ICM chairman Jeff Berg, independent film executives Bob and Jeanne Berney and Margin Call executive producer Kirk D’Amico. “Everybody got to really talk to each other, and it built a lot of excitement about what the possibilities were for the new Miramax.”
Nearly a year later, those prospects aren’t quite as rosy. Since Tutor and partners took over, The House That Harvey and Bob Weinstein Built has not produced a film nor put any in development. On March 16, CEO Michael Lang, who had been recruited from Fox to help exploit Miramax’s rich library of more than 700 films, departed. All of this has led chatter in Hollywood to center not on Miramax’s next steps but on whether there is even a long-term strategy at all. Says a puzzled film executive, “As far as making it a going concern, I think there is a fuzziness as to what they plan to do.”
More clear is the financial toll Tutor’s dalliance with Hollywood has taken on a man whose estimated net worth is $790 million. A twice-divorced 71-year-old who skis in Sun Valley, vacations in St. Barts, calls a $32 million Beverly Park manse home (neighbors include Sumner Redstone, Denzel Washington, Haim Saban and Barry Bonds) and travels the globe on a private Boeing 737, Tutor might have discovered his life’s missing ingredient — glamour — through dabblings in film and the Miramax acquisition but likely not financial gain.
At issue is not only Tutor’s investment in Miramax (it is estimated he personally fronted $50 million to purchase the company) but also his messy entanglement with embattled film financier David Bergstein. And it comes at a time when Tutor Perini Corp., the $3 billion-a-year publicly traded construction company he runs as CEO, remains locked in a nearly two-decade legal war with Los Angeles’ Metropolitan Transportation Authority stemming from construction of the city’s Red Line subway. The company also is battling MGM Resorts International over its work on the allegedly uninhabitable Harmon Hotel at the $8.5 billion CityCenter development in Las Vegas.
But if you ask him, Tutor will say he believes that his experience in the construction business can be used to his advantage in Hollywood. “The lessons I learned in the construction contracting business that I have brought to the entertainment business is [sic] never let the numbers lie and go to work every day with a sense of discipline and goals as to what we are trying to accomplish and how we are going to get there,” says Tutor, who last spring answered questions in an e-mail interview but declined further comment.
Since August 2010 — about four months before the Miramax transaction closed — Tutor has sold $188 million of Tutor Perini stock, doing so at increasingly lower prices. The liquidation has at least partly funded Tutor’s film ventures, he said in a March conference call with analysts who cover Tutor Perini, and has considerably reduced his stake in the company. In 2008, when his namesake firm combined with Perini Corp., he owned about 43 percent of the new company’s shares; he was down to about 23 percent by the end of 2011. And in a September federal filing, Tutor Perini’s board allowed Tutor to sell 100 percent of his stock if he chooses. “I hated every sale of stock I’ve made since the first one,” said Tutor in a call last year.
BMO Capital Markets analyst Avram Fisher notes that Tutor Perini shares are trading at six times analysts’ 2013 consensus earning estimates, while the company’s peer firms are trading at 12 times their earning estimates. He says the valuation gap can be partly explained by investors’ concerns over Tutor’s personal business in Hollywood at the expense of the construction firm. “I think some of that fear is reflected in that multiple discount,” says Fisher. And Tutor Perini is being hounded by a group of unnamed shareholders that has written to the firm and called for Tutor’s removal as CEO because his Hollywood pursuits have become a “distraction,” says Robert Ottinger, the shareholders’ attorney. He says the bankruptcy proceedings of five film companies Tutor and Bergstein partnered on have exposed the CEO as someone with “poor business judgment. And he is the guy we supposedly trust with running this huge public corporation.” Tutor Perini did not return phone calls seeking comment.
If Tutor could take back any part of his Hollywood experience, his business with Bergstein would likely top the list. They met around 2000, introduced by Bergstein’s then-girlfriend, who had known Tutor through a“lady friend” of his, said Tutor in a July 2010 deposition. The then-sixtysomething Tutor began to frequent L.A. nightclubs with Bergstein, 22 years his junior. They met controversial producer (and now Grauman’s Chinese Theatre co-owner) Elie Samaha, who also had a movie company and introduced them to Sylvester Stallone, John Travolta and others in Hollywood. Tutor and Bergstein’s first venture into the movie business came with the creation and incorporation of film company R2D2 in November 2002; they’d later add ThinkFilm and Capitol Films to their stable of companies and would produce such movies as The Wendell Baker Story (2005) and Father of Invention (2010). But they’ve been sued for not paying back loans they received to finance films and now find their five companies mired in bankruptcies. It’s not clear whether any of the movies made by Tutor and Bergstein has turned a profit, though it is likely that titles in their library that were added through acquisitions have been profitable. There have been high-profile debacles, such as David O. Russell’s unreleased $26 million comedy Nailed, which the director walked away from in 2010 after production problems and disagreements with Tutor and Bergstein. In a February deposition, Tutor said he’d been “inundated” with legal fees related to the Bergstein ventures that have totaled more than $10 million during a period of about a year and a half.
In Hollywood, of course, there is a long history of rich outsiders coming to town, losing their money and returning home with their tails between their legs. But Tutor, who already had spent tens of millions of dollars on lawyers and legal settlements related to his dealings with Bergstein, instead decided to double down on the biggest of bets. Hollywood increasingly is wondering whether Tutor’s investment in Miramax is fueled by simple vanity or whether he has a viable plan to create a lucrative next act for a company that counts 284 Academy Award nominations and 68 Oscars in its pedigree.
From the outset, some observers scoffed that the nearly $700 million Tutor and partners paid to Disney was too pricey for a library without an A-list franchise like Twilight or The Hunger Games to exploit and no Weinsteins (who partnered with supermarket investor Ron Burkle to try to reacquire their company) at the helm to generate future hits. Weinstein Co. COO David Glasser says that under the Weinsteins, Miramax would have been run differently. “It wouldn’t have just been monetizing the library but growing it by adding new titles to it. For us and Ron Burkle, that’s where we saw the value,” he says. “Could you imagine in a perfect world if we had brought back the Miramax name through our company? We could have moved titles like The King’s Speech to it. There is a business value in that. That [could have been] really interesting.”
Since the acquisition, Miramax has, at least outwardly, remained quiet; its biggest moves have been brokering digital deals with the likes of Netflix and Hulu to generate revenue from the film library, which includes such titles as best picture Oscar winners Shakespeare in Love and Chicago as well as the Scream franchise. But there are diminishing returns on exploitation of a film library (just ask MGM), and many believe that the company will need to expand the collection to remain vital. Says a rival film executive, “I like the Miramax guys, but the question is the long-term plan.” At the center of the uncertainty is Tutor, a man known by few in Hollywood. But those around Tutor say he knows what he’s doing. “He is a man who knows what he wants and will work hard to get it,” says James Robinson, the mercurial chairman of production company Morgan Creek, who was part of the Tutor-led group that eventually bought Miramax but dropped out for undisclosed reasons. “He’s not a complicated man.”