ThinkFilm's Bergstein on Hollywood's hot seat

Businessman denies money woes

He's been called an unabashed Hollywood hustler. Sordid tales of unpaid vendors, lawsuits, layoffs and movie shutdowns have dogged him in the year and a half since he took over specialty distributor ThinkFilm and foreign sales agent Capitol Film.

Yet David Bergstein is unperturbed.

"There is always an adjective that precedes us: 'Beleaguered,' 'financially distressed,' " Bergstein said recently from his plush new offices in the Fox Plaza in Century City, with a hint of an accent from his native New York. "And none of these people know anything."

What is known is that after a summer in which ThinkFilm has been battered by bad press -- especially during the repeated shutdowns of the Jake Gyllenhaal political satire "Nailed," financed by a Bergstein-backed entity -- he is actively looking for cash.

Whether that will be enough to repair the executive's strained relationships with Hollywood and allow his company to stay in business remains to be seen.

But Bergstein is adamant that he is on the right track.

"Our business plan is not so much about the movie business," he said, noting that he controls about a thousand films. "It's really to build a global digital distribution business. It's based on the expectation that in the not too distant future most content will be delivered digitally and on-demand."

Bergstein began to make a mark in Hollywood just 18 months ago, when he and construction magnate Ron Tutor bought ThinkFilm and London-based Capitol.

Yet after releasing 20-odd pictures in 2006 and 2007, only nine ThinkFilm movies have opened this year. Bergstein apparently has sold off some films, canceled others and has refused to commit to release dates for the only other two films originally scheduled for 2008: January's Sundance Film Festival pickups "Phoebe in Wonderland" and "The Escapist."

At the same time, at least four separate lawsuits have been filed against ThinkFilm this year by vendors and others claiming they were short shifted.

"Some of what is out there is true," Bergstein said. "The vast majority is not true. And for the stuff that is true, my answer is, 'So what? So what if X, Y or Z might be owed money?' "

That attitude has some in the creative community fuming.

"He's the biggest disgrace in the film business," said producer Albie Hecht, formerly president of Nickelodeon, who produced the Oscar-nominated ThinkFilm documentary "War/Dance" and claims he still has not seen the small advance ThinkFilm promised. An arbitration is pending.

"This is someone who goes around making deals and looks like he has no intention of fulfilling his obligation to filmmakers and artists," Hecht added. "Not only is it disgusting, but downright immoral."

Alex Gibney, director of the Oscar-winning ThinkFilm documentary "Taxi to the Dark Side," charges in a lawsuit that ThinkFilm did not have the financial resources to properly release his film and "fraudulently concealed this fact from the film's creative team, its investors and the film's sales agent, Cinetic Media."

Bergstein said Gibney was paid everything he was owed, including a $50,000 Oscar bonus. Bergstein also downplayed lawsuits by Allied Advertising seeking $4.2 million for ads it placed and Brooklyn-based Mammoth Advertising, which said it has nearly $430,00 in unpaid bills.

Lawsuits are just part of doing business, said Bergstein, 46, whose office is stacked with boxes of files and a framed photo of John Lennon flashing a peace sign.

He made a small fortune acquiring depreciated assets, cutting costs and selling for a profit, then dived into the film business in 2003 via his acquisition of Elie Samaha's Franchise Pictures library.

"He is used to going in, buying something that's normally four cents for two cents and then saying to everyone, 'It's a distressed asset. I'm only going to pay you half of what you deserve,' " said a veteran talent manager and producer who has worked with Bergstein. "It's just a whole mindset that is antithetical to the movie business."

Bergstein acknowledged he's had problems paying such creditors as PR companies and production services, but he said those issues were caused by the move of ThinkFilm's headquarters from Canada to the U.S., which required new accounting and tracking systems.

A spokesman for Investment bank DB Zwirn & Co. says it has about $100 million in loans to ThinkFilm’s umbrella company. Zwirn was forced to liquidate a hedge fund this year but Bergstein said he has been able to find additional funds from Comerica Bank and others.

He said he has brought ThinkFilm’s debts from $30 million to $8 million and is pumping in another $25 million to market ThinkFilm releases on top of a total investment of $400 million for all his entertainment businesses, which include a postproduction facility and music publisher in London. He declined to say where that new money will come from.

Bergstein said he has image problems because nobody in Hollywood really knows him. He grew up in New York and attended Polytechnic Institute (now part of New York University), studying engineering and pre-med. In the late 1970s he became an investment banker, seeking undervalued stocks.

He moved to Los Angeles in 1983 and worked for a mortgage broker, then began buying real estate. He operated Metropolis Publishing for a time and acquired Express Inc., an online DVD seller that had gone bankrupt in 2001, losing a reported $240 million.

Bergstein and Tutor, a friend who headed two major construction companies that merged this year in a deal valued at $862 million, began investing in Los Angeles restaurants, including Le Dome. There they met Samaha, who was flying high with Franchise Pictures. When Franchise began struggling, Bergstein and Tutor loaned Samaha $14 million, secured by Franchise's film library. When Franchise went under, Bergstein ended up with most of the library.

Armed with product, Bergstein and Tutor acquired ThinkFilm in November 2006 for a reported $18 million in cash and $5 million in debt. The distributor, founded in September 2001 by veteran execs Jeff Sackman, Randy Manis and Marc Hirshberg, as well as Mark Urman from Lionsgate, fielded a string of such Oscar-worthy films as "Half Nelson," which earned Ryan Gosling a best actor nod in 2007, and "Born Into Brothels," 2005's winner for best documentary.

Bergstein said ThinkFilm was insolvent when he bought it. Sackman, who quit the company in anger in April, said it was profitable for four of its first five years but looked for a buyer two years ago when art-house attendance dipped.

"We were very cooperative at first," Sackman said of Bergstein.

At Bergstein's urging they went on a buying spree, acquiring films like "In the Shadow of the Moon," which ThinkFilm bought for $2.5 million at Sundance in 2007 but which grossed only $1.1 million in theaters that November.

Indeed, only four films out of more than 30 releases during the past two years have grossed more than $1 million, including Sidney Lumet's "Before the Devil Knows You're Dead," which grossed $7 million last fall, and Helen Hunt's "Then She Found Me," which grossed $3.6 million in April despite advertising money being pulled, sources said.

Many planned ThinkFilm releases are now in limbo. The dark comic drama "Momma's Man" was announced in March as a ThinkFilm acquisition and August release. But the deal never happened and it went to Kino International instead.

"Battle in Seattle," "A Stone's Throw" and "A Happy Death" have been taken off the calendar and the drama "Blue Valentine" was never made because the promised funding fell through.

ThinkFilm doesn't list "The Last Confederate: The True Story of Robert Adams" as having been released but producer Julian Adams said it was released briefly last August. Since then he said he has been unable to get a financial statement from Bergstein. "I can't even describe the heartache," Adams said. "I'm beyond frustrated with it."

Bergstein's highest-profile production is the $30 million "Nailed," directed by David O. Russell, which was shut down by SAG, the DGA and IATSE four times this summer over money woes.

Bergstein said the guild problems have been resolved and that the movie only needs two days of pickup shots; others said scenes crucial to the film are missing. In any case, additional days were funded and the film will apparently arrive on schedule in early 2009.

Producer-director Taylor Hackford, who is finishing postproduction on ThinkFilm's "Love Ranch," starring his wife Helen Mirren, said funding came through "just in time."

"The fact is he stayed with us," Hackford said of Bergstein. "We never shut down for a day. Everybody got paid."

Other Bergstein-backed movies nearing completion include the road comedy "Five Dollars a Day," the romantic comedy "My Sexiest Year" and the $30 million crime drama "Black Water Transit."

It's unclear what effect, if any, ThinkFilm's apparent money woes will have on Bergstein's current productions. But his credibility, per various sources, is at an all-time low.

One agent said he feels sorry for Urman, who must field calls from angry filmmakers and skeptical reporters. "(Bergstein) over-committed," the agent said. "He didn't care about the budgets of movies. He just did them. It was like almost a three-card Monte game. Monies were moving in all different places to meet the latest fire drill, and at some point the cards stop and there is no money."

Urman declined repeated requests for an interview, but Bergstein angrily denied rumors that the company is firing employees, withholding paychecks and stiffing profit participants.

When he bought ThinkFilm, he said, he agreed with Canadian regulators to close its Toronto office, which resulted in layoffs. He also put pressure on Urman and Sackman to trim the staff, and he outsourced home video to Image Entertainment, which Bergstein was to acquire. The Image deal later fell apart, with Bergstein blaming Image for backing out and Image claiming Bergstein did not come through with funding. A separate deal to acquire IM Global as a second sales agent also unraveled, and Bergstein recently divested his majority interest in the company.

Bergstein dismissed as "complete nonsense" allegations that he has not paid DVD royalties. "We're the same as any other studio," he said. "We recoup what we're due. We get our distribution fee and the rest goes out. Sometimes reporting by ThinkFilm was in fact late, just like studios report to me late sometimes."

Bergstein said his plans for ThinkFilm are much larger than anyone realizes. Theatrical distribution and foreign sales platforms are only a means in which to gather content before the industry transitions to selling directly to consumers digitally. Then the key will be to own the most content, so despite all the naysayers, he plans to acquire even more movie and TV libraries.

In the meantime, Bergstein said ThinkFilm's finances are solid and it will continue to release films.

But Sackman said what has happened at the company he co-founded breaks his heart.

"I am very proud of what we built and accomplished at ThinkFilm," Sackman said. "And very sad to see how in the past 16 months the company and its reputation have been diminished."