Interview: Flight of Fancy

Ted Hartley, who came to Hollywood as an actor and left for investing, has found running the legendary RKO studio rife with challenges.

Staff Reporter

Fighter pilot, actor, investment banker, studio head. Such has been the eclectic career of Ted Hartley, RKO Pictures chairman and chief executive. Hartley, who in the 1960s played the Rev. Jerry Bedford on television's "Peyton Place," is now overseeing the revival of once-moribund RKO Pictures. The famed studio, home of "Citizen Kane" and "King Kong," had fallen on hard times well before Hartley and a small group of investors bought a controlling interest in 1991 from a group that included former Treasury Secretary William E. Simon.

Intrigued by the potential value of the brand, Hartley took a flyer on a company that had sold off rights to its most important titles, had no physical assets and which, in Hartley's words, amounted to little more than "a filing cabinet." After a decade, RKO has a slate of films and affiliated distribution, television production and music publishing businesses. Earlier this year, RKO announced a deal with London-based Cobalt Media Group in which the two companies will be partners on RKO International, financing up to six films annually, including some remakes from the old RKO library. For domestic distribution, RKO is relying on film-by-film deals with some of the major studios. And the company is co-financing some films such as the upcoming thriller "Shade," in which Merv Griffin is a partner.

And Hartley, who is married to actress Dina Merrill (she's vice chairman of the RKO board), hasn't entirely given up acting. You'll see him playing bit roles in RKO's new productions.

Question: RKO has made some of the biggest movies ever "Citizen Kane" and "King Kong" to name two. Are those titles still in the RKO library?

Answer: In most cases and with most films, those rights are in other people's hands. For 80 percent of the RKO library, Turner Entertainment Co. has the North American rights, some of the South American rights and some of the English-speaking video rights. Distribution rights are pretty well scattered around the world. All the ones that you really think about with RKO, the "Citizen Kanes," the "Magnificent Ambersons," "(She Wore a) Yellow Ribbon," the Fred Astaire-Ginger Rogers films, Katharine Hepburn-Cary Grant films, all of those things are in distribution with other people on long terms. We get very little current income from those, less than $1 million a year.

Q: So where is the value in the library?

A: We have the right to repurpose all that stuff for new videos, new feature films, new cable films, cartoons. Also, the musical rights to "Swing Time" are very valuable and can be sold a number of times. We do want to make a musical about "Citizen Kane," but that's a huge project. It's an ongoing project. We need to get one under our belts before we take that on.

Q: How many films are you looking at remaking from the RKO library?

A: Our current slate of production includes "Locked Room," an original screenplay, and "Age of Consent" and "Set Up," both repurposed RKO films. It works out that the mix is about 50-50.

Q: What else is coming up on the RKO slate?

A: "Shade," which has an $8.5 million budget and "Set Up," directed by Sidney Lumet, is a big star film in the $25 million range.

Q: How did your partnership with Cobalt come about?

A: RKO International, which is a financing and international distribution company, was a joint venture with Disney's Buena Vista Entertainment. Buena Vista then made a decision that they were not going to into the sales and financing business for films other than Disney films. So we met with a number of companies and we picked Cobalt because they seemed to have the most in-depth financing commitments behind them.

Q: Is RKO International financing all of your pictures?

A: No. RKO International finances 100 percent of the pictures that are done through the RKO International division, but we have several ways that we finance our other films. We have what we call Tier One projects, which are done as a joint venture with a major studio. "Suspicion," a film from the RKO library, is a project we are doing as 90-10 split with Dimension-Miramax. They are financing 90 percent and handling the international and domestic distribution.

Q: How did RKO get to the point where it's able to finance some of its own films?

A: Until you are off the ground it's impossible. You must have a quality production slate coming that's recognized by the industry and through them the general public. Secondly, you have aligned yourself with financing resources, both distributors and banks that recognize a project as a profitable piece of commerce. So it's one of those things that is impossible to do until you do it, and once you do it it's pretty easy.

Q: Your first trip to Hollywood was as an actor.

A: The last movie Cary Grant made was the first movie I made. That was a lot of fun. I had a continuing role on a very successful television series called "Peyton Place," and I made a movie with Clint Eastwood and I made a movie with Ann-Margret and just had a ball as an on-the-way-up movie actor.

Q: Why did you leave acting?

A: One day it wasn't happening anymore. I was on a television series that was canceled after 13 episodes and Alan Ladd, who was my agent, said, "Guess who gets blamed when the series fails? The damn actor who had the lead in the series." I went back to New York and I joined a group of guys who were starting a boutique banking firm and going into middle-sized companies. I bought and sold some television stations, which was interesting.

Q: How did RKO enter the picture?

A: Eventually I ran into William E. Simon and Ray Chambers, who ran a company called Westray Capital. They had bought RKO Pictures, which was down on its knees from years of bad management but still one of the great names. It was a library, some intellectual property rights a few businesses here and there, but not very much.

It turned out I couldn't afford the price they were asking and neither could anybody else. I made a deal with them to bring in a group of investors and working capital for a 51 percent interest.

Q: What was the initial strategy?

A: To build the reputation in the community by standing for something. We were not going to do anything dumb with the RKO logo. We weren't going to sell it for people to put on popcorn boxes or brassieres. Second thing was to find out what we had. We had the equivalent of a filing cabinet. We had to go in and dig out all the rights to these films. "Did we really have them all? Did we have a piece of it? What was sold off?"

Q: It sounds like you went into this not knowing what you had.

A: Not only did we not know what we had, I didn't really have a business plan. I believed the logo and the library were a business plan, which wasn't true. Our first plan was to make small movies with a modest risk and invest in them ourselves. The problem was we didn't have distribution and small movies are not particularly desirable because people want to see stars. The first big movie we made was "Mighty Joe Young," six years after we came in. If you are going to make a $120 million movie, you better have somebody big who is not only going to help you with the money, but is going to get it out into the theaters.

Q: "Mighty Joe Young" was budgeted at more than $100 million but only earned $50 million domestically. What happened?

A: It came out at the same time as a movie called "Meet Joe Black," which was an adult movie that didn't do that well. A lot of people got confused because of the similarity of the titles. Some went to "Meet Joe Black" when they meant to see "Mighty Joe Young." Some just didn't go at all.

Q: Your wife, actress Dina Merrill, is a board member of RKO. How is to work with your spouse?

A: My wife is not only a very talented woman, but also a very wise woman and I rely on her for advice. She's vice chairman of the board and she's the second largest stockholder. If you have the right kind of partner it's the best thing in the world.

Interview: Ted Hartley

Title: Chairman and chief executive

Organization: RKO Pictures

Born: Omaha, Neb., 1935

Education: Bachelor of Science in engineering, U.S. Naval Academy; MBA from Pepperdine University

Career Turning Point: Leaving the Navy after an accident in an F-11 aboard an aircraft carrier in 1964.

Most Admired People: Former U.S. Navy Admiral and current Microsoft Corp. executive Bill Owen; wife, Dina Merrill

Personal: Married, one son, two grandchildren

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