TLDR;
This video explores the rise and fall of Synergy, an independent film production company that partnered with Disney in the early 1990s. It covers Synergy's ambitious beginnings, its struggles with high-budget films, its brief success with "Die Hard with a Vengeance," and its eventual liquidation due to financial difficulties and changing industry trends.
- Synergy was founded by Andrew Vajna after selling his stake in Carolco.
- The company aimed to produce big-budget "event films" but faced challenges with rising costs and slow development.
- Despite a distribution deal with Disney and a major hit with "Die Hard with a Vengeance," Synergy struggled with flops and financial problems.
- Internal issues, an IRS investigation into Vajna's finances, and Disney's shift in strategy contributed to Synergy's downfall.
- The company's legacy includes its involvement in films like "The Matrix" and "Armageddon," as well as its role in Disney's corporate expansion.
Disney and Vajna's Synergy Formation [0:21]
In the late 1980s, Disney experienced a resurgence, forming Touchstone Films in 1984 to target adult audiences and later establishing Hollywood Pictures. By 1987, Disney was the second-highest-grossing film studio and aimed to release 24 films annually across its labels. Meanwhile, Andrew Vajna, after achieving success with "First Blood" at Carolco, sold his stake in 1989 for $100 million to start Synergy. In the summer of 1990, Synergy secured an exclusive deal with Disney, committing to distribute 25 of Synergy's films, with Disney financing a third of each film's budget in exchange for distribution rights in North and South America.
Synergy's Early Investments and Industry Challenges [2:01]
Synergy quickly invested in high-profile projects, acquiring Tom Schulman's "The Stand" for $2.5 million and Joe Eszterhas' "Original Sin" for $1.5 million. However, the film industry was changing, with rising salaries for talent increasing film budgets and decreasing profits for major studios. In January 1991, Disney's Jeffrey Katzenberg urged the studio to avoid the "blockbuster mentality," suggesting co-financing deals with smaller companies to lessen risk while still benefiting from potential successes.
First Film "Medicine Man" and Financial Struggles [4:30]
Synergy's first film under the deal, "Medicine Man," was released in February 1992 through Hollywood Pictures. Despite a $40 million production cost, the film barely recouped its budget domestically. Synergy had acquired rights to "Super Mario Brothers" for $40 million but was behind schedule, having only produced one film in nearly three years. By mid-1992, the company downsized, laying off 20 employees, while Vajna's former company, Carolco, thrived with blockbuster hits.
Co-financing "Die Hard 3" and More Film Releases [5:43]
In the summer of 1992, Synergy and Disney co-financed "Die Hard with a Vengeance" with 20th Century Fox. Synergy had two high-profile films scheduled: "Super Mario Brothers" and "Tombstone." "Super Mario Brothers" failed critically and commercially, and by 1993, Synergy had reportedly lost $27 million. "Tombstone" was released through Hollywood Pictures and became a moderate box office success.
Synergy Goes Public and Releases "Renaissance Man" [7:38]
In the spring of 1994, Synergy announced it would go public to raise funds. Despite skepticism from Wall Street, Synergy's positive first-quarter earnings, driven by "Tombstone," helped attract investors. Disney bought 10% of the shares, with Vajna retaining 60% ownership. Synergy aimed to release two to four event films annually with budgets of at least $40 million. The first release after the IPO was "Renaissance Man," which flopped.
More Film Failures and Financial Difficulties [8:55]
Synergy's next film, "The Color of Night," faced production problems and was a critical and commercial failure, winning a Golden Raspberry Award. The company continued due to home video sales of "Tombstone" and foreign distribution revenues. In April 1995, Synergy sold 3 million shares of stock, raising $23.5 million. Synergy acquired Mass Illusion, a special effects company, and began work on "Judge Dredd."
Success of "Die Hard" and Failure of "Judge Dredd" [10:31]
In May 1995, "Die Hard with a Vengeance" was released and became a major success, grossing $366 million worldwide and becoming the highest-grossing film of the year. However, "Judge Dredd" was a critical and commercial disappointment, leading to an $18 million loss for Synergy in the first nine months of 1995. Synergy's stock dropped from nearly $11 per share to $4 per share.
More Film Failures and Financial Concerns [11:53]
"The Scarlet Letter" and "Nixon" were critical and commercial failures. Despite Vajna's claims of low overhead, blockbuster film budgets and marketing costs had increased, making Synergy's pre-selling model unsustainable.
IRS Investigation and Disney Cuts Back [13:29]
In January 1996, Andrew Vajna was under investigation for federal tax evasion related to his time at Carolco. The IRS claimed Vajna and his wife owed $41 million in back taxes and penalties. Synergy's stock fell by 32% after the story went public. In June 1996, Disney announced plans to cut back its live-action production slate, impacting Synergy's distribution.
Synergy Explores Sale and Continues Operations [15:20]
Synergy explored putting itself up for sale, with its stock dropping to $2 per share. Disney considered acquiring Synergy as a subsidiary. Mass Illusion took on outside projects, and Synergy continued developing films, including "An Alan Smithee Film: Burn Hollywood Burn" and "The Broadway Brawler."
Release of "Evita" and Cancellation of "Broadway Brawler" [16:18]
"Evita" was released in December 1996 and became Synergy's second-highest-grossing film, earning around $150 million worldwide. However, in March 1997, production on "Broadway Brawler" was halted due to a dispute between Bruce Willis and director Lee Grant. Disney paid off Synergy's $17 million investment, and Willis agreed to star in several films for Disney at a reduced rate.
Final Troubles and Dissolution [18:07]
"Shadow Conspiracy" was a commercial flop. Synergy faced scrutiny for excessive executive pay, including payments to Vajna for office rent and air charter services. Synergy surrendered its film library to Disney and sold its stake in "Die Hard 3" to 20th Century Fox to settle a $38 million debt. The company liquidated, with shareholders receiving only $2.30 per share.
Synergy's Final Films and Legacy [19:36]
Synergy's last two films, "Deep Rising" and "An Alan Smithee Film: Burn Hollywood Burn," were commercial flops. Synergy failed to fulfill its 25-picture contract with Disney. Mass Illusion was renamed Manx Visual Effects and contributed to "The Matrix." Bruce Willis starred in "Armageddon" and "The Sixth Sense" for Disney, achieving significant success. Disney reduced live-action film production and shut down Hollywood Pictures. Vajna paid $6.5 million in back taxes and formed C2 Pictures with Mario Kassar, producing "Terminator 3: Rise of the Machines."
Reasons for Failure and Final Thoughts [22:01]
Synergy entered the film industry at a challenging time, with rising film budgets and leveling revenues. Vajna's strategies were incompatible with the changing industry. Synergy produced films that left a mark on popular culture and played a role in Disney's corporate expansion.