LIVE Entertainment Inc.

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LIVE Entertainment Inc.

15400 Sherman Way, Suite 500
Van Nuys, California 91406
U.S.A.
(818) 988-5060
Fax: (818) 908-9539

Public Company
Incorporated: 1988
Employees: 119
Sales: $140.1 million (1996)
Stock Exchanges: NASDAQ
SICs: 7812 Motion Picture, Video Tape Production; 7822 Motion Picture, Video Tape Distribution

LIVE Entertainment Inc. is one of the leaders in independent film production and videocassette distribution in the United States. Located in Los Angeles, California, LIVE was founded in February 1988 by former RCA employee Jose Menendez when he merged Lieberman Enterprises Inc. and International Video Entertainment. Growth began almost immediately when, in March, LIVE paid more than $6 million to acquire part of Vista Organization Home Video Corporation and then brought in nearly $25 million when they liquidated their Video Technology Services division.

Rough Waters, 1989-91

This film distribution leader has had its share of troubles during its history, however. Overambitious and attempting to expand too fast, LIVE floundered when, in headlines that would shock not just the film and music world, founder and CEO Menendez and his wife Kitty were murdered in their Los Angeles home by sons Lyle and Erik in August 1989.

In the next few years following Menendez’s death, LIVE would fight an uphill battle to stay afloat. Running through capital at breakneck speed and operating at near debt capacity, the company continued to overreach itself with continued acquisitions through July 1991. LIVE, the parent company, picked up Strawberries Music, Movies & More (a chain of specialty retail stores) and Waxie Maxie Inc. (a specialty retailer of audio records and tapes, compact discs and video products) for approximately $54 million. The Lieberman subsidiary bought Navarre Corporation, a Minnesota-based company primarily engaged in the business of rackjobbing personal computer software, for $5 million, picked up over 80 percent of VCL, a distributor of home videos to the German-speaking worldwide market, for another $6 million in cash and $2.5 million promised, and acquired most of Vestron Inc. for another $21 million, leaving the subsidiary with debt of approximately $42 million. Some of that was recouped when LIVE sold most of Lieberman Enterprises Inc., including Navarre Corporation, to Handleman Co. for approximately $75 million. The bankruptcy of Ames Department Stores, a major account for LIVE, caused company writeoffs in 1990, hurting the company even more. And to top it all off, when Wal-Mart purchased Western Merchandisers in 1989, rackjobbers such as Lieberman were afraid that major disaffiliations would occur with outside rackjobbers.

Luckily, in what industry analysts would call “A Turtle Year,” LIVE shipped almost nine million copies of Teenage Mutant Ninja Turtles on videocassette, bringing in sales of approximately $27 million. Total Recall was released late in 1990 and brought another $6 million. The sales from these two films, combined with another $34 million in sales from their home video catalog in 1990, helped LIVE manage to stay alive long enough to file for Chapter 11 Bankruptcy in California in 1992, which was approved in 1993.

Corporate Leadership Turnovers

Operating capital was not the only thing flying fast and furious at LIVE. Corporate leaders played musical chairs for many years. In an attempt to stabilize the management hierarchy after Menendez’s death, Wayne Patterson, former chairman of Pace Membership Warehouse, was hired as CEO and Theodore Bean as CFO in 1990. It was hoped that the experience Patterson had in turning Pace around and selling it to Kmart would work for LIVE.

In what Forbes’s Lisa Gubernick would call “a revolving-door executive suite,” two other CEOs and assorted other officers attempted to steer LIVE in the right direction before Iowa-born accountant Roger Burlage left competitor Trimark Pictures in 1994 to head LIVE as its new CEO. He decided to “get the company back to its core business” and began unloading dead weight. In August of that same year, Ivan R. Lipton, president of the Strawberries subsidiary of LIVE, along with 15 other subsidiary leaders and Castle Harlan Inc., purchased the Specialty Retail division of 155 stores for $35 million. Burlage also cleaned house, removing high-ranking officials such as LIVE Home Video’s president David Bishop and vice president of sales and marketing Stuart Snyder and bringing in new figures such as Vision International’s Elliott Slutzky and Epic Home Video’s Jeff Fink to replace them. Other people such as Tim Landers and Ronald B. Cushey were brought in about this time, too, to take the positions of head of national sales for rental videos and CFO, respectively. Many of the people Burlage brought in have remained at LIVE to this day.

In what experts predicted could have been a financial disaster, LIVE, in 1991 in an effort to grow vertically, offered a merger with independent film production company Carolco, which already owned approximately half of LIVE in the early 1990s and with whom LIVE had been doing business for a number of years. Carolco, suffering from underperformance of its films, despite its success with Total Recall, had an operating debt of $230 million and would have benefitted greatly from the merger, but LIVE would have been hard-pressed to keep the ailing production company alive. In 1994, under Burlage’s direction, the merger plans fell apart, an event which proved to be fortunate for LIVE since Carolco later filed for bankruptcy and was liquidated.

Better Times

Although the company’s corporate headquarters suffered nearly a quarter million dollars in damage from the 1994 Los Angeles earthquake whose epicenter was a mere six miles from their building, LIVE bounced back under Burlage’s guidance. LIVE Interactive was formed in October of that same year to produce CD-ROM titles, the first being Angels: The Mysterious Messengers, capitalizing on the sudden boom in popularity of angel merchandise and literature. The year 1995 saw LIVE Interactive entering into a partnership with Enteracktion for further development of CD-ROM projects. The LIVE International division was also created in 1994 for feature film financing and distribution around the world. The Avid Home Video division, in association with Ikegami, introduced a new video camera the same year at the annual convention of the National Association of Broadcasters in Las Vegas. The camera did not use tape and had editing capabilities.

In addition to dropping many of their money-eating subsidiaries, Burlage also drove the company to buy the rights to films more selectively. Beginning in 1995, instead of buying “B”-rated films indiscriminately, LIVE purchased the rights to films such as Wagons East, a comedy-western which featured John Candy in his final appearance prior to his untimely death, and Stargate, the science fiction action film starring Kurt Russell, James Spader, and Oscar-nominee Jaye Davidson, which shipped one million units for sale and almost another half-million for rental. When LIVE obtained the rights to The Terminator from financially-distraught Hemdale Inc., they combined it with Terminator 2, which it already owned and had set a record with when it shipped 700,000 units, and created “Collector’s Packs” and within a very short time sold a half-million copies at $24.98; the first three movies in the Rambo series sold a quarter-million copies at $29.94. Indeed, 1995 was the first year since Menendez’s death that LIVE once again showed a profit, bringing in almost $9 million on sales of about $150 million from a loss of $180 million in 1994.

The following year, 1996, LIVE picked up The Substitute, starring Tom Berenger; The Arrival, starring Charlie Sheen; Maybe... Maybe Not\ Phat Beach; and Trees Lounge, starring Steve Buscemi. LIVE Home Video distributed 240,000 copies of Cutthroat Island, directed by Renny Harlin and starring Geena Davis and Matthew Modine, which set a new record for video sales of features having earned $10 million or less at the box office. And in the first few months of 1997, LIVE had already acquired the rights to distribute Critical Care, starring James Spader, Kyra Sedgwick, Helen Mirren, Anne Bancroft and Albert Brooks, directed by Sydney Lumet; Suicide Kings, starring Christopher Walken, Henry Thomas, Sean Patrick Flannery, Jay Mohr and Johnny Galecki; Wes Craven’s Wish-master, Gentlemen Don’t Eat Poets, starring Alan Bates, Theresa Russell, and Sting; Dead Men Can’t Dance, starring Kathleen York, Michael Biehn, and Adrian Paul; and Australian film Hotel de Love.

Company Perspectives:

LIVE Entertainment Inc., headquartered in Los Angeles, California, is a diversified entertainment company organized to develop, produce, market and distribute pictures on a worldwide basis via distributors internationally and direct domestic distribution. LIVE acquires and finances the production of projects from independent producers as well as acquires distribution rights to projects in various stages of completion.

LIVE Family Home Entertainment (FHE) has become one of the most successful distributors of high-quality family entertainment. In early 1997, FHE had already distributed an animated special called The Littlest Angel based on the bestselling children’s book of the same name, LIVE International distributed Washington Square and LIVE Interactive released CD-ROMs The Arrival, based on the theatrical motion picture of the same name; Speedracer, a fast-paced game based on the classic animated television series broadcast in over 60 countries; Radical Rick, an interactive adventure based on the popular comic book character who goes everywhere on his bicycle, and The Dream. FHE also holds the rights to a musical animated feature based on Tom Sawyer, Princess Gwenevere and the Jewel Riders, the world-famous Hello Kitty and Friends, Phantom 2040, Highlander: The Series, Littlest Pet Shop and Flash Gordon. Christmas classics such as Rudolph the Red-Nosed Reindeer, The Little Drummer Boy, and Frosty the Snowman also top the charts every year and FHE has added A Monster Christmas, The Moo Family Holiday Hoedown, and Santa’s Christmas Crash.

In late 1996 and early 1997, LIVE, along with longtime competitor Trimark Pictures and newcomers DreamWorks, Polygram, and a revitalized Orion Pictures, in a risky move, geared up for theatrical distribution of films. Such companies as New World, Savoy, National General, DEC, Hemdale, AFD, AIP, Hammer Films, and Interstar had already tried that route only to fall by the wayside and the three companies still operating in that market, New Line, TriStar, and Miramax, have all been purchased by the major studios.

Future Predictions

Despite its ups and downs, LIVE continues to hold the rights to an outstanding stable of films in addition to those already mentioned, including Academy Award-winning film The Piano, plus others such as Dirty Dancing, LA. Story, The Doors, Basic Instinct, Reservoir Dogs, Bad Lieutenant, The Crying Game, Light Sleeper, Air America, Mountains of the Moon, Narrow Margin, Jacob’s Ladder, Johnny Handsome, Music Box, The Arrival, and Paula Abdul: Get Up and Dance. At the time of this writing, LIVE was in negotiations with investor group Richland, Gordon & Co. to be acquired, ensuring its future as a leader in film production and distribution, although, perhaps, under another name.

Principal Subsidiaries

Chatter Inc.; Lieberman Enterprises Inc.; LIVE America Inc.; LIVE Film and Mediaworks Inc.; LIVE Ventures Inc.; Silent Development Corp.; Tongue-Tied Inc.; Vestron Inc.