How Disney sort-of crowdfunded its 80s and early 90s films

The unusual way that Disney financed its 1980s and early 90s slate of films, including 1990’s Warren Beatty-starring Dick Tracy.

Dick Tracy was often seen as a turning point in Disney’s movie strategy of the 1990s. Headlined and directed by Warren Beatty, the 1990 comic book movie saw the then frugal film studio dipping its toe into expensive blockbuster territory, and hoping to follow in the footsteps of the previous year’s juggernaut, Batman.

For Disney, spending $46m on a single movie – the production budget of Dick Tracy – was pretty much unheard of. To spend at least the same again promoting the thing? It’d be the last studio in town back then to do that. Whilst this was the same year Fox was throwing $75m at Die Hard 2, and Carolco was happy to stump up $65m for Total Recall, these were the kind of numbers that had Hollywood trade reporters looking on in horror. ‘How could a movie that cost so much ever make a profit?’ went the line.

Disney had stared down the abyss of this with Who Framed Roger Rabbit in 1988, as its complex mix of live action and animation saw the negative price come in just shy of $60m. It hit big, though, and perhaps that emboldened the studio a little. Yet there was little getting away from the fact that the company’s live-action film unit was far more comfortable in the $15–30m per movie range, aiming for mid-market fare that didn’t require a summer tent-pole release.

Dick Tracy was a change indirection, and its failure to fully ignite at the box office would send Disney back into its financial shell for most of the decade. But what’s often overlooked is just how Disney raised that $46m to pay for Tracy in the first place. In fact, just how Disney was financing most of its movies at that time. Enter stage left, the Silver Screen Partners.

Silver lining

The story starts a few years previous. In 1982, a broker by the name of Roland W Betts– working for stockbrokers EF Hutton – came up with a limited partnership idea. Going under the name Silver Screen Partners, it would allow investors to put their funds into motion pictures, with the guarantee that they’d get their financial returns before the studio took its profits.

In many ways, it was an ahead-of-the-game piece of thinking. By the 2000s, many studios would be looking to share the costs and the risks of major movies by bringing in co-funding arrangements. In the 1980s, Silver Screen Partners got there first, initially raising funds for planned film productions by HBO, which was just looking to break into movies. Whilst HBO didn’t get all of the upside if it had a successful hit, it was hardly betting the house on a film either, given that someone else was helping to foot the bill.

The first limited partnership thus launched in 1982, and people quickly jumped on it. Heavily oversubscribed, 13,000 investors pumped in $83m. That $83m in turn first funded the western Flashpoint, released in 1984 and starring Kris Kristofferson and his facial hair.

Perhaps the highest-profile of eight films that the first lot of Silver Screen Partners sunk funding into was 1986’s The Hitcher, starring Rutger Hauer. Others included the Judge Reinhold-led comedy Head Office, Patsy Cline biopic Sweet Dreams, and the Tom Hanks-headlined Volunteers. There were no breakout hits there, but there was proof that the model was working. HBO had mitigated its risk; investors had earned their investment money back. And there was appetite for more.

Round Two

HBO thus wanted to press ahead with a second round of investment, and Wall Street too wanted to open up the opportunity to directly fund movies to more people. Yet around Hollywood, people had taken notice of what was going on. The movie business was seen as increasingly risky – this was the decade when Coca-Cola opted to buy a movie studio (Columbia) and would be spooked enough by its losses to sell up within a few years to Sony. Furthermore, films were getting more and more expensive. Here then was an answer of sorts: a sizeable pot of funding that could be drawn on, and others wanted it.

Thus, whilst HBO may have wanted to do a second round, Roland W Betts’s head was understandably turned when Disney got interested. Disney hadn’t had a good run of live action movies in the first half of the 1980s, and it had opted to hire two executives from Paramount – Michael Eisner and Jeffrey Katzenberg – and the late Frank Wells from Warner Bros to turn the company in a new direction. Between them, the trio had been involved in hits such as The Exorcist, Indiana Jones And The Temple Of Doom, Beverly Hills Cop and Superman II. Whilst Disney had enjoyed some decent films of its own in that period, the likes of Tron, Dragonslayer, Herbie Goes Bananas, and The Black Hole were more liked than watched at the time. Disney’s film division had been experiencing dwindling profits throughout the first half of the 1980s, and slipped into loss in 1983.

But eyes were opened when 1984’s Splash– starring Tom Hanks and Daryl Hannah – then hit big, just as the new trio were settling into their offices. Astonishingly, as Variety reported at the time, this was Disney’s first big box office hit since 1964’s Mary Poppins. Katzenberg, Eisner, and Wells moved quickly to turn that around, and changing the way Disney’s films were financed was part of that.

Exclusive

Silver Screen Partners II then was exclusively, to HBO’s disappointment, a Disney affair. The new Disney regime was looking for around $150m to invest in 10 to 15 movies. The idea was that Silver Screen Partners II would put in around a quarter of the funds for those films, and in turn Disney could swiftly increase its output. The differential for the investors was that they had no input into Disney’s output outside of writing cheques, whereas HBO had allowed influence over its slate. Not so here.

No worries, though. For Richard F Williams,working as a broker at EF Hutton, the Disney name rocket-fuelled interest from its side of the fence. “The name Disney is magic,” Williams told the Chicago Tribune. “It attracts a lot of interest in Florida,” adding “it’s an excuse to go to a Disney film and say you own this.”And that goes to what was different about the Silver Screen investment opportunity too. The vast majority of limited partnerships that had been set up for feature film funding only went out privately. Here was early crowdfunding at work: a public chance to put money into a film, irrespective, to a degree, of whether you had millions in your bank account.

Over 20,000 took advantage of that second round, and it brought in $193m that Disney quickly set about spending. Of the 15 films that it helped fund, there were quite a few that have long been forgotten, such as Baby: Secret Of The Lost Legend starring William Katt and Sean Young, or an early John Cusack movie, The Journey Of Natty Gann, starring Meredith Salender. There’s also one of Disney’s most infamous movies, the dark animated fantasy The Black Cauldron, which holds the uncomfortable distinction of being the film that very nearly got the animation unit shut down (but that’s one hell of a story for another time).

But this time, there were successes too, and the new regime got some hits in relatively quick time. Return To Oz, The Color Of Money, Down And Out In Beverly Hills, Ruthless People, Stakeout, and Tin Men were in that raft of films, and some of them struck gold at the box office. By sharing the risk, Disney could afford to throw more darts, and it quickly decided it wanted to return to the Silver Screen Partners idea.

Round three

This, again, put HBO’s nose out of joint. The initial Silver Screen offering had “put us in the movie business in a big way,” the company’s head of film production at the time, Maurice Singer, told the Los Angeles Times. It had been looking to tap into that third round of funding once Disney had taken the second.

We like to think we paved the way for Disney,” Singer – not unreasonably – said. Even though Silver Screen Partners had much less control over the films with its Disney deal – described as a passive partner, and far more hands-on with HBO – there was little doubting that round two’s movies had been bigger than round one’s. HBO was out of luck.

Silver Screen Partners III would, once again, be exclusive to Disney, and the most successful funding round of all. Buoyed by the studio’s successes, $300m was raised. That helped pay for 19 more movies, and the hit rate was increasing. The aforementioned Who Framed Roger Rabbit got over the line because of the fund, along with Three Men And A Baby, Cocktail, Big Business, Good Morning Vietnam, and Honey, I Shrunk The Kids. That’s some return.

But here’s where it started to get more complicated; by this stage, Silver Screen Partners was part-funding the bulk of Disney’s slate, and the fourth and final offering – that put up a chunk of the funding for animated blockbuster Beauty And The Beast– would bring a parting of the ways. The reason? The whole idea had become too successful, and Disney’s head had been turned by other funds offering them a better deal.

The studio hitched its wagon instead to what it called Touchwood Pacific Partners I, which the Los Angeles Times described in October 1990 as “the main source of finance for all live-action films at Disney’s three studios – Disney, Touchstone and Hollywood Pictures.” Crucially, and as the name suggested, this time the idea was to look outside of America for funding – with the new partnership drawing funds primarily from eager Japanese investors. As Disney’s spokesman at the time, Erwin Okun, declared: “the whole film business has been becoming more global. And, frankly, the Japanese provided better terms.

Some 30 films later, things wound down by the end of 1993, after a decade where Disney had rediscovered the art of getting a hit movie. Ironically, it was about to start a smaller live-action drought of sorts, whilst its animation arm entered its second golden age.

The funding model too would alter, as Hollywood looked overseas for production capital. Over the ’80s and ’90s, the studios ceased to be owned by California-based companies, so different funding pots opened up from overseas owners and investors with much deeper pockets.

Disney wasn’t one of those who sold up: but it did change. And, following its Dick Tracy peek above the parapet, when it did once again venture into expensive blockbuster cinema, with the $75m 1997 action favourite Con Air, it would pay the bill itself. Put the money back in the box…

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