Dreamworks: Why the dream team became a nightmare

There was a colourful addition to the annals of Hollywood history last week, when it was reported that a young Russell Crowe once telephoned a producer of his breakthrough film, Gladiator, at 3am, in order to utter the immortal words: "You motherfucker! I will kill you with my bare hands!"

Crowe issued the threat, we were told, during a row over the meagre salary that his team of personal assistants were being paid. Shortly after, it was claimed, the unfortunate producer, a 77-year-old Holocaust survivor called Branko Lustig, phoned Steven Spielberg in Los Angeles and asked to be removed from the project.

Everyone loves a good tale of superstars behaving badly, particularly when it involves swear words, diva-like behaviour, and just a hint of life imitating art. So after being plastered across the muck-raking Hollywood website Defamer, Crowe's epic sense-of-humour failure made headlines around the world.

Yet behind the scenes, deeper intrigue was brewing. For Defamer's story had been plucked from an advance copy of The Men Who Would Be King, a 400-page history of DreamWorks by Nicole Laporte, a former Variety writer who spent almost a decade following the headline-prone film studio and its high-profile bosses.

While tales of actors like Crowe throwing hissy fits are relatively commonplace – think Christian Bale and his tape-recorded threat to "thrash the lights" of a hapless lighting technician – Laporte's book, which came out on Tuesday, promised something rarer, and more juicy: a chance to explore the dirty laundry of three of Hollywood's untouchable moguls: Spielberg, Jeffrey Katzenberg and David Geffen.

The hard-nosed trio founded DreamWorks in 1994, on a wave of hype and a stated aim to become the most exciting and far-reaching brand in entertainment, throwing artists to the forefront of the process by which live-action films, animations, TV dramas, and video games were developed and brought to the masses.

But instead, their firm waxed and waned, producing plenty of misses along with the hits, and shutting down many of its unprofitable arms. Today it's but a fractured version of the vast media empire its founders envisioned. Katzenberg runs Dreamworks Animation, a publicly-owned company. Spielberg has Dreamworks Films, a separate firm largely owned by Indian investors. Geffen is out altogether.

Laporte's book attempts to make sense of this tale of failed ambition, peeking inside the private jets, status-symbol offices and Beverly Hills mansions of the firm's three founders in an effort to explain how their considerable talents failed to make the big idea properly fly.

It was quite a challenge, she says, since Spielberg, Katzenberg and Geffen are famously protective of their public image. Though tales of their alleged temper-tantrums and personal eccentricities have been whispered about in industry circles for a generation, few journalists have ever been allowed to rake over them.

Laporte was frustrated in her efforts to interview them (Katzenberg warned every potential source he knew not to talk to her, she claims). But she did manage to speak with around 200 different insiders, who took sometimes extreme precautions to remain anonymous.

"One person agreed to talk to me at a Malibu restaurant one weekend," she said yesterday. "When I showed up he came running out saying someone he knew was inside. He told me to get in his car, and for two hours we just drove up and down the coast; he talked and I took notes."

DreamWorks was always an exciting ride. When it was founded, in 1994, it was Hollywood's first new studio for 60 years, and embraced a revolutionary principle that had not been seen since Douglas Fairbanks and Charlie Chaplin founded United Artists in 1919: that creative staff would hold sway over the men in suits.

Geffen, a billionaire music impresario, was to be the firm's deal-maker. Katzenberg was its relentless head honcho, in charge of day-to-day operations. Spielberg, the mysterious and obsessive movie-maker, was the resident artist, who would add star-wattage to the boardroom.

Ten separate divisions were to be created, including a physical film-production studio, live action and animated film labels, a TV station, a video-game company, and a music label. Staff would get free food, and address each other by first names. Paul Allen, the Microsoft founder, stumped up $500m of venture capital. It was the most ambitious and forward-thinking Hollywood venture in a generation.

Yet somehow, the three founders never quite meshed. Laporte accuses the frenetic Katzenberg, in charge of Dreamworks Animation, of micro-managing expensive flops like The Road to El Dorado, Sinbad and Spirit. With the exception of Shrek (which returns to cinemas for a fourth time this summer), the firm never enjoyed the commercial success of rival Pixar, and was floated to raise much needed capital in 2004.

Geffen, a famously robust personality, would have been what Laporte calls "a great solo artist" but like many a man used to getting his own way, struggled to work in a "supergroup" environment where he was one of three major stars. Spielberg was often busy with outside projects.

That's not to say that the firm failed on every level. After a stuttering start, it enjoyed a golden run in the late 1990s, when it turned out the Oscar-winning films Saving Private Ryan, Gladiator and American Beauty, which due to its quirky nature and small ($15m) budget is often described as the quintessential DreamWorks film.

Yet the business suffered from lavish corporate spending habits. Unprofitable arms had to be closed, or sold off. The video-games wing was axed. A planned film-production studio was abandoned, after eating up tens of millions of dollars. At one point, Allen was forced to stump up an additional $200m to ward off bankruptcy.

In 2005, the live-action wing of DreamWorks was sold to Paramount, where it remained until last year, when Spielberg again took the firm into private ownership. Ironically, given the fact that big studio ownership runs counter to its founding principles, it enjoyed some of its most profitable years there, producing Transformers, Indiana Jones and Tropic Thunder.

Laporte captures every tantrum and wrong turn in the firm's story. We even hear how Spielberg told the then TV star George Clooney that he might make it big in films, provided he "keeps his head still".

We also learn how, while all three of the founders eventually made small profits when parts of the firm were sold, many of their staff (who had often taken large pay cuts to work in an "artist friendly" environment) failed to share in the wealth. Sam Mendes, whose American Beauty made $350m, made (after taxes and fees) just $32,000 from his initial wage for directing the film.

As for Russell Crowe, Laporte adds that he twice walked off the set of Gladiator because he thought his line, "I will have my vengeance, in this life or the next!" was "overwrought puffery". Ridley Scott, the film's director, eventually persuaded him to stay, and the phrase ended up helping him win a Best Actor Oscar. Proof that, as with so much else of the DreamWorks story, big cheeses aren't always right.

We three kings: Spielberg, Geffen and Katzenberg, behind the scenes

Steven Spielberg

He's the father of the modern blockbuster, and one of the most famous men in show-business, so Steven Spielberg could perhaps be forgiven for filling his home and office with the sort of extravagant security technology you'd normally expect to find in a Bond villain's lair.

A never-used motorcycle is always parked outside Spielberg's office, Laporte alleges, "so that, in the event of the unthinkable, he has a getaway." Employees are kitted out with "survival kits, including jump suits, gas masks, and other essential emergency gear" in case of a natural disaster, or terrorist attack.

His properties are scattered with rocks containing hidden microphones, which allow him to communicate with staff, she adds. Above his desk, he keeps a plexi-glass half-moon dish, so that sound does not reverberate and phone calls remain private. Assistants like to call it his "dome of silence".

"His passion for secrecy sometimes suggests a burgeoning near-paranoia," claims Laporte. A spokesman for Spielberg says otherwise: "This description is so far from the real world of Steven that it doesn't deserve a comment."

David Geffen

Laporte describes Geffen as the firm's "heavy", talented at hammering out tricky business deals, and devoted to looking after the company's music label.

She adds to the folklore about his robust personality by claiming that he sometimes used his standing in the Forbes rich list to win arguments. In business meetings, she claims the veteran impresario would joke to people who disagreed with him: "I didn't get to be the 32nd richest man in America for nothing!"

Years before he started DreamWorks, Geffen famously told the producer Julia Phillips that Spielberg was: "selfish, self-centred, egomaniacal, and worst of all, greedy." At the firm, his flamboyant way with words endured. He once allegedly joked that a test audience who'd enjoyed the musical 'Dreamgirls' was unreliable because the room contained: "all fags and old people!"

Jeffrey Katzenberg

The workaholic studio executive toils seven days a week and expects similar commitment from his staff. He once introduced himself to a team of animators by joking: "everyone thinks I'm a tyrant. I am a tyrant. But I'm usually right!" He also has an unfortunate habit of wearing ironed jeans.

Katzenberg keeps a team of three secretaries and makes 150 phone calls a day, according to Laporte. Despite this, he's never won an Oscar. After 'Shrek' (below) was shortlisted for Best Animated Feature in 2001, pundits wondered if he'd be named by DreamWorks as the official nominee. But that honour went to producer Aron Warner.

Despite his tough manner, Katzenberg can be thin-skinned. When 'LA Times' show-business correspondent Claudia Eller criticised his films 'Prince of Egypt' and 'The Road to El Dorado', Laporte says he marched into the newspaper's offices and presented the editor with a stack of "negative" articles Eller had written, in an effort to get her muzzled.

For further reading:

'The Men Who Would Be King' by Nicole Laporte

'The Operator: David Geffen Builds, Buys, and Sells the New Hollywood' by Tom King

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