How two once-hot producers stopped getting action - Mario Kassar and Andy Vajna seduced stars, spent oodles of cash, and blew up a lot of stuff, including their own white-hot careers

By Daniel Fierman
Updated April 30, 2004 at 04:00 AM EDT

When Terminator 3 opened last summer, jaws dropped all over Hollywood. Not because the future governor of California was in it. Or because the franchise still proved so lucrative. No, people in the industry were flabbergasted for just one reason: Mario Kassar and Andy Vajna had produced it.

A dozen years ago, Kassar and Vajna were names that could open doors. But by 2003, half the town thought they were dead, and the other half figured they were probably in self-imposed exile. That’s the kind of reputation you get when you find yourself at the center of one of the great flameouts in Hollywood history.

Back in the day, Kassar and Vajna ran a company called Carolco, and produced just about every big, dumb, loud, profitable action movie in town. They were the money, if not the minds, behind Terminator and Rambo, Basic Instinct and Total Recall. They spent wildly on unworkable projects and unmentionable extravagances. They jacked up star salaries in a way that still causes studio executives to curse bitterly. And their company imploded in a debacle of petty jealousy and bitter competition, not to mention federal investigations and bankruptcy proceedings. One lost everything, and the other waltzed off a rich man.

Here’s how it all went right. And then wrong.

It’s pretty much lost to history now, but there was a time when John Rambo was considered a serious literary figure. You can look it up. The New York Times hailed David Morrell’s 1972 novel First Blood as a wildly entertaining, and almost important, Vietnam-era novel.

Warner Bros. had tried to make First Blood with Clint Eastwood, with Steve McQueen, with Al Pacino, even with Dustin Hoffman. By the time a couple of producers offered to buy Warner’s rights for $383,000 in 1980, First Blood had more than 30 different screenplays and a toxic reputation. So the studio sold it, taking every cent that Mario Kassar and Andy Vajna had.

Kassar and Vajna had met four years earlier at the Cannes film festival. The two Europeans — Vajna was a Hungarian refugee, Kassar is Lebanese-Italian — hit it off immediately. ”I had been designing wigs in Hong Kong,” remembers Vajna, now 59. ”Then I got into movie theaters. Mario joined me here, and we started.” They struck a deal for an awful Roger Moore movie called The Sicilian Cross, buying the film for $130,000. Kassar flew to Asia and sold it for $220,000. And with 45 grand in profits apiece, they baptized their new foreign-sales venture. ”Carolco was a [defunct] Panamanian company,” explains Kassar, 52. ”We just bought the name. It means nothing.”

Kassar and Vajna showed an uncanny understanding of foreign markets at a time when most of Hollywood viewed the rest of the world as an uncharted sea of red ink. ”They knew the international distribution business so well,” remembers Alan Parker, who directed Angel Heart for Carolco. ”They figured out that 60 percent of the revenue of a film comes from outside the U.S. market. Andy and Mario personally knew all the worldwide local independent distributors.” Working out of a small office on Melrose Avenue with their desks facing each other and Vajna’s wife and Kassar’s girlfriend as secretaries, they quickly developed a reputation as experts in the field — and they made money. But they wanted to be more than just movie resellers.