Strapped Orion Shifts Executives in Attempt to Attract Investors

Financially troubled Orion Pictures Corp., in a major executive shift designed to attract new investors to the company, on Tuesday named William Bernstein president and chief executive and moved studio founder and Chairman Arthur Krim to a largely ceremonial post.

The realignment signals majority owner John Kluge’s intention to stick with existing Orion managers, rather than appointing new executives, Kluge associate Stuart Subotnick said.

Subotnick added that Kluge no longer wants to sell his 70% stake in the movie and television studio. “Orion has needed a little revitalization and reorganization financially. In order to get the latter done, revitalization had to come first,” Subotnick said in a telephone interview Tuesday.

Krim, who will be 81 years old Thursday, was named to the newly created post of founder chairman of Orion. He remains chairman of the executive committee. But people close to the studio say that the executive, who once wielded considerable influence in Hollywood and Washington, has stepped aside from day-to-day operations.

Eric Pleskow, 66, who was previously Orion’s president and chief executive, was named chairman, succeeding Krim.

Bernstein, 57, previously Orion’s executive vice president, is a longtime associate of Krim and Pleskow and has been involved with Kluge’s attempt to recapitalize the company.

In other management changes, David Forbes, president of Orion Pictures Distribution Corp., and Marc Platt, president of Orion Pictures Productions, were made executive vice presidents.

Orion has enjoyed enormous success with two recent films, “Dances With Wolves” and “The Silence of the Lambs.” But the studio continues to suffer under a $509-million debt burden that piled up as the company’s films underperformed in past years.

While searching for new investment, Kluge has flirted with arrangements that would have replaced Orion’s existing management team. One such plan, which would have given key management positions to Alan Horn and other co-owners of Castle Rock Entertainment, collapsed last month. Under the Castle Rock arrangement, Orion would have received new capital from outside sources, but Kluge would have given up a major portion of his control over the studio.

Kluge owns his Orion stake through Metromedia Co., a New Jersey-based concern. Both Metromedia and Orion have retained Salomon Bros., a New York investment banking firm, to search for new investors, and Metromedia had said it was considering a sale of its stake.

People close to Orion say that potential investors from Japan and elsewhere have continued to look at the company, although none has yet come up with a satisfactory recapitalization plan.

“The pitch is now, ‘Let’s stick with the home team,’ ” said one person close to Orion. That person said he expected Kluge to stick with the newly aligned management team for at least a year.

Harold Vogel, a securities analyst with Merrill Lynch, said the moves indicate that Metromedia plans to “tough it out.” But he questioned where the company goes from there.

“It’s a logical progression,” Vogel said. “I don’t think anyone can see it as anything but positive. But that doesn’t address the question of how you finance a whole slate of movies and how you survive in a liquidity-starved environment. The real question is where do they get the money? Their bankers obviously have already looked high and low to smoke out a buyer.”

Strapped for cash to meet debt payments, Orion was recently forced to auction off one of its most promising productions, “The Addams Family,” to rival Paramount Pictures for $20 million.

Kluge has also kept Orion afloat by taking a direct financial interest in at least one of his own films. He received a significant percentage of the profits from “Mermaids” in return for a $23-million cash infusion.

Orion’s problems have been mitigated by the strong performance of “Dances With Wolves,” which has taken in more than $144 million at the box office and received an Oscar for best picture. “The Silence of the Lambs,” another Orion hit, has taken in $87 million at the box office since its release earlier this year.

Krim, who is three years older than MCA Inc. Chairman Lew R. Wasserman and every bit his equal as a political player in Washington, was the oldest reigning chairman of a major film company.

He and other United Artists Corp. executives founded Orion in 1978. The mini-studio earned a reputation for quality in its early years as the home of Woody Allen and other respected filmmakers. It also enjoyed box office success with “Amadeus” and “Platoon.” But a string of recent flops that included “State of Grace” and “Hot Spot” left the company bleeding.