TRaFoSW: Part 11

The Rise and Fall of Star Wars, Blog #11

7/12/2017
12 Comments


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Curt, Steve, John, and Terry

That fall, producer Rick McCallum was pleased when Lucas moved Lucasfilm Corporate, about 200 of us, to our new home: Big Rock Ranch, about five-minutes east of Skywalker Ranch. You could walk over the hills from one “ranch” to the other, past a little observatory with a telescope; I made the journey a couple of times, but it took about 20 minutes and traversed a path otherwise occupied by enormous horned cattle that didn’t look happy to see me.
We were the first occupants of Big Rock, a spectacular Frank Lloyd Wright–style compound, with an inner courtyard and fountains that formed an appropriate setting for a statue of Yoda, who was placed on a pedestal to greet visitors.
Inside a high-ceilinged foyer, bejeweled with an original Gustav Klimt painting, we could look through tall, elongated windows onto a lake. When we arrived, there was only a soul patch of water at its bottom. When the rainy season hit, the basin filled up quickly and a family of ducks moved in. An even sleeker and more robust cappuccino machine had been installed not far from the Klimt, where coffee drinks were again free. (This was part of a SF filmmaking tradition, I believe: the first iteration of American Zoetrope had imported an espresso/cappuccino machine from Italy.)
At first I shared an office with Leland Chee. Not long before I started, if an editor had wanted to know, say, what planet was the homeworld of an obscure alien species, they’d have to consult their mini-library of Star Wars reference books, which took time. So Lucy had decided to create a gigantic digital database for everything Star Wars, mostly in-world, but also containing a fair amount of real-world info. Leland was in charge of populating that Filemaker program. Consequently, every novel, short story, comic book, videogame plot, and roleplaying game went through his hands to make sure it fit continuity and so he could log its contents into his growing database.
I couldn’t have done my job without him, and was constantly asking him questions, which he patiently answered. Early on I noticed that Leland was not listed on the mastheads of LucasBooks, our imprint, which went into every book and comic book we did. I suggested to Lucy that he should be on the masthead, and she agreed. Leland chose his own title, and “Keeper of the Holocron” was born. (A “Holocron,” I learned, was a Jedi storage device for that Order’s arcane lore and wisdom. And Leland, if you read this, please correct any mistakes of my memory.)
After a few months, I was moved to an individual office and told I could choose which original licensing artworks would go up on my two designated walls. Because I was one of the last to move, the binder didn’t have much left, but I noticed way in the back a section called something like “Original Poster Art.” It was mostly still-lifes of flowers, but one had a written description that read something like, “American Graffiti—artwork.”
On schedule, a friendly operations person showed up with, improbably, Mort Drucker’s original artwork for the American Graffiti poster. I couldn’t believe it. As soon as he left, and for every day afterward, I studied the Graffiti collage—for Drucker had done his pen-and-ink caricatures of Richard Dreyfuss (Curt), Ron Howard (Steve), Paul Le Mat (John), Charles Martin Smith (Terry), Wolfman Jack, et al, individually, then cut them out and composed them to make the 27 x 41 one-sheet poster.
For years, visitors to my office were flabbergasted, but the Drucker was just part of Lucas’s vast art collection, which he shared with us, not realizing perhaps where certain paintings and drawings were winding up. (The second artwork in my office was the original painting for Clint Eastwood’s Escape from Alcatraz. It was suprisingly small, only about 10 by 16 inches high.)

Overlook Ranch

Lucas had paid for Big Rock Ranch (BRR) out of his own pocket and we were his beneficiaries. As at Skywalker Ranch, every amenity was supplied and more, from an underground parking lot to a sophisticated heating and cooling system made of enormous pipes plunging deep into the earth, which kept the compound’s interior cool in the summer and warm in the winter.
On either end of the main building were supplementary structures: to the east, a weight room with tiled showers and a day-care center. To the west, a footbridge spanned a lily pond populated with turtles, creating a picture that would have looked at home in a Monet painting. On the other side of the footbridge was a spacious cafeteria where one large wall was a mural in the style of Thomas Hart Benton depicting American industry. Next door was a company store and another state-of-the-art movie theater, with stadium seating, redwood paneling, and a giant screen. Of course it had a great sound system.
Big Rock was so grandiose and spacious, it felt empty; meeting rooms abounded and additional rooms were so large that it worked out to something like 1,000 square-feet per employee (visiting Japanese licensees simply couldn’t believe it; one group I toured around went hog wild in the company store, spending about $750 per person). BRR had been built for 350 people, but we were only about 200 and we were never at capacity. Anyone could walk down the building length-wise, along its 50-yard east-west corridor, without meeting a soul. Large windows on empty stairwells stared eerily onto the still waters of the lake. Some began referring to our new luxury digs as “The Overlook,” after the haunted hotel in Stanley Kubrick’s The Shining (taken from Stephen King’s novel), and it caught on.
But this is not to knock it. We may have been, some of us at least, the happiest corporate serfs on the planet.
All of this extravagance didn’t come cheap, however. Word was that BRR went way over budget. And because Lucasfilm was between prequel movies, a big layoff was said to be in the cards. At a company meeting in our new Big Rock theater, one executive made what would become a notorious claim, promising that no one “important” would be let go.
Substantial layoffs were announced shortly thereafter, and many people were let go, all of whom considered themselves “important.” Lucasfilm was not immune to corporate greed or folly, and in this instance proved itself to be like any other company, for we’d staff up a year or so later. Of course the layoffs were also an excuse for a few execs to get rid of those they considered dead weight. On the positive side, licensing did give six months to those being let go to find another job. Everyone I knew found another place to work before their term expired.
Publishing was shaken up, too. I was taken off the George Lucas Books imprint and Lucy Wilson moved back to Skywalker Ranch, where she would eventually publish: Cinema by the Bay (on SF Bay Area filmmaking); Blockbusting (on movie financials); and Cause of Death (on medical statistics). A new publishing director was hired, Amy Gary, and I stayed on Star Wars, along with senior editor Sue Rostoni, who began handling novels and comic books around that time. (Sue and I would remain the two constants for about a decade.)
There were further changes. In 2003 Lucas replaced Radley with Mich Chau, the former CFO. From Singapore, educated at Wellesley and Stanford Business School, Chau was profiled in Variety and quoted as saying that one of her career mantras was, “Have a clear moral compass.”

A Word About Licensing

Entrepreneur.com defines “licensing” as, “a business arrangement in which one company gives another company permission to manufacture its product for a specified payment.” For Lucasfilm, this meant licensing out the company IP to other companies—for a substantial sum—which then manufactured toys, comic books, sneakers, and hundreds of other products (thousands, over the years) based on Star Wars, using the appropriate logo and other copyrighted material, all subject to approval. For every item sold, licensing also collected a royalty.
A brief history of licensing at Lucasfilm is as follows: 20th Century–Fox did not want to make Star Wars. The only notable exception at the studio was its production executive Alan Ladd, Jr., who had liked Graffiti, which he saw in a pre-release preview (a copy of the film was smuggled onto the lot for him to see), and signed up Lucas for his next film. The business arm of Fox, however, plotted against Ladd and Lucas, used stalling tactics to withhold preproduction money and delay the contract, hoping that they’d eventually go away. Turning the tables on them, Lucas enlisted the services of lawyers Tom Pollock, Jake Bloom, and Andy Rigrod, as well as his agent Jeff Berg, and took on the studio, saying in essence, “You want to negotiate? Okay, let’s negotiate every term.”
When they started their battle, Graffiti was in limbo. The film’s financier and distributor, Universal Studios thought it was a turkey. But Fox delayed so long that Lucas and Graffiti producer Coppola, fresh off The Godfather, had the time to wrestle Universal to the ground and compel them to release Graffiti, which turned out to be a huge hit (still one of the greatest cost-to-profit earners ever, because it cost so little—about $800,000, earning to date $115,000,000, according to Boxoffice Mojo). Suddenly Lucas had more leverage in his negotiations with Fox. He also had more cash, and was able to pay for most of Star Wars’ preproduction himself. Contractually, his short-term goal with Fox was to ensure that only quality product was associated with his space fantasy film, which meant a few T-shirts, comic books, and lunchboxes, while avoiding inferior quality knockoffs. He and his lawyers thereby managed to acquire half the merchandising rights for Star Wars. Much more importantly, instead of more money for Lucas as director/writer, which they could have asked for based on Graffiti’s success—they were able seize the rights to the Star Wars sequels.
Since then no studio has been so financially irresponsible (as far as I know), while Lucas and his allies have been credited with one of the better deals of the century.
By 1979, Lucas was making real money from his first film’s licensing, so he was able to move Lucasfilm from its trailer in a parking lot across the street from Universal to the Olson Brothers Egg Company Depot, a building he purchased in the same vicinity. It was a case of location, location, location; he and Marcia Lucas figured that its value would only go up. They renovated the 30,000 square-feet old brick structure, turning it into a design statement that prefigured Skywalker and Big Rock Ranches. They had it structurally reinforced, planted green ficus to climb up the repaired exterior, added a humidified atrium in the interior with polarized skylights for tree growth (which anticipated the ranch’s Solarium), and a courtyard office with French doors and a family style kitchen (where Spielberg would famously make cookies for actors auditioning for Raiders of the Lost Ark). Into this masterwork moved Lucasfilm licensing, marketing, and publishing, with its first president, Charlie Weber.
(I was once chatting with Bob Wilkins, who hosted a popular late night Bay Area TV show called Creature Features in the ’70s, which has since attained cult status. Apart from achieving local fame, he was the first to broadcast Night of the Living Dead, and I remember he brought author Anne Rice onto his minimalist set to talk about her new book, Interview with a Vampire. Locally, Wilkins was the only one paying attention to the genre, the only one to broadcast old horror movies, the good, the bad, and the horrible, as well as old Japanese monster flicks—while genteelly mocking it all, in suit, tie, and nerd glasses. Lucas wore similar glasses and must have been a big fan, for, Wilkins told me, he offered Wilkins the job of Lucasfilm president circa 1974. Wilkins declined. He passed away in 2009 and I spoke to him circa 2002.)
Lucas christened his licensing division Black Falcon, Ltd. Because Fox owned half the licensing rights, it made sense to locate Lucasfilm corporate down south in order to keep an eye on the studio and their shared businesses.
Years later in the Skywalker art archives I found many concept sketches for the Black Falcon logo. Lucas saw every detail as an opportunity to create art, or have it created, and went through dozens of designs before hitting on the right one. By contrast, during the early days of the new presidency, the logos of licensing, ILM, LucasArts, and Skywalker Sound were re-designed, each subsidiary’s iconic images—a lightsaber, a magician, etc.—were replaced with meaningless corporate swirls in a vain attempt to homogenize the different branches.
Back in 1978, while prepping the first sequel, Lucas hadn’t gone back to the studio for financing. Instead, he shocked Fox by announcing that he would pay for The Empire Strikes Back himself. Thus began the real rise of Lucas and his franchise. Until then he’d been a glorified work-for-hire. By bankrolling his own film, Lucas took a calculated risk in a bid for real independence. Also, because he could go to any studio to distribute Empire, Fox had to give up an additional 40 percent of the licensing rights to Lucasfilm in order to remain the franchise distributor. (Fox still managed to keep 10 percent, though eventually Lucas would buy that back.)
Empire turned out to be a hit, too, and Lucasfilm profited accordingly. The inevitable consequence was that Lucas decided to move his corporate HQ north to further consolidate his businesses (he’d already moved ILM up north in 1978). He also felt that Weber and others at the Egg Company were becoming tainted by the Hollywood life style; too many executives were driving Porsches, the story went. Lucas laid off Weber, and a few people were found offices at ILM or in scattered offices throughout Marin County. Most of the Egg Company was let go, and Lucas, reportedly, felt terrible about it. In fact, the Egg Company layoff prefigured the Big Rock layoff 20 years later in that people were given severance packages and six months to find another job. Lucas had also begun a pattern with Weber, his first president. Lucas had wanted to change things for a long while before finally acting, and hadn’t been overly communicative.
“[The move north] happened two or three years earlier than I anticipated,’” Weber said. “It was sudden and somewhat abrupt.”
(As for the renovated Egg Company, Marcia Lucas would retain ownership as part of their divorce settlement and eventually sold it. In 1994 it was razed for a parking lot; Marcia organized a wake for the building the day before.)
As mentioned, licensing had died out by the mid-1980s when Black Falcon was merged into Lucasfilm and renamed the Licensing Division. Thanks to the first film of the Prequel Trilogy and canny licensing execs, by the time I arrived in 2001, the department had undergone another name change, to “Lucas Licensing”—and was an economic juggernaut.

Next: Revenge of the Sith
(Thanks to RobertRogerRossblogspot.com for the architectural info on The Egg Building.)