Sam Warner first entered the film business as a traveling exhibitor after purchasing a film projector and print of “The Great Train Robbery” in 1903. From these humble beginnings, over the next five decades, the four Warner Brothers built one of the most iconic and influential institutions in entertainment.
In 1956, the three living Warner Brothers, Jack, Harry and Albert (Sam passed away in 1927), received an offer from a syndicate of investors led by a Boston banker named Serge Semenenko to purchase the studio for $22 Million.
With a great deal of lobbying from little brother Jack, Harry and Albert reluctantly agreed that it was time to cash out, reap the benefits of the empire they had built together, and move on.
Well, time for Harry and Albert to move on; Jack made a side deal with Semenenko. After the sale was finalized, Jack bought back the shares he just sold, making him the largest single shareholder of the Studio. He then declared himself president of the newly brother-less Warner Brothers. (“The Fall of the House of Warner: The Warner Brothers,” by Graham Daseler, Bright Lights Film Journal, Jan. 2014.)
Harry discovered the ruse by reading an article in Variety, and he suffered a heart attack followed by a stroke and had to walk with a cane for the rest of his life. Albert and Harry never spoke to Jack again.
As a transactional entertainment attorney, what happened to Harry and Albert informs how I evaluate deals and approach my profession. As lawyers, skepticism is our stock-in-trade. To quote Bay Area Rap Legend E-40, “You call it paranoid. I call it prepared.”
The client is usually focused on what could go right. But we also must ask “what could go wrong?” Have I done sufficient due diligence? Is there a loophole that the opposing side (or a nefarious actor on my side) can use to undermine the intent of the transaction? Does this deal have a clause providing “Schmuck Insurance” (Jerk Insurance for those without a working knowledge of Yiddish) if the economic outcome of the transaction varies widely from what was expected?
We are not omniscient, but to be effective counsel, we must remain eternally vigilant. What could go wrong? What could go wrong? Ask yourself a third time for good measure, what could go wrong?
You may be curious to know how things turned out for Jack Warner. For 11 years he was the big cheese, an iconic studio head wielding immense power and making some truly marvelous films. In 1967, Jack sold a controlling stake in the studio to Toronto-based production company, Seven Arts. Despite assurances to the contrary, he was muscled out by 1969.
Jack passed away in 1978 at 86 years old. Among his belongings was found an unsent postcard on which he had written the following:
I have made a new resolution not to speak. Never, never say a word. Not to utter more than absolutely essential. To erect barricades and walls of silence between myself and the world. One has to be a cobblestone or a diamond not to be shattered by the hardness of most people. Perhaps it is much harder to struggle against oneself than against fate.
(The Brothers Warner, Warner Sisters Productions, 2008.)