Cigar Aficionado

Winston Churchill once uttered these words: "[It] is a riddle, wrapped in a mystery, inside an enigma." The question is, which part of that phrase applies to Arnon Milchan. For anyone outside of Hollywood, the key word would be mystery; very few people have ever heard of him. For Hollywood insiders, the key word would be enigma; they have never quite understood how he has managed to be so successful in a business filled with stories of big losses.

But in truth, if you love movies, the only answer to the riddle is that Arnon Milchan loves to tell stories, and he has turned his storytelling passion into a love for movies. There's also a pretty good chance that he has produced one of your favorite films in the last 25 years.

Milchan's Once Upon a Time in America is Marvin R. Shanken's all-time favorite movie. That was one of the reasons the Cigar Aficionado editor and publisher wanted to interview Milchan as part of his ongoing series with men who normally don't give interviews. In the past, Shanken has interviewed for this magazine Fidel Castro, Michael Jordan, Francis Ford Coppola, Gen. Tommy Franks and Ronald O. Perelman.

Since the late 1970s, Milchan has produced more than 120 films. Through Regency Films, which today has a distribution deal with 20th Century Fox, owned by Rupert Murdoch, he produces 10 to 12 films a year that reach theaters. Besides Once Upon a Time in America, his credits include Pretty Woman, L.A. Confidential, JFK, Man on Fire, Mr. & Mrs. Smith and the Free Willy series. The list goes on and on. In all, his movies have earned several billion dollars. And he's still going strong. This spring, he released What Happens in Vegas, with Ashton Kutcher and Cameron Diaz, and by the end of its first month in release, it had earned more that $76 million.

But Milchan's life is about a lot more than movies. A descendant of an Israeli family that has lived in the region for more than 500 years, Milchan owns businesses that have helped build Israel's agricultural industry into a world power and helped the desert to bloom. He bought a stake in the Puma athletic shoe company, quintupling his initial investment before selling his stake in 2002. He controls more than 30 companies in 17 countries, with interests ranging from aerospace and automobiles to stereos. He has partnered with some of the most powerful business leaders in the world, including Murdoch, Kerry Packer, Johann Rupert and Nelson Peltz, just to name a few.

But in the end, Milchan keeps coming back to the movies, his true love. Shanken gets Milchan to discuss some of his biggest successes and disappointments in the film industry, and the inside story on how he managed to bring together as partners two of Australia's most powerful businessmen, Packer and Murdoch, at a time when they were avowed rivals.

MARVIN R. SHANKEN: Arnon, I'm curious. You are considered a recluse in Hollywood and in the business world. What brings you to this table to allow me to interview you?
ARNON MILCHAN: Part of the reason as far as interviews go is it's very rare that you can actually get through the barrier of trusting or not trusting someone, number one. Number two is to find somebody who stimulates you. In any case, sooner or later, somebody writes about you. I'd rather be in the situation where I have somebody who I know. Not because you're going to protect me. You can go straight in my face and make chopped liver out of me if you feel like it. But I know at least I will fight back, and we'll have fun, but more than anything, I think the stimulation I get from intelligent questions is major for me. We have a common friend who always says QTL, Quality of Time Left. So even in an interview, if I do something, I want to do it well, and I want to do it with somebody who is not out to get me. But the other thing that I'm really emphasizing here, is that sooner or later, every few years, you have to expose yourself. I'd rather expose myself here.

MRS: In 2000, "60 Minutes" did a segment on you. In his opening remarks, Steve Kroft said, "You probably haven't heard of Arnon Milchan, but he's one of the most powerful people in Hollywood, and has bankrolled a string of successful films like Pretty Woman [1990] and L.A. Confidential [1997]. He also happens to be a trained scientist, a former soccer star and a high-stakes gambler who likes fast cars and a good time." Your comments?
MILCHAN: Everything is true except the fast cars.

MRS: I'm thinking of becoming an independent film producer.
MILCHAN: Yes?

MRS: What advice can you give me?
MILCHAN: First of all, ask yourself, Why do you want to do it? And if the answer is business, I would say, please don't. It's a horrible business. And it's also a business where the amount of rejections are enormous. In any event, the word "independent" doesn't exist. The more you call yourself independent, the more you are dependent. Independents are the people who can write a check. The studios, or guys like myself, who actually have the ability to write a billion dollars a year and spend a few hundred million dollars in advertising. The guy who is a so-called independent has to go and raise money. Therefore, he depends on somebody from Korea and Switzerland and France, or the studio has to give him money and then to pay for the advertising. When people give somebody money, they also give conditions. They want less violence, or more sex. All of a sudden they change your movie. The other thing, unfortunately, is that in today's world, the marketing has become such an important part of the business. The advertising is through the roof, and it's still not enough. We're going to open at 3,000 theaters. We have to be aware of the fact that there are five other movies around us, who also want two or three thousand theaters and as many screens as we do. And the following weekend, there are four or five other movies coming out, and each one spends 40 or 50 million dollars to push you off the screens and take your place in the theaters. So the independent business is practically gone today. You need to be affiliated with the bigger picture, meaning the marketing side of the equation. So unfortunately, there is no such thing anymore as an independent.

MRS: All right, now I can tell you, I have no interest in being a movie producer. It's too tough a business from what you're telling me.
MILCHAN: It's a horrible business. In the good old days, where a guy like Arnon could go and spend three years on one movie called Once Upon a Time in America [1984], that's a luxury that I could afford at the time, because I had some other businesses and money, and I could gamble. If you love movies, find somebody who can adopt you and help you to focus. It is no different than any other artist, or any painter, any musician, who wants a gallery, wants a name.

MRS: What exactly does a movie producer do? What is your role? A lot of the people who are going to read this interview are not Hollywood people and don't really know what you do.
MILCHAN: The words "movie producer" should disappear. Let me compare it to a guy who builds a building. Now, he actually is a developer. He has to choose the best location. In our case, the best location is the script. A script to a movie is like location is in real estate. It's location, location, location. The second thing, he has to choose the best architect. Now, it's a trade-off. If you have a way you want to do it, and you hire your best architect, like Spielberg or Coppola, they come and say, Excuse me, I'm going to do it my way. So your architect is the director. If you want to control him, you won't get the best one. You have to be able to say, OK, let's agree up front, here are the keys, you carry our common vision. So, I need a director. You have to make a decision. Are you calling the shots? Is he calling the shots? Are you both calling the shots? If you're smart enough, you realize what's an ideal case, and maybe what's not ideal. We then try to get the best possible script we can get, meaning you're making sure the location is perfect, so you get another writer and another rewrite until the script is perfect. Very often we also have in mind a movie star or an actor for the lead role, or maybe we have a list of three names, so the guy could be Kevin Costner or Brad Pitt or Danny DeVito. And then, we talk about who you can match them with: Jennifer Aniston or Cameron Diaz or whoever. You have a lot of conversations about chemistry. For instance, to give you one example, we did a movie called Sommersby [1993]. Sommersby was a movie about a guy who comes back after the Civil War and says, I'm your husband, and she doesn't know for sure it's him. It's been seven years, and she's not sure, but she likes him. The guy's Richard Gere. Now, everybody said, You should put Michelle Pfeiffer or Julia Roberts [opposite him]. And I said, No. Jodie Foster. And people around me, said, Why Jodie Foster? Why? I said, because if a guy leaves Michelle Pfeiffer or Julia Roberts for seven years, she'll find another guy. Jodie Foster is the type of girl who would stay and be credible to be loyal, to wait. However, when he comes in and she sees it's not him, but that he's good-looking, she makes a quick decision, and lives in the lie, and then gets upset when it all comes out. So the decision about actors and actresses is also about your own gut, about chemistry. Then you have the constraints of budgets. You could say, OK, how much can I spend? The answers are based on what we call the four audience quadrants: male under 25, male over 25, female under 25, female over 25. Who can this movie appeal to? Is it only for kids? Is it for the whole family? Is it Alvin and the Chipmunks [2007] or is it Mr. & Mrs. Smith [2005]? Based on what you think, you say: I'm going to appeal to a certain audience, and you adjust your budget accordingly. Therefore, you get selective in your decision about who your key people are to execute your building, which have been decided between yourself, the architect—or director—and the writer. Now you choose your actors and you choose your budget and you analyze your budget and you nail it down, and then you hire a producer.

MRS: So at this point, you already have your cast?
MILCHAN: Yes. But it's after I have my cast and after I've made that decision, then you hire a producer. Now, why am I saying, then you hire a producer? Because [whether] people call it line producer, executive producer, producer, it's basically somebody to oversee your project.

MRS: Is he like a business manager?
MILCHAN: Yes. He's a businessman, a guy that you say, You're making so much money and here's some points. If you save money, here are some more points. If the movie makes money, here are some more points. That's one type of producer. They are guys for hire.
Sometimes there are guys who are very creative, and you recognize that they are creative, and you say, You know what? Why don't I give you an office and a couple of secretaries and two or three guys to work for you and I'll pay all your overhead and you bring me material. You go find the new book, the new idea, the new thought. And I will finance the ones I decide to make, but you will get a bigger salary and a percentage of the profits. And then you have the third type of producer, who is the guy who would buy an article from your magazine. He heard something or he read a book, or he optioned something for $25,000. He finds a way to get to Brad Pitt and says, How about that? And he gets Pitt excited, and all of a sudden he has an asset. And then he would come to me and say, I've got something Brad Pitt wants to do. And all of a sudden the dynamics are changing, and that producer can say, instead of $500,000 I want a $2 million fee, and he's got a list of things. But at the end of whatever it is, we are all in the hands of the marketing machine, because you can make the best movie and at the end there are only five or six or seven studios: Fox and Warner Bros., and Sony and MGM, and Universal and Columbia, and Disney and Paramount. Now, they are the guys who can tell the theater owner, If you are not putting this movie on three screens in your multiplex, you're not getting Star Wars next month. So you need the muscle to get in. The second thing you need from the studios is this: I want 60 percent of the box office, not 35 percent like you're giving to the independent guy, as you say, because if not, you're not getting the new Star Wars or the new X-Men or the new Batman. So the importance of being affiliated with a distribution system is to get your theaters, to get the best theaters, to stay longer at the theater. The normal today is they'll throw you out in two weeks, and you have to be able to say, Excuse me, I need another two weeks. And then the last thing is, the percentage of what Fox gets, or Warners, is double than what some of the smaller guys get.

MRS: If you had the choice of two movies to make, one had a better script, one had a better cast, which one are you going to choose?
MILCHAN: The script. That's without a doubt. But one way of life is, you make a movie once every couple of years. Then you are an artist. You're an artist, and as an artist, absolutely without a doubt, you choose the script. If I don't have a great story to tell, why would I take a great cast to tell a stupid story? A great script can be told by few people; there is more than one cast that could tell a great story. A bad story, nobody can tell. Now, unfortunately, if you don't do one movie a year or whatever, as an artist, then you have to become a business. As a business, you have to realize the following statistic: a company like ours [Regency Films] gets 50 project proposals a week. That's 2,500 a year. And, we do about 10 or 12 movies a year. Meaning, you are spending your time saying no 2,490 times a year. Most of your effort, most of your creative work, is to be able to say no, even if you have a great cast, to a bad project. Now of the 10 movies that you make, statistically you are hoping to get two or three hits. You make a movie like Pretty Woman, or Once Upon a Time in America, or Alvin and the Chipmunks, it becomes evergreen. This type of movie stays forever. It delivers additional profits in DVD, in television and in foreign rights. These two or three movies out of the 10 carry the rest of your business. What is the rest of your business? If you're lucky, three or four break even, or make a little money. Two lose money, and two are total disasters. Basically you're in the business of bad news. No more than seven out of 10 that are positive. I mean, really, like wow! This year we've been very lucky. It's been our best year, touch wood; it's a fluke.

MRS: So you're saying that the single most important element is the story or the script?
MILCHAN: Yes. That's right. Think about what has worked in history. Rocky: nobody knew Stallone. Pretty Woman: nobody heard of Julia Roberts. And you can go on and on. Titanic: nobody knew who was Leonardo DiCaprio. L.A. Confidential: nobody heard of Russell Crowe.

MRS: Now, I may change my mind later, but I want to say, I will go see every Denzel Washington movie because every movie that he's in is a great movie. A movie with real meaning in it.
MILCHAN: That's a very good point. Why? There are very few actors who are smart about choosing the material to say yes to. I go with my eyes closed to Denzel Washington. I made a movie with him called Man on Fire [2004]. Denzel is so intelligent, but he also knows what he should not do. Clint Eastwood is another one of them. Some actors know what they should not do. And you can count on them that you're going to see a great movie.

MRS: Most of the time, even with the actors and actresses that I adore, it's hit or miss. What was your biggest box office movie in your career?
MILCHAN: By far, in real dollars, Pretty Woman.

MRS: Walk us through Pretty Woman for a moment. When you got the script, were you excited, did you yawn, did you project in your mind who was going to be in it? What was your initial reaction, and did you ever think that you had something special?
MILCHAN: I'll walk you through Pretty Woman. I believe it is a very interesting story. Here was a story that had been running in Hollywood for years, and had been called Three Thousand. That was the name of the project. Three thousand was the $3,000 that the businessman was paying the hooker. Now, there was a company called Vestron [that owned the rights to Three Thousand] and they were going out of business. They made a lot of money the first time doing Dirty Dancing, and then everything they did after didn't go. And I had a guy in my company, and I told him, You know, that sounds like an interesting project, see if you can get an option on it for less than $3,000. We got an option for $2,500.

MRS: On the script?
MILCHAN: On the script called Three Thousand. In the original story, at the end of the movie, he leaves her. He gives her money, he buys her a fur coat and he says good-bye. I go, Guys, you have taken the audience the whole way to feel good and now you drop the poor girl. It's wrong. You should have seen all the people looking at me with disgust, because I'm known … well, they call me Mr. Cappuccino. Why? In Hollywood, the reason I'm called Mr. Cappuccino is that there are the guys who do popcorn movies, but they say to me, Arnon, your movies, everybody has to sit down, have a cappuccino and discuss it. You know? Why don't you do popcorn movies?

MRS: I'm just thinking of the final scene when Gere drives up in the car with the great music and the flowers.
MILCHAN: Yeah, and so now I say, Why can't he come back? And they say, What are you talking about? I say, I'm talking about My Fair Lady, Pygmalion, and then they say, you know what they said? With total disgust in their voices they said, You sound like Disney. I said, You know what? Great idea, get me Jeffrey Katzenberg on the phone. I call Jeffrey, who was running Disney. I said, You know, we have a great Disney movie in my hand. With a happy ending. I do the kosher thing when he said, What is it about? I said, It's, well, it's about a hooker and a businessman.

MRS: In a million years, Disney would never do it.
MILCHAN: Well, he said, You call this a Disney movie? I said, Well, believe me. He gets it. He calls me back and he says, Well, as a matter of fact, we have a director called Garry Marshall, who just did a movie called Beaches for us, with Bette Midler. And we have a commitment for him to do another movie, but we don't have a movie. Maybe he should do that for us, and actually the idea of a happy ending is a great idea—why don't we do it together? They have a cast also ready. The cast is Sean Connery and Michelle Pfeiffer. Now me, I'm so happy we're going to have a happy ending, I said, OK, Sean Connery and Michelle Pfeiffer. Sean Connery writes me a letter and gives a phone call to Disney and says, Guys, you know what? I think I'm too old for this part. So we replaced Sean Connery with Al Pacino. But three weeks before the movie started, Al Pacino calls me and says, Arnon, come on, I don't know how to play a businessman, I've never been a businessman, I mean I . . . it's not me. I can't do it. Michelle Pfeiffer realized that both Sean Connery and Al Pacino dropped out . . .

MRS: They must have all figured the movie's a bomb.
MILCHAN: . . . she drops out. Now we have nobody, and we are about to start. We start looking for people. We don't know where to start, you know, auditioning for this little fakakta movie called Three Thousand. At the time, it's still called Three Thousand. And finally I saw a movie called Mystic Pizza [1988], and there was a girl there called Julia Roberts, and I said, How about this girl? We tested her. She was great in the test—crying, very emotional—and Katzenberg called and said, But can she play a hooker? I don't want to sound chauvinistic, sexist or anything. But I said, Jeffrey, what's wrong with you? Any woman can play a hooker. I mean, if she can cry and be emotional, I'm not worried about [her] being a hooker. I don't mean that I think women are that, but anyway, and then Richard Gere called. He called, because at that time he had a bad spell of pictures. He had King David [1985] and Power [1986] and God knows, he couldn't get arrested. He's in. The movie cost only $17 million. But if you ask me, Did I think this would work, I'll tell you what I thought. I had a guy running my company called Steve Reuther. At that time everybody who worked for me was also a producer. Going back to your question on producers, I found out that if I have a guy who works for me, and I give him the word "producer" on the screen, I don't have to give him a raise, you know? I said, Steve, why are you wasting our time and your time going to the set? This movie will never make money. I mean, you're getting some producer's fee and we'll see what comes of it, but let's concentrate on more commercial movies. So did I know? Absolutely not. At the end of the production, when the movie was practically done and it was in what we call a rough cut, the mayor of Jerusalem, Ehud Olmert, who is today prime minister of Israel, came to Los Angeles and said to me, Arnon, can I see how you guys do these things, finish a movie? I said, Yeah, actually we are screening, with Michael Eisner and the director and Katzenberg, a movie called Three Thousand.

MRS: So you did end up collaborating with Disney on this movie?
MILCHAN: So you'll see: Disney Presents, Arnon Milchan produces . . . I became the producer, OK? I'm like the guy who I described as one who came up with the idea. I said, I have an idea, I have a script, why don't we cofinance it? Now, in the case of Disney, the reason I wanted Disney was a lucky charm.

MRS: Like an endorsement?
MILCHAN: Yeah, if it was somebody else, a hooker and a businessman, that would be tough. But this is Disney, So it's safe.

MRS: I'm shocked that Disney would make the movie about a hooker.
MILCHAN: I know.

MRS: I mean, I find that . . . I find that shocking.
MILCHAN: Believe me, you're not the only one. But because it became Disney, they made sure, for instance, that she is flossing her teeth, if you remember that scene. They made sure that it's her first week. She's not like a hooker who's been on the street forever. Also make sure that she works and goes to university. And stuff like that. Now, Olmert sits there in the screening room of a movie called Three Thousand, and we are trying different songs, which we don't own at that time. One of them was Roy Orbison's "Pretty Woman," and Olmert said, This should be the title of the movie. I said, What the hell do you know? How can you call a movie Pretty Woman? I mean, I've never seen something more heavy-handed than that title. And he goes, Do me a favor, try . . . I said, What do you know about movie titles? Anyway, we tested different titles. It came in as the best, and we bought the song. The numbers on Pretty Woman were about $180 million domestic and about 300 international. I'm rounding it a bit, but call it $500 million, when a ticket costs $3 at that time. In today's dollars, it would be close to $2 billion. It's more or less the numbers of Titanic, but with a much longer life. Forever.

MRS: So who owns the movie?
MILCHAN: The movie is technically owned by Disney, and I'm what is called a gross participant. Meaning there is net and gross. Gross is when you get a piece of every dollar.

MRS: So can you say over the course of its life, how much you made from that one movie?
MILCHAN: You know, a lot. Much more than what the movie cost.

MRS: OK, and the movie cost?
MILCHAN: Seventeen million.

MRS: OK, so when you first saw the movie, when it was done, final cut. You're in a theater or in a studio, and you see the movie, and it's wrapping up, the car drives up, the music's playing, everybody's got a smile on their face. At that point in time, did you now change your mind?
MILCHAN: Yes, absolutely, as soon as we saw the first screening. We actually do test movies. We give the audience cards and ask them to rate it excellent, very good or would definitely recommend. It was the highest scoring results we had ever had. So it was clear this movie is a hit. Now, this movie opened to a $12 million weekend. In today's business, a successful movie does three times the opening weekend. This movie does 12 and by the time it's done, [by this standard] it would have done $36 million. Maybe if you're like hugely successful, like Alvin and the Chipmunks, you did $45 million on the opening weekend, [and] you did five times that. Pretty Woman did the maximum ever. We opened to $12 million and we did 180 million; that's 15 times the opening weekend. That did not happen in the last 10 years. At the time we have what we call word of mouth: you open and then you wait for a hundred years until people hear about it. That doesn't work anymore. They kick you out of the theater.

MRS: Let's go to a different extreme. One day, you're given a script, maybe it's with a cast or without a cast, and you said, This is no good. There's no way that I'm going to put a nickel of my money into this piece of shit film. You passed on it. Somebody else did it, and it was a great success. Did that happen to you?
MILCHAN: A lot. I'll give you three or four examples. When I talked about Man on Fire with Denzel Washington, I once did the same movie 30 years ago, and it didn't work. The agent of the writer of that book told my secretary in Israel, Listen, I've got something new in galleys. Send it to Arnon before anybody sees it, and I think he can get it for a $35,000 option. And he sent it to us and we decided it's not going to work. Name is Harry Potter.

MRS: Harry Potter!
MILCHAN: Harry Potter. I'll give you another example.

MRS: So wait, wait. So when that actually happened, did you want to vomit and kill yourself?
MILCHAN: I don't know what I wanted first, to vomit or kill myself. But probably both. But I'll give you a couple more.

MRS: That's a good one.
MILCHAN: Yes. Another one was, I did the play Amadeus in Paris with Roman Polanski, onstage. When I heard that Milos Forman wants to direct the film, I came to Milos, I begged him: Milos, it will never work, this cannot work.

MRS: Great movie.
MILCHAN: I begged him not to do it, because as a friend, I said, Milos, there is no way a kid is going to watch that on film. It's a theater piece. Another one was that we made a deal to cofinance a movie called Ice Age. It's like a billion-dollar industry today. The budget was $57 million. We were sharing with Fox, 50-50. When the budget actually came [in] $4 million higher, our CEO decided we're not doing it and cancelled the contract. That cost us probably $500 million.

MRS: I have to admit something here and now: I have not seen all your movies.
MILCHAN: I know.

MRS: Yeah. How many movies have you made altogether?
MILCHAN: You know what, I have to admit, I don't know exactly, but I would say about 120.

MRS: Let's talk about some of your biggest movies. L.A. Confidential. I don't know about the financials, but it was a huge hit.
MILCHAN: Right, huge hit, and a great movie.

MRS: A great movie.
MILCHAN: Yes.

MRS: There's an urban legend about that movie. It starts with Arnon Milchan, this big-time movie producer, and you've never won a Best Picture Oscar. This is true, yes?
MILCHAN: Twice it happened to me. The other one starts with JFK [1991]. We had eight nominations. I was sure we were going to get the Oscar, and in the ceremony, when I start to realize that we only got two Academy Awards, and [the awards are] going in the direction of Silence of the Lambs—I probably was drunk or angry or something—I left the Academy Awards show in the middle. I stood up and left. For L.A. Confidential, I was sure we got it. By the way, seriously, L.A. Confidential got every single critics award in the history of the business. I think it is the only movie ever to do that. L.A. Critic, New York Critic, Boston, you name it: Best Movie, Best Screenplay, Best Director. It was to a point that on the flight from Paris to L.A. on Air France, to the Academy Awards, I'm sitting next to Donald Sutherland, and I say, I'm very nervous about my acceptance speech. We're in first class on the second floor. We were talking different approaches and finally he said, What are you really feeling? And it ended up, I took a bottle of Coca-Cola, I stood up in first class, and I said, Ladies and gentlemen—I was starting to get teary eyed—I want to dedicate this to Anwar Sadat and Yitzhak Rabin. Peace, shalom and salaam. I sit down. Standing ovation, the whole plane. People were crying, you know? And then obviously, Titanic, got it that year.

MRS: Did you feel that L.A. Confidential not getting the award was personal, because you weren't liked, or was it just business, because Titanic was more deserving?
MILCHAN: First of all, I think it's business, and I tell you why. Who votes? About 4,000 members of the Academy, and many of them work for the studios. So each studio has, automatically already, people voting for their film. L.A. Confidential was fully financed by our company, by Regency, and it was at the time when we left Warner Bros. to go to Fox. Warner Bros., the last thing they wanted probably was to vote for the guy who's leaving them, and Fox had a huge amount of money invested in Titanic. They had to back Titanic. I already know for sure I did not have Warners and Fox, which counts for God knows. As it turns out, I've heard that L.A. Confidential lost to Titanic by less than 15 votes. From the whole few thousand.

MRS: So you've been in the movie business for 25, 30 years.
MILCHAN: Yeah. More than 30 years.

MRS: More than 30 years, and you've never gotten an Oscar?
MILCHAN: My movies got a lot of Oscars, but me personally . . .

MRS: Never . . . Best Picture.
MILCHAN: I never cried onstage. I never say, Mom, this is for you.

MRS: And when your movies get awards for other roles, then it's not appropriate for you to get up anyway. How important is it for you to get an Oscar for Best Picture?
MILCHAN: Many years ago it was important. Today, I swear to you I know it sounds like bullshit, I really . . . I really don't care. I really don't care. And know why I don't care? Maybe because I didn't get it; maybe I would care if I got it, you know?

MRS: There are great actors, and directors and producers, who at the twilight of their career are given an Oscar for contributions to the world of movies, and when that day comes for you, if it does, I hope I'm sitting in the audience.
MILCHAN: You'll definitely get an invitation.

MRS: Do you remember where we met? We didn't know each other.
MILCHAN: How could I forget? We met at lunch at Château Latour in Bordeaux, France.

MRS: During table conversation, I asked you where you were from. You smiled without answering me. Later I asked you what you did. And you wouldn't answer. You then asked me, What's your favorite movie? And I said to you, It doesn't matter, you never heard of it. You said, Try me. I said, Arnon, trust me, it's an obscure movie that you've never heard of. And you kept badgering me, and I said, OK, Once Upon a Time in America. You then get this shit-eating smile on your face, right? [Laughter] And what did you say?
MILCHAN: I said, Well, it's a movie that not only I made, but I spent three years and all my money making it.

MRS: No, that's not what you said first. You said—you smiled—and you said, That's my movie. Like a proud papa.
MILCHAN: Yeah, and it's still the best movie I've ever made.

MRS: Well, I'd love to hear the story of it. If my memory serves me, it wasn't a commercial success at the time, or it wasn't a big box office movie. Was it?
MILCHAN: Well, I'll tell you what, it was a very big success outside the United States, and a disaster here. What happened here was very interesting. You know that you normally test movies. By the way, nobody told me at the time that three hours, 47 minutes is a little long for a movie. We decided with Warner Bros. to test the movie for the first time ever in Boston. I think it was February, it was very cold, and I asked the director to come and watch. And Sergio Leone had said, No, no, you take care of it, because I already cut the movie. I said, What do you mean? He cut the movie from four hours and 15 minutes to three hours and 47 minutes. And he says, All I will insist on is that we have an intermission in the movie. He called me from Italy and says, Make sure that the movie, at a certain point, when he goes to jail, you stop the movie, and then people can go to the bathroom or whatever.
MILCHAN: So people are lining up to what has been described to them as The Godfather, even more. They're waiting at six o'clock to get in at seven, in Boston, in the cold.

MRS: This is opening night?
MILCHAN: No, this is the first test of the movie. We test it to see all the reactions. They come in, they've waited an hour, and a woman gets onstage and says, Ladies and gentlemen, just in case you don't know, this movie is three hours and 47 minutes. If somebody wants to go to the bathroom, we will have an intermission in two and a half hours. They're looking at their watch, and we realize, they haven't eaten dinner. This is not going to end before midnight or something. And there's booing and whistling and they already hate the movie before we start. The movie starts, and about two minutes into the movie the projector breaks. OK? Then we start again. And then there is a scene where the phone rings, you remember, the phone keeps ringing . . .

MRS: In, like, the lounge. In the lounge, yeah.
MILCHAN: Yeah. And all of a sudden the audience is thinking, "Get the fucking phone, get the fucking phone, answer the fucking phone," you know? And so from that point on, the credits start coming, they boo everything. When the movie finally broke for the intermission, now there were like 600 or 500 people in the theater, 500? At the break, people go to the bathroom, only 200 stayed. I had never seen a movie in my life where two-thirds of the audience deserted. As a result, Warner Bros., on the spot, decided to cut the movie from three hours and 47 minutes to two hours. Because contractually I believed the director and I had signed a deal that the movie would be two hours and 45 minutes, I lost any power to argue. They butchered the movie, and released a version that doesn't work. Outside of the U.S., it stayed as you saw it, and was immediately a huge success.

MRS: What were the box office numbers for Once Upon a Time in America? Do you recall?
MILCHAN: I could tell you the following: outside of the United States, I'm guessing, maybe a hundred million dollars. Here, maybe eight or ten.

MRS: And what did it cost to make it?
MILCHAN: It cost $28.8 million.

MRS: So you've made money with it?
MILCHAN: Here's something interesting. They released the DVD, or at that time, the cassette. The short version sold, I think, a hundred thousand copies. The long version sold [a] couple of million copies. Today, the DVD of Once Upon a Time in America has generated in the last three years close to $20 million.

MRS: And you own it?
MILCHAN: Yes. And the movie is highly successful. When it's good, in the end it makes money.

MRS: How did you come upon Once Upon a Time in America, to make it?
MILCHAN: I'm going in the Cannes Film Festival about another movie that I was selling, trying to describe it as Gone with the Wind. And I see on the terrace of the Carlton Hotel somebody who looks to me either like Buddha or Orson Welles or Sergio Leone; I wasn't sure. So I go close and I realize it wasn't Buddha, and it wasn't Orson Welles, and because he didn't speak English so well, it must be Leone. I introduced myself because I loved his spaghetti Westerns, Once Upon a Time in the West, and The Good, the Bad and the Ugly. I said, Mr. Leone, it's an honor. I speak French to him. I said, What are you doing? He said, Well, there's a movie I've been trying to make for the last 11 years, but nobody takes it. I said, Why? You are like God. And he said, Because it's a big American saga. Would you care to hear about it? I said, Of course. Now, this is like three o'clock in the afternoon, or maybe four. He starts to tell me the movie, frame by frame; I'm not exaggerating. "Now the camera moves up, or it goes down, and then we see the car arriving and then in." He took more than four hours to tell me the movie. It was . . . the sun was down already, and at the end I said, I would like to make this movie. He said, You're ready to pay for this movie? I said, Yes.

MRS: But did you have the money, or you had to go out and sell it?
MILCHAN: I committed to finance the movie on the spot.

MRS: And it was how much money?
MILCHAN: He said it would cost $22 million, but it ended up costing $28 million.

MRS: Did you have the money, or you had to borrow the money?
MILCHAN: It was all the money I had at the time. It was a gamble with everything I had on this one movie.

MRS: Talk about a brilliant story, talk about the narrative, the street scenes, the whole thing, but what I find when I watch it now, and I've watched it many, many times, is the cast. The cast is one of the brilliant casts of relatively unknown people in the history of the movie business.
MILCHAN: We made a hardcover book on the making of Once Upon a Time in America, and in the book, it's a beautiful picture of the preparation, but you will also see how Sergio Leone, he's acting every single part to the actors. So when De Niro has to rape Elizabeth McGovern, he shows him how to rape her, and then he becomes Elizabeth McGovern, and said, Rape me now, at him. But he said to me at the start, Bambino, you have to be ready, this is going to take time. I said, I know the movie's long. He said, No, no, the casting. We rented a house on East 48th Street in New York City, between Second and Third. Sergio would get hundreds of people coming through the house and test them with a handheld video camera. You would get this phone call, say: Sergio, Warren Beatty's on the phone. He would reply, No, no, he's a hairdresser. People would tell him, He's not a hairdresser. He said, He played [one] in Shampoo, it doesn't work; no, no, he's a hairdresser. . . . He would talk like that. Everybody wanted to be in that movie. I said once, Clint Eastwood is on the phone. Leone said, Oh, no, I already did three movies with him. I want something fresh. And he would go on and on, until he found the right thing. But the one guy he really wanted was Robert De Niro. Now, I had just finished making a movie with him called The King of Comedy [1982], and so I was trying to convince him to read the script and meet with Sergio Leone. He finally reads it, and they finally meet at the Mayflower Hotel. Now, Sergio is extremely large. He sits there in a bathrobe and they talk. De Niro also has a suite, and they move to his room and continue to talk. At one point, De Niro calls me, and says, Arnon, I need to talk to you. I go to his room, and De Niro says, I'm not making the movie. Why, I ask? He takes me to the bathroom and says, Look at that. He peed on the seat, on the toilet seat. I said, Bob, he didn't pee on the toilet seat to offend you. He's fat, he didn't see his thing. He said, No, he did it purposely. I said, No, I swear. So we're having this silly conversation. But it's really all about the dynamics between actors and directors. It's about territories. Who's the boss and who is not. When it came to the last casting, it was a girl, Elizabeth McGovern. De Niro was not sure about her, and he actually said, I don't want her. Sergio said, Tell you what. This is not a Robert De Niro movie, it's Sergio Leone's. This is a Sergio Leone movie with Robert De Niro. Right? If you want to direct, I'll be your assistant, but one of us is going to direct it. De Niro went upstairs, and he finally said, OK.

MRS: When you started the business, it was your own business. But in 1994, Kerry Packer became a shareholder in Regency Films. I understand you met him that year at the Australian Open tennis tournament. Packer headed up his family's publishing and media empire in Australia, Consolidated Press Holdings. He was also known as the world's biggest gambler, frequently winning or losing tens of millions of dollars in a single night at casinos around the world. How did he become your partner?
MILCHAN: It was a bizarre turn of events. I was in my helicopter leaving the tournament, and Kerry comes up to me and says, I've always wanted to be in the movie business. You and I are going to be partners. I laughed and said, How is this possible? I don't have stock for sale. He moved quickly with his team of lawyers and accountants and within a few weeks bought out my outside shareholders and acquired new stock in Regency. He ended up with 25 percent of Regency Films, for somewhere in the $200 to $220 million range.

MRS: But then, in 1997, you managed to bring in one of his archenemies Rupert Murdoch. How did you convince them to be partners with you in your film company? Where did this idea come from? How did it come about?

MILCHAN: At the time Regency was trying to buy MGM together with Warner Bros. When that fell apart, I felt that the idea was that we were making locomotives, but we didn't have a big library, or a backup to those big engines. So even with all the exposure that we have, all the success, we don't leverage it enough. When I described my vision to Warner Bros., they thought I was out of my mind. As a result I decided to leave Warner Bros., although I had a lot of friends, especially Terry Semel, who was the chairman, and is still a great friend. I said, I don't want to be anymore with people who are just taking fees from my movies; I want to partner with my distributor, and I want a co-owner. There were only three guys in the business. One was [Sumner] Redstone, who owns Viacom and CBS and Paramount. One was [Edgar] Bronfman [Jr., at Universal] at the time. And one was Rupert Murdoch. So I told Terry Semel, I'm leaving. He said, Bronfman is not going to return your calls. I will make sure of that, which he did. Redstone said yes to everything I wanted, but then he said, By the way, I'd like you to buy Aaron Spelling for a billion two. And half of Showtime for 750. So he was giving me $300 million and asked me for two billion. It's not what I was looking for. So the only thing left was Rupert, and News Corp. and Fox. I have, and still have, a very good friend there, Peter Chernin. Peter and I are close friends, and he's running News Corp. for Rupert. As a last resort, I go to Rupert Murdoch. I'll never forget that first meeting. I had a bag with Puma shoes and Free Willy merchandising, and I got so excited the first thing I did was spill a bottle of Coca-Cola on him. And he said, in the first dinner we had, to Peter Chernin, I don't understand half of what this guy's saying, but I really like him. Now, I said to Peter, I don't understand anything he says, but I like him. Then we met to finalize the deal. Chernin orchestrated that deal. So I'm meeting now with Rupert Murdoch, and there are a few open points. Chernin was on a ski holiday, so I met with Murdoch alone. And he says to me, By the way, what are we going to do with Kerry Packer? But he said, first, I want to ask you five questions. Did you ever risk your own money? I said, What do you mean? Right now Regency owes me $50 million. He said, And so if I put a few hundred million dollars in your company, you're planning to take it out, to pay yourself, then? I said, Yeah. And he goes, How about you reinvest that money on the same terms you're asking me? And I go like, OK. And then he relaxed. He said, Are you healthy? I said, Yeah.

MRS: What year is this?
MILCHAN: This is '97. [Rupert says,] Would you run the company? I said, Why not? Do you have some money on the side? I said, Yeah, why? He said, I don't like to work with desperadoes. And then he says, And how are we going to handle Kerry? I said, Let me try and convince him. So he said, Where do you think we can find Kerry? I say, Probably in a casino somewhere. So we start calling different casinos. We finally find him at Aspinalls in London, gambling. I said, Kerry, I'm sitting with Rupert Murdoch here. We're about to make this deal that can change my working life. I need you to say yes. And he goes, No fucking way. I said, Kerry, this is my life. He said, This is my life too.

MRS: When you say, "I need you to say yes"? To what?
MILCHAN: To accept Rupert as a partner.

MRS: Because Kerry was already a partner in your company. What percent did he own?
MILCHAN: Twenty-five percent.

MRS: OK, now I got it. So you need Kerry to give approval to open the gate so a new partner could join you and Kerry.
MILCHAN: Exactly. These guys have been fighting like The Duellists, they don't even remember why. So Kerry said, This is my life. And I said, Come on, Kerry, this is not your life. But Rupert is listening. So I said, Oh great, I'm glad you love him, he loves you too. By the way, here, why don't you say hello? And I hand the phone to Rupert. I'm kind of listening, and they're going, Yeah, yeah, this Israeli guy, yeah, we better gang up. And all of a sudden I think something dawned on them, that under the roof of Regency, they can actually meet like two Israelis and Palestinians and they have a reason to talk. They can go fight outside, but then whenever they need to do something, they can because we're partners. Nobody can blame them for stopping the war. And they started laughing. Rupert said, You're a rainmaker, miracle maker. Then I said, You know, Rupert, I have one more favor. I need the blessing of Gerald Levin—who was the head of Time Warner at the time—because he's a really good friend, and I don't want to leave him out. So I leave the room, Rupert calls him. I come back. He said, There are two possibilities here. He cannot wait to get rid of you, or he really likes you. I said, Why? He said, Arnon needs wings to fly and with you he'll fly higher. He gave his blessing, and I think it was sincere. And I go, So Rupert, did you just give me a few hundred million dollars? How do you analyze it so fast? And he says, I don't analyze the past, I analyze the future. I said, But explain to me, how do you do it? He said, It's very simple: I look behind you, no dead bodies, I know all your partners, they're all smiling. And by the way, I did not give you any money. I said, What do you mean? [He said,] I put money in our company. And I go, Can you explain it to me? He said, OK. Let's say you're playing baccarat, and you're a great player, but you don't have enough chips? So I come and say, Oh, this guy looks like he knows what he's doing, and I give you a bunch of chips. I leave the casino. You rush to the cashier to say, Can I please cash in these chips? And the cashier says, Are you Mr. Milchan? I say, Yes. [He says,] I have a note from Mr. Murdoch here: he said you cannot cash the chips for another 15 years. You go back to the table, you leave the chips on the table and you wait. The guy with a suit and tie from the casino comes. He said, Are you Mr. Milchan? We have a note from Mr. Murdoch here: you're supposed to play every five minutes. Whatever is left is yours. And that was it.

MRS: So Rupert invested in Regency. Kerry owned 25 percent, you owned 75 percent. Now, what did Rupert buy?
MILCHAN: Actually what happened was, at that time there were other partners [besides] Kerry: there was Samsung with 6 percent, and a combination of Leo Kirsch and [Silvio] Berlusconi, with 4 1/2 percent. Kerry was, I think, 30 percent. We all got diluted, to a situation where it ended up where Kerry owned 25, Rupert 20, and I owned 55.

MRS: You said that you have bought that 25 percent back because Kerry passed away a few years ago.
MILCHAN: I bought the 25 percent out three weeks ago.

MRS: How well did that investment for Kerry Packer turn out?
MILCHAN: Very well. Let's put it this way: he received much more money than he put in. I wrote the check. But there was also a big dividend, part of a Puma profit distribution that they received as a Regency shareholder. Puma alone covered his investment. Beginning in late 1996, Regency Films, over a series of stock investments, bought 42 percent for around $150 million. The Puma stock position was later sold, in 2002, for around $800 million.

MRS: And Rupert, in terms of his 20 percent? Does he get distributions, and is the investment growing in value?
MILCHAN: Rupert Murdoch gets a distribution fee, News Corp./Fox, on every movie we make. They probably make between $40 and 60 million a year in fees. Since the beginning, they have made distribution fees of over $1.1 billion on their $200 million investment and still own 20 percent of Regency Films.

MRS: So when they bought the 20 percent, they invested $200 million?
MILCHAN: Two hundred million dollars for 20 percent, plus they invested an additional $60 million in our television company, which is called Regency TV, which is a 50-50 joint venture, which made highly successful television series such as "Malcolm in the Middle" and "Bernie Mac." "Malcolm in the Middle" was a billion-dollar exercise. Today, they receive rich annual fees from syndication from around the world.

MRS: So Rupert Murdoch is very happy with you.
MILCHAN: Yes, very, very. It may be the best deal they've ever done. I mean, in the movie business.

MRS: In other words, their part of the deal is they can't lose because they get fed movies for distribution and you are assured of a very powerful distribution network. It's a win-win?
MILCHAN: Yes.

MRS: JFK was a very, very controversial movie with a very controversial director. Did you have the script and go to him? Did he have the script and go to you? How did that evolve?
MILCHAN: This was the beginning of an invention that I have called a rent-a-studio system. Our relationship with Warner Bros. started in the conventional manner, where they would pay the expenses, but they would have control over what I could do or could not do. I could not live with that.

MRS: So if you wanted to do a movie, they could say, you're not going to do it here?
MILCHAN: Not going to do it here. So I said, I'm out of here, and Terry Semel said, But we just signed the contract two weeks ago. I asked him if he had read it? He said, No. He flew to Paris, and asked me, Do you understand what you're asking for? Yeah, I said, I'm asking for the right to spend my own money, I'm asking for the right of freedom. He said, But how do I know if tomorrow you're even going to make movies in English? I'm a public company. But I said, It won't work otherwise. So he said, You need a billion dollars. I said, OK, well, how much are you ready to put in? He said, We'll put 300 million. I said, If I get you the rest, you'll give me carte blanche? He said, Yes. And you just take fees? Yes. Where are you staying in Paris? He said, The Ritz. Seven o'clock the same day, I call him in his room. I said, I need to talk to you at the bar. And he went down to the bar; he met with two people from Canal Plus, whose principals said to me that if you ever get a carte blanche from a studio, we'll put up a third of the money. So I said, Terry, did you say you'll put in a third? Yes. Did you guys say you'd put a third, if I get a studio? Yes. OK, I'm putting a third. So I had $900 million, to finance movies that I decide on. This became a total innovation in the business. Nobody's ever done what you call a rent-a-studio system, meaning, you rent the studio just to distribute and not tell you what to do. I'm coming to JFK. Warners said, You know what? We have a problematic situation. It's called JFK. It's very long, and very problematic; it's Oliver Stone. We need you. I read it, I look at all the conspiracy theories, but there was one thing that intrigued me. Somebody shot the president of the United States, [two days later] he's shot by Jack Ruby, and until today we cannot open the files on Lee Harvey Oswald, and the reason is national security. And I'm still scratching my head, saying, What is it in national security that you cannot open the files on Lee Harvey Oswald? That was good enough for me to absorb bullshit theories, or maybe not, or they're made up or whatever, but there was one thing real, that we actually made millions of buttons of . . . saying, "Open the Files." I still don't know why they don't open the files. When the movie came out, CNN interviewed Gerald Ford, who was on the Warren Commission, who said, Everything is wrong in the movie, it's real baloney, and the interviewer said, But Mr. President, what do you think about the movie as a movie? He said, Well, I haven't seen it yet. I liked the story as a movie, I liked the director, because of The Doors, I liked Kevin Costner, but more than anything, the whole thing it's about, I don't understand why.

MRS: Was it a commercial success?
MILCHAN: Very, huge.

MRS: Huge?
MILCHAN: Huge. The budget was $52 million. It did over 200 million worldwide. And it got eight Academy Award nominations.

MRS: There's another legend that you and Oliver Stone had a conflict. Is there anything there?
MILCHAN: Yes. It is true. We did other movies, like Natural Born Killers [1994] and Heaven & Earth [1993], and then he wanted to do a movie about Nixon, and in the beginning, he wanted to do it for $18 million with Tom Hanks, which we said yes to at Warners. And then he changed his mind, wanted Tommy Lee Jones, and it was more expensive. And then it was Dustin Hoffman, you know, and then it was Warren Beatty, and then he came at Christmas and he said he changed his mind. He wants to do it with Robin Williams. Robin Williams playing Nixon. We started to get nervous. And then he came with Anthony Hopkins, and the budget kept going up and up and up, and finally Terry Semel and I said no. He got very upset that the budget that started at $18 million ended up at $65 million. We divorced. I like Oliver. I mean, I'm very fond of him. Truly.

MRS: A few years ago you did Mr. & Mrs. Smith?
MILCHAN: Yeah.

MRS: I guess that's where Brad Pitt and Angelina Jolie got together.
MILCHAN: Yeah, they met. A lot of my movies, [they] make couples, like Daredevil [2003] was Ben Affleck and Jennifer Garner. Made in America [1993], Whoopi Goldberg and Ted Danson. . . . Actually, I did another movie called Pushing Tin [1999], Angelina Jolie and Billy Bob Thornton. And then I made another movie with her called Mr. & Mrs. Smith, with Brad Pitt. So they fall in love in my movies.

MRS: Now, personal relationships during the movie, is that something that works for the movie, or gets in the way of the movie?
MILCHAN: Let's put it this way: If it's hot, the guy's sexy and married [laughs], and the girl is sexy and kind of married. And, they're hiding it, and they're shooting lots of hot scenes, and they deny it. [And] the paparazzi get curious. So you know, it's free publicity.

MRS: Interesting side note. Remember when you and I first met, we went outside and called somebody on the phone?
MILCHAN: Alan Hirschfield [former CEO of 20th Century Fox].

MRS: Right. I happened to have lunch with him a few weeks ago, so I asked him to tell me about you as a producer and as a businessman. And he said, "There are three things to know about Arnon. One, his economics are compelling. He puts in his own money." I guess he's referring now when he was president at 20th Century Fox. "Two, you can trust him. And three, he's one of the smartest people I ever met." I was actually trying to get some negative points on you. What's your reputation with your competitors, do you think?
MILCHAN: Sergio Leone said once, like I said, Script, script, script, Leone said, With Arnon its charm, charm, charm. I think they think I'm fun, charming. That's one side. Because I elaborate with a lot of precision and details, and I have a strong memory, they think there is an angle because I talk too much. So when somebody tells a story and normally you would expect, like, to take one minute and it takes half an hour? They go, Where is the angle here? What does he want? I think that people give me sometimes a quality that I truly don't have, Marvin: that I'm shrewd and I'm probably so smart, and I'm not. Most of my success has been based on mistakes. In hindsight, you know, I should not have done all these things that worked. But I would say probably one of the things that you'd find them saying is, I'm fearless.

MRS: You're a risk taker?
MILCHAN: Yes.

MRS: A true entrepreneur?
MILCHAN: I first do and then I think. I never go and have a game plan in my life. I actually don't have a business plan in my life. I get instinctive, and then I say, shit, how do I get out of it now? Or how do I make it work? I fall in love and then I give all my energy to make it work.

MRS: You said you made around 120 movies?
MILCHAN: Yes.

MRS: Have you read every script?
MILCHAN: Yes.

MRS: Are you involved in the selection of the cast of every movie?
MILCHAN: There are some movies, and I don't want to degrade my own company, but sometimes I say, Guys, this is so stupid, and they would say, Arnon, there is an audience for that. And I would say, OK, let's have a stupid division and make these dumb movies, as long as they don't cost more than they make, and please don't tell me the story. Do what you want. So we have a bunch of spoofs. Epic Movie and Date Movie, Meet the Spartans. Spoofing other movies.

MRS: How involved are you in Regency Films today?
MILCHAN: You know what? We have two great CEOs, Robert Harper and Hutch Parker, and great, I mean really great management. Great CEOs, great heads of productions, great creative team and a lot of support from Fox. Now, I'm involved in saying the final yes.

MRS: So a movie can't be made unless Arnon nods his head?
MILCHAN: Yes.

MRS: In reading a lot of stuff, and of course in knowing you, and knowing that sometimes you're e-mailing me from South Africa or from Israel or from Paris or London, you only spend a few days a month in Hollywood?
MILCHAN: Yes.

MRS: How do you run a company that's doing so much while spending so little time on the business?
MILCHAN: You know what? I have companies that do business in 17 countries, companies that do aerospace, agriculture and electronics, companies that do cars; we represent Ford and Chrysler.

MRS: I read that you have 30 companies in 17 countries? Is that true?
MILCHAN: Right. I would ask you the same question, how do you run your business? At the end of the day, it's not generally any different, but you have to delegate the no. In the beginning of our conversation, I think I explained that 99.9 percent of the business is to say no. So I only have to deal with the yes.

MRS: Nothing really can screw everything up, unless you agree to take the chance to allow it to be screwed up? Because you have to say yes or it doesn't get done?
MILCHAN: Exactly. But how do I do it, is very simple, because I trust the management to say no.

MRS: Which gets a lot of the stuff out of the way?
MILCHAN: It leaves us with only what they want to do. So out of 15 projects, I probably say yes to 10 . . . I probably say yes to two out of three, or maybe with the current management, nine out of 10.

MRS: If you put together all the different businesses that you're in, how big a business is it in revenues?
MILCHAN: That's a difficult question to answer. One is the library. Because when you own the movies like Once Upon a Time in America, or Mr. & Mrs. Smith, they generate a hundred million dollars in cash flow.

MRS: With no cost. I like that business.
MILCHAN: You can close the business today, and have two secretaries and sit on that cash flow. But you have to actually make one or two movies to keep this library alive. Staying alive in our business after 30 some years—all of a sudden, like in real estate, even if you break even on your movies, now you can rent the apartment and it's yours. So we are renting our apartments, we're collecting rent. The other ones are the movies we make, the new projects. [Say] we do 10 movies a year, and the average cost of the movie today would be probably 65 million, some are a hundred million. The average advertising budget in America would be about 35 million and another 25 outside, another 60, so you're talking about $125 million. Stay with me. And then you have distribution fees, which will cost you, let's say, another 20 or 25 million. So every time you're out of the gate, it's $150 million. Ten times is one and a half billion dollars. So to break even you need to generate one and a half billion dollars. We are doing a little better than breaking even.

MRS: Are any of your other companies comparable to Regency, or is it the biggest?
MILCHAN: Regency as a single enterprise is the biggest one.

MRS: How do you get to know all these actors and actresses? I mean, is it you want to know them, or they want to know you, and how does it happen? It seems like you've done work with 30 of the top 50, 40 of the top 50?
MILCHAN: Probably 49 of the top 50. I can't think of anybody I didn't work with.

MRS: Is there anyone that you would love to work with, that you've never done a movie with?
MILCHAN: Yeah, I'm trying to think. Throw names. I don't know. Actually, Clint Eastwood,

MRS: Let me just say one other thing. You're, I think, 63? [Pause] You are certifiably crazy, per the YouTube video of you bungee jumping in South Africa.
MILCHAN: Just to show you how crazy I am, my oldest son is 40, and my youngest daughter is five.

MRS: Let's move on to the subject of Israel. You are unquestionably a devout Israeli. You're very proud of it, you're very vested in it. You have done a lot of work to help Israel defend itself over a long period of years, in terms of helping them get what they needed to defend themselves and protect the country. There are people that are critical and call you an arms dealer. I'd like to hear you, in 2008, tell me what you feel on the subject on what you did to help Israel.
MILCHAN: About arms? OK. Now, let's talk about it historically, and talk about it very openly. Israel was a test field for the American defense system against the Russians. Why? Because the Russians were supplying the Arabs with the MiG-21 or 19 or whatever. First, the French and Americans, and later only the Americans, were helping Israel. Every time there would be conflicts, the Israeli pilots would go up in their American planes and the Arab pilots would go up in their Russian planes. But no American soldier has ever, ever, ever had to fight in Israel for Israel. There was not a single American life lost for the cause of the friendship between Israel and the United States. And it's a very important thing. This is not Iraq or Iran, Afghanistan or whatever. Israel is a result of thousands of years of persecution. That's something that I cannot get rid of about being Jewish. So, you know what, we deserve a little place. Something we can call home. Now, that place does not have oil, it's two-thirds at least desert, and I think it should be inspiring to see a bunch of Jews rolling up the sleeves and making a desert green. This is what Israel is all about. It's oranges and agriculture. Now, about the weapons. First, does Israel ever want to expand? No. They just want to live in peace. But what if you're being attacked, let's say, like in the Six-Day War? Israel took over the Sinai, but when they made peace with Egypt, they gave it all back. Israel is building a wall to try and stop terrorism. The Berlin Wall went down. This wall will go down when there is peace. But in the meantime, you had to do whatever you can to stay alive. The United States and Israel have been so close and so friendly, doesn't matter Republican or Democrat. In two weeks, on the 60th birthday celebration of Israel, there is a three-day convention about communication and technology. Rupert Murdoch is coming. President Bush is coming. A lot of heads of states, a lot of heads of media. On one of those three days, Israel is thanking the United States for its friendship. Normally it's the other way around. The Israelis recognize that the commitment that the Americans have made for Israel [is] not because of the arms thing, but because Israel is the only democracy in the Middle East. [Elsewhere] there are only kings and sheiks, and no elections. [Israel is] the only democracy, so America needs a place that there's a democracy in the whole region. That's Israel. Obviously, some of the stuff that happened in the past could not go government-to-government. They needed parallel channels. It's obvious that if the United States wants to deliver something to Israel, they would be looking for a parallel channel to deliver it to Israel in a private way. So companies were created to serve those relationships, with a stamp of America and Israel cooperation, but giving deniability to the government. I remember one day, on a certain subject that came up in the press, coming to Shimon Peres—I think he was defense minister at the time—and saying to him that they were accusing me of personally doing it. I said, You know I didn't do it for me. I'll never forget this, and he said, What do you expect them to do? I said, I don't know. Call Reagan or whoever was the president and fix it. Why should I be the scapegoat? And he said—I'll never forget—he said, Arnon, what do you want me to do? To go public and explain how me and the president of the United States ganged up to use you to get these things?

MRS: Let's stay with Israel for a minute. Do you have any reaction to President Carter going to meet with the Hamas?
MILCHAN: You know, I think there is a level of the American naïveté. I wouldn't even call it Carter's alone. [George W.] Bush is naïve and Carter is naïve. Because they didn't have an exit strategy. You can't go somewhere and then not know where it's going to lead. You can go to Iraq, but you have to know how you're going to get out of it. You can go to Hamas, but you have to start thinking, what is going to be the effect? Are you sure the Hamas is going to like it? Carter's got eggs on his face. The next day the Hamas said, We're not even interested. Here is something that you have to realize, because it's also about economics and about politics. The United States has been a self-sufficient island on its own. They didn't need the world. They could self-supply economically. They did not need to be global. There was no such thing as global. But in the world of today, everything is global. You cannot say, I'm only making cars for America. The world is getting bigger and bigger and the U.S. is staying the same size. The sophistications that you need, that you don't have unless you travel the world not only physically, but mentally, is that you cannot assume that your values are the same as the Chinese or the Arabs. They have different sets of things, so the fact that democracy is great doesn't mean that you can go to a place saying, I'm giving you democracy. There was a very great book by [Isaac] Bashevis Singer called The Slave, and, among other things, it said, We're giving you freedom, you don't have to be a slave anymore. And he started to cry, I don't want to be free. I want to be a slave. You have to understand that the mentality of different regions is so different. It's very easy to say: education, education. But education is going to take 500 years, until all people read and write. You have to be very practical about your approach to democracy and peace. I'll give you just one example, in Israel. In Eilat in the Red Sea, there are four countries, Israel, Jordan, Saudi Arabia and Egypt, all touching each other, like in the American West's Four Corners. There is an airport serving the Israelis, another airport serving Aqaba, in Jordan. Not like in Basel in Switzerland, [where] you have one airport. You have one door to Switzerland, the other door to France. Like a lot of places. Why not build one airport? By both countries. The Arabs will get jobs and all of a sudden you work together. Why not have a casino? The Jews will lose the money, the Arabs will get work. So you have to approach it not in a patronizing way, and not in a defensive way. The cynics would say, So what if you make this peace with Palestinians and Israel? That's not the real problem. The real problem is Iran. Iran has the atomic nuclear thing, and they're going to export it to the Hamas and the Hezbollah. But they're using the conflict of the Israelis and the Palestinians as an excuse. You've got to take it out of the equation, by making the Israelis and the Palestinians work together, and understand each other. And wait a minute, we can be the Singapore of the Middle East. The technologies are astounding there. No different than you go in the United States and get cheap labor in Mexico. They can get cheap labor from the neighboring countries. You know what Qatar, Abu Dhabi, Dubai, the kind of money that's there? They don't want wars. They want peace. They don't want everybody to turn against them.

MRS: What is out there yet to be done, that would bring you completion in your life?
MILCHAN: This is part of my chutzpah, but I really, really believe that I have skills, the courage, the conviction and the know-how to make a difference in the peace process in the Middle East. I know a lot of people are cynical, but they were cynical also when I bought Puma. They said, how are you going to connect it? They were cynical when I did L.A. Confidential, they were cynical when I started a project in Kazakhstan to help grow barley and wheat. I know one thing: I can figure out a way. The reason I brought up Shimon Peres was that I was told that Shimon Peres was a loser, that he could not win this election. I said Shimon Peres has to be the president of Israel, because he's the only messenger of peace that this country can deliver. It's about perception. I think I can get in a room, no different than I got in a room with [Yasser] Arafat. I can get in the room and work out a deal. No different than I did with Rupert Murdoch and Kerry Packer. I can get with the Iranian guy. I think if I really want something, it is to work with the next administration in Israel and the United States, whoever is the president here, whoever is the president in Israel, and get myself hired to be the go-between, between Arabs and Jews. I will deliver this one. The point I'm making here, I'm the most qualified person I've ever met to make peace. It will be my best movie, and I can do it. That's my big dream.