In one of the biggest artistic power shifts in the theatre in recent memory, Todd Haimes, head of the Broadway and Off-Broadway powerhouse Roundabout Theatre Company, has been named the new artistic director of Livent, the once dominating, but now financially struggling Canadian production company. Haimes will assume his post immediately, while continuing in his artistic director duties at the Roundabout through the coming season, including the company's move into the Selwyn Theatre.
"Todd's artistic excellence and creative touch have enabled him to mount a string of critically acclaimed productions at Roundabout that have enjoyed commercial success," said Livent Chairman and CEO Roy Furman (Sept. 2). "These productions have shown his ability both to handle multiple projects simultaneously, which is essential for us at Livent, and to present shows widely varying in tone, content and audience."
Haimes said, "Joining Livent give me the opportunity to work in the theatre on a scale and with a palette that holds almost limitless artistic and creative possibilities."
Livent also promoted its associate producer Marty Bell to senior producer. Bell will oversee Livent's productions of Ragtime, Fosse, and Parade. In the course of the last month, Livent has gone from a theatrical force akin to Disney, to a hobbled giant with an uncertain future. In August, the company's new management team, headed by Furman and Mike Ovitz, discovered accounting irregularities dating back to 1996 involving millions of dollars. The discovery lead to the ouster of Livent founders Garth Drabinsky and Myron Gottlieb. The two officials, who ran Livent as recently as April, are on suspension until a financial investigation is completed.
Haimes will be taking over the artistic end of the company -- formerly Drabinsky's province. The Roundabout chief would seem a logical replacement for the famously profligate Drabinsky. Over the last eight years, the frugal Haimes successfully brought the Roundabout back from the brink of bankruptcy, transforming it from a tired Off-Broadway institution into a Tony-nominated titan of New York theatre. Some productions Haimes has shepherded over the years include successful revivals of Anna Christie and She Loves Me. The past season alone produced A View From the Bridge and 1776, both of which transferred to Broadway houses, and Cabaret, perhaps the biggest hit in New York.
Drabinsky's suspension was followed by accounts that the impresario kept two sets of financial records on the Canadian producing company. Reports cited people close to the situation who said Drabinsky used a second set of books to record lavish expenses while presenting to Livent's new management team a "phantom" set which painted a far rosier financial picture.
The Times quoted a statement from Drabinsky and Livent co-founder Myron Gottlieb, who was suspended along with Drabinsky Aug. 10, which said the executives were "unaware of anything other than one set of books."
Livent had said a restating of the company's financial results for 1996, 1997, and the first quarter of 1998 was "virtually certain." Livent also plans to request an extension from Canadian securities regulators for filing its second quarter `98 findings.
Drabinsky and Gottlieb have protested their removal, saying "The company has provided few details, and no practical opportunity for us to address or respond to them.... New management was provided ample opportunity, prior to closure of the transaction, to raise any accounting concerns."
Indeed, the same KPMG/Peat Marwick which has been hired to investigate the situation was brought in by Ovitz and Furman earlier this year to inspect Livent's books. "The new management team conducted [its investigation of the books] with due diligence," said a Livent spokesman (Aug. 11) who asked not to be identified. "Yes, they were looked at."
However, if the new allegations about the existence of two sets of books prove to be true, they would seem to explain how Livent's true financial standing remained hidden from Furman et al. Said the Times, a second set of books was used by Drabinsky to record expenses such as advertising costs. Drabinsky also allegedly transferred costs from one project to another in order to misrepresent profits.
The Times cited one case in which advertising expenditures were transferred to a construction project, where they were recorded as an asset. Other members of Livent's financial staff are said (according to Variety) to have known about the dual books.
To add to Livent's woes, the company has been hit by a several class action suits filed on behalf of all holders of Livent common stock.
Ovitz's sudden entrance into legitimate theatre was announced in April. Under the agreement, he bought 2.5 million shares of Livent, or 12 percent, for $20 million. Ovitz brought along with him a hand-picked management team, including Furman and new president David Maisel.
Ovitz and Furman had their work cut out for them. The Canadian theatrical production company's lost $20 million during 1998's first quarter. That represents two thirds of the $30 million the company lost in all of 1997. The company plans to request an extension from Canadian securities regulators for filing its second quarter results.
Other salient figures from the first quarter findings included a 19 percent jump in operating expenses to $45 million, and an increase in preproduction costs from $9 million to nearly $17 million. Upcoming Livent productions include Fosse: A Celebration in Song and Dance, which recently opened in Toronto for a pre-Broadway tryout, and the Jason Robert Brown-Alfred Uhry musical Parade, to open at Lincoln Center in November with Harold Prince directing.