The suspension was announced today by U.S. investment banker Roy Furman, who along with former Walt Disney executive Michael Ovitz took over financial control of Livent in April. At that time, Drabinsky was demoted and put in charge of creating and developing new artistic properties. Mounting losses and Drabinsky's free-spending ways were cited as the reason for the corporate shuffle.
The suspension of Drabinsky and Livent co-founder Myron Gottlieb suggests that the Toronto-based company's financial picture is even bleaker than has been long rumored.
For Drabinsky, the 48-year-old Canadian producer whose critically heralded productions of "Show Boat" and "Ragtime" recently wound up long engagements in Washington, today's developments were a potentially crippling blow to a career that has often been compared to that of such legendary showmen as Mike Todd and Florenz Ziegfeld.
"The board and I are obviously disturbed and upset about what we have uncovered, none of which was previously revealed to the company's board or audit committee," Furman said today in a public statement. He also indicated that the company may default on some of its debt.
"While it is too soon to determine the precise amount or the effect of the irregularities, they appear to involve millions of dollars," Furman said. "It seems virtually certain that the company's financial results for 1996, 1997 and for the first quarter of 1998 will need to be restated." In 1997 the company, which is traded on the Toronto and Nasdaq exchanges, reported losses of about $30 million, compared with a reported profit of $7 million in 1996.
"We are surprised and dismayed at concerns raised by the new senior management of Livent, Inc.," Drabinsky and Gottlieb said in a brief statement released late today, adding that "the company has provided few details and no practical opportunity for us to address or respond to them."
On Broadway, shock and disappointment spread quickly through theaters and production offices as the news about Drabinsky became public.
"It doesn't bode well for Livent," said veteran Broadway producer Emanuel Azenburg. "Whatever Garth's excesses, he was out there, producing a lot of musicals, opening new theaters, taking old warhorses and turning them into viable properties. He has a lot of conviction in what he does. The ultimate outcome, if any of this is true, is that the theater gets another black eye. And that's sad."
Andre Bishop, artistic director of Lincoln Center, said he was totally taken aback by the news, especially since Lincoln Center is producing a new $5 million musical, "Parade," with Livent this fall. Bishop said that as late as Friday he had no intimations of Drabinsky's troubles.
"Even though these are allegations and have to be proved, there are bound to be those who will say, 'I told you so,' " Bishop said today. "But I've always thought Garth's heart was in the right place in the theater. His whole being is for the artistic excellence of a show. And that's rare." Bishop said "Parade" would proceed on course and start performances in New York, as planned, on Nov. 12.
In a letter circulated today to Livent employees, Furman tried to reassure them that the company was still viable and that future projects would not be affected by recent events. But trading in Livent shares was halted on both exchanges following the announcement. An independent accounting firm, KPMG-Peat Marwick, has been brought in to examine Livent's books.
Among Broadway artists, writers and composers, who have benefited most from Drabinsky's munificence, there was a general feeling of uneasiness. Drabinsky has been popular for his practice of putting new musicals through extensive workshops before exposing them to the public, and promoting them heavily often with costly full-page newspaper ads and television spots once they opened.
Terrence McNally, the playwright who won a Tony this year for the book of "Ragtime," said that he was "shocked and very upset by the news. At a time when everyone was closing their wallets to the commercial theater, Garth was opening his checkbook, and that's very unusual. There hasn't been anyone like him in a long time."
McNally, who is currently rewriting the book of "Pal Joey" for a future Livent production, said he didn't know where the project stood now.
"Ragtime," although one of the year's most popular musicals, is also one of the most expensive to stage and run. The recent 17-week engagement at Washington's National Theatre drew heavy crowds and often grossed more than $600,000 a week, but operating expenses were so high "he probably didn't make any profit on the run," said a person close to the show.
While many Broadway insiders refused to believe today that Drabinsky was lining his pockets, they acknowledged that he often spent money lavishly, keeping a personal plane to jet between New York and Toronto and giving sumptuous opening-night parties.
© Copyright 1998 The Washington Post Company
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