Nilsson’s Talkin’ : Wealthy Rock Singer Shifts Attention to Making Movies; Doubters Wonder Whether He Can Carry a Business Tune

Nobody’s talking very much about Harry Nilsson these days.

Once one of rock’s richest stars, Nilsson now works in a gray Studio City building that didn’t even have a sign on it until Monday. There, Nilsson runs a fledgling public company called Hawkeye Entertainment that lost about $240,000 last year. But Nilsson hopes eventually to make the company profitable by acquiring the rights to, and developing, movies and television specials for others to make.

It’s a long way, however, from the center stage of pop music that Nilsson occupied in the early 1970s. A millionaire before he was 30, Nilsson, now 46, grew rich writing hits like Three Dog Night’s “One” and singing such Grammy-winning numbers as “Without You” and “Everybody’s Talkin’,” the song that made him a major star when it was featured in the 1969 film “Midnight Cowboy.”

Although he still dabbles in music, Nilsson hasn’t made an album since 1979. Now, he is learning a new role: Last August he was installed as chief executive of Hawkeye after a board-room power struggle.

Nilsson was only supposed to be in charge for a few weeks while an executive search firm found a replacement. But Nilsson has decided to stay on permanently to save money on finding a new chief executive, and because he likes the job.

But does he have what it takes to run a public company? Nilsson and his supporters say he can apply his talents to business, but some executives familiar with Hawkeye have their doubts because of Nilsson’s lack of executive experience.

The company was founded in 1985 principally by Nilsson and screenwriter Terry M. Southern, best known for helping write the 1960s classics “Dr. Strangelove” and “Easy Rider,” along with James E. Hock Jr., a former Citicorp executive who served as chief executive.

Hock said he wanted to build a diversified entertainment company through acquisitions such as a graphics firm, while Nilsson and Southern, the company’s vice president for literary and script development, wanted a so-called “entertainment boutique” that would work on specific projects they like. Hock, who was ousted by Nilsson and Southern, is clearly clearly bitter about his experience, and suggests that investors have little faith in Nilsson the businessman.

“When I left office, the stock was at 38 cents a share and we were growing . . . the stock price today is at 6 cents a share with no volume. You figure it out,” Hock said.

Eric P. Lipman, a Philadelphia lawyer who sits on a Hawkeye advisory board and owns about 100,000 shares, accuses Nilsson and Southern of using the company to finance their pet projects regardless of whether they will benefit shareholders.

“That’s exactly what they are doing. They are artists with no business background,” Lipman said.

Nilsson counters that stockholders investing in Hawkeye are effectively investing in his and Southern’s talents.

“The company exists so Harry and Terry can do what they want to do, and we have investors who understand that,” Nilsson said. “I have a real concern for our shareholders. We are frugal, we don’t waste money and we are in here 6 to 7 days a week, from 9 in the morning to 7:30 every night, sometimes until midnight.”

Hawkeye’s first project, to be released later this month, is a feature film called “The Telephone,” starring Whoopi Goldberg. But the project is off to a rocky start. Goldberg unsuccessfully sued distributor New World Pictures and director Rip Torn last year in Los Angeles Superior Court to stop the film’s release. Her attorney was quoted as saying the movie was a piece of “fluff” that could hurt her career.

The film, in which Goldberg plays a lonely, unemployed actress who uses the telephone a lot to call her friends, was made “in association with” Hawkeye, with the script written by Nilsson and Southern. Hawkeye received $100,000 for the script.

Nilsson said the film, regardless of how it does, is likely to make Hawkeye money because it features a major star and cost a modest $2.2 million to make. Furthermore, Nilsson said, Hawkeye didn’t finance the picture and stands to receive a chunk of the profit. It also will help the company establish credibility in Hollywood, he said.

The company has a number of other projects in the works, such as a television awards show for science fiction films and a movie about a tabloid reporter. But at the moment, Hawkeye is still in the embryonic stage. Nilsson said Hawkeye lost about $240,000 for its fiscal year ended Oct. 31, with revenue consisting of the $100,000 received for “The Telephone.”

Nilsson is Hawkeye’s largest shareholder with 4.2 million shares, or about 12%, and said he invested $114,000 of his money to help get the company started. Hawkeye went public last March when it netted about $2.9 million by offering 14 million shares at 25 cents each through R.B. Marich Inc., a brokerage in Denver known for selling penny stocks, a term used for speculative stocks that often sell for a few cents a share.

High-risk companies with no earnings history often rely on the Denver market to raise funds because Colorado laws do not require them to submit the kind of comprehensive business plan required by states like California when offering stock for sale.

Nilsson, who said he is still a millionaire, is cagey about his net worth. But, he said, he tries to keep a lid on his company’s costs to the point of searching San Fernando Valley stores himself for discount office furniture.

“It costs us $1,388 just to open our doors each day, even if we just sat around and did nothing, and we have $2.3 million in the bank,” Nilsson said.

He added that the company bought its headquarters building for what he believes was a good price of $730,000, paying $240,000 down.

Put on Weight

His appearance has changed considerably from the way he looked on his album covers in the early 1970s, when he was a skinny young man with golden blond hair and beard. The hair and beard are graying, and his weight has ballooned to what he says is a lifetime high of 243 pounds.

Always known as a heavy smoker and drinker, Nilsson does little to change that image. At a two-hour lunch last week, he nervously smoked half a pack of cigarettes and drank four vodka martinis, each with a twist of lemon.

Although known for relatively mild pop songs, Nilsson was often experimental and controversial in his approach to his music and lyrics. His “You’re Breakin’ My Heart,” was a ballad about a broken love affair that included a familiar two-word obscene phrase that caused some critics to label him vulgar. He also once battled unsuccessfully with RCA executives to try to get them to include grains of sand in each of the packages for his 1976 album “Sandman.”

Nilsson’s hits brought him a $5-million recording contract with RCA in the early 1970s that at the time was one of the music industry’s most lucrative agreements. Fifteen years ago Nilsson was chosen as one of four stars to appear on the cover of Time magazine for a story on the business of rock.

Nilsson’s eclectic style endeared him to The Beatles, with whom he became good friends. Nilsson still speaks each week by telephone to former Beatle Ringo Starr and has become leading spokesman for the abolition of handguns, largely because of the 1980 slaying of his close friend, John Lennon.

His association with the Beatles helped his career. Nilsson tells of the time he and Lennon dropped in unannounced before a stunned RCA executive who was considering not approving the $5 million contract Nilsson wanted.

“John said: ‘You’ve only had two (expletive) artists in the history of your label--Elvis and Harry. Pay him the two bucks,’ ” said Nilsson, who credits Lennon’s efforts with helping him eventually get the contract.

Nilsson’s interest in films dates back to his early days in music when he wrote an animated feature for television called “The Point,” about a boy and his dog that included his hit song “Me and My Arrow.”

Fed up with the music business, Nilsson stopped making albums and eventually decided that making films is what he wants to do most.

“I can’t think of anything better in life than making movies. It’s like being a child with a large budget,” Nilsson said.

But Lipman, the Hawkeye advisory board member and investor, argues that having fun making movies should not be the goal of the chief executive of a public company. Rather, Lipman said, Nilsson should be building the business to generate cash so it can survive slow periods.

“If you don’t have any assets, where are you going to get your cash flow? It seems to me absolutely logical for this company to acquire assets so it can weather down periods,” Lipman said.