A few months back, a top Walt Disney Co. executive asked Fox Searchlight chief Peter Rice a question that once would have seemed inconceivable.
The executive wanted to know how Rice was having so much success with his red-hot independent film label, which produced this year's Oscar-nominated "Sideways." The answer: by taking creative risks, not financial ones.
In other words, by operating the way Disney's own pioneering specialty label Miramax Films used to.
That an executive of the Burbank entertainment giant would seek a competitor's counsel says much about the gulf between Disney and Miramax's co-founders, whose relationship -- long viewed with envy in the industry -- is in its final days.
Much has been said and written about the personal animus between Disney Chief Executive Michael Eisner and Miramax co-founder Harvey Weinstein, whose ambitions set the maverick studio on a collision course with its parent company. But the breakup is about more than clashing egos. It's also about the evolving nature of specialty film companies in Hollywood today.
Despite the huge sums Disney has reaped since its 1993 acquisition of Miramax from brothers Harvey and Bob Weinstein, the company is eager for a return to the past.
Disney executives and industry analysts say Miramax's business model has shifted so radically in recent years that the company is no longer a good fit with its corporate parent.
"Miramax became another big-spending subsidiary of Disney, which they don't need," veteran industry analyst Harold Vogel said. "The Miramax style drifted from its original roots as an indie hotshot that made low-budget, offbeat films which supplemented Disney's mainstream lineup."
Even before the split is final, Disney has quietly been making plans to reshape Miramax into a financially restrained subsidiary more in sync with specialty units owned by other media conglomerates. The division will bear little resemblance to the Miramax that in recent years grew to nearly 500 staffers with an annual $700-million allotment from Disney to produce, acquire and market movies.
The new Miramax, said a high-level Disney source, will operate "lean and mean," with a staff of fewer than 50 and an annual budget of about $300 million, a figure more in line with other specialty film units. Disney sources said they expected the division to produce six to 10 low-budget movies a year.
But cost containment is easy compared with duplicating Miramax's artistic success, box- office record and innovative marketing.
Disney's biggest challenge will be to find a new Miramax chief with the creative instincts of Harvey Weinstein and the business savvy of younger brother Bob, whose hugely profitable Dimension Films label produced such valuable franchises as "Spy Kids," "Scary Movie" and "Scream."
No studio in Hollywood comes close to matching Miramax's Academy Awards track record of 249 nominations and 54 wins since 1988, including best picture Oscars for "Chicago," "Shakespeare in Love" and "The English Patient." In this year's race, Miramax has amassed 20 nominations, including two for best picture, "The Aviator" and "Finding Neverland."
"They proved you can create audience allegiance for specialty films and literally become part of the popular vernacular," said former Miramax executive David Linde, who now co-heads NBC Universal's Focus Features, the label behind such Oscar-nominated films as "The Motorcycle Diaries."
As the Weinsteins depart Disney to start a new operation, they leave behind a library of more than 800 titles, which some analysts value at as much as $2 billion, along with the Miramax moniker, an amalgamation of their parents' names, Miriam and Max.
Neither Disney nor the Weinsteins would comment for this report, citing the continuing divorce negotiations.
The Partnership Begins
The Queens, N.Y.-born brothers founded Miramax in 1979, making a name for themselves by skillfully marketing low-cost art house movies, such as "sex, lies and videotape" and "The Crying Game," that became mainstream hits.
But like all independent studios, Miramax had limited access to capital. When Disney offered to buy their company for about $70 million, the Weinsteins jumped. Disney guaranteed the brothers enormous autonomy with the caveat that they limit their investment on each film to $12.5 million.
The partnership began with a bang as Quentin Tarantino's "Pulp Fiction," which cost only $8 million, grossed more than $200 million worldwide. Even as their budgets nudged higher, the Weinsteins limited their financial risk by selling foreign rights before production.
In the mid-1990s, when Anthony Minghella's $27-million epic, "The English Patient," exceeded the mandated cap, the Weinsteins got approval from then-Disney Studios chief Joe Roth to press ahead. After the film grossed around $80 million domestically and landed an Oscar, Disney raised Miramax's budget limit to $20 million.