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Weinsteins Face Life After Disney

Now that the filmmaking brothers have finalized a split from the media giant, the duo will be starting over again with less money and clout.

March 30, 2005|Richard Verrier and Claudia Eller | Times Staff Writers

After years of flying in private jets on Disney's dime, of wielding Disney's clout and of dipping into Disney's very deep pockets, Harvey and Bob Weinstein now have what they say they wanted: freedom from the constraints imposed by a global media conglomerate.

But unless they impose some restrictions on their spending, not to mention yelling, many say the tempestuous brothers may have trouble duplicating the kind of success they enjoyed at Disney.

The Weinsteins, whose contract with parent Walt Disney Co. expires in September, have six months to firm up plans for what they described Tuesday as a "fully integrated media company." They appear to have their work cut out for them. Among the things the duo lacks are a marquee name (Miramax Film Corp. stays with Disney), a staff (top Miramax people have been jumping ship for weeks) and a film library to fuel cash flow.

"Clearly, they've had enormous financial flexibility under the Disney umbrella, which is not likely to continue no matter how they design their independent company," said Jeffrey Logsdon, an analyst with Harris Nesbitt.

Under the terms of a long-awaited settlement announced Tuesday, the Weinsteins will continue to have a relationship with Disney on individual projects -- at Disney's discretion. In fact, the Weinsteins' new company will start with six movies that Disney has agreed to co-finance, including "Scary Movie 4." The Weinsteins are hoping that ties to Disney will help them snag investors for 10 or so other projects, including "Derailed," starring Jennifer Aniston and Clive Owen, and director Anthony Minghella's "Breaking and Entering." So they're not starting from scratch.

But to achieve their higher ambitions of creating a self-standing company that also reaches into television, publishing and the Internet, it will take considerable funding.

No longer can the Weinsteins rely on the $700-million allowance that Disney doled out each year for them to acquire, distribute and market films. When Disney bought Miramax in 1993, the Burbank company used its considerable clout and relationships with video wholesalers around the country to open up new markets for Miramax's quirky and often controversial art house movies, particularly in the Midwest. This also helped establish the Miramax brand outside New York and Los Angeles.

The brothers also will no longer be able to exploit Disney's international reach to distribute and market DVDs, Hollywood's fastest-growing revenue source.

It's no accident that virtually all of the so-called specialty film operations are now owned by major media companies. The only major independent left is Lions Gate Entertainment, which unlike the Weinsteins has a huge film library that throws off enough cash to finance its overhead.

In other words, the Weinsteins are probably in for some belt-tightening.

They'll start off, for example, with a staff of fewer than 100 people, compared with the nearly 500 they once employed at Miramax. They plan to release 15 movies a year, rather than the dozens they distributed annually under Disney ownership.

Although Harvey Weinstein has longed to launch a Miramax movie cable channel, he probably will have to put those plans on hold until he and his brother can amass enough movies to develop a viable and varied film library. (Disney retains the Miramax library of about 550 titles.)

One of the disadvantages the Weinsteins may also face is the loss of a powerful partner to negotiate favorable payment terms from theater owners wary of antagonizing big studios -- and along with that, Disney's collection muscle.

Start-up independent distributor Newmarket Films recently had trouble collecting money it was owed from exhibitors for Mel Gibson's blockbuster "The Passion of the Christ." Gibson's company, Icon Productions, recently settled a lawsuit it filed against the nation's largest theater chain, Regal Entertainment Group.

Sources close to Disney and the Weinsteins suggest that, in the short term, the Weinsteins may try to hook up with a major studio to handle their video and international releases in much the same way DreamWorks has enlisted NBC Universal.

The Weinsteins also have something else working to their advantage: a long track record of box-office hits, which exhibitors take into account when negotiating terms with studios. But investors also are aware of several expensive misfires, most notably "Cold Mountain" in 2003.

"Despite their extraordinary track record, the investment community is much more sophisticated today in assessing the risks involved in financing a movie slate," said Christopher Dixon, a managing director at Gabelli Group Capital Partners.

"There's nothing to prevent Bob and Harvey from being successful in their new company," he said, "but they need to adhere to a business plan that's not only realistic but can generate returns that will reward investors."

To that concern, the Weinsteins told reporters Tuesday that they had assembled an "honorary advisory board" that includes such high rollers as investment banker Steve Rattner and Cablevision Inc. Chief Executive James Dolan, as well as actors Robert Redford and Paul Newman.

"Any board with Butch Cassidy and the Sundance Kid," Harvey Weinstein quipped, "is a good group of people."

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Miramax by the numbers

26: Years Harvey and Bob Weinstein ran Miramax.

11: Miramax films that grossed over $100 million domestically.

53: Academy Awards won by Miramax since being acquired by Disney in 1993.

550: Roughly the number of film titles in the Miramax library, which Disney is keeping.

20: Best-selling books published by Miramax Books.

3: Years Talk magazine lasted.

10: Miramax films involving Quentin Tarantino.

Source: Miramax, Times research

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