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Disney puts Miramax Films up for sale

The Burbank studio has been shopping around its specialty film label for more than a year, but some say its $700-million asking price is too steep.

February 03, 2010|By Dawn C. Chmielewski and Claudia Eller

Walt Disney Co. is attempting to learn whether it can still mine gold from Academy Award winners such as "Shakespeare in Love" and "The English Patient" from its Miramax Films unit.

The Burbank studio had barely closed the New York and Los Angeles offices of its specialty film label and laid off dozens of employees last week when news surfaced that Miramax was in play. But as Disney entertains inquiries from possible buyers, people close to the situation say that the $700-million price that Disney places on the asset could be a stretch.

Several investment firms and independent studios -- including Lions Gate Entertainment, Summit Entertainment and Amir Malin's investment fund Qualia Capital -- have expressed interest in Miramax and its library of about 600 movies. Still, Disney's asking price could be too steep for an asset that has declining value, as DVD sales have fallen precipitously and pay TV deals are no longer as reliably lucrative.

Disney is engaged in talks with possible suitors at a time when another major film library, Metro-Goldwyn-Mayer Inc., is also on the auction block and having trouble getting the $2 billion to $2.5 billion that the beleaguered studio's lenders are seeking. Any negotiations for Miramax could be complicated by other factors, such as rights that are encumbered by previous distribution deals.

Several would-be suitors said Disney's expectations don't match the value of Miramax, whose film catalog by some estimates generates cash flow of less than $100 million annually -- and possibly less than $50 million. Revenue for the company is about $300 million, a knowledgeable person said.

If Disney doesn't get the price it seeks, the entertainment giant, which has been quietly discussing a sale with various parties for more than a year, could hold on to Miramax until the financial markets improve. It's not known whether Disney would be willing to sell Miramax for the $400 million to $500 million that many believe it's worth.

A Disney spokesman declined to comment on a possible sale of Miramax, which was first reported on the website.

Miramax's days with Disney have been numbered since the ouster in September of studio Chairman Dick Cook, who fought to retain the label. Though Miramax has released such prestigious films as "The Queen" and "No Country for Old Men," it also had several recent box-office flops, including "Extract" and "Cheri." Such art-house fare is out of step with Disney President and Chief Executive Robert Iger's emphasis on building family-focused entertainment brands with broad appeal that can be adapted into theme park attractions and consumer products.

In October, Disney slashed Miramax's staff by 70%, sharply reduced the number of films it would release and forced out studio head Daniel Battsek. Last week, Disney closed Miramax's New York headquarters and Los Angeles offices. The distributor still has six completed films to be released, including the animated feature "Gnomeo and Juliet." "The Baster," starring Jennifer Aniston, and the thriller "The Debt," with Sam Worthington.

It is an ignominious end for the studio founded in 1979 by brothers Bob and Harvey Weinstein, who revolutionized the independent film scene with such offbeat hits as "sex, lies, and videotape," "The Crying Game" and "Pulp Fiction." They sold Miramax to Disney in 1993 for $80 million and parted company with their corporate parent in 2005 after an ugly feud.

The Weinsteins would like nothing more than to reclaim the studio, named for their parents Miriam and Max. But that appears to be a long shot, given their own financial struggles. The privately held Weinstein Co. has been laying off staff, shedding non-core businesses and scaling back its production plans, going from making 20 movies a year to just eight. The brothers received good news Tuesday, when their Quentin Tarantino movie "Inglourious Basterds," was nominated for nine Oscars, including best picture, and Weinstein Co. walked away with 13 nominations overall.

Reached Tuesday, Harvey Weinstein appeared distraught over Miramax's fate.

"I'm sad that it's closing," he said. Asked whether he would try to buy back Miramax, he replied, "As people approach me, I'm considering all my options."


Times staff writer Ben Fritz contributed to this report.

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