After months of negotiations with various buyers that failed to bear fruit, Walt Disney Co. finally reached a deal to sell its Miramax Films unit in a deal that severs the independent movie pioneer's 17-year association with the Burbank studio.
Disney late Thursday signed a definitive agreement to sell Miramax to Filmyard Holding, an investor group led by Los Angeles construction magnate Ron Tutor, for more than $660 million, putting the future of the company with a long string of award-winning films into the hands of a Hollywood outsider.
Tutor and his partners, including Los Angeles private equity firm Colony Capital, delivered a nonrefundable down payment of $40 million to Disney on Thursday, which will be held in escrow until they secure all the financing by a closing date of no later than Dec. 3. Tutor and Colony Capital will each put up about $100 million of the purchase price, while minority investor Jerome Swartz, a retired engineer and philanthropist, is expected to contribute an additional $25 million to $50 million in equity.
Additional investors could be brought in, with the remainder of the purchase price to be financed with debt. It is unclear whether Morgan Creek Productions founder James Robinson, who initially planned to invest as much as $75 million and distribute the Miramax library overseas, will remain involved in the acquisition.
The deal brings closure to Disney's tortured process of trying to unload Miramax and its library of 700 movies that includes such titles as "Pulp Fiction" and "Shakespeare in Love." Under Chief Executive Bob Iger, Disney has shifted away from the low-return specialty film business and focused the studio on "branded," broad-appeal family entertainment. This year Disney shut down Miramax's operations, closing its offices in New York and Los Angeles and laying off 80 employees. "Although we are very proud of Miramax's many accomplishments, our current strategy for Walt Disney Studios is to focus on the development of great motion pictures under the Disney, Pixar and Marvel brands," said Iger in a statement.
Under its deal with Tutor, Disney has agreed to manage the Miramax library for one year. The new owners have an option to renew the arrangement for an additional year.
Tutor, chairman of Sylmar construction giant Tutor Perini Corp., plans to hire a seasoned movie executive to run Miramax and recruit a staff of as many as 50 employees. Plans call for the company to produce a few films a year to freshen the library to sustain its value. Declining DVD and television sales have depressed the value of older film libraries such as Miramax's.
Many people believed that the Miramax library and name would be reclaimed by founders Bob and Harvey Weinstein. But the brothers, backed by investor Ron Burkle, lost out in their bid for the company in May when they lowered their offer at the eleventh hour. Shortly thereafter, Disney turned to Tutor and his advisor, David Bergstein. But Bergstein's role diminished in recent weeks as Tutor sought to distance himself from his advisor's troubled financial history running small film companies.
Colony Capital principal Richard Nanula, a former chief financial officer at Disney, then assumed the lead in negotiations for Miramax. Colony, an equity fund founded by Thomas Barrack that specializes in distressed assets, has had little involvement in the entertainment business other than taking a stake in British movie theater chain Virgin Cinema in the 1990s. Colony also controls Michael Jackson's Neverland Ranch.