Plotting a New Take
Disney Lays Groundwork
For Miramax Films' Future
As Weinsteins' Exit Looms
By BRUCE ORWALL
Staff Reporter of THE WALL STREET JOURNAL
December 10, 2004; Page B1
As Miramax Films seeks a bounty of Academy Award nominations for movies like "The Aviator" and "Finding Neverland," it may well be the last time Miramax co-Chairmen Harvey and Bob Weinstein will go Oscar hunting as executives of the Walt Disney Co. unit.
Disney and the Weinsteins, the sibling duo behind Miramax, are grinding slowly toward an expensive and probably inevitable split.
The Weinsteins founded Miramax in 1979 and have continued to run it since Disney's $70 million acquisition of the company in 1993, generating prestigious titles like "Shakespeare in Love," "Chicago" and "The English Patient."
They have built Miramax into a Hollywood force that by some estimates is worth $2 billion or more. But this year, the latest in a series of never-ending clashes between Disney and the Weinsteins -- over issues like compensation, autonomy and even whether the unit was profitable -- came to a head.
The situation became so toxic that Disney this year moved toward exercising an option the company holds to opt out of the Weinstein's contract next fall, something now seen as a virtual certainty. While people close to both sides caution that the situation is ever-changing, for some time the discussions between Disney and the Weinsteins have focused solely on the mechanics of a breakup. It could still take weeks or even months to work out the details.
Breaking ties with the Weinsteins won't be cheap for Disney. People familiar with the matter say that it will probably cost the company more than $100 million to settle its obligations to the Weinstein brothers. That figure would cover their bonus payments for 2004 and 2005, plus a buyout of their future profit participation in the library of films they have created. In a joint statement, Miramax and Disney said: "There are ongoing amicable discussions."
Since selling their company to Disney, the Weinsteins have been among the best compensated executives in Hollywood, thanks to an annual bonus formula that lets them participate in the profits generated by the films Miramax released. In all, they have already received in the neighborhood of $250 million in compensation over the years.
The possible payout to the Weinsteins comes at a tricky time for Disney. Some past and current directors are currently fighting off a shareholder suit against them in Delaware over the company's $140 million exit package to former President Michael Ovitz, who worked just 14 months at the company. Certainly, the Weinsteins present a much different case, having built a valuable asset for Disney over more than a decade. Nonetheless, when the estimated $275 million payout to former Disney studio chief Jeffrey Katzenberg is taken into account, Disney in the last decade will have paid roughly $500 million to sever ties with just four executives.
While money is always a complicated issue between Disney and the Weinsteins -- in the past, it has often taken months to simply negotiate their annual bonus -- compensation is not the only thing at stake in the current negotiations. Other big issues involve the future of projects Miramax has been developing; the company's publishing unit; and whether the Weinsteins will be able to reacquire the Miramax name from Disney, which at this point does not want to sell. Such issues could have an impact on how much cash the Weinsteins ultimately walk away with.
Many of those topics remain tricky issues. For example, the parties must together decide which future movie projects the Weinsteins can take with them to their new company, and whether Disney will help fund some of those films or distribute them. A couple of already completed movies -- including "Proof," starring Gwyneth Paltrow, and "An Unfinished Life," directed by Lasse Hallstrom -- could also be points of contention. Another important future project may be "Mila 18," based on a Leon Uris novel that Harvey Weinstein has expressed interest in directing.
As the Disney talks plod on, the Weinsteins have been talking with potential investors who might back their future ventures in the film and publishing worlds. Last week, for example, Mr. Weinstein hosted Cablevision Systems Corp. Chief Executive James Dolan at the Los Angeles premiere of Miramax's Howard Hughes biopic "The Aviator."
At the same time, Disney is laying the groundwork for what Miramax will be after the Weinsteins' expected departure. One certainty is that it will be a lot smaller. One of Disney's frustrations with Miramax over the past few years has been the way the operation has ballooned from a small independent film company into the equivalent of a major studio. Miramax this year had a $700 million budget for producing and marketing films, a figure that does not include the company's overhead.
Going forward, people familiar with the matter say, Miramax will likely be a much more modest operation, with perhaps $300 million to spend, including overhead. The idea would be to return Miramax to its roots, when it frequently made substantial hits -- and profits -- of tiny films that the company either made or acquired from other producers. While Hollywood has been rife with speculation about who Disney might hire to manage the post-Weinsteins Miramax, people close to the company say that such decisions are still quite a ways off.
If and when the Weinsteins leave, Disney will have to figure out what to do about dozens of films the Weinsteins have acquired, but never released, over the years. Independent film producers have long complained that Miramax bought or made films that it cavalierly abandoned when the projects didn't come out as planned. Titles like "Prozac Nation," a Christina Ricci movie based on the Elizabeth Wurtzel book, sometimes vanish into Miramax's vault. That film was supposed to be released several years ago but hasn't surfaced for a variety of reasons.
Write to Bruce Orwall at bruce.orwall@wsj.com
Disney Lays Groundwork
For Miramax Films' Future
As Weinsteins' Exit Looms
By BRUCE ORWALL
Staff Reporter of THE WALL STREET JOURNAL
December 10, 2004; Page B1
As Miramax Films seeks a bounty of Academy Award nominations for movies like "The Aviator" and "Finding Neverland," it may well be the last time Miramax co-Chairmen Harvey and Bob Weinstein will go Oscar hunting as executives of the Walt Disney Co. unit.
Disney and the Weinsteins, the sibling duo behind Miramax, are grinding slowly toward an expensive and probably inevitable split.
The Weinsteins founded Miramax in 1979 and have continued to run it since Disney's $70 million acquisition of the company in 1993, generating prestigious titles like "Shakespeare in Love," "Chicago" and "The English Patient."
They have built Miramax into a Hollywood force that by some estimates is worth $2 billion or more. But this year, the latest in a series of never-ending clashes between Disney and the Weinsteins -- over issues like compensation, autonomy and even whether the unit was profitable -- came to a head.
The situation became so toxic that Disney this year moved toward exercising an option the company holds to opt out of the Weinstein's contract next fall, something now seen as a virtual certainty. While people close to both sides caution that the situation is ever-changing, for some time the discussions between Disney and the Weinsteins have focused solely on the mechanics of a breakup. It could still take weeks or even months to work out the details.
Breaking ties with the Weinsteins won't be cheap for Disney. People familiar with the matter say that it will probably cost the company more than $100 million to settle its obligations to the Weinstein brothers. That figure would cover their bonus payments for 2004 and 2005, plus a buyout of their future profit participation in the library of films they have created. In a joint statement, Miramax and Disney said: "There are ongoing amicable discussions."
Since selling their company to Disney, the Weinsteins have been among the best compensated executives in Hollywood, thanks to an annual bonus formula that lets them participate in the profits generated by the films Miramax released. In all, they have already received in the neighborhood of $250 million in compensation over the years.
The possible payout to the Weinsteins comes at a tricky time for Disney. Some past and current directors are currently fighting off a shareholder suit against them in Delaware over the company's $140 million exit package to former President Michael Ovitz, who worked just 14 months at the company. Certainly, the Weinsteins present a much different case, having built a valuable asset for Disney over more than a decade. Nonetheless, when the estimated $275 million payout to former Disney studio chief Jeffrey Katzenberg is taken into account, Disney in the last decade will have paid roughly $500 million to sever ties with just four executives.
While money is always a complicated issue between Disney and the Weinsteins -- in the past, it has often taken months to simply negotiate their annual bonus -- compensation is not the only thing at stake in the current negotiations. Other big issues involve the future of projects Miramax has been developing; the company's publishing unit; and whether the Weinsteins will be able to reacquire the Miramax name from Disney, which at this point does not want to sell. Such issues could have an impact on how much cash the Weinsteins ultimately walk away with.
Many of those topics remain tricky issues. For example, the parties must together decide which future movie projects the Weinsteins can take with them to their new company, and whether Disney will help fund some of those films or distribute them. A couple of already completed movies -- including "Proof," starring Gwyneth Paltrow, and "An Unfinished Life," directed by Lasse Hallstrom -- could also be points of contention. Another important future project may be "Mila 18," based on a Leon Uris novel that Harvey Weinstein has expressed interest in directing.
As the Disney talks plod on, the Weinsteins have been talking with potential investors who might back their future ventures in the film and publishing worlds. Last week, for example, Mr. Weinstein hosted Cablevision Systems Corp. Chief Executive James Dolan at the Los Angeles premiere of Miramax's Howard Hughes biopic "The Aviator."
At the same time, Disney is laying the groundwork for what Miramax will be after the Weinsteins' expected departure. One certainty is that it will be a lot smaller. One of Disney's frustrations with Miramax over the past few years has been the way the operation has ballooned from a small independent film company into the equivalent of a major studio. Miramax this year had a $700 million budget for producing and marketing films, a figure that does not include the company's overhead.
Going forward, people familiar with the matter say, Miramax will likely be a much more modest operation, with perhaps $300 million to spend, including overhead. The idea would be to return Miramax to its roots, when it frequently made substantial hits -- and profits -- of tiny films that the company either made or acquired from other producers. While Hollywood has been rife with speculation about who Disney might hire to manage the post-Weinsteins Miramax, people close to the company say that such decisions are still quite a ways off.
If and when the Weinsteins leave, Disney will have to figure out what to do about dozens of films the Weinsteins have acquired, but never released, over the years. Independent film producers have long complained that Miramax bought or made films that it cavalierly abandoned when the projects didn't come out as planned. Titles like "Prozac Nation," a Christina Ricci movie based on the Elizabeth Wurtzel book, sometimes vanish into Miramax's vault. That film was supposed to be released several years ago but hasn't surfaced for a variety of reasons.
Write to Bruce Orwall at bruce.orwall@wsj.com