Analysts say the Weinstein brothers may miss Disney's vast resources.
By Claudia Eller and Richard Verrier | Los Angeles Times and Sentinel Staff Writer
Posted October 24, 2004
Be careful what you wish for, Harvey.
For months, Miramax Film Corp. honcho Harvey Weinstein has been telling his industry friends that he can't wait to get out from under Walt Disney Co. He has complained that, for all of Disney's resources, the company led by Chief Executive Officer Michael Eisner is too rigid and restrictive to be a good creative partner.
But as talks about extending Miramax's relationship with its corporate parent have foundered, the prospect of life after Disney may not be as bright as Weinstein and his brother Bob once hoped. Even if they can find private investors to bankroll a new venture, many say, it seems unlikely that life outside the Magic Kingdom will be better than life inside.
"It's difficult to envision the Weinsteins finding the resources or capital that would give them the same financial flexibility that they've had," said media analyst Jeffrey Logsdon. Although the brothers will surely lure some investors, Logsdon said a recent media report that suggested they could easily raise $1 billion to create their own production company "defies financial logic."
To assess what the future might hold, the Weinsteins have engaged in talks with such investment-banking houses as Goldman Sachs and Lehman Bros. as well as private equity firm Blackstone Group.
Although prohibited from entering into any formal agreements before resolving Miramax's deal with Disney, Harvey Weinstein has been promoting the idea of an independent start-up with the kind of bravado he uses to wage his Oscar campaigns.
But some analysts and deal makers say that, despite the brothers' record of award-winning hits, including Chicago and Shakespeare in Love, the hype is getting ahead of the reality.
In recent weeks, Disney put the Weinsteins on notice that their current employment contracts would not be renewed under the existing financial terms when they expired next September. That leaves open the possibility that a new deal could be struck. But sources close to both parties say the chances are slim.
More likely, they say, is a settlement that would end the Weinsteins' 11-year partnership with Disney for good.
The Disney board, which has rejected the Weinsteins' requests to present their case, is expected to address the company's relationship with Miramax at a meeting this month.
The Weinsteins and Disney executives would not comment.
If the Weinsteins end up on their own, their trademark brusque style could make investors wary. Harvey, in particular, is famous for b__________g authority.
"They're not going to get everything they want because people are aware of their reputation," said Dennis Leibowitz, money manager with Act II Partners in New York.
Another potential turnoff for investors is the fact that the Weinsteins must leave behind not only their famed moniker, which the brothers invented by combining their parents' names -- Miriam and Max -- when they founded the company 25 years ago, but also Miramax's 550-title library.
For investors leery of the volatile movie business, film libraries are attractive because they generate steady cash flow, which in turn helps fund overhead and film development, production and marketing.
As the Weinsteins continue to talk with investment banking firms, the role they've played in revolutionizing the world of independent film gives them undeniable cachet. There is little doubt that the brothers could generate some heat -- and dollars -- on Wall Street. The issue is: How much?
"There's no question that these are very bankable people," said Jill Greenthal, a partner at Blackstone Group.
Still, it's clear that investors will need to be convinced that any new venture will be run with firm fiscal restraints.
Since selling their maverick New York-based movie company to Disney in 1993 for about $80 million, the Weinsteins have had a tempestuous relationship with their corporate parent -- a situation that boiled over this spring when Eisner prohibited Miramax from investing in and releasing Michael Moore's anti-President Bush documentary Fahrenheit 9/11.
Despite their gripes with Disney, some industry insiders say, the Weinsteins may only now be realizing how good they've had it.
Sources close to them say they still hold out hope that, particularly now that Eisner has announced his retirement in 2006, there may be a chance to make a new beginning with Disney.
Said one Hollywood executive who knows the Weinsteins well: "It's the classic case of you want what you don't have and take for granted what you do have."
Claudia Eller writes for the Los Angeles Times, a Tribune Publishing newspaper. Sallie Hofmeister and Joseph Menn of the Times contributed to this report.
Richard Verrier can be reached at richard.verrier@latimes.com or 1-800-528-4637, Ext. 77936.
By Claudia Eller and Richard Verrier | Los Angeles Times and Sentinel Staff Writer
Posted October 24, 2004
Be careful what you wish for, Harvey.
For months, Miramax Film Corp. honcho Harvey Weinstein has been telling his industry friends that he can't wait to get out from under Walt Disney Co. He has complained that, for all of Disney's resources, the company led by Chief Executive Officer Michael Eisner is too rigid and restrictive to be a good creative partner.
But as talks about extending Miramax's relationship with its corporate parent have foundered, the prospect of life after Disney may not be as bright as Weinstein and his brother Bob once hoped. Even if they can find private investors to bankroll a new venture, many say, it seems unlikely that life outside the Magic Kingdom will be better than life inside.
"It's difficult to envision the Weinsteins finding the resources or capital that would give them the same financial flexibility that they've had," said media analyst Jeffrey Logsdon. Although the brothers will surely lure some investors, Logsdon said a recent media report that suggested they could easily raise $1 billion to create their own production company "defies financial logic."
To assess what the future might hold, the Weinsteins have engaged in talks with such investment-banking houses as Goldman Sachs and Lehman Bros. as well as private equity firm Blackstone Group.
Although prohibited from entering into any formal agreements before resolving Miramax's deal with Disney, Harvey Weinstein has been promoting the idea of an independent start-up with the kind of bravado he uses to wage his Oscar campaigns.
But some analysts and deal makers say that, despite the brothers' record of award-winning hits, including Chicago and Shakespeare in Love, the hype is getting ahead of the reality.
In recent weeks, Disney put the Weinsteins on notice that their current employment contracts would not be renewed under the existing financial terms when they expired next September. That leaves open the possibility that a new deal could be struck. But sources close to both parties say the chances are slim.
More likely, they say, is a settlement that would end the Weinsteins' 11-year partnership with Disney for good.
The Disney board, which has rejected the Weinsteins' requests to present their case, is expected to address the company's relationship with Miramax at a meeting this month.
The Weinsteins and Disney executives would not comment.
If the Weinsteins end up on their own, their trademark brusque style could make investors wary. Harvey, in particular, is famous for b__________g authority.
"They're not going to get everything they want because people are aware of their reputation," said Dennis Leibowitz, money manager with Act II Partners in New York.
Another potential turnoff for investors is the fact that the Weinsteins must leave behind not only their famed moniker, which the brothers invented by combining their parents' names -- Miriam and Max -- when they founded the company 25 years ago, but also Miramax's 550-title library.
For investors leery of the volatile movie business, film libraries are attractive because they generate steady cash flow, which in turn helps fund overhead and film development, production and marketing.
As the Weinsteins continue to talk with investment banking firms, the role they've played in revolutionizing the world of independent film gives them undeniable cachet. There is little doubt that the brothers could generate some heat -- and dollars -- on Wall Street. The issue is: How much?
"There's no question that these are very bankable people," said Jill Greenthal, a partner at Blackstone Group.
Still, it's clear that investors will need to be convinced that any new venture will be run with firm fiscal restraints.
Since selling their maverick New York-based movie company to Disney in 1993 for about $80 million, the Weinsteins have had a tempestuous relationship with their corporate parent -- a situation that boiled over this spring when Eisner prohibited Miramax from investing in and releasing Michael Moore's anti-President Bush documentary Fahrenheit 9/11.
Despite their gripes with Disney, some industry insiders say, the Weinsteins may only now be realizing how good they've had it.
Sources close to them say they still hold out hope that, particularly now that Eisner has announced his retirement in 2006, there may be a chance to make a new beginning with Disney.
Said one Hollywood executive who knows the Weinsteins well: "It's the classic case of you want what you don't have and take for granted what you do have."
Claudia Eller writes for the Los Angeles Times, a Tribune Publishing newspaper. Sallie Hofmeister and Joseph Menn of the Times contributed to this report.
Richard Verrier can be reached at richard.verrier@latimes.com or 1-800-528-4637, Ext. 77936.