Miramax markets itself
They'd like to say "We're going to Disneyland!" Or Paramount. But the town is skeptical it'll be for $ 80 million.
That's the reported asking price for Miramax, in which both Disney and Paramount are interested. Sources say 20th Century Fox also was approached by the Weinsteins.
In fact, this is hardly the first time the Weinsteins have peddled their 12 -year-old concern, whose true value is tough to gauge since the company's primary assets are the brothers themselves. The Weinsteins are renowned for finding gems like "My Left Foot" and "sex, lies and videotape," and for squeezing out profits with relentless promotion and hype. As "The Crying Game" nears the $ 60 million gross mark, the distribbery has never been hotter.
Sure, there's an OK library. But the biggest hits are the two burly guys themselves, hailed as promotional wizards by their admirers and called (behind their backs) the Brothers Grim.
Their rough-and-tumble dealmaking style has made them part of indie lore, but it might not translate well in the plush corridors of a major studio. The usually talkative Weinsteins, who've recently become tougher to get on the phone than Sam Cohn, aren't talking about their latest campaign.
While Disney insiders say the studio hasn't balked at the price, Paramount exex appear squeamish over the numbers.
Those familiar with the negotiations say Paramount considers the brothers' assessment of their worth and the value of Miramax's encumbered 200-plus title library overblown at best.
One source close to the discussions said: "The Weinsteins and (Paramount topper) Marty Davis are irritating each other. The Weinsteins are known to irritate everyone, but they just can't seem to get along with Paramount on this one. They keep walking out on the meetings."
Expertise for sale
"As of a day or two ago, Disney didn't seem to shudder at the Weinsteins' asking price," said the source. "Miramax has over $ 100 million in revenues and about $ 10 million to $ 15 million in profits. But what a buyer would really be getting for their money is expertise."
Indeed, the value of Miramax depends on how many times the brothers can find a sleeper hit like "The Crying Game," which is no small feat. Other concerns voiced are that the Weinsteins might get complacent with wealth, or could walk away after a few years.
And although they've proven themselves savvy acquisition experts, they are unproven filmmakers with a weak track record in production so far.
"Harvey and Bob are great marketing guys, but the biggest question about Miramax is whether it will grow," said one former Miramax exec. "Unless the Weinsteins change their abrasive management style, it won't. Good people just can't take their treatment after a while. And there are no incentives like an equity interest ever even considered for employees to keep them there. So they burn out and leave. And the Weinsteins themselves would never be good employees.
"As for the company, every two or three years they try to sell it. Universal thought about it at one point. And in late 1989 or 1990 they were considering a public offering but it fizzled," he noted.
Polygram took a look in 1989 when "My Left Foot" ran up high grosses, but eventually backed off. And even in this latest effort, the Weinsteins were in discussions with 20th Century Fox.
"They've shopped themselves all over town," said one Fox exec. "They came to us and made their pitch. We looked at it but as far as we were concerned, their library is encumbered, so there's nothing there other than the services of those two guys. We're not paying $ 80 million for their services. If we want that, we'd hire them. Any major would be crazy to pay that price."
By comparison, analysts who track the studios in talks with Miramax compare their pursuit to the Interscope deal that Ted Field and Bob Cort landed with Polygram last year. Polygram's Filmed Entertainment head Michael Kuhn basically paid $ 35 million for their services at that time, which drew some criticism over the price of expertise.
But Field and Cort's track record rests on higher-risk, high-concept commercial pictures, whereas Miramax is known for art-house product.
But Miramax, which generally picks up about 10 or 15 pix a year, has been in an expansion phase. The purpose is to make itself more attractive to buyers, say insiders.
Last fall the indie closed a deal with U.K.-based Rank, where the lab giant would funnel $ 5 million into the indie in exchange for its processing business. The two companies said at the time they expect to buy future movies together and pursue sequels and remakes from Rank's 300-title film library.
As for Miramax's financials, the company is not strapped by a huge amount of borrowing. Over the past three years, Miramax has shown dips in its profit margins from 9% to 5%, although "The Crying Game's" performance could change that significantly. The Weinsteins have also said they expect a boost in future dividends from the company's entry into the international arena.
MerchantIvory question
Also in question is how well the Weinsteins would mix with Disney's rigid corporate structure, or even Par's. Another Disney question is how well they get along with former collaborators Ismail Merchant and James Ivory, the longtime indie filmmakers who signed a deal last year with Disney.
Though the two parties had bitter disagreements over Miramax's distribution of "Mr. and Mrs. Bridge," Merchant feels there is room at Disney for both.
"You can have many people under the same roof, as long as they keep their independence and identity," he said. "Miramax, with all their oddities, have done some remarkable things, and have contributed greatly to independent cinema. One can only quibble with the personalities of Harvey and Bob."
He even left open the possibility of another collaboration: "They can promote the hell out of a film, and could handle a Merchant Ivory film as long as they follow certain criteria. When it comes to content of films, they will have to live with it, they cannot dictate."
