The independent filmmaking world changed dramatically Friday when Harvey and Bob Weinstein sold their 12-year-old, fiercely nonconformist Miramax Film Corp. to thoroughly mainstream Walt Disney Co.
Unconfirmed reports pegged the purchase price of the privately held Miramax at between $ 60 million and $ 65 million.
The deal marks a sea change in Hollywood, as studios and independents increasingly align to battle a constricting market and booming costs, capture fragmented audiences and win a bigger piece of the box office pie.
It also illustrates how fast fortunes can change in Hollywood. Miramax was a company reportedly close to the edge and cash-strapped only a year ago, before scoring the biggest art-house hit in history with the $ 60 million-plus grosser “The Crying Game.”
Financial terms of the deal were not disclosed, but sources confirmed that Disney has picked up Miramax’s extensive array of debts in addition to a cash payment to bring the company into the fold.
Reports earlier this month said the Weinsteins were asking for $ 80 million, a figure that potential buyers — including Disney, Paramount and 20th Century Fox — balked at.
Financial analyst Ray Katz, of Lehman Brothers, said Paramount thought the price was too high for what it was getting and therefore backed away.
In acquiring Miramax, Disney automatically enters into the business of high-end, lower-budgeted specialized movies — a world dominated by the likes of Neil Jordan and Jane Campion as opposed to Goofy and Mickey.
But the marriage melds two companies with the rarest of qualities in Hollywood — brand identity.
The deal also unites two of the most powerful marketing/distribution companies in the business. Disney has distinguished itself as one of the premier marketers and distributors of mainstream commercial fare, while the Weinsteins — Miramax’s co-presidents — have made their name on their aggressive, shuck-and-jive salesmanship, their taste in high-quality specialized movies and the savvy to nurture new young talent.
Consummation of the purchase underscores Disney Studios chairman Jeffrey Katzenberg’s bid to put his family-film company in the business of making cheaper, more high-brow, artistic movies.
Earlier this year, Katzenberg inked a formal relationship with the prestigious independent producer/director team of Ismail Merchant and James Ivory, who have made such Oscar-winning pix as “Howards End” and “A Room With a View.”
Miramax is hot
In Miramax, Disney gets a company with a hot hand, given the breakthrough success of “The Crying Game” and its stockpile of upcoming movies accumulated through its voracious appetite.
Under the deal, Disney will acquire Miramax’s existing library of more than 200 films, including “Enchanted April,””sex, lies and videotape””Cinema Paradiso” and Oscar winners “Pelle the Conqueror” and “My Left Foot.”
While Miramax will continue to handle its own foreign sales to indie distributors around the world, Disney will have first crack at acquiring international rights to the indie’s product.
One industry observer noted: “Disney is clearly driven to have volume and this allows them to play at three separate non-competitive levels — adult traditional Hollywood films, family films and art films.”
But in joining Disney, Miramax may have bargained for survival.
“Crying Game” and critical success notwithstanding, Miramax has been a free spender in the hard-scrabble independent world — a factor that has led to financial struggle. With Disney’s backing, there will be no more question about Miramax’s ability to meet its obligations.
“This deal speaks to the issue of the depth of the pockets one needs to stay in the business,” said Creative Artists Agency’s Robert Bookman.
At a press conference Friday at the Directors Guild of America, where the deal was announced, Katzenberg said Miramax “has survived enormous hurdles and weathered every obstacle to become a haven for independent filmmakers throughout the world.”
Remaining in New York and continuing to release films under its own label, Miramax will function as a fully autonomous division of Disney’s Buena Vista Pictures Distribution Inc., with assurances built into the deal that the indie will continue to operate its own production, acquisition, marketing and theatrical distribution company.
Miramax will be able to draw upon BV’s financing as well as all of its marketing and distribution resources in the ancillary markets, including video, pay TV and syndication. The Weinstein brothers have said they believe aligning with a major will deliver anywhere from $ 750,000 to $ 2 million per title (Daily Variety, Sept. 17, 1992).
“We are autonomous so we greenlight the movies, we make the financial decisions, the creative decisions,” Harvey Weinstein said.
Katzenberg added, “As the marketplace becomes more and more difficult and the risks become greater and greater financially, giving them the financial resources that we can provide them with ensures that they will continue to be the best, most successful independent film company in the world.”
The Weinsteins, who now become employees of Disney, both signed five-year contracts.
Harvey Weinstein said Miramax not only doesn’t plan to downsize its staff as a result of the Disney deal, but will likely hire additional personnel in its Los Angeles office.
Asked how Disney benefits from being in business with Miramax, Katzenberg said Disney believes the indie is “going to grow and be substantially more profitable.”
Another value he sees in associating with the Weinsteins: “There is so much talent and so many careers they have launched and have fed into the Hollywood mainstream.”
Bob Weinstein noted, “We think this is a perfect synergy, for an independent company to align with a major like Disney. They’ve got the best management in the business … and we think it’s a win situation for an independent.”
Disney’s doctrine of cost-consciousness and keeping their average negative costs below the industry average fits well with the Weinsteins’ legendary ability to squeeze blood from a turnip.
The deal hasn’t been met with universal optimism, however. Many in Hollywood say Miramax’s library is highly exploited, including sequel rights to such movies as “Cinema Paradiso.”
Also at issue is how a traditionally conservative company such as Disney will live with Miramax’s proclivity toward distributing controversial, racy, sexually explicit and sometimes violent movies such as “Reservoir Dogs” and “Tie Me Up, Tie Me Down.”
Miramax has gone to the mat more than once with the Motion Picture Assn. of America over X or NC-17 ratings on several of its pix.
But Katzenberg said he is not at all worried. “Let me make it very clear. We spent a great deal of time talking philosophically about what their vision for the future of their company is and we could not be more comfortable with that.”
With the acquisition, Miramax becomes Disney’s fourth movie label, joining Walt Disney Pictures, Touchstone and Hollywood Pictures. Bob Weinstein said Miramax will continue its custom of distributing 20 movies a year.