Doubts remain about viability of TWC
Flying under the radar is not in Harvey Weinstein’s DNA.
He casts a giant shadow on the Croisette and in his dealings, attracting attention to himself, his stars and his movies. Weinstein, 55, is all about living large: throwing large parties and fundraisers (this year’s AMFAR benefit raised a record $7.5 million), announcing large prebuys, and often adjusting large deal terms.
But the Weinstein Co. — launched by Bob and Harvey Weinstein amid considerable hype some 19 months ago — has spent millions and produced several profitable films, but only one big grosser: Dimension’s “Scary Movie 4,” half-owned by Disney, earned $91 million in 2006.
Including the titles released by MGM, TWC’s domestic box office for 2006 was $311 million, second among independents to Lionsgate. But as of May 20, their domestic box office for 2007 was just $76.1 million.
This year at Cannes, there were hints of the old Weinstein magic. The brothers had three high-profile entries: Wong Kar Wai’s competition fest opener “My Blueberry Nights,” Michael Moore’s out-of-competition health doc “Sicko” and Quentin Tarantino’s in-competition recut of “Death Proof.”
But the buzz on the Croisette was focused largely on the brothers’ miscues: Bob and Harvey’s spending on “Grindhouse,” which cost some $100 million to make and market worldwide, but which has grossed only $25 million thus far (they sold off non-English-language foreign territories); their less-than-productive distribution deal with MGM; their rumored cash-flow problems; and speculation that they could lose TWC to their investors, who could force them to sell or merge to survive.
If DreamWorks couldn’t stand alone as an indie studio, the logic goes, how can the Weinstein Co.?
Something else seems to be fueling the rumors, and maybe it’s the rivals’ wishful thinking that the rumors are true.
Harvey has always been a magnet for media attention, but he says he’s tired of all the sniping and misinformation.
“We’re financially healthy,” says Harvey, wearing a black shirt and pants in his Majestic Hotel suite. “This is done out of jealousy. Execs and people I know who look cool and have a big office just say nasty shit. At the end of the day, no one made more money in the indie sector than Bob and I both personally and professionally: $400 million in 12 years, not including the sale of Miramax.”
When the Weinstein brothers left Disney to start the Weinstein Co., they boasted of the $1 billion they were raising through Goldman Sachs ($490 million in equity and a $500 million line of credit) and the scale of the “giant multimedia company” they were building.
Harvey challenged the very suggestion they were in the movie production and distribution business. That was too small for his outsized ambitions.
Now the empire-builders own 70% of the cash-generating video company Genius, the social networking site aSmallWorld.net, a Halston product line, the Ovation arts channel, a 1,500-title library (including the acquisition of Wellspring and some Asian and grindhouse titles), and a separate $285 million Asia Fund.
All well and good. But with an indie company like TWC, it’s not so much about how much money each movie makes as it is about meeting quarterly projections.
Cash flow is key. If the lenders don’t get their money back in a timely manner, they might be unwilling to open up the credit line without new security coming in. After an early pay TV misunderstanding with Encore, the Weinsteins were forced to forge a distribution arrangement with MGM — in effect paying MGM for their rich Showtime deal. (While they take responsibility for supervising their releases thru MGM, the Weinsteins will be free to forge their own deal in 2009.) Weinstein insists that he has $300 million in credit which he is free to spend however he wants.
“We’ve been surpassing our numbers,” Weinstein insists, pointing out that the original projections assumed they would go through a studio for homevideo, but now share in the Genius returns.
Dimension tried to get an Encore deal but couldn’t. The reason the Weinsteins keep making distribution deals with the likes of Lionsgate (“Sicko”) is to access their pay TV deals.
From the start, the point of building the Weinstein Co. was to turn around and take it public. But Harvey says the decision whether to go public is controlled by the board — and that he and Bob control the board.
While Harvey has been forced — by his brother, among others — to state that he is refocusing his energy back on the movie business, he is also tired of hearing assessments of his company’s financial health that are not true.
When Focus Features or Lionsgate has a tough year, he says, the media ignores it. But they jump all over him.
“We made $420 million last year. (That’s the implied value of Genius based on 70% of its stock price.) What we’re missing is one big glamorous theatrical hit, and it takes a couple of years to get productions up and running.”
Prospects are rosy for the genre pics “1408,” Rob Zombie’s zombie remake of “Halloween” and “The Nanny Diaries,” which Weinstein moved off a crowded spring release date. “Sicko” should do substantial business around the world this summer, based on its Cannes reception. DVD expectations on “Death Proof” and “Planet Terror” are high. Harvey is high on the animated film “Igor,” which already has a sequel in the works.
On the Oscar front, the Sundance pickups “Grace Is Gone” and “La Misma Luna,” acquired with Fox Searchlight, could be contenders along with Moore’s “Sicko.”
Harvey is also looking forward to TWC’s fully owned projects coming to market, including Denzel Washington’s “The Great Debaters,” Wayne Kramer’s “Crossing Over,” Stephen Daldry’s “The Reader” and Anthony Minghella’s “The No. 1 Ladies Detective Agency.”
“Next year it’s my risk and my record — my slate,” he says.
Weinstein Intl. has brokered output deals with TF1 in France, Motion Picture Distribution in Canada, RAI Cinema for theatrical, homevideo and free TV in Italy, Paramount in the U.K. for one year, a distribution deal with Australia/New Zealand’s Village Roadshow, and a coveted German free TV deal covering three years.
The doubts about the Weinsteins have many sources: the deals gone bad, the movies on the shelf, the rejiggered release schedules, the employees who have left.
For his part Weinstein dismisses such negative buzz.
“These rumors come from competitive sources or disgruntled former employees or people along these lines,” he says.
While they’ve had public tangles with filmmakers, from Pedro Almodovar and Chen Kaige to Julie Taymor, they also inspire loyalty from Quentin Tarantino, Robert Rodriguez and Kevin Smith.
Luc Besson claimed at Suicidegirls.com last week that the Weinsteins butchered the release of the animated family film “Arthur and the Invisibles”: “Its American distributor was the worst I have worked with in my entire life, in any country, because they changed so much of the film and tried to pretend the film was American.”
Harvey responded in the New York Daily News by calling Besson a “has-been” and offering him $1 million if he could prove that he made the film for the $85 million he originally claimed.
That’s one way to win friends and influence people.