Weinstein's indie video co. battling economy
Long before holiday shopping season, indie video outfit Genius Products started offering deep discounts.On its stock. Over-the-counter shares in the Santa Monica, Calif.-based company, the homevid distrib for brands such as ESPN, Sesame Workshop and the Weinstein Co. (which owns 70% of Genius), now trade at 6 cents. That’s down from more than $2.50 a year ago, and word in mid-October that the company plans to restate 2006 and 2007 earnings due to an accounting irregularity didn’t help. Indie rivals, meanwhile, are whispering that the ailing concern is telling some of its brands to seek distribution elsewhere; they also marvel at Genius’ overhead, due largely to its hefty staff of 125. The handful of analysts covering Genius attribute the free fall to a range of factors. There has been overall erosion in the DVD biz and questions about the muscle of its film and TV titles. One common scenario that’s been floated is the Weinsteins buying the 30% of the company they don’t own and taking the whole thing private. It is an open question — and one neither company chooses to discuss — about whether such a move is even possible given the pressure on TWC to focus on delivering more of the movie hits it promised Goldman Sachs and other investors. Last year at this time, the sentiment was the opposite — that Genius could be a vehicle for TWC to go public. At that time, the Weinsteins touted their investment in the small video company with just $32 million in revenue (before the restatement) as a secure way to profit without the risk exposure of theatrical. Genius got a total reboot in 2004, eight years after its founding. The main architects were Steve Bannon, a former Goldman Sachs exec who is now chairman, and onetime Warner Home Video exec Trevor Drinkwater, now chief exec. The company set about signing output deals (Animal Planet, World Wrestling Entertainment and Tartan are now in the portfolio) and expanding its staff. In order to get access to the Weinstein slate, Bannon agreed to a 5% distrib fee — easily half the going rate. That’s another part of the conundrum: Given how much it saves on distribution fees, what’s the incentive to redo the deal? Diane Garrett contributed to this report.
Follow @Variety on Twitter for breaking news, reviews and more