Construction magnate Ron Tutor is getting closer to building himself a future in the entertainment biz.
The Los Angeles billionaire’s decision to pair up with local private equity firm Colony Capital has put him within reach of securing Disney’s speciality label Miramax Films and its library of 611 films for about $650 million, sources close to the talks have confirmed.
The pair-up also paints a clearer picture of how a new Miramax under their control might be run, with Colony likely to lead the charge in turning it into a more active producer of pics again — or at least a digital distributor of the titles it owns. Those include indie darlings like “Shakespeare in Love,” “Pulp Fiction,” “The English Patient,” “My Left Foot” and “Chicago.”
That’s because Colony, run by Thomas J. Barrack Jr., already has an established history in acquiring struggling companies and revitalizing them with new leadership — some with a wealth of studio experience.
Film financier and producer David Bergstein is still closely connected to the dealmaking as an adviser. And a sale cannot officially take place without a legal signoff from Miramax’s founders Bob and Harvey Weinstein, who retain rights to some of the shingle’s movies and are in a position to create a legal headache for any interested party. The brothers are said to still be an active contender for the company, backed by supermarket mogul Ron Burkle.
But a sale to Tutor and his assembled moneymen would enable the exec to pursue his growing interest in figuring out ways to exploit a slew of new digital distribution platforms that are taking off with consumers and to wring out more revenue from film libraries.
The success of his bid now seems to rely on the negotiating skills of a top former Mouse House executive.
Richard Nanula, a well-respected executive in Hollywood who served as chief financial officer of the Walt Disney Co., and president of its Disney Stores during his 12 years there, is heading up negotiations for Tutor as he tries to finalize the acquisition of the specialty label and its library of films.
Tutor turned to Nanula thinking the exec’s former ties to Disney might help win over the studio during an exclusive negotiating window that began in early June.
Nanula, who joined Colony as a principal in 2008 to focus on turning around companies the firm acquires or invests in, had been chief financial officer of biotech giant Amgen. He was chairman and CEO of Internet media venture Broadband Sports before that, and spent two years as president and chief operating officer of Starwood Hotels and Resorts. He was at Disney from 1986 to 1998, during which his titles also included senior executive VP and corporate treasurer.
Tutor was forced to rely on a company like Colony to provide financial backing, rather than debt financing from an outside bank, because the overall valuation of the Miramax library has been a sticking point that has kept major financial institutions at bay.
While Disney expected $700 million or more for Miramax, those looking at the books say the 611 films in the library are not worth that much over the longrun, despite new claims that Miramax is owed $300 million in accounts receivable.
Tom and Alec Gores had offered $550 million in cash for the company.
Founded in 1991, Colony has invested more than $45 billion mostly in real-estate assets. Deals have included buying the Raffles, Swissotel, Fairmont and Kingdom hotel chains, as well as the French professional soccer team, Paris Saint-Germain, and Las Vegas’ Station Casinos. It also jointly owns properties like the Atlantic City Hilton and Las Vegas Hilton in the U.S. and a vast portfolio of properties around the world with Accor, Europe’s largest hotel operator, along with movie theater chains across that continent.
Additionally, Colony has been involved in more quirky deals like taking over Michael Jackson’s Neverland Ranch, and arranging a financing and marketing package for photographer Annie Leibovitz to ensure that she not lose rights to her vast library of 100,000 pics.
Whether Bergstein will be part of Tutor’s new Miramax is still unclear.
Bergstein is dealing with a bankruptcy battle with creditors who are seeking back pay from several of his companies. They include SAG and the Directors Guild of America.
Those close to Tutor’s camp say Bergstein may eventually be asked to step aside and let one of Colony’s more experienced execs take charge.
Either way, a sale to Tutor and Colony would be bad news for Miramax’s original founders, Bob and Harvey Weinstein, who had aggressively pursued buying back the company they founded and named after their parents Miriam and Max. They sold it to Disney in 1993 for about $80 million but remained on board as managers. They left to form the Weinstein Co. in 2005.
But don’t count them out just yet.
Their $625 million offer, backed by Burkle’s Yucaipa Cos., fell apart in May after their bid was lowered to $565 million, those close to the talks said. Another reason is said to have been just how much ownership the Weinsteins would have in Miramax and how the Weinstein Co.’s financial troubles would affect the company down the road.
Yet the Weinsteins have since worked out a deal in which they restructured their debt, temporarily giving the rights to 200 movies and about $233 million in receivables on those films to Goldman Sachs and its partner Assured Guaranty. The Weinstein Co. had been weighed down by interest payments on about $500 million in debt. The deal wipes away that debt while providing a new credit line for $100 million to produce a new slate of films.
That should put them on firmer footing to get themselves and Burkle back to the negotiating table.
In fact, sources close to the company said they’re redoubled their efforts with Burkle and are eager to get back into the auction.
They have some leverage: They already own the remake or sequel rights to 17 films in the Miramax library, including “Scream,” for which they’ve started filming a fourth installment, “Spy Kids,” “Scary Movie,” “Halloween” and “Piranha,” for which a 3D version is forthcoming.
But the timing of another round of talks might be too late should Disney spark to plans Nanula may lay out for the future of Miramax — and the final figure behind the dollar sign.
Disney representatives have not commented during the lengthy negotiating process.
For now, Disney is still releasing films through Miramax. It recently skedded the Guillermo del Toro-produced thriller “Don’t Be Afraid of the Dark” to be distribbed through the banner on Jan. 21. It also has Julie Taymor’s “The Tempest,” John Madden’s “The Debt,” Jennifer Aniston’s comedy “The Switch,” and “Gnomeo & Juliet” set for release.