Knowledgeable individuals described Tutor’s share as a “large minority stake.” Tutor partnered with QIA and Tom Barrack’s Colony Capital to buy the library from Disney in 2010, a deal that pitted the group against former Miramax toppers Bob and Harvey Weinstein, who were backed by supermarket magnate Ron Burkle.
Tutor did not respond to requests for comment. Colony Capital declined to comment. QIA could not be reached.
The Weinsteins were said to have had Miramax valued at less than $400 million. Tutor, QIA and Colony Capital eventually paid $663 million (including about $50 million Miramax had in cash).
But observers questioned that price tag then, and some are still questioning the company’s valuation now.
Miramax’s new management team has aggressively exploited the company’s 700-some titles, inking distribution deals with Netflix, Hulu, Lionsgate and others. In 2011, the company completed a film-backed securitization, a rarely used fundraising technique that valued the company at more than $800 million.
But that transaction included no plans for future production, challenging the long-accepted belief that library assets need new content to add or maintain value. Instead, the securitization primarily banked on increased digital and television licensing revenue years into the future, especially from Netflix.
“All of a sudden, less than a year since acquisition and with only 50 people on staff, there’s $350 million of investment grade (debt) available for the library,” Colony Capital Principal and Miramax chairman Richard Nanula told Variety at the time. “I think that’s an amazing story.”
QIA was at one point said to be a preferred investor in Miramax, meaning they got preferential distributions, and other investors may want the company to do another recapitalization in the near future, according to sources close to the company. Tutor’s sale brings QIA’s ownership of the company up to about 75%, according to one source close to Miramax.
But observers question just how long Miramax can continue to survive on the library alone. While the company is developing a number of properties that came with the sale from Disney, talks with outside production companies — including Lakeshore Entertainment — have yielded no greenlit films. A small crew of Miramax employees is attending Sundance this week, but a spokesperson said the company does not plan to make any acquisitions. In fact, they have made no acquisitions either before or after the departure of former CEO Mike Lang. Lang joined the company in December 2010, only to leave 15 months later amidst reports that he clashed with Nanula over strategy and direction. Lang, a former News Corp. exec with deep ties to the digital world, wanted to expand the company’s reach. Nanula, insiders said, did not.
Colony Capital also made a play for Summit Entertainment last year before the company merged with Lionsgate. That purchase could have used Summit’s extensive international sales and distribution operations to further exploit the Miramax library.
CFO Steve Schoch has run Miramax as interim CEO since Lang’s departure in March.
Tutor, tied up in involuntary bankruptcies involving embattled film financier David Bergstein, hinted that he might divest himself of Miramax during a conference call for his construction business, Tutor Perini Corp., May 4. Facing pressure from investors over his involvement in entertainment ventures (Tutor has divested himself of millions of dollars in stock since 2010, reportedly to help fund his film activities and various lawsuits), Tutor told analysts that he planned to liquidate his “movie interests.”
“God willing, I’m probably a week to 10 days away from executing and selling my movie interests,” Tutor said on the call. “If for any reason, awful as it might sound, that doesn’t go through, I’d probably have another stock sale in June or July.”
At the time, sources close to Miramax said the movie interests would exclude the film library. Tutor’s other assets most notably included the Intermedia library, which includes “The Wedding Planner” and “Basic Instinct 2.”