..Gary Dretzka
..Noah Forrest
..Leonard Klady
..David Poland
..Douglas Pratt
..Ray Pride
..Kim Voynar
..Michael Wilmington

Maxetmom Risk...

If the intention was to stir up a little excitement, the official news and details of Harvey and Bob Weinstein's segue from Disney was a flat out bust.

The devil may indeed be in the details but the broad strokes provided little worth noting. Les Freres Weinstein will be out of Miramax before the autumn; they will retain the Dimension name but not the important moniker; they will receive a settlement package; and they will start a new company that will probably look more like their old company than the future configuration of the entity they are about to depart.

It's a press release that could have been written by any decent journalist covering their beat in the past six months. In addition to an exit package reported to be $130 million, they retain a handful of projects and tiny percentages of potential profits from current and imminent productions.

The rest is speculation that boils down to what Disney intends to do with the label and company that's been a financial and artistic success and how much money the Weinsteins can raise quickly to put their future ambitions into high gear.

There are other aspects of the divorce that bear scrutiny. For starters, what was so horrible about the marriage that forced the lingering separation and now the formal breakup? Granted California is a no fault state but by that gauge the partners ought to be carving things up on a 50/50 basis and its plain who's getting the lion's share in this settlement.

Twelve years ago Jeff Katzenberg was keen to get into the specialized film business and rather than start from the ground up, targeted Miramax as an easy and desirable acquisition. The company was riding high on the success of The Crying Game though below the surface it was hemorrhaging in red ink that threatened to bankruptcy in a matter of months. Its debt load was rumored to be around $60 million though the actual amount was considerably higher.

Part of the dilemma was something particularly endemic to indie outfits. In a particularly good year, Miramax and its ilk would be truly lucky to have two potent and profitable releases. Then there are the 10 to 15 additional movies that aren't going to get exposure outside the art house ghetto that exists to some degree in the top 25 urban centers.

On the books The Crying Game had generated in excess of $60 million and Miramax had negotiated standard deals with theater circuits that should have returned more than $30 million. But the company had no leverage; there weren't a half dozen commercial movies lined up in its portfolio to insure maintaining the contract terms. On paper there was a $30 million collectible that everyone knew would shrink by at least one-third when it came time to make settlements.

So, the Weinsteins were highly receptive when Katzenberg came knocking. They got lucky again about a year later when they won Cannes' top prize with Pulp Fiction and the picture went on to gross more than $200 million theatrically worldwide and, with Disney behind it, didn't have to make the sort of settlements they'd been forced to accept in the past.

Pulp Fiction was a major turning point for Miramax and the Weinsteins. The company to that point had been pumped up on prestige thanks to a catalogue that included Pelle the Conqueror, The Thin Blue Line, Strictly Ballroom and sex, lies, and videotape. The Quentin Tartantino movie provided them with their first commercial blockbuster and the seeds of becoming a major began to bud … in their mind.

The co-presidents developed a slate that balanced high brow and the crassly commercial, got into publishing, music and other media and were allowed to go wild in the candy store as long as they continued to be conspicuously profitable. Harvey Weinstein also enjoyed the spotlight via political and charitable activities.

What Harvey wanted was a seat at the table and while he convinced himself he could earn it and force the issue, the harder he pushed, the greater the resistance became. Aside from the fact that he headed a sub-division of a major, his braggadocio was not in consort with the other studio chiefs.

Eventually matters had to come to a head. Though the company was extremely adept at touting its hits and burying its failures, there was bound to be a misfire it could not dodge. Perception is paramount and regardless of what the balance sheet said, The Gangs of New York was viewed as a catastrophe. The famous Miramax Oscar push netted the film 11 nominations and when it struck out in every category, the gloves came off in the Magic Kingdom.

The inarguable point was that Miramax had been acquired to fulfill a specific need and had spun out into areas that replicated what its parent, at least ought, to be pursuing. It was an excuse for a fight employing the rationale that if one orders a suit from a tailor and he tosses in a second pair of pants or a vest, you throw away the extras. But, really ,just as much as Katzenberg wanted Miramax under the Disney umbrella, Michael Eisner wanted them off the premises.

Still, Eisner didn't crave another embarrassing situation involving high profile executives that the departures of Katzenberg and Ovitz had previously spawned. The brothers would not be fired but their realm would shrink considerably. Operating, production and marketing budgets were slashed and the Weinsteins were instructed to reduce the payroll by 30% to 50%. The message may not have come from Western Union but it couldn't have been clearer.

Several years prior to the commencement of the death by a thousand cuts, the Weinsteins had floated trial balloons about a management buy out of Miramax. Wall Street traders began to salivate and rumors started to circulate that the brothers would be able to raise whatever amount they desired. It didn't seem to matter that the company wasn't for sale under any circumstance and events of the past year chiseled that fact in concrete.

Now that the door has been opened for Harvey and Bob to set the wheels in motion to finance a new venture, the word on the Street is that the sky is no longer the limit. The most obvious difference then and now is that the brothers don't have those tempting lures like the Miramax name, a library, staff, offices or a raft of projects with high profile talent attached. The market also has cooled considerably in the past five years and there's the question of Harvey Weinstein's health following a couple of reported but mysterious health ailments.

What the Weinsteins chiefly bring to the table is themselves and considerable past achievements. Regardless of the present investment climate that heft should attract a considerable initial war chest. It may not be a sufficient amount to do everything on their wish list but it will be more than ample to establish a core business.

Meanwhile back in Burbank there's the mighty big question of what Miramax is without Harvey and Bob. It's been decades since audiences have had strong product identification with a studio slate. The era when MGM or Warner Bros. or even Monogram and Republic made a type of movie that gave them a distinct personality has virtually vanished. A survey in 2000 not surprisingly showed Disney as the most recognizable industry name and also first in terms of people's sense (valid or not) of the type of pictures it produces. In both areas Miramax ranked second and that's rather amazing considering the half century edge other studios have on this upstart.

Miramax is so intrinsically associated with the Weinsteins it's difficult to imagine anyone else at its helm. It has to be galling for the brothers to see the company named for their parents in the hands of others and the folks at Disney know that as well. I've already dubbed their new endeavor Maximum (pronounced Max et mom) as a salve to this loss.

The perception is that the new Miramax will largely be a library operation, exploiting its current inventory of about 550 titles. However, to what extent and form will that play out?

The best indicator of the company's future will be reflected in Disney's selection of a new president. Suffice it to say that if it's an unknown or a person conscripted from another industry, we're likely looking at someone whose marching orders will be heavily weighted toward caretaking activities. Regardless of its shape it's a pretty safe bet it will be headquartered in Los Angeles.

My gut keeps telling me that Disney wants to do more than simply license the Miramax inventory to cable and make the odd sequel to an existing or potential franchise. This Disney regime has already learned a great deal about the value of a library.

When Eisner took the reins a little over 20 years ago, the company had only about 200 titles to exploit. In that era one of the mantras was fast, cheap and out of control as annual production climbed to 30 movies. Volume trumped quality and no one particularly bothered to consider that not all titles are created equally. But the on-going vitality of Down and Out in Beverly Hills stood out in stark contrast to My Boyfriend's Back and there were more of the latter than the former. Disney switched to fewer movies and upped the pedigree of its releases.

The once glorious RKO, home of King Kong, Fred and Ginger, Gunga Din and Orson Welles, went out of the movie making business in any meaningful way in the mid-1950s and is the best example of an entity that exists on library revenues. Let's just say that it would be a more viable operation if it had been able to maintain at least some production component to add to its inventory of ageing movies.

There's a major difference between Miramax and RKO that's not simply related to the vintage of their respective stock. A healthy percentage of Miramax's current titles are acquisitions whose rights will lapse in a matter of years unless they're renewed. Their equivalent My Boyfriend's Back (and there are many) will simply fall from the roster and the more exploitable pictures whether in ancillary arenas or as remakes and sequels come at a cost.

The new Miramax won't be like the feisty acquisitor and scrappy marketer that are its roots or the variegated company it evolved into during its evolution at Disney. Its most likely future is along the lines of the current Fox Searchlight model to accommodate and foster relationships with the likes of the Coen Brothers, Wes Anderson and Wayne Wang that produced such films as O Brother Where Art Thou, The Royal Tennebaums and The Joy Luck Club. And taking that path will require hiring someone savvy about material and talent.

As for the people at Maximum, you can be certain they will be worked to the bone. The Weinsteins are big believers in that adage about things that don't kill you, making you stronger. Time will tell whether they can make lightning strike twice and in the interim it's worth noting that they were more interesting on the way up than when they became somewhat Mouse trained.

April 1, 2005

- by Leonard Klady