Escape from the Mouse House
By Ronald Grover
Can Harvey and Bob Weinstein, the irascible brothers who created independent Miramax Films, assemble their own "media giant?" That's how Harvey Weinstein described their goal during a Mar. 29 conference call at which Disney (DIS ) announced an end to its often turbulent, 12-year agreement with the duo.
Under their new deal, announced by Disney studio chairman, Dick Cook, the siblings will see out their contract, which ends Sept. 30, then launch their new outfit, making some films with Disney and others on their own.
LEFT ON THE TABLE.
No financial terms were discussed, but it is believed that the brothers walked off with more than $100 million to settle a long-standing legal dispute in which the Miramax duo charged that they didn't get some of the bonuses due them.
It isn't hard to see why both sides often disagreed in the final years of the relationship. For example, outgoing Disney CEO Michael Eisner has said Miramax failed to make money in three of its prior five years, but Miramax insists it was a highly profitable period. The Weinsteins founded Miramax in 1979 to make "art house" movies, many proving so successful that Disney paid $80 million in 1993 buy the outfit. But while the brothers became part of the Magic Kingdom, they remained their own masters -- answerable to Eisner only if their projects flopped.
While Cook went out of his way to be diplomatic on Mar. 29, skipping questions about disagreements, Harvey Weinstein bored in, talking about how the brothers brought potential ventures to Disney -- the chance to buy Bravo and the International Cable Channel from Cablevision (CVC ) and independent Artisan Entertainment with its rich library -- only to have Eisner turn them down.
BUTCH AND SUNDANCE.
"There was some frustration," says Harvey Weinstein, but in an obvious nod to incoming CEO Bob Iger, the Miramax mogul also adds that "in the new Disney, these entrepreneurial efforts would have been met with a stronger response." Indeed, Weinstein hints that, with some of the deals Eisner rejected, Miramax might have been valued at $5 billion "instead of the $2 billion we think it is valued at now."
Harvey Weinstein says he and his brother are already working on movies for their new company, tentatively named The Weinstein Co. Some, like Scary Movie 4, are being made in conjunction with Disney, while a solo project will be a NC-17-rated version of Quentin Tarantino's Kill Bill movies. Weinstein says he intends "to take with us our relationships with very successful and profitable directors," including Tarantino and Spy Kids director Robert Rodriguez.
The Miramax exec, who once said he could raise more than $1 billion to start his own company, refuses to say how much he intends to assemble -- but he did unveil an all-star advisory panel that includes investment banker Steve Rattner, Cablevision CEO Jim Dolan, entrepreneur Nelson Pelz, and actors Robert Redford and Paul Newman. "If you have Butch Cassidy and the Sundance Kid, how can you go wrong?" says Weinstein. As for the amount he and brother Bob will raise, "It will be significant."
QUITE AN EDUCATION.
The brothers will use that money to create a major media empire that will include not only films, but also book publishing, magazines, and content for the Internet, Weinstein says. He credits Disney with helping his personal evolution.
"I remember sitting down with Frank Wells, Michael Eisner, and Jeffrey Katzenberg, and learning the skills to be a businessman," he says, noting that business acumen is "part of the legacy of going to school at Disney," noting the post-Mouse careers of luminaries like eBay (EBAY ) CEO Meg Whitman, Dreamworks' Jeffrey Katzenberg, and Revolution Studio founder Joe Roth. Now Harvey and Bob Weinstein are embarking on their own graduate course.
Grover heads BusinessWeek's Los Angeles bureau