Billionaire Tom Barrack Throws Harvey Weinstein a Lifeline

Updated on
  • Investment firm to provide immediate cash infusion to studio
  • Harvey Weinstein fired Oct. 8 on harassment allegations

Weinstein Co., Colony Capital Enter Sales Talks

Billionaire investor Tom Barrack is circling the ultimate distressed asset in Hollywood: the movie studio co-founded by Harvey Weinstein.

Barrack’s private investment firm, Colony Capital, is offering Weinstein Co. a financial lifeline as the studio reels from the widening scandals surrounding its co-founder, who knows the billionaire from a previous deal. In a brief statement Monday, Weinstein Co. said Colony might end up buying its assets.

The small studio, known for award-winners such as “The Artist” and TV shows such as “Project Runway,” has been plunged into crisis by allegations of rape and sexual harassment against Weinstein going back to the 1990s. Weinstein, one of Hollywood’s most powerful figures, has denied the rape allegations while acknowledging his behavior “caused a lot of pain.”

Barrack, a close friend of President Donald Trump, made his fortune in real estate but has a history of plucking distressed assets from the entertainment industry. Colony Capital took over Michael Jackson’s Neverland estate in 2008 for $23.5 million in debt, averting foreclosure, and saved photographer Annie Leibovitz from bankruptcy by buying out her $24 million of debt. And Colony was part of a group that acquired Harvey Weinstein’s former company, Miramax, in 2010 from Walt Disney Co. for $660 million.

Tom Barrack

Photographer: Kevork Djansezian/Bloomberg

With Weinstein Co., Barrack would employ a strategy similar to the one he used with Miramax, milking a library of movies and shows for distribution deals and new programming projects.

Barrack, 70, has a net worth of $1.3 billion, according to the Bloomberg Billionaire’s Index. He was chairman of Trump’s inaugural committee, which lends his talks with Weinstein Co. a certain irony -- a deal could financially benefit Harvey Weinstein, who was a longtime Democratic donor who backed Trump’s opponent Hillary Clinton in the 2016 presidential race.

“We will help return the company to its rightful iconic position in the independent film and television industry,” Barrack said in a statement Monday. Colony agreed to immediately provide cash to the film studio. No other details of the talks were disclosed.

Brothers Harvey and Bob Weinstein founded Miramax in 1979, then sold it to Disney in 1993. Years after the Weinsteins left, the group that acquired Miramax included Colony Capital and a unit of the Qatar Investment Authority. In a 2010 interview discussing a new entertainment fund he was working on with actor Rob Lowe, Barrack told New York magazine he envisioned acquiring other film libraries and assets.

In 2013, Miramax did a deal with the Weinsteins to make new films, TV shows and stage productions derived from the works in the Miramax library. “You don’t know who the winner of this race is, but they all need somebody brilliant to tell a story and who can take all of the threads and weave them into a tapestry, that takes the genius of somebody like Harvey and Bob,” Barrack told CNBC at the time.

When Qatar-based broadcaster BeIN Media Group. agreed to acquire Miramax in 2016, Colony made 3.5 times its equity, according to a person with knowledge of the matter who asked not to be identified since the terms aren’t public.

‘Polaroid,’ ‘Paddington’

The Weinstein brothers founded Weinstein Co. in 2005 after leaving Miramax. Their New York-based company quickly reestablished their standing in pop culture, using savvy strategy to accumulate even more Academy Awards. Weinstein Co. plans to release horror film “Polaroid” on Nov. 22 and children’s movie “Paddington 2” on Jan. 12. 

After founding Colony in 1991, Barrack made much of his fortune by investing in out-of-favor assets, including soured Middle East real estate and bad German real estate loans. His business took a downwards turn in the mid-2000s buyout boom, when multibillion-dollar investments in flashy casinos and trophy properties went south. By 2010, Colony’s flagship private equity fund had lost 60 percent of its value.

Barrack changed tack by backing away from the risky, high-profile leveraged buyouts that caused him trouble, instead turning to a series of investment vehicles that focus on lending and distressed property debt. He took Colony public with little fanfare in 2015 by merging it with Colony Financial, a publicly traded real estate investment trust.

Tom Barrack addresses the Republican convention in Cleveland in July 2016.

(Source: Bloomberg)

— With assistance by David Carey, Melissa Mittelman, Heather Perlberg, Christopher Palmeri, and Anousha Sakoui

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