The Fight Over Miramax

Harvey and Bob Weinstein want to buy back Miramax, their parents’ namesake film catalog which they sold to Disney during the Eisner years for $80M.

With Ron Burkle’s Yucaipa and Fortress Financial backing them, the Weinstein’s had entered into an April exclusive buy with Disney for $625M.

However, Disney is reportedly reopening the bidding, including the Gores’ Platinum Equity Group.

Via LAT: The Weinsteins and Burkle had been in exclusive negotiations with Disney after beating out two other bidders in April: investor brothers Alec and Tom Gores and an offshore entity organized by troubled financier David Bergstein and his partner, construction magnate Ron Tutor. It’s believed that Disney plans to approach the Gores about restarting talks.

Disney shuttered Miramax, laid off 80 employees, and put it up for sale in January after concluding the low-budget film division no longer fit in its branded entertainment strategy.

Where will it end? If Burkle can lock in the $625M and work out Disney’s revshare needs (again, minus the Dimension films), Disney will likely let the Weinsteins buy back their family label.

Disney has no reason to keep control of these films for channel distribution purposes – as brand merchandising on largely R-Rated films is negligible. It’s an asset sale to the highest bidder, and the price is relatively in line for Disney.

Interestingly, no other studio has made it to the finals in the negotiations – Lionsgate, Summit, Sony and others were interested – many for the high number of Academy Award winners towards promotable library classic re-releases, but the valuations likely didn’t match up to the asking price.

Early last year, Relativity Media acquired Rogue Pictures for $150M with some valuing it at $300M, hence a good discount for a label that NBC-Universal, pre Comcast buy, saw as a sale for profitability.

Per the NYT: With Rogue, Relativity acquires a library of about 25 films, along with about 30 development projects and a valuable distribution arrangement with Universal. Rogue also has a producing deal with Wes Craven, a prolific maker of horror films whose next picture for the studio is “25/8,” a serial killer thriller scheduled for release this year. [Note: "25/8" has not been released as this NYT story came out in Jan 2009.]

What with every other major studio jettisoning its independent arm: New Line, Paramount Vantage and Warner Independent Pictures, this streamlining of library makes sense if you can garner the right price.

While the Weinstein brothers are masters of theatrical PR and marketing, the Miramax vault of films and its home entertainment multiplatform distribution strategy does not seem fully formed yet. Will the brothers (aka The Weinstein Co) revert to “Miramax” as a label?

Our prediction, should they close the deal: they re-become Miramax, hire the best of the traditional/digital execs or agency to handle the past library and/or create an “independent” cable channel of their own to first-run, so to speak, their classic titles.

The cable channel strategy gives them a possible multiplier on their Disney buyback, and puts them in a position to raise more money against the channel. If content is king, distribution is queen, then cable is the Weinsteins’ active chancellor.

On the other hand, Disney may want to make this sale difficult and perhaps take points on any future “indie” channel.

Per Nikki Finke/Deadline: A Weinstein insider just told me the deal is not dead. And I have other sources who described talks are tense right now, but not over. They say this has been a study in leverage, with Disney wanting to squeeze every last dollar out of Burkle for the library. The studio believed it had the upper hand because Harvey badly wanted to announce its completion during the Cannes Film Festival, specifically during Weinstein’s beachfront bash last Saturday. The sources tell me that Disney has now seized on the strategy of holding the Miramax name hostage, which was a sentimental draw for the Weinstein bros in the first place.