Discussion in 'Disney Rumors and News' started by tuck, Mar 2, 2003.
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So whats the deal, is there a article or something about Miramax that you would like to share?
There was an article in the LA Times today that addressed the friction that exists between Disney & Miramax. I've copied and pasted the article below since registration is required to access the site.
By Richard Verrier and Claudia Eller, Times Staff Writers
Like a proud parent, Walt Disney Co. has been eager to tout the extraordinary 40 Oscar nominations garnered last month by its unit, Miramax Film Corp., the industry's leading distributor of independent movies.
But as Disney publicly crows about the achievements of Miramax, which received a remarkable three best-picture nods for "Chicago," "The Hours" and "Gangs of New York," the two companies are locked in a family feud over the fundamental terms of their business relationship.
Tensions between Disney Chief Executive Michael Eisner and Miramax Co-Chairmen Harvey and Bob Weinstein have escalated of late as Miramax has evolved into a more mainstream studio with big-budget films and ambitious new ventures. Conflicts about money and control are souring a partnership that for nearly a decade has been one of the most successful, albeit uneasy, alliances in Hollywood, according to sources close to both companies.
"There are just a whole panoply of issues between them," said a source close to the dispute. "There are some very serious problems."
Specifically, the two sides are at odds over how much Disney allocates each year to Miramax to finance its movies, how Miramax accounts for its profit and how much goes to the Weinsteins.
The fiercely autonomous Weinstein brothers also resent what they perceive as Disney's meddling in decisions that should be theirs to make, sources close to the Weinsteins say.
Adding to the friction is an audit of Miramax's books that Disney launched last year. The Burbank-based entertainment giant insists that it is just a routine review of the company, which it purchased in 1993.
But the Weinsteins view it as an attempt to intrude on their business and are said to be responding with their own audit of Disney, sources close to the brothers said.
To represent them in their fractious dealings with Disney, the Weinsteins have taken the provocative step of hiring Bert Fields, the Los Angeles attorney who has been a thorn in Disney's side for years. Fields, who declined to comment, is currently representing a family suing Disney for hundreds of millions of dollars in Winnie the Pooh royalties.
The Weinsteins declined to be interviewed for this report, but a Miramax spokesman said in a statement: "We've enjoyed a decade of profitability and success with Disney and look forward to continued success in the future."
Eisner also declined to comment. Disney Studios Chairman Dick Cook downplayed any conflict, saying every business relationship has its ups and downs.
"This is a classic case of somebody who's had his own business and becomes part of a corporation," Cook said. "They've become a much bigger player; they have growing pains." He also praised Harvey Weinstein: "Harvey is the consummate entrepreneur. He's an absolute original in a sea of mediocrity among a bunch of dull suits.... He's constantly pushing the envelope."
The deteriorating relationship comes at a delicate time for Disney, which also has been at odds with another key longtime partner, Pixar Animation Studios. In addition, Disney faces shareholder pressure to bolster its earnings amid a slowdown at its theme parks and struggles at its ABC television network.
The Weinsteins believe that Disney, because of these financial challenges, is seeking to change the terms of its deal with Miramax, sources said.
Disney currently allocates about $700 million a year for Miramax's production and marketing. The two sides, however, disagree over which expenses should be deducted from that allocation. Sources say, for example, that Disney recently began counting expenses that it previously had not, leaving Miramax with less money to finance its movies.
The Weinsteins also differ with Disney over how their annual compensation is calculated, those familiar with the matter say. The brothers currently receive about 20% of Miramax's overall profit, but they disagree with Disney on how to measure those earnings.
Disney historically has given the Weinsteins a wide berth to operate on their own. But in the last year, Miramax has come under greater scrutiny from its corporate parent as it has struggled with high overhead costs and -- its Academy Award success not withstanding -- fewer box-office hits.
Eisner, sources said, voiced objections last year about the escalating budget for Martin Scorsese's "Gangs of New York," which Miramax says cost $100 million and predicts will be profitable. He also complained about "Cold Mountain," an $84-million Civil War drama scheduled to open in December, sources familiar with the project say. Miramax has been searching for a partner to help cover the cost of "Cold Mountain" after MGM Inc. last fall withdrew its co-funding of the movie. Disney has declined to invest in it, citing other commitments.
What's more, sources said, Eisner for the most part has refused the Weinsteins' requests to pour money into projects that have been close to the brothers' hearts.
They failed, for instance, to persuade Disney to invest in what would become the hit Broadway play "The Producers." The Weinsteins, as a result, ponied up money themselves, profiting handsomely. A Disney source said that as a matter of policy the company does not take a minority investment position in theatrical productions.
Miramax, which originally developed "The Lord of the Rings," also was unable to get Disney to underwrite the movie series. AOL Time Warner Inc.'s New Line Cinema eventually produced the blockbuster project. The Weinsteins were given executive producer credit and retain 5% of the gross receipts. In turn, half of that 5% goes to Disney. Had Disney bankrolled "Rings," it would have reaped hundreds of millions.
Cook said all divisions at Disney have faced fiscal constraints over the last two years, pointing out that Disney Studios has reduced its costs by hundreds of millions. "We're all butting up against living within our means," he said.
Cook said any refusal to partner with the Weinsteins on a particular project should not be interpreted as a slight.
"[Harvey] has more ideas per day than an industry has in a year," Cook said. "No one could ever afford to do all of his ideas."
And not all of them have been winners.
Miramax has stumbled recently with such box-office duds as "Pinocchio," "The Shipping News" and "Texas Rangers." Miramax also closed its much ballyhooed Talk magazine, which was edited by Tina Brown and lost $27 million for Disney. Miramax last spring also was forced to lay off 75 staffers in the biggest downsizing in its 23-year history.
The current tensions are in stark contrast to the more convivial climate in 1993, when the Weinstein brothers sold their New York art house business to the more conservative and publicly held Disney for about $75 million.
Although a seemingly odd pairing, the partnership has provided benefits to both.
For its part, Miramax has gained greatly from Disney's financial backing, its global home entertainment network and its international distribution clout.
For Disney, Miramax hits such as "Shakespeare in Love and "Good Will Hunting" have delivered solid profit and added a certain prestige to the studio. Disney also has cashed in on Miramax's film library; the company is able to package its movies with those of Miramax for foreign sales.
As part of the contract between the two, Miramax cannot release an NC-17 or X-rated movie. Miramax also must receive Disney's blessing for any movie that costs more than $20 million.
Despite the promising beginnings, tensions quickly arose.
Part of the problem has been the clash of two strong personalities. Harvey Weinstein is a brusque, larger-than-life figure who does not compromise easily. Eisner is equally tough-minded and tenacious and also likes to be in control.
At the same time, the cultures of the companies that each man heads have clashed.
Disney prides itself on being the premier family brand, while Miramax sees itself as an edgy distributor of provocative films.
That difference has prompted conflicts over such controversial Miramax movies as "Priest" and "Dogma," both of which sparked outrage among Christian groups.
As the bad feelings between Disney and Miramax have persisted, some have started to speculate about a divorce.
"I suspect that over time Miramax would like to be independent again," said Dave Davis, a Los Angeles-based investment banker with Houlihan, Lokey, Howard & Zukin. "Harvey's the kind of person who is so powerful now and has such a track record he would really like not to be handcuffed."
Yet as much as the Weinsteins might like to buy back their company, Disney is unlikely to sell, sources say.
The brothers could exercise some leverage should they opt not to renew their employment contract with Disney, which runs through 2007.
But Disney has leverage of its own. It would get to keep the rights to Miramax's lucrative library of about 500 film titles.
In the end, some believe Eisner and the Weinsteins will continue to live with their differences.
"It's a business relationship that serves both companies and makes a great deal of sense for both companies," said Joe Roth, former Disney Studios chairman and founder of Revolution Studios.
"As strong as their personalities are, they recognize how valuable they are to each other. They have too much good history to let it go awry."
The real "Scoop":
Only scoop could imply that this is a good thing!!!
And that's why we love him!!!! Keep it up Scoop!! You always make me smile!!!
Of course DVC, would we want the hundreds of millions that LOTR would make and the attractions that could be developed from the movies of 2.5%???
Only in eisner's world and his defenders could look at this as a positive. But look at the postive instead we had Bad Company and Reign of Fire!!!!
Another little Michael tidbit from the news this morning ...
Disney Shares May Double in Two Years, Business Week Reports
NEW YORK (Bloomberg) -- Walt Disney Co. shares, which have fallen 32 percent in the past 12 months, are poised to double over the next two years, according to one investor, Business Week reported in its Inside Wall Street column. Scott Kuensell, managing director of Brandywine Asset Management Inc., which has been buying Disney shares, says the stock is cheap because it trades for 1.5 times the company's book value, half its five-year average, the magazine reported. The stock trades at 1.3 times sales, the magazine reported, less than its five-year average of 2.5 time sales. Kuensell thinks the shares will double in two years as Chief Executive Michael Eisner utilizes the company's brands to boost its financial performance, the magazine reported.
Well, yeah ... we can yell and scream at Disney NOW for not taking on the LOTR trilogy, but I'll bet that if Disney had taken it on at the time, everyone would have yelled about how much it was going to cost and how it was never going to make back its investment. Monday morning quarterbacking is easy. But think about it .... three-episode, multi-year epics have never really been a Disney thing. The fantasy of it might have appealed to the brand, but I doubt that the product would have been the same. Who's to say that if the film had been made under Disney or Miramax parameters that it WOULD have made hundreds of millions?
(NOTE: That I am not in any way saying that Bad Company or Reign of Fire were good choices. But every movie studio out there passes stuff up and makes bad films. It's not like everyone out there is developing gold and Disney's making tin foil. The same brilliant studio that released LOTR was also responsible for All About the Benjamins, Mr. Deeds and Simone last year.)
Not unless they already had a sure thing on the initial picture.
LOTR was planned to be shot sequentially without interruption in order to maintain efficiency in production. You had to sign on for the duration. There was no way of knowing it would be a success before the second installment had significantly tapped its budget. So the question is: do you roll the dice and bet long or play it close to what you are familiar with and not risk losing your shirt.
Disney obviously opted the latter but would have been equally criticized if they had made the decision to bankroll a failure.
Scoop, assuming Disney's portion(2.5%) is for gross receipts during theatrical release, then we'd be looking at roughly $15 million after the first two installments, with probably another $7-$8 million on top of that when Return of The King is released this December. If the take extends to DVD/Video sales, then that number easily triples. If that's the case, Disney could easily earn upwards of $70 million. In stark comparison Time Warner on the other hand will be looking at over $3 billion in sales when it's all said and done.
TheDscoop. i thought you were defending them, since you werent i apologize for comments directed too you!!
wdwsearcher as hard as it is for some too admit the fact is that disney made a awful decision in regards to LOTR(unless of course you takre into account that if they made the movies they would have ruined it which is very possible).
And i for one wont criticize disney for spending money too make a quality film even if it doesnt payoff at the box office. Gangs of NY will likely make no money and will lose money but it still was a excellant film. Its when they spend big money and produce "crap"!!
Ah ... but "crap" is in the eyes of the beholder. If you look at the box office numbers, they tell one story. The Oscars tell another. Audience surveys still another. You think "Chicago" was a waste of money. I think it was a great film and deserving of every nomination. So, who's right?
And if Disney had gone with LOTR, and criticism had come, you would have some pretty good ammunition...
But instead, Pearl Harbor and Reign of Fire are examples of Disney's decisions on big budget films.
Rather than hypothesizing on what might have happened if Disney had made the right call, I find it more relevant that they did not make the right call.
The fact is, you have no idea what anyone would have said had Disney decided to do the LOTR trilogy. The criticism that has been leveled at Disney's decisions is not a simple case of how much they spend on a movie, but instead on which big-budget films they chose, and the direction they took with those movies.
To use what you imagine some of us might have said had something happened is unfair, and really serves no purpose.
Frankly I fear what would have happened to Peter Jacksons amazing vision if Disney had gotten its hands on it.
Well!! Since our nice, pleasant lunch at Olivia's in July, where we seemed to agree on almost everything, we now seem to agree on nothing!! Except this!!! You are right! They (Disney) would have ruined it!! Utterly!
Hmmmm. Glad to have finally found some common ground, Mr. Show!!!
Baron I still agree with you a great deal, and the more you argue your points the more I can see your side of things, but I just try to see both sides to every arguement.
Yes, they are being criticized about choice, focus and money in this discussion. I don't disagree with you on the fact that there is a problem with the direction being taken with the films they choose and they very well may have ruined LOTR if they had gotten their hands on it. So why is this? Two things: talent and money.
Separate names with a comma.