The death knell may have sounded over The Weinstein Company (TWC) name but Hollywood rivals believe the business has a secure future – without its disgraced co-founder – due to a legacy of hits including The King’s Speech and Silver Linings Playbook, as well as a strong slate of upcoming releases.
The independent studio, mired in the Harvey Weinstein abuse scandal, has put itself up for sale and this week TWC secured an emergency injection of cash from private equity firm Colony Capital, which is also in talks to buy all or part of the business. Last year, Weinstein said that the business, including its library, was worth up to $800m (£600m) and had no debt. What is certain now, however, is that the brand is worthless.
Harvey’s brother Bob, who owns a combined 42% of the business with his sibling, has already said the company will be renamed but entertainment industry investors are more interested in the Weinstein back catalogue. A string of titles, including Quentin Tarantino’s most recent films such as Django Unchained and Oscar winners such as The Artist, are being eyed by bidders, as well as a TV division that co-produced Netflix’s Marco Polo and the BBC’s War & Peace.
“The death star is imploding,” said Eric Schiffer, chief executive of Los Angeles-based private equity firm Patriarch Organization. “The old company will be burnt to ashes but the assets will survive. There are some very valuable properties.”
However, the problem with attempting to value future exploitation of any films or TV shows associated with TWC is that the scandal shows no signs of abating.
An allegation of sexual harassment has been levelled at Bob Weinstein and he denies the claim. And TWC president David Glasser, whose close ties with the Weinsteins have seen him called the “third brother”, is under pressure over what he knew of Harvey’s decades-long behaviour.
Any deal will have to be structured to insulate the buyer from the potentially crippling costs of legal action arising from the 30-plus allegations. An outright acquisition of the company could include a stipulation that a sum of money is set aside to cover legal liabilities. Or TWC could file for bankruptcy, with a buyer such as Colony waiting in the wings to buy the main assets, which would protect it from inheriting legal liabilities.
Of immediate focus is the fate of the seven films that the Weinstein Company has scheduled for release over the next five months. Bob Weinstein has guaranteed that the company will back the release of horror film Polaroid, Paddington 2 and Robert De Niro comedy War with Grandpa.
There is also a question mark over an awards contender starring Benedict Cumberbatch. The Sherlock actor plays inventor Thomas Edison in The Current War and has said he is “utterly disgusted” by Weinstein’s actions. The film was due to be released next month, but has now been put back to 2018 in a bid to spare its awards ambitions from being affected by the scandal.
There have been reports that agents have been pushing the company to sell the other finished, or nearly finished films, due for release by March. Those films include: The Upside, a comedy starring Kevin Hart and Nicole Kidman; and Mary Magdalene starring Rooney Mara. Mark Wahlberg’s Six Billion Dollar Man, a remake of the hit 1970s TV show, is pencilled in for release in 2019.
An executive working on one upcoming Weinstein project said that no stars or production companies want to have their films tainted by association with TWC. “It is like the plague, no one wants to catch it,” said the executive. Citing two established Hollywood studios and two independent producers as potential destinations, he added. “Everyone would rather take their work to a Fox, Universal, A24 or a Bleecker Street if they could.”
However, films within a few months of release are typically paid for and locked into TWC contracts. But if Colony agrees a rescue deal it is likely to focus on two factors: retaining the best TWC films that are currently in development; and making money from the intellectual property, whether earning revenues from TWC’s extensive back catalogue in sales to broadcasters and streaming companies, or making spin-offs of existing titles.
“Can they afford to make delivery payments and the often tens of millions of dollars to market each of the theatrical releases coming up?” said the executive. “The Weinsteins and Colony will try and cherrypick the films and projects they want to pay for and hold on to, valuable ones – there is no way they would give up on a Paddington for example.”
The first Paddington film came out in 2015 and grossed $268m globally and was the Weinsteins’ eighth biggest film success in the US. The sequel, which comes out in the UK in December and the US in January, is likely to be another cash cow – its biggest since Django Unchained in 2012 – and the company has already made it clear it wants to hold on to the US distribution rights.
The Weinsteins have put out 94 films since 2010 with the top five grossing more than $1.5bn internationally, according to Box Office Mojo.
Analysts estimate that the lifetime value of a film can be as much as double what it makes at the box office. For example, The King’s Speech made just over $400m globally in cinemas but has probably amassed about $1bn once its post-multiplex takings are included. About 25% of the $1bn is from the ever-shrinking DVD market, maybe 15% to 20% from pay-TV broadcasters for premiere rights and 10% (and growing) from services such as Netflix, Amazon and Apple, according to Ampere Analysis.
Colony has invested in Weinstein properties before. In 2010 it bought their original studio, Miramax, long after the brothers had sold it to Disney in 1993. Colony made a quick profit on the $660m deal, selling the business and its 700-film back catalogue – for hits such as Shakespeare in Love and Pulp Fiction – to Qatari broadcaster BeIn Media last year for a rumoured $1bn.
The Miramax deal shows why TWC could yet survive in a different form, and make a sizable return for the disgraced Harvey Weinstein.
“It is about the library,” says Patriarch Organization’s Schiffer. “In a year from now when what has been the greatest of abuses of power has dissipated from the memories of the majority of the public those movies will live on, especially with The Weinstein Company excised from credits. Investors know this. Acquiring some of these assets now might look to be one of the best investments in modern Hollywood history.”
The Weinstein Company’s biggest box office hits
1. Django Unchained (2012)
Worldwide box office: $425m (£323m)
Director: Quentin Tarantino
Stars: Jamie Foxx, Leonardo DiCaprio
Nominated for five Oscars, won two
2. The King’s Speech (2010)
Worldwide box office: $414m
Director: Tom Hooper
Stars: Colin Firth, Geoffrey Rush
Nominated for 12 Oscars, won four
3. Inglourious Basterds (2009)
Worldwide box office: $321m
Director: Quentin Tarantino
Stars: Brad Pitt, Mike Myers
Nominated for eight Oscars, one win
4. Paddington (2015)
Worldwide box office: $268m
Director: Paul King
Stars: Hugh Bonneville, Sally Hawkins
No Oscar nominations
5. Silver Linings Playbook (2012)
Worldwide box office: $236m
Director: David O Russell
Stars: Bradley Cooper, Jennifer Lawrence
Nominated for eight Oscars, one win
6. The Imitation Game (2014)
Worldwide box office: $233.5m
Director: Morten Tyldum
Stars: Benedict Cumberbatch, Keira Knightley
Nominated for eight Oscars, one win
7. Scary Movie 4 (2006)
Worldwide box office: $178m
Director: David Zucker
Stars: Anna Faris, Regina Hall
No Oscar nominations
8. Lee Daniels’ The Butler (2013)
Worldwide box office: $176.6m
Director: Lee Daniels
Stars: Forest Whitaker, Oprah Winfrey
No Oscar nominations
9. The Hateful Eight (2015)
Worldwide box office: $155.8m
Director: Quentin Tarantino
Stars: Zoe Bell, Demian Bichir
Nominated for three Oscars, one win
10. Lion (2016)
Worldwide box office: $140m
Director: Garth Davis
Stars: Dev Patel, Nicole Kidman
Nominated for six Oscars
11. The Artist (2011)
Worldwide box office: $133m
Director: Michel Hazanavicius
Stars: Jean Dujardin, Berenice Bejo
Nominated for 10 Oscars, five wins
