October 7, 2005
Ex-Miramax Chiefs Halfway to Financial Goal for New Studio
By DAVID M. HALBFINGER
and ANDREW ROSS SORKIN
LOS ANGELES, Oct. 6 - If all goes according to plan, Bob and Harvey Weinstein, the former heads of Miramax, will soon have raised more than $420 million for their movie studio, people briefed on the efforts said Thursday.

And if all goes according to an early version of their business plan, the new movie studio will be profitable by 2007, putting out 25 movies a year, and generating annual revenue of $1.9 billion.

That would give the new company annual sales greater than those of Metro-Goldwyn-Mayer before it was acquired by Sony and other investors this year. It would also give the Weinstein Company revenue roughly equal to the revenue of Miramax when the brothers ran it for the Walt Disney Company.

While many in Hollywood were skeptical of the ambitions of the Weinsteins, they appear to be closing in on meeting their goals.

In a regulatory filing with the Securities and Exchange Commission on Monday, Weinstein Company Holdings, the venture of the brothers, reported it had raised $230.5 million from 18 equity investors thus far, out of an anticipated $420 million.

People briefed on the fund-raising - who insisted on anonymity, saying they feared that identification might disrupt the deal - said the equity offering was already oversubscribed, and that the amount raised would exceed the goal. Investors so far, these people said, include strategic partners like the advertising agency WPP Group and the film-processing company Technicolor, which will process and distribute Weinstein Company films. (At Miramax, the Weinsteins had used a Technicolor competitor, Deluxe.)

Other recent investors include Mark Cuban, the owner of HDNet, a high-definition satellite TV network, as well as the Dallas Mavericks; the luxury goods company LVMH Moët Hennessy Louis Vuitton; and TF1, a French television broadcaster. As previously disclosed, the biggest investors in the Weinsteins include their investment banker, Goldman, Sachs & Company, and Tarak Ben Ammar, a French-Tunisian financier, producer and chairman of Quinta Communications.

The Weinsteins are also still working on a plan to issue what is expected to be some $500 million in securitized debt.

Bob and Harvey Weinstein declined to comment. A company spokeswoman, Sarah Levinson, said by e-mail message that the company was "confident that it has the operational capacity and financial resources to successfully meet its goals and carry out its business plan."

While a fuller picture of the new company and its finances is likely to emerge within weeks with the completion of the equity offering, a working draft of a confidential memorandum to investors, written in June, provides a wealth of previously undisclosed details about the business strategy for the new studio.

The draft, provided by a potential investor who received it, details their inventory of completed, current and still-sketchy projects; the kinds of movies they plan to make; the types of deals they intend to make with distributors like cable operators and pay-cable television networks; and their relationships with directors, producers and screenwriters.

For example, the Weinsteins say in the draft that "it has become critical to control one's own destiny" by owning their own home-video distribution; people close to the brothers' planning confirm that they intend to work out a collaboration with an established video distributor.

One conclusion that jumps out is that if Miramax became known as the house that Quentin Tarantino built, the Weinstein Company, as envisioned back in June, might become known as the house that Michael Moore built.

Two Moore films, one this year and one next, were projected to bring the Weinsteins their largest profits each year: "Fahrenheit 9/11.5," a sequel to last year's blockbuster, would examine the run-up to the 2004 presidential election and is projected to deliver $47 million in profit; and "Sicko," on the health care industry and health maintenance organizations, is projected to deliver $52 million to the bottom line. Neither film was included in a public announcement of coming projects earlier this week.

Under the separation agreement between the Weinsteins and Disney, the brothers were given sequel rights to 15 franchise or potentially franchise projects, including a remake of "Halloween." They also took 13 TV projects from Disney, including future seasons of "Project Greenlight" and "Project Runway"; a pilot called "Emergency Sex," on United Nations aid workers; a potential reality series based on the movie "Rounders;" and "Dangerous Company," a series for NBC based on a novel by Peter Bart, the editor of the trade publication Variety.

Some of the draft's language seems aimed far more at investors than at peers of the Weinsteins in Hollywood and independent film circles: "The Weinstein Company will be less focused on 'prestige pictures' and more focused on the types of films that have made Dimension so successful over the past 11 years," it assures, referring to Bob Weinstein's Dimension label, which has made genre films like the "Scream" and "Scary Movie" series.

As for the new Weinstein label itself, the draft makes clear that Harvey Weinstein intends to continue making "high-quality commercial films" like Miramax's "Good Will Hunting" and "Chicago"; "moderate-budget prestige pictures" like "The English Patient" and "Shakespeare in Love"; English-language acquisitions; and foreign films like "Amelie" and "Like Water for Chocolate."

There is no mention of plans to risk making movies in the vein of high-budget box-office disappointments like "Cold Mountain" or "Gangs of New York."

David M. Halbfinger reported fromLos Angeles for this article and Andrew Ross Sorkin from New York.