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Revenge of the Weinsteins

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The liberation was not without its complications. In the fall of 2004, Harvey engaged Pete Peterson at the Blackstone Group as his adviser. At first, the Weinsteins wanted to release their movies worldwide (instead of selling off foreign rights) and start their own home-video operation—costly propositions, says a potential investor who saw an early version of the plan.

Movies that lost money, like the $79 million Cold Mountain and the $100 million Gangs of New York, were omitted. Both films were considered symptomatic of some serious overreaching. “Cold Mountain will eventually break even—it’s minus $16 million now,” Harvey says. He points to Disney films that had suffered staggering losses and the many profitable Miramax films that had followed Cold Mountain. “So we had a loss. Big shit,” says Harvey. “So we had a loss. Who caaares?”

Plans were then shown to Goldman Sachs and the Quadrangle Group, and Goldman suggested recasting the numbers; individual films were no longer being displayed. As for the Weinstein Company’s projected slate through the end of 2006, some snickered at how every single movie showed a profit, though two-thirds of all movies break even or lose money. The plan projected the studio to be profitable by 2007, generating close to $1.8 billion in annual revenues five years from now.

“For us to raise the money wasn’t difficult,” says Harvey, “because who else is going to fight like crazy to protect the investors’ money?”

Regardless of the figures, anyone who invested did so because he believed Harvey and Bob are just better at picking films, better at making them, better at selling them. It might not have been the most rational reason to invest, but it was a reason.

At the pitch meetings, Harvey would fire up a cigarette, talk about big-picture multimedia stuff, and flash his Disney battle scars. Harvey’s irritation with Eisner was Ahab-like, a quenchless feud that was highly entertaining to hedge-fund managers more accustomed to deals for telecom towers and cable-TV systems. Harvey always told the story about the time he and Bob presented at a Disney board meeting and so impressed Warren Buffett that Eisner never invited them back.

Bob would stress Miramax’s financial discipline. In L.A., studios threw away millions planting vanity billboards on Wilshire: “We never spend a fuckin’ dime on that.”

Harvey had been hoping Blackstone would put up about $200 million. But when it didn’t, Harvey fired Blackstone from the deal, paying Peterson about $1 million after he complained. Harvey and Bob refuse to comment specifically on what happened, but “everybody who was pitched did not respond,” says Bob. “Warren Buffett heard Microsoft’s pitch and thought it was crazy. He’s come on the record to say it’s one of the dumbest decisions he ever made. So the fact that people pass on something doesn’t mean they’re right or wrong.”

Harvey entertained pitch meetings with tales of his Ahab-like feud with Eisner.

It didn’t help that Michael Eisner was telling people the brothers had spent $7 million one year in travel and entertainment expenses—private planes Harvey’s staff referred to as The Flying Ashtray, suites at the Peninsula. “That’s just completely ludicrous,” says Harvey. “You were up at our offices. Does it look like we spend that kind of money?”

In March 2005, Harvey threw in with Goldman Sachs. Harvey’s relationship with Joseph Ravitch at Goldman Sachs had begun in 2001, when Harvey came looking for cash to save Talk magazine (where I happened to work until it was put out of its misery the following January).

Ravitch—whose father is former MTA head Richard Ravitch and who helped broker the sale of MGM to Sony—now offered to write a check for $45 million if Goldman could take over as adviser. Harvey and Bob considered naming the company Maximom or Mad Max, as Clive Owen had suggested. (“Let’s just say intellect prevailed over emotion,” says Harvey.)

Harvey was smoking at the pitch meetings, and some privately expressed concern about his health. (Harvey’s father died of a heart attack at age 52.) They were told he was “in a serious relationship” and “he’d lost some weight.” And if they could just make movies for the next three or four years, the brothers would create a library worth the money everyone was investing—and more.

“I think people recognized that Harvey and Bob were clearly guys who understood how to make money,” says Ravitch. “There was an extraordinary amount of financial rigor with the decisions that they made.”

That they always handled their own distribution was a big selling point: Joe Roth doesn’t sit there strategizing which theaters their movies should play at and when.

Goldman’s private-equity group had also been interested in putting in all the capital for the studio, but that notion was abandoned after Harvey balked at the controls they demanded. Kirk Kerkorian also met with the brothers, but he, too, wanted more power than the Weinsteins would grant, wanted them to take on Chris McGurk as COO, their onetime Disney minder on his way out as vice-chairman at MGM, who would have insisted on making movies, too.


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