Disney agrees to buy Miramax

By DAVE McNARY UPI Business Writer  |  April 30, 1993
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LOS ANGELES -- Walt Disney Co., in a significant expansion of its movie business, announced Friday that it has agreed to buy independent distributor Miramax Film Corp. for an undisclosed price.

Disney said 14-year-old Miramax, which has released such offbeat hits as 'The Crying Game,' 'Truth or Dare,' 'sex, lies and videotape' and 'Enchanted April,' would retain its autonomy and current management. Miramax will continue to produce, acquire and market movies.

Disney has also agreed to buy Miramax's library of 200 films.

Disney, often feared in Hollywood for its aggressiveness in telling producers how to make movies, said the deal means it will bankroll 15 to 20 Miramax films next year. 'We're the ones that are going to have to get comfortable with giving up control,' said Jeffrey Katzenberg, chairman of Walt Disney Studios.

'Miramax is truly a beacon in the independent filmmaking community,' Katzenberg said at a news conference. 'The company has survived enormous hurdles and weathered every obstacle to become a haven for independent filmmakers throughout the world.'

The purchase means that Disney's release schedule, already near the top in volume among the major studios, will increase from about 40 movies a year to as many as 60.

Katzenberg said Miramax chiefs Harvey and Robert Weinstein, the college dropouts from Queens, N.Y. who founded the company, would have the ability to 'green-light' movies and get Disney to pay for them. The brothers, who are co-presidents of Miramax, have each been given five-year contracts.

Katzenberg said the alliance with Disney will mean Miramax movies will receive more of a marketing push than previously. 'I think that in the past, Miramax has had to give away much of the upside potential because they were so spread out with so many film commitments,' he said.

Miramax got its break in 1988 when former partner British Midland Montague Bank invested $5 million and extended a $25 million credit line. That gave the company the ability to invest $2 million in 'Scandal,' which became a moderate hit.

Miramax came to prominence the following year with 'sex, lies and videotape,' which set a record for grosses by an independent release at $23 million that was not broken until 'The Crying Game' caught on this year on its way to grossing nearly $60 million.

Miramax followed 'My Left Foot,' 'Cinema Paradiso,' 'Tie Me Up! Tie Me Down!' and 'Truth or Dare.' It hit a dry spell last year with 'Zentropa,' 'Kafka' and 'Delicatessen,' although the Weinsteins insist the company was profitable, earning about $4.7 million on revenues of $75 million.

'Miramax will now be able to get full value for their product, which they have not been able to do in the past,' Katzenberg said. 'To give them the financial backing like ours ensures that they will continue to be the best independent film company in the world.'

The Weinsteins, who considered taking their company public two years ago through a stock offering, said Disney executives approached them three weeks ago with the idea of a buyout.

'The question of our autonomy was the most important issue,' said Harvey Weinstein, co-president. 'We will be making the financial decisions and the creative decisions.'

Katzenberg said he was unconcerned about the potential clash of Disney's wholsesome image with the adult-oriented films with heavy sexual content sometimes released by Miramax such as 'Scandal,' 'Truth or Dare' and 'Tie Me Up! Tie Me Down!' The affiliation will not damage the Disney 'franchise,' he said.

'Miramax will be autonomous and operate at arm's length,' Katzenberg said. 'We looked at the body of Miramax films and quality and good taste has always been primary.'

Harvey Weinstein said the concerns by Disney shareholders about the deal's propriety will be assuaged by the high profitability of Miramax.

Katzenberg has been among the leading champions of cost-cutting in movies and has steered Disney in recent years toward focusing on relatively low-cost movies that produce a profitable return. Its biggest successes have been in the animated area with 'Aladdin' and 'Beauty and the Beast.'

In an indication of its strong commitment to films, it signed a major production deal last fall with former 20th Century Fox chief Joe Roth. Katzenberg said Friday that Roth will be producing about seven movies a year.

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