LOS ANGELES – Bob and Harvey Weinstein reinvented the world of independent films in 1979 when they formed their company named for their mother, Miriam, and father, Max — Miramax. (search)
The brothers nurtured the careers of writer/directors Quentin Tarantino (search) and Kevin Smith, releasing such groundbreaking films as "Pulp Fiction," "Clerks" and Anthony Minghella's Oscar-winning "The English Patient."
In 1993, they sold their New York-based company to The Walt Disney Co. (DIS) for $80 million in a deal that guaranteed them unprecedented autonomy as long as they continued to turn low-budget "art" films into box office gold.
That relationship ended Tuesday, with Disney and the Weinsteins agreeing to part ways. Disney will keep the Miramax name and vast film library. The Weinsteins will keep the Dimension Films label and start their own, new venture with private financing.
The profitable and prestigious partnership between Disney and the Weinstein brothers soured in recent years as the Weinsteins' ambitions grew, colliding with the need of Disney chief executive Michael Eisner (search) to control the duo.
The war of egos escalated over the years, with Eisner vetoing several ambitious plans to expand the Miramax empire and the Weinsteins pushing to fund larger, more expensive films.
In the past two years, the relationship deteriorated even further.
Disney chafed at the decision by the Weinsteins to fund the civil war drama "Cold Mountain" after partner Metro-Goldwyn-Mayer pulled out. The film was a commercial flop.
Then Eisner and Harvey Weinstein (search) clashed over the Michael Moore (search) film "Fahrenheit 9/11." Eisner forbid Miramax from distributing the controversial movie, but allowed the Weinsteins to buy it back. The film became a surprise hit last year.
The Weinstein brothers were under contract to run Miramax through 2009. But a clause in their deal allowed Disney to renegotiate its terms this year. Those talks grew heated and difficult, with both sides eventually agreeing to end the relationship.
The financial terms of the settlement, announced Tuesday, were not disclosed.
But a source familiar with the talks said Disney would make a cash payment to the Weinsteins of around $100 million, which includes salary and bonuses owed to the brothers as well as their participation in various projects.
While the Weinsteins were tremendous creative forces at Disney, Miramax's financial contributions were a relatively small percentage of the entertainment company's overall film revenues. The unit contributed about 2 percent of Disney's operating income in 2004.
The Weinsteins have already begun to seek financing for their new company, which will temporarily be called "The Weinstein Co." The advisory board for the new venture includes various investment bankers and media executives as well as Robert Redford and Paul Newman, Harvey Weinstein said during a conference call with reporters.
Tuesday, Harvey Weinstein cataloged his disagreements with Disney which he said stifled the brothers' entrepreneurial spirit. He noted that Eisner's newly-named successor, Robert Iger, has pledged to give executives more leeway to make deals.
"In the new Disney, I think those entrepreneurial efforts will be met with a stronger response," Weinstein said. "So that's the irony of this deal."
The Weinstein brothers will stay at Disney on a non-exclusive basis through September.
Disney will name a new head of Miramax by July, the company said. The new unit will be much smaller, with a budget of around $300 million per year instead of the $700 million the Weinsteins had managed in recent years.
Talks between the two sides were described Tuesday as "long and arduous," but also amicable. Cook praised the brothers and Harvey Weinstein said the talks would not have concluded as favorably as they did without the participation of Cook and other Disney executives.
"Harvey and Bob are true motion picture pioneers," Cook said. "All of us at Disney wish them well in their new venture."
Disney shares rose 16 cents to $28.06 on the New York Stock Exchange (search). The stock has traded in a 52-week range of $20.88 to $29.99.