The Crying Game grossed $62.5 million, finally shattering the $25 million ceiling that none of the indie blockbusters had been able to break. “When it began to make enormous amounts of money in America,” says Jordan, “I definitely should have made $2 or 3 million. Having gone through this extraordinarily difficult process of making the film for almost nothing, I felt more annoyed at the stupidity of the English partners—the producers and Channel Four—for not protecting the ancillary rights and allowing this to happen so blatantly, than I was at Miramax. You kind of know they’ll try to squeeze every penny out of everything. Harvey is what he is, isn’t he, and Bob definitely is what he is. ‘What do you think I’m going to do? I’m Harvey. Of course I’m going to sting you.’ The pity of it is they’re one of the only ports of call for independent filmmakers. I wish there were alternatives. On the other hand, they distributed the film brilliantly, and I wouldn’t mind making more films for them at all.” Indeed, says Harvey, “Our deal was never with Neal Jordan, it was with Film Four. If Jordan feels he’s owed money, he should call them.”
Miramax must have made in the neighborhood of $20 million on the picture, way more than it had made on any film to date. But the real importance of the success of The Crying Game wasn’t the profit per se. Rather, it paved the way for a long-cherished dream to come true. Miramax became attractive enough to be coveted by a studio—Disney.
WITH THE CRYING GAME as their rainmaker, the heavens cracked open in a downpour of cash, bringing the Weinsteins’ three-year drought to a watery conclusion. Even the brothers couldn’t spend fast enough to burn through the film’s earning power. And the success they enjoyed with Jordan’s film seemed to irrigate everything else they released that year: John Sayles’s Passion Fish opened on January 29, 1993, and grossed a very respectable $5.4 million. Baz Luhrmann’s Strictly Ballroom followed three weeks later and rang up $11.7 million, spectacular for a small, clumsily shot, albeit charming Australian picture. Two months later, in April, Miramax released Like Water for Chocolate. “It was kicking around, no one really wanted it,” recalls Eamonn Bowles. “Harvey did a radical restructuring, and it became one of the biggest foreign language films ever,” grossing $21.6 million. He continues, “They call him Harvey Scissorhands, but he’s helped way many films commercially.”
In February, Miramax received twelve Academy nominations. In addition to The Crying Game’s six, which included Best Picture, Best Actor, for Stephen Rea, and Best Director, for Jordan, Enchanted April got three, Passion Fish, two, and Close to Eden, one, for Best Foreign Film. When the dust settled, Miramax won four Oscars. The brothers understood that if ever there was a moment to cash out, this was it.
Harvey, who talked to everyone and trusted no one, got into a conversation with Katzenberg, to whom he had unloaded Sarafina! Historically, of course, the studios had always disparaged the indie business as small change. Explains Katzenberg, “Investing a million to make $10 million would seem like a not very big business, but if you could do that four or five times a year, then it’s a $40 or $50 million business, and suddenly it has size and scale to it.” Katzenberg discussed Miramax with Ptak, who had first introduced him to the Weinsteins. Ptak advised him to go ahead, saying, “These guys don’t quite know how to do it. They think that developing a friendship can be a sign of weakness, but I love them.”
On April Fool’s Day, Katzenberg phoned Chris McGurk, who was then CFO of Disney Studios, and said, “Hey, call Harvey Weinstein, let’s talk to him about buying the company.” McGurk had been an executive at Pepsico before coming to Disney, and he was a numbers guy, almost the definition of a suit, with a Grant Wood face, long and narrow, thin lips. He looked like he belonged behind the counter of a dry goods store in Nebraska at the turn of the century. But when he opened his mouth he revealed a dry, sardonic, slashing wit. McGurk threw knives, and enjoyed it when they drew blood. More important, he wasn’t blinkered by the studio sensibility. McGurk called the brothers, said, “We’re interested, make a proposal.” Even though yesterday they had been on life support, the Weinsteins demanded upward of $90 million for their company.
According to McGurk, as Disney began to look at the deal, “We said, ‘Hey, wait a minute, if they piggyback on the studio and we put them into our TV deals, put their product into our video operation, Jesus, we can increase their revenues by 30, 40 percent, dramatically improve their bottom line. This gives them a huge advantage in the marketplace, maybe there’s something to this.’ We laid out on a piece of paper how we would help Miramax take over the independent world and kill everybody. The big issue was whether these two guys could work with us, work within the system.”
On the Disney side, everyone was worried about Eisner’s take on it, given the Disney brand name and the parade of controversy the Weinsteins trailed in their wake. To their surprise, he went for it. Eisner had been uneasily watching his competitors get a foothold in television. Says Katzenberg, “Michael did not want to vertically integrate the company, he did not want to buy cable, he did not want to buy a network, because he felt we were too late. Our strategy was to extend our reach in terms of content. If we had a large enough control of the product being made—25, 30 percent—these so-called gatekeepers, the Rupert Murdochs, the John Malones, the Viacoms, the Time Warners that did own cable and network, would always have to deal with us. Miramax was a big building block in that strategy.” Moreover, branding was something Eisner understood, and there was no question that Miramax had a brand name. Beyond that, “We’d had a couple of years of poor performance and he probably saw Harvey as a backstop in that regard, just as he brought in Joe Roth and gave him a producer’s deal,” McGurk explains. As for controlling the brothers, Katzenberg and Eisner had always been able to hammer anyone who got out of line, so he didn’t think he needed to worry about that.
And Oscars—forget it. Disney couldn’t buy one. So far as nominations were concerned, that year, Miramax outscored Disney twelve to five—and Disney’s were all for Aladdin, an animated feature. If the studio were able to acquire Miramax for a song, it would be buying an Oscar factory with a track record of prestigious movies for adults. Compared to the other studios, Disney did not have much in the way of a live action film library. The Weinsteins, on the other hand, were building one at a rapid clip for next to nothing—by studio standards.
From the Weinsteins’ point of view, the advantages were overwhelming. Harvey has always denied that Miramax was in financial trouble. But, he recalls, “The handwriting was on the wall, we kept losing talent. Jim Sheridan came in and left, Steve Soderbergh said, ‘Hi and good-bye.’ It was hand-to-mouth, and all of a sudden we’d have these resources.”
Still, it was a gamble on both sides. As McGurk puts it, “You had a situation where the whole company was on the back of these two guys, and if something happened to one of them, you were out of luck. Plus, an uncertain profit stream, where they’d never made more than $5 or $6 million in any year. How were you going to justify paying even $70 million for this company? You had to go on faith that this model that we put together would work.”
Disney president Frank Wells knew that the Weinsteins had always lived day to day, and feared that once they got a big payday they would lose their edge. He said, “You’re gonna pay ’em $60 million, and they’re gonna retire!” Katzenberg replied, “Not these guys.” Still, one of the big incentives for Disney was that Miramax operated at a reduced buget level, and Wells was also worried that it was going to be harder for the brothers to plead poverty once they were feeding at the Disney trough. Neither its staff, nor the above-the-line talent could be expected to go quietly into the night of scale and deferrals.
Then, on Friday the 1st of May, the parties gathered around the big polished wood table in the sixth-floor conference room in Michael Graves’s Team Disney building, the one with the nineteen-foot-tall seven dwarfs, on the Disney lot in Burbank, to sign the deal. Wells, on his way to chair a benefit for the Martin Luther King Foundation, was weari
ng black tie. Bob was skittish and upset. He was worried that they were making the biggest mistake of their lives, that they would lose their autonomy. “People were calling me and saying, ‘They’re never gonna keep their word,’ ” Harvey recalls. “We were terrified.” The worst-case scenario, he continues, was that, “These guys were gonna say, ‘You better do this, and you better do that, and if we didn’t protect ourselves, we were gonna be in trouble.”
Bob was reading the entire fifty-odd-page agreement himself, from cover to cover. Plus a fat attachment of schedules listing every movie in their library along with the rights they did and did not have. Getting more and more agitated by the minute, he was saying, “Wait, we don’t have that, how’d this get on here?” Says former Disney VP of finance Rob Moore, “Bob suddenly started to fear that it was all a setup, and that once they signed the deal, we would attack the rights schedule, say, ‘Hey, you told us that you had video rights in Latin America on this movie, you don’t, so we’re going to have to reduce the purchase price.’ ” Which, one suspects, is exactly what the Weinsteins would have done were they in Disney’s shoes. Bob would look at McGurk or Wells and see himself. As Moore puts it, “Most people who had dealt with Frank could count on the fact that he would ultimately do the right thing. But that just didn’t ring true to them, because that’s not the way they work. These guys do what is in their best interests. And that means if they have leverage to screw a million dollars out of you, that’s what they’re going to try and do.”
Ultimately, the pluses outweighed the minuses for both parties. The deal got done, and the brothers had a glass of champagne with Wells. Each side felt it had walked away from the table a winner. Disney assumed all the company’s debts, including the payables, which amounted to about $22 million, and the bank lines, another $20 million. They had agreed to pay the Weinsteins a salary of about $1.5 million a year. All told, the deal was worth over $100 million to Miramax. Moreover, the brothers got what they valued most: their autonomy. “I said to Wells, ‘I know it says it, but I really want to say it,’ so I wrote it out and made Frank sign it next to me,” recalls Harvey. “It’s written on the contract in handwriting, ten times. If we lived within a cap of $12.5 million per picture, no one had the right to tell us how many to acquire, what to produce, or how many to produce. Nobody could tell us what to do.” 11
“Eisner was so concerned that they would get money and turn into crazy men, he made a very smart deal in terms of keeping them in a financial box to force them to be profitable,” says Roth. To make sure that they didn’t just loot Disney, take the money and run, payments to the Weinsteins were doled out, little by little, over a period of five years if they showed up at the office every day, worked hard, and were as productive as they had been in the past. A clause was inserted into the contract that stipulated that if Miramax did not meet its projections for two years in a row, Disney could abrogate its autonomy. Although Disney now owned Miramax, the Weinsteins were incentivized not as producers, which would have given them a percentage of the gross and just encouraged them to spend Disney’s money creating mammoth box office, but as shareholders in the company, with an interest in growing it. They were given a phantom equity position in the value they created over time. Beyond that, Harvey and Bob had escalators, which allowed them to take home a bigger and bigger chunk of their profits the more they made, starting at 15 percent of the company’s pretax profits that exceeded the $10 million a year projection contained in their business plan. Disney didn’t charge Miramax for operating capital, and there was no cap on the amount it could borrow from Disney to finance its operations. Disney wanted to take out life insurance policies on both brothers, but they had a hard time finding a carrier willing to write them. Bob got upset because Harvey’s policy was larger.
According to one source, when Harvey returned to his New York office, he told the staff, “I finally found someone to buy this shithole!”
By selling themselves to Disney, the Weinsteins laid the groundwork for the phenomenal success to come, but they would be haunted by their decision not to go public and build the value of the company, which in turn would fan the flames of animosity that consumed their relationship with their corporate parent. Says Schmidt, “What they do so well, scaling the next mountain that’s in front of them in terms of the film release, would work well inside the Disney machine, but it never resulted in them creating that big company that would perhaps have enabled them to split $100 or $200 million between the two of them, instead of $60 million.” The brothers would always feel cheated.
Indeed, when Miramax accepted Disney’s hand in matrimony, it was clear the match was one of convenience, not affection, and most observers, dumbfounded, predicted it would end in a messy divorce. After all, Disney stood for everything the Weinsteins hated, or claimed they hated. Harvey said things like, “Michael Eisner can’t make me do anything,” a sentiment that was at once heartfelt and calculated, intended to reassure his constituents that he was still in the Miramax business. For its part, what would Uncle Walt have made of The Cook, the Thief, His Wife, and Her Lover, or Paris Is Burning? Or, for that matter, Reservoir Dogs? On the face of it, it would be hard to imagine two companies more ill-suited than the white-bread, wholesome, Burbank home of Mickey and Donald, and the two slobs from Queens with their ragtag, anything-goes company in Tribeca. As a Disney executive put it, “When you see Bob or Harvey in L.A., it’s like Where’s Waldo in reverse: They are all you can see. . . . They seem like aliens from another dimension.”
Now that Miramax was on its way to becoming a producer as well as an acquirer and distributor, the biggest question mark was whether the Weinsteins would be as skillful developing, shooting, and editing their own films as they had been acquiring those of others, which is to say, it’s much easier to recognize in a finished film elements that can be exploited for an effective marketing campaign than it is to develop an idea from scratch and successfully see it through production. Not to put too fine a point on it, none of the films Miramax had produced up to that point had been any good.
While the Weinsteins were negotiating with Disney, Harvey was acquiring Jane Campion’s The Piano, starring Harvey Keitel and Holly Hunter. Ptak was handling the sale of North American rights. He set up a screening in L.A. for all the distributors, but Jean-François Fonlupt, an investment banker who had just been hired to run CiBy 2000, refused to send a print to him in Los Angeles, and instead required him to fly to Paris. After flying all night, Ptak showed up at ten in the morning on a Tuesday at the Pathé screening room, and was nonplussed to come upon Harvey pitching Miramax to Fonlupt, when Ptak had promised the distributors back in L.A. that they would all see The Piano at the same time. Harvey wasn’t any happier to see Ptak, because in Fonlupt, new to the job, he figured he’d found a pigeon, and had succeeded in convincing him to sell him the movie. Fonlupt asked for $3 million, and Harvey agreed to his price. During the negotiations that followed the screening, in front of nine or ten people, Weinstein promised an additional $50,000 bonus for each $500,000 of North American box office over $13.5 million, every once in a while darting a glance in the agent’s direction. Ptak, who had been around the block and then some, asked him, “How many films has Miramax had that have grossed over $13.5 million in North America?” Weinstein stopped, looked him in the eye, and said, “Nine! Nope, ten! ’Cause we’ve got a movie out right now and I think it’s going to hit the mark,” and he continued his spiel. Later, during a break and away from the CiBy team, Ptak said, “Harvey, let me ask you a question: Why did you tell everybody that Miramax has had nine pictures that have grosssed over $13.5 million in North America?”
“Why, whaddya mean?”
“Because it’s not true. You’ve only had three.”
“You didn’t tell ’em, did you?” Weinstein asked, turning pale.
“I had to, otherwise I’m lying to them too.”
“Oh, no, this whole thing’s gonna blow up—John, why’d you tell ’em?”
> “What I told ’em was this was just an example of your creative enthusiasm, how much you wanted this movie.” Weinstein threw his arms around Ptak, gave him a hug, and Miramax got the film. Ptak returned to Los Angeles to tell the other distributors that The Piano was off the table. He says, “Everyone was furious with me, but it was a real compliment to Harvey.”
Soon after the deal was concluded, the Weinsteins took The Piano to Cannes, where it and another Miramax film, Chen Kaige’s Farewell My Concubine, shared the Palme d’Or. In mid-November 1993, Miramax released The Piano, to rave reviews. It went on to gross an astonishing $40 million in the U.S. alone.
Like Cinema Paradiso, Farewell My Concubine was long. The version that won the Palme d’Or was just twelve minutes shy of three hours. Harvey took out his shears and lopped off ten minutes. Once again, there were howls of outrage—Harvey Scissorhands had cut up a film that had earned the international film world’s most prestigious prize. Louis Malle, head of the Cannes jury that year, was incensed. He went so far as to challenge Miramax’s claim, in its print ads, that Concubine had won the Palme d’Or. He said, “The film we admired so much in Cannes is not the film seen in this country, which is twenty minutes shorter—but it seems longer, because it doesn’t make any sense. It was better before those guys made cuts.” Still, the film grossed $5 million. The Weinsteins would get ten Oscar nominations that year, eight for The Piano and two for Concubine. And it would only get better.
Down and Dirty Pictures Page 23
