UPDATE WRITE-THRU: Why did Disney’s sale of Miramax Films to Ron Burkle and Bob and Harvey Weinstein implode at the last moment? It’s become a real Rashomon. One version is that as lawyers put the finishing touches on a deal worth around $625 million, Burkle came back after doing his own due diligence and lowered the bid to $575 million. That runs counter to private assertions by Disney insiders last weekend that the real reason the deal didn’t come together was that The Weinstein Co. board wouldn’t give its approval. This situation had been developing for weeks and that’s why a five-day negotiating window stretched to more than a month, as the Weinsteins tried to convince its board. In the end, unsuccessfully. At a certain point, Disney’s negotiating team reported back that the studio should move on and that’s when talks broke off. The Weinsteins denied this. Yet another source said that Disney got hold of a document that laid out Weinstein’s game plan for an undervalued and Underutilized Miramax library, and that complicated matters.
We may never know the full truth, but Disney formally broke off talks and reopened them with Tom and Alec Gores, the billionaires who reportedly bid $550 million. Burkle claimed last week that the deal wasn’t dead, and if he indeed dropped to $575 million, there might yet be a deal there still unless the Gores siblings raise their bid. The other alternative is the higher bid floated by investors fronted by troubled film financier David Bergstein. The Gores’ can certainly afford to pay more, but nobody wants to overpay these days. The Gores brothers are reportedly angling to buy Overture, which has a DVD arm in Anchor Bay which that would be able to manage a Miramax library which, aside from gems like Pulp Fiction, No Country for Old Men and The Queen, is filled with splits rights titles, licensing deals that will expire, and a trove of Asian films. Still, the Gores brothers have a reputation for being savvy financial guys and have the counsel of their smart brother, Paradigm chief Sam Gores.
What a surprising development in the biggest studio-owned film library to hit the marketplace since Ted Turner paid $1.5 billion in 1986 for the MGM library and used it to build his media empire. While Summit Entertainment, Lionsgate and others rushed in to look at the books when the “for sale” sign went up during the Sundance Film Festival, all but three suitors bowed out. The Miramax library doesn’t have the same game-changing potential as Turner’s library acquisition, and library values in general have been dented by the erosion of DVD and the uncertainty of VOD. And so it seems like Disney could still face a rough road ahead before it finally closes the books on Miramax.