EXCLUSIVE: The struggling Weinstein Company has lost Colony Capital as a financial savior, but it looks like Fortress Investment Group is coming to the rescue. As a series of potential big buyers including Viacom, Lionsgate and more contemplate a TWC buy, the consensus seems to be solidifying that legal protection must be ensured to close a deal, and chair Bob Weinstein has to go.
Keeping the bankruptcy wolves at bay, Fortress Investment Group is replacing Colony Capital in putting up a $35 million bridge loan for The Weinstein Company in a deal that’s expected to close by tomorrow. Yesterday, after giving the TWC board about 48 hours to take or leave its more slender than expected offer, Colony essentially announced it was closing its three-week exclusive window it had to place itself on the inside of a sale of assets for the troubled company.
The depleted TWC board is seeking a check in the $350 million range. Realists say they will likely take a haircut on that asking price.
Among the companies who have looked at the books and are considering getting in the mix for a long-term asset purchase with Fortress are Viacom, IMG, Anchorage, Yucaipa, MGM and Lionsgate, insiders say. Moelis & Co, which delivered a prospectus earlier this year for the television company, is handling the potential sale of all the assets. In a move that may serve as a TWC blueprint, Fortress took over Revolution Studios three years ago. Playing off the Joe Roth co-founded company’s library, the investment group recapitalized Revolution and sold it to Content Partners at the beginning of this year.
However, TWC faces an investigation by the New York Attorney General and one lawsuit already arising from the dozens of allegations of sexual harassment and sexual assault being leveled against now ex-chair Harvey Weinstein. It means that whatever their plans, potential buyers are insisting on indemnification from legal action before putting money on the table.
Facing a sexual harassment accusations of his own from the showrunner on the now-canceled The Mist, any deal will likely insist on seeing Bob Weinstein exit TWC. The working scenario has Weinstein leaving with the Dimension Films label and a payout for his 23% of the company. But he has denied the sexual harassment claims and publicly insisted he is not going anywhere — and neither is the company.
With that potential hindrance, the reality of the ever-growing scandal surrounding Harvey Weinstein and the toxicity of the company means that TWC will likely have to bring their $350 million asking price down to fire-sale levels. Still, the company seems confident that whether it is Fortress, Ron Burkle’s Yucaipa or one of the others, the final offer will still end up being more than the low-ball offer put forth by the Tom Barrack-run Colony Capital.
As for any check-cutting for Harvey Weinstein, who was terminated by the TWC board on October 8 and formally resigned October 17, that decision remains in flux. With the disgraced Oscar-winning producer also owning 23% of TWC, discussions are leaning towards placing his share in a trust with the courts. At this point in the bidding process, the logic of that is to make those funds susceptible to legal claims, both current and expected.
On paper, there is strength in the assets of the company despite the scandal. While the profitable TV side has taken a bit of a hit as projects are being scrapped, completed movies remain potential moneymakers. There are seven movies in the can including Paddington 2, The War With Grandpa, The Current War, Polaroid, The Intouchables remake Upside, Hotel Mumbai and Mary Magdalene.
Among the properties headed toward production starts are In the Heights (creators Quiara Alegría Hudes and Lin-Manuel Miranda have asked TWC to give up its movie rights to the Tony-winning musical). Additionally, TWC has The Boys in the Boat, the Richard Pryor biopic, and The Six Million Dollar Man, which Mark Wahlberg has been circling.
There is also Michael Moore’s Fahrenheit 9/11 sequel Fahrenheit 11/9 on the election of Donald Trump as president. That project is more complicated. It is owned by Harvey and Bob Weinstein because of the original distribution construct of the first film, which became the highest grossing docu of all time. The Weinsteins took it out of Disney, which would not release it, and the brothers did it themselves. Since Moore was unsparing in blasting Harvey Weinstein following the revelation of the scandal (they had a checkered relation anyway with Moore once suing over proceeds from the original movie), it remains to be seen whether the filmmaker’s agents can pry loose a film announced at Cannes to be ready for the one year anniversary of Trump’s election. Moore’s progress was slowed by his Broadway show, but it seems unlikely that the filmmaker would continue if Harvey Weinstein was in any way associated with the project, on which TWC was only going to be domestic distributor. At Cannes, HBO and Netflix were among the parties most interested, and the film would seem a strong fit for either.
While some have made noises about walking away with these projects piecemeal, that runs counter to the board’s plans. The attitude is that the TWC board will get the most cash by bundling those assets, which would not be tarnished if another company saw them through. However, there is acknowledgement of the impact of the situation created by Harvey Weinstein and the scandal that has seen nearly 60 women come forward. To help offset that, the plan is to put a ringed fence of sorts around the assets. The expectation is that some of the company sale proceeds will be set aside, along with insurance policies that TWC has in place, to offset those costs as they grow