EXCLUSIVE – UPDATED FROM 8:30 AM: Forget the bizarre involvement of David Bergstein, and Morgan Creek’s James Robinson, and even Rob Lowe. (I know, I know… I’ve learned Lowe may pull in Arnold Schwarzenegger post-November.) More on them in a minute. But they’re just the side show. Instead, I can report that, 5 days ago, Santa Monica-based Colony Capital, the private international investment firm which currently has $30 billion of assets under its management, was brought in by construction magnate Ron Tutor to help him buy Miramax from Disney. The reason? Because two years ago, Colony Capital president Tom Barrack hired 12-year Disney popular executive and former CFO Richard Nanula who’s now leading the Tutor negotiations with the Mouse House point man on the Miramax sale, Kevin Mayer, who’s EVP for Disney’s Corporate Strategy in the Business Development and Technology Group.
So, for the past five days, Nanula has organized a team of “25 guys working on it 24 hours a day” to get the deal done “like a bullet train”, I’ve learned — maybe as soon as next week. My insiders tell me that Disney could get very near to the $700 million price it’s recently wanted for Miramax — a big raise from the $625M, maybe even $650M max, which the Weinstein brothers/Ron Burkle/Fortress-Colbeck partnership seemed ready to pay until talks broke down. The reason is that Nanula and his team have now confirmed from due diligence that Miramax is sitting on a lot of cash, as much as $300M in receivables. That’s more than even the Weinstein partnership told me was out there.
Meanwhile, I’ve learned that Harvey is a Barrack pal, and the Weinstein bro is spitting mad that Tutor now looks to snag Miramax with Colony Capital’s help. “Harvey is very agitated,” an insider tells me. “He’s threatening litigation everywhere.” That’s vintage Harv: when he loses, he sues. Of course, the Weinstein brothers wanted to reclaim their former company because of its sentimental value: it’s named after their parents, Miriam and Max. To that end, I’ve previously reported how Harvey privately is warning to screw over anyone even thinking of buying Miramax. Under their exit deal in 2005, the Weinstein bros were able to retain a hold over sequel or reboot rights to films like Scream, Spy Kids and some other Dimension titles. Harv, in his inimitable way, has said he’ll do what he can to make developing those projects a nightmare.
Because the Tutor group has signed a non-disclosure agreement and entered into an exclusive negotiating period with Disney, no one is publicly commenting on anything. From Disney’s POV, it’s “still negotiating” with the Tutor group. But its comfort level has vastly improved now that Nanula has taken charge. The Harvard alum was the youngest CFO of a Fortune 500 company when he took the fiscal reins of the $22B corporation. He left in 1998 to become president and CEO of Starwood Hotels & Resorts to work for his best friend Barry Sternlicht. Then Barrack snatched him up 2 years ago. Barrack, too, has tangential Disney ties. He worked with Robert Bass, one of the Texas billionaire Bass brothers whose 1983 investment rescued the Hollywood studio.
Meanwhile, on Nanula’s team is also Justin Chang whom Barrack hired in April as a principal responsible for extending the Colony brand into complementary areas. Chang most recently served as a partner of TPG Capital, the international private investment firm which took a bath on MGM.
I’ve learned that Tutor first approached Barrack last week “because he was queasy about the existing guys he had,” an insider tells me. “especially about David and the baggage he brings.” Before Tutor brought in Colony Capital, he was being advised by two of Hollywood’s most controversial and disliked figures: not just troubled film financier/distributor David Bergstein, whose film companies this year were placed in involuntary bankruptcy; but also his good friend, Morgan Creek’s James Robinson whose company has a mediocre track record. I understand that both men are being pushed aside now.
Then there’s actor Rob Lowe’s purported involvement with Colony Capital because he’s Barrack’s pal. That surfaced in the UK gossip columns because he was seen having dinner with Barrack at London’s fashionable C restaurant – Madonna’s favourite – to meet its owner Flavio Briatore, the Italian entrepreneur and Formula One player whose yacht was seized last month by Italian police for tax evasion, and Giuseppe Cipriani, owner of the famed restaurant. However, I can report that media reports of any Briatore and/or Cipriani involvement in the Miramax deal or any media investment fund with Colony Capital are flat-out wrong. I’ve learned that Lowe may bring in his good friend Arnold Schwarzenegger once the California Guvernator leaves office. “He’s not in a position today. He can’t talk details. But it’s anticipated that this would be a platform he’ll get involved in,” an insider tells me.
Colony Capital’s involvement with Miramax represents a marked departure in investment strategy. The firm’s goal has been to take troubled companies and nurse them back to health, but only those with a bricks-and-mortar component. Barrack’s real estate investment firm has done small deals like co-owning Michael Jackson’s Neverland ranch, or stepping in to bail out photographer Annie Leibovitz after she couldn’t meet interest payments on a $24 million loan and faced losing her home. But also big entertainment deals like casinos or cinema chains (the Mars chain in Turkey, the MGM UK chain turned into Virgin Cinemas), even sports teams (baseball in Japan and soccer in France and their respective stadiums). Miramax, of course, consists only of a name and a library “but Colony’s theme in the entertainment business is distress,” an insider tells me. “So they’re going to invest a few hundred million dollars, put on a team of brilliant financial guys, and take it to the next level by building a real company.”
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