Weinstein Co Suffers More Exits & Layoffs; Why 'Nine' Was Such A Financial Disaster

UPDATE: Eric Robinson, a senior production exec at The Weinstein Company, is in talks to exit the company after a decade. CFO Larry Madden has already left. Meanwhile, there’s another round of massive layoffs coming along with talk of another restructuring. Seriously, how is that place surviving? To get down to its goal of 90 employees from 112, The Weinstein Co has to do more firing. Even if Nine does eke out a win or two this Sunday because of its 12 Golden Globe nominations, the most of any studio, thanks to Harvey’s usual manipulation campaign of those faux foreign journalists who make up the Hollywood Foreign Press Association, it’ll be too late: Nine is losing a shitload of theaters this coming weekend. And it’s a financial disaster.

How bad were the economics of Nine and its impact on The Weinstein Co? When it was also heavily funded by Relativity? First, you have to understand that my experience is that these two companies have a huge problem telling the truth about anything money-wise. Oy vey. But, from what I understand, the Nine financing was rather unique.

TWC produced the feature but only took foreign rights. Given the pedigree of the project and cast, it did well “selling” the film to distributors around the world for an advance guaranty. (Unlike a major studio, companies like TWC sell off the foreign rights to distributors in each territory). Both TWC and Relativity claim $50 million in foreign sales was generated. But my sources not only very much doubt that number, they laugh at it.

But let’s assume for the moment that this is correct. TWC then sold the domestic rights to Relativity.  TWC agreed to market and distribute the film on behalf of Relativity in the U.S. for a 15% fee. Relativity claims it put up up advance of $16 million, but my sources say it was close to $30 million for domestic.

Relativity insists it did not cover P&A on Nine, rather TWC did. My sources say the film will never recoup its P&A understood to be $45 million. (Relativity insists that’s a “very inflated and inaccurate” figure. But they also don’t correct it. My sources say it’s right.)

Both TWC and Relativity will get hurt together. And both companies say these projections on Nine are wrong. So let’s do the math: The film’s box office is currently $17+ million. Let’s be generous and say it ends up at $25 million. This is North American box office, so when you take out Canada (which was licensed to Alliance as a pre-sale), the U.S. will be around $22.5 million. Translated to gross film rental (what the distributor takes from the box office), there will be about $10.7 million taken in By TWC. Add PPV – $1.25 million, DVD/VOD – $17.5 million, Pay TV – $3.5 million, Free TV – $2.5 million, and the total is $35.7 million in revenue.

Now compare the costs: Theatrical P&A – $45 million, Residuals – $2 million, Gross Participations – ?, TWC Distribution Fee (15%) – $5.35 million, DVD Marketing and Distribution Costs – $7 million, and the total is $59.35 million (without any assumption for gross participations).

Since The Weinstein Co is responsible for the P&A costs, then they will lose at least $20 million on the film ($25 million shortfall, minus the $5.35 million fee they earn for distributing on behalf of Relativity).

As for The Weinstein Co, it’s supposedly considering several deals to restructure its finances yet again while its liquidity is on life support and its creditors breathe down their necks.

Isn’t moviemaking a fun business?

This article was printed from https://deadline.com/2010/01/weinstein-co-suffers-more-exits-the-411-on-why-nine-was-financial-disaster-22333/