Media’s Slings and Arrows Aside, Miramax Prospers

Miramax Films founding brothers Harvey and Bob Weinstein may think they’ve mellowed with age and success, but it’s still pretty easy to get their goat.

Sitting on the sun-drenched patio of the Peninsula Hotel in Beverly Hills last Friday, the Weinsteins were beaming, having just read the morning’s glowing reviews of their new release, “Shakespeare in Love.”

The fuse was lit by the suggestion that this was a nice cap to what Hollywood has perceived as an otherwise lousy year at the box office for Miramax--with such misses as “The Mighty” and Woody Allen’s “Celebrity.”

“I’m sick,” said Bob Weinstein, 44, groaning in disgust while his 46-year-old brother shook his head in disbelief.

Part of the reason for the perception is that Miramax releases more movies than any other distributor--more than 30 this year--and with that many films, there will be plenty of losers. And in fact, the Weinsteins are right about the reality.

For starters, three Christmas ’97 holdovers made substantial money in 1998: “Good Will Hunting,” “Scream 2” and “Jackie Brown.” With such 1998 releases as “Halloween: H20” and “Rounders,” Miramax’s cumulative gross is likely to match last year’s total of nearly $420 million.

But box office and market share are insufficient indicators of how a company is really doing. In the most important category, Miramax has scored its most profitable year ever.

For the fiscal year ended Sept. 30, “we made $125 million in profits,” said Harvey Weinstein. That represents an almost 80% increase over 1997’s earnings of $71 million. In the two previous years, the company earned $30 million and $50 million, respectively.

Since being acquired by Walt Disney Co. in May 1993 for about $75 million, Miramax has shown record profits and avoided periods of being short on cash--a nagging problem when the company was financially independent.

The reason Miramax can withstand several box-office misses in any given year is that it mostly handles specialty films, so losses rarely amount to much. One or two flops for a major studio can represent $50 million or more in red ink. Over the years, Miramax has managed its losses by keeping its production and acquisition costs low and hedging its risk by pre-selling foreign rights or partnering on expensive projects.

“The key to their success is equal in terms of their ability to get hits and avoid any big losses,” said Rob Moore, executive vice president and chief financial officer of Disney Studios. “So when they have a big hit, it goes straight to the bottom line.”

Hollywood was quick to ask if Miramax was getting in over its head financially with back-to-back announcements that it was launching two new businesses: TV production, under former CBS executive Billy Campbell, and a magazine and multimedia company with former New Yorker and Vanity Fair Editor Tina Brown.

Moore believes that won’t be the case. “They’re approaching both businesses the same way they approach the movie business, keeping their investment low by pre-selling rights or taking on partners.”

Miramax will look to sell off international rights to “wasteLAnd,” its new series created by Kevin Williamson for ABC, to avoid a significant deficit.

“We’re not running a $50-million TV operation making big writer deals,” said Bob Weinstein. “We’re pretty much taking our in-house people like Kevin Williamson, Kevin Smith, Robert Rodriguez, who work with us anyway.”

Miramax is also talking to potential partners about Brown’s forthcoming magazine, Talk.

As for its movie business, the Weinsteins are hoping “Shakespeare in Love,” which has opened in limited release in New York and Los Angeles, will follow the pattern of other Miramax breakout films like “Good Will Hunting,” “Pulp Fiction” and 1996’s Oscar winner “The English Patient”--each of which grossed more than $200 million worldwide.

Sure to help are the six Golden Globe nominations for “Shakespeare” that were announced Thursday--including for best picture, best director and best screenplay. The tally tied Paramount Pictures’ “The Truman Show.”

“Shakespeare,” director John Madden’s romantic comedy based on a script by Marc Norman and Tom Stoppard, exemplifies the kind of refreshingly original independent movie that Miramax has built its name on since coming to life two decades ago. Joseph Fiennes and Gwyneth Paltrow star.

Being associated with smart, upscale movies that are unafraid to take creative risks--and can cross over commercially--has made Miramax, based in Manhattan’s chic TriBeCa neighborhood, the envy of all independent movie companies.

“Shakespeare,” which has the rare distinction of being praised by virtually every major critic, has been a pet project of Harvey Weinstein for years. In fact, it’s the first film on which he’s taken a producer credit. The brothers are usually credited as executive producers.

Weinstein not only had a direct hand in picking Madden and convincing his actor friends Rupert Everett, Ben Affleck, Geoffrey Rush and Colin Firth to appear in it, he exercised his usual promotional showmanship by personally calling on Hillary Rodham Clinton to host the film’s New York premiere.

“I didn’t want to bother the first lady, but I thought I needed to give it an importance,” said Weinstein.

Weinstein became interested in the “Shakespeare” project when filmmaker Ed Zwick gave him Norman’s script in 1995. Zwick was originally set to direct the movie for Universal, but it never got off the ground.

Weinstein was interested in taking over the project, but he recounts that Universal wouldn’t sell it until Miramax agreed to reimburse the studio $4.5 million spent on sets and costumes.

“Their development costs were as much as the budget of a Miramax movie,” said Bob Weinstein, who runs Miramax’s Dimension Films label, which has produced several hit horror movies including the “Scream” series.

Universal exercised the right to come back into the deal as Miramax’s financial partner after production was complete. The studio reimbursed Miramax for half the total production cost, which Weinstein said was just shy of $40 million. “The deal was always we would control the production and have full autonomy, and we’d split the profits in a pool, 50-50.”

Weinstein said he was taken with the project “because it was so contemporary and it humanized Shakespeare.”

Describing his own early experiences with Shakespeare as “horrendous,” he recalled: “We used to go on high school field trips to the Shakespeare theater in New York and watch the most boring productions. We’d all make out with our girlfriends, and if I didn’t have a girlfriend I’d watch somebody make out with their girlfriend--anything but watch the show.”

In his youth, he said going to see a Shakespeare play “was synonymous with going to the dentist.”

The Weinsteins believe that if “Shakespeare” can get Oscar recognition, it has a shot at following the path of “The English Patient,” the best-picture winner that grossed just under $80 million in the U.S.

Miramax is rolling out “Shakespeare” much like “Good Will Hunting,” expanding its run from eight to 200 screens Christmas Day and to 800 on Jan. 8.

Miramax is also mounting an Academy campaign and has high financial hopes for another current release, Roberto Benigni’s critically acclaimed “Life Is Beautiful,” which has grossed about $7 million in limited release domestically and $26 million overseas.

(Miramax paid $7 million for worldwide rights outside of Italy, where it’s grossed nearly $40 million).

A moving story about the undying love of a father for his son set against the Holocaust, the film was ineligible for the Golden Globes since it was released last year in Italy, but is that country’s official Oscar entry for best foreign language film. “Life” could be nominated as best foreign-language film and best picture. The last film to accomplish that was Costa-Gavras’ “Z” in 1969.

Miramax prides itself on amassing 110 Oscar nominations, 30 wins and five Palmes d’Or--the Cannes Film Festival’s highest honor--over the past 10 years.

“When one of our competitors has a hit or gets one Oscar nomination, the press says, ‘Wow, the next Miramax,’ ” said Bob Weinstein. “We’re saying, do what we’ve done, and we’ll congratulate you.”

It also irritates the Weinsteins that the Hollywood trade media ignore profitability when reporting box-office results. He cites Dimension’s recent “Halloween” sequel as a film that’s erroneously characterized as a disappointment when it cost only $17 million and is highly profitable.

Weinstein also has a message for all the investment bankers and analysts who impose their financial models on the movie business: “Finally, it’s an artistic business. It’s about picking scripts, picking the right directors and picking the right casting. Either you’re good at it or you’re not. We are player managers. We play that game.”