Miramax Films and Metro-Goldwyn-Mayer Inc. said they will make as many as eight films together in a joint venture aimed at helping MGM breathe life into its ailing film division and giving Miramax access to MGM's vast library.
Under the deal announced Tuesday, Miramax will develop and produce each of the two or three films that will be made each year. Each company for now is planning to split domestic and international marketing chores, although the firms said the arrangements are flexible. The movies are expected to have modest budgets averaging about $25 million, although some higher-cost films may be made.
Deals in which studios co-produce films together is increasingly common because it allows them to share the risks and costs associated with the volatile business. Miramax and MGM will split production and marketing costs and share in all revenue.
Hooking up with Miramax, which is owned by Walt Disney Co., gives MGM access to a company that has emerged as the industry's savviest marketer and distributor of smaller films. Although Miramax has joined with other studios on deals in the past, this marks the first time the company has had access to another studio's library to search for projects.
"My sense is MGM is setting out to dramatically enhance its production activity, and the easiest way is through joint ventures," Seidler Cos. analyst Jeffrey Logsdon said.
To launch the deal, each company will contribute one film each, which Miramax will market and distribute domestically, with MGM responsible for the international part. MGM recently struck a deal in which 20th Century Fox will market and distribute its films internationally starting late next year.
MGM's contribution will be "Cold Mountain," based on the best-selling Civil War novel by Charles Frazier that the company's United Artists unit acquired for $1.25 million in 1997. The film is to be written and directed by Anthony Minghella, who previously worked with Miramax on the Oscar-winning "The English Patient."
Miramax will contribute its remake of "Harvey," the 1950 James Stewart comedy about a man who talks to an invisible, 6-foot rabbit. Miramax in April obtained the rights from the estate of Mary Chase, from whose 1944 Pulitzer Prize-winning play the film was adapted, and it has been hoping to attract a top star such as Tom Hanks to the role.
The deal means Harvey and Bob Weinstein, the brothers who head Miramax, will be reunited with MGM's new vice chairman, Chris McGurk.
McGurk was the top financial officer for Disney's studio operation after Disney acquired Miramax. Later, as a senior executive at Universal Pictures, McGurk worked with the Weinsteins on the joint production of the Oscar-winning "Shakespeare in Love."
In an interview, McGurk said the company may seek to finance the films using money from third parties. He added that the Miramax deal does not mean MGM is shifting away from doing its own marketing and distribution.
Harvey Weinstein said that although both "Cold Mountain" and "Harvey" are attractive projects, neither was the reason for the alliance. "More important was the overall deal. The concept of this was not about one movie," he said.
The agreement allows Miramax to sift through most of MGM's library of more than 5,000 films, as well as scripts for pictures never made. Not included are projects MGM already has in the works, such as a remake of "Rollerball" or a potential sequel to "Basic Instinct," or long-standing franchises such as its James Bond and Pink Panther series.
MGM, which is controlled by billionaire Kirk Kerkorian, has seen its movie business struggle amid losses on such films as "The Mod Squad" and "At First Sight."
Its next film is a remake of "The Thomas Crown Affair" due out in August. Its next James Bond film, "The World Is Not Enough," is due in November.