Walt Disney Co.-owned Miramax Films could lay off as much as 20% of its workforce in a series of cost-cutting measures aimed at heading off a financial squeeze, people familiar with the plans said.
The layoffs are being weighed as Miramax’s co-founders, Harvey and Bob Weinstein, are under increasing pressure to save money at their New York-based movie company.
The Weinsteins have run through most of a $700-million annual production and marketing budget, nearly four months before the end of the company’s fiscal year on Sept. 30.
The total number of jobs cut could reach as high as 100 out of 450 Miramax employees worldwide, the sources said. It is unclear how the layoffs would be divided between the company’s corporate headquarters in New York, where the bulk of the staff is located, and its Los Angeles offices.
“This is just speculation at this point. No decisions have been made,” Miramax spokesman Matthew Hiltzik said.
A Disney spokeswoman declined to comment on the potential Miramax layoffs.
In the 24 years since founding the company, which they named after their parents, Miriam and Max, the Weinstein brothers have become the most influential executives in the independent film world.
Since Miramax was bought by Disney in 1993 for about $75 million, they have produced such highly profitable films as “Pulp Fiction” in addition to the “Scary Movie” franchise and the “Spy Kids” series. And they have given Disney the cachet of such best-picture Oscar winners as “The English Patient,” “Shakespeare in Love” and “Chicago.”
But Miramax has increasingly chafed under tighter financial reins imposed by Disney, which itself is under pressure to further improve profit. The companies have been feuding for more than a year over how much Disney allocates each year to Miramax and how Miramax accounts for its profit, which determines how much the Weinsteins are paid.
So strained are the relations with Disney that the Weinsteins this year proposed buying back the company, an idea that was rejected by Disney Chief Executive Michael Eisner.
The companies can’t even agree on Miramax’s profitability: Eisner recently said the company made money in just two of the last five years, whereas Miramax said it was profitable in four of the last five.
One reason for the downturn in Miramax’s fortunes is its move in recent years into financing a bigger and more costly slate of movies, including “Cold Mountain” and “Gangs of New York.” It also has been plagued this year by an anemic box office. Although “Kill Bill Vol. 2" performed well, such films as “Ella Enchanted” and “Jersey Girl” flopped. (Last year, the company had its biggest box-office year with such films as “Spy Kids 3-D: Game Over.”)
Beyond the proposed job cuts, Miramax has already reined in costs by curtailing the development, production and acquisition of new movies until it receives its 2005 allocation from Disney on Oct. 1.
The Weinsteins’ employment contract with Disney expires at the end of September 2005. Disney has the option to extend their contracts for four additional years under previously agreed to terms. Disney has expressed interest in extending the brothers’ tenure but is seeking to change those terms, sources said.
In recent weeks, talks between the companies reached an impasse as other tensions flared, notably over Michael Moore’s documentary “Fahrenheit 9/11,” a scathing criticism of the Bush administration that took the top prize this year at the Cannes Film Festival.
Last year, Disney told Miramax it couldn’t distribute the film because of its overtly political nature. Miramax had the right to challenge Disney’s decision to block the film’s release and ultimately the two sides reached an agreement allowing the Weinsteins to buy back the film and release it through another distributor. Nonetheless, Disney found itself on the defensive with Miramax and Moore over its decision.
The brothers have made no secret of their desire to start a new company if need be after the expiration of their employment contract.
The relationship is deteriorating at a delicate time for Eisner, who has come under fire from critics over his handling of key Disney partnerships. Another longtime partner, Pixar Animation Studios, decided earlier this year to end talks to renew its lucrative association with Disney.
To be sure, it would be a blow to Disney if the Weinsteins left Miramax. But if the two companies parted ways, Disney would get to keep and exploit the more than 500 titles in Miramax’s library.
Just last week at a Los Angeles screening of “Fahrenheit 9/11,” Harvey Weinstein joked to the crowd that he and his brother had placed an advertisement in the Los Angeles Times seeking new positions: “Two execs looking for a company to run. Resumes available upon request.”