Walt Disney Co.'s divorce from Miramax Film founders Bob and Harvey Weinstein just got more costly as audiences last weekend ran for cover from their “The Great Raid” war movie.
Grossing $3.4 million from its showing on about 800 screens, despite a $20-million promotional budget, the lackluster opening could portend a Disney write-off if the movie fails to subsequently catch on in theaters and on DVD.
For Disney, “The Great Raid” could be the first in a string of potential headaches in dealing with the remaining films made while the Weinsteins were part of the corporate family. The Burbank entertainment giant is on the hook for all marketing and distribution costs -- and any potential losses -- on seven other Miramax releases that are being rushed into theaters before the brothers split for good Sept. 30 to run their own company.
Both sides called the unusual move to hurry the films into theaters a joint decision. The Weinsteins were particularly insistent on making sure that they could handle the marketing and release of the movies for their filmmakers before they leave Disney. (“The Libertine” period piece starring Johnny Depp was the exception, recently moved from September to December to increase Depp’s Oscar chances.)
“Everybody felt it was best that we see the movies through before the transition was over,” said Bob Weinstein, who runs Miramax’s Dimension Films label.
Last week, Disney Chief Financial Officer Thomas O. Staggs singled out the Miramax releases in a conference call with analysts. He warned that “the marketing and distribution expenses associated with these titles will impact this year’s operating income in the fourth quarter,” although he added that those costs could be offset if the films performed well.
But some of the films have been gathering dust for two years or more, usually a red flag in Hollywood as to commercial prospects. “The Great Raid,” was shot in 2002. Still to come is the Aug. 26 release of Terry Gilliam’s “The Brothers Grimm,” starring Matt Damon, which was filmed two years ago.
Media analyst Richard Greenfield said that based in part on Disney’s upcoming “unusually heavy release slate” with so many Miramax titles, his firm, Fulcrum Global Partners, had reduced its fourth-quarter estimates for Disney to 26 cents a share from 29 cents.
“The impact of releasing this many films this quickly is going to burden Disney because of the P&A; [prints and advertising] costs,” Greenfield said.
Bob Weinstein suggested the films might have been released earlier had it not been for the brothers’ protracted breakup with Disney. The brothers were immersed for months in negotiating a settlement with Disney, which chose not to renew their contracts after 12 tumultuous years. Both sides finally signed off in March, with the brothers walking away with a settlement of more than $100 million.
“These releases were delayed until we settled our outstanding business with Disney,” Bob Weinstein said.
He added that one couldn’t assume that a delayed movie would perform poorly. He noted that Miramax’s 2004 release “Hero” sat on the shelf for two years but ended up highly profitable.
“You can’t make up any rules,” he said.
Miramax said it expected to spend about $30 million to support the national release of “The Brothers Grimm.” Although the picture’s original production budget was $88 million, Miramax said, its total financial exposure was significantly less, thanks to $16 million in European tax breaks and $40 million in foreign sales. Miramax added that audience research showed the film had promise.
The latest films are being released at a time when both Miramax and Disney could use a hit.
Last week, Disney’s movie unit -- which includes Walt Disney Studios and Miramax -- reported its first fiscal loss in four years after a string of such box-office disappointments as its own “Herbie: Fully Loaded” and “A Lot Like Love,” as well as the Miramax and Dimension films “The Adventures of Shark Boy & Lava Girl” and “Mindhunters.” In addition, home video sales were softer than expected.
Disney Studios Chairman Dick Cook acknowledged that his studio hoped for better results from both its own lineup of recent movies and Miramax’s.
But, Cook added, “we’ve all been affected by the box-office slump this summer and by the maturing of the DVD market.”
Miramax’s current box-office problems come at an especially sensitive time for the Weinsteins, who are trying to raise $900 million to $1 billion in capital to fund their new movie company. The brothers are looking to raise $300 million to $400 million in equity over the next month, along with selling $500 million to $600 million in debt.
But Harvey Weinstein said he had no concerns that the disappointing opening of “The Great Raid” or any of the other films would affect his ability to raise money.
“All sophisticated investors understand that theatrical release [prints and advertising costs] have to be written off in the quarter you spend it and you realize revenue from home video and television in the next quarter,” he said in an interview.
Weinstein also said that he wasn’t about to give up on “The Great Raid.” Weinstein cited exit surveys of moviegoers that showed 89% of those asked about their overall reaction to the movie designated it either “excellent” or “very good,” with 78% saying they would “definitely” recommend it.
“I’m really disappointed in the opening weekend; however, it was only in 819 theaters and we plan on adding more screens,” he said. “With exit surveys like this, my plan is to build that film.”
Meanwhile, Miramax has its work cut out marketing and releasing its other remaining titles, some of which will be backed by major campaigns. Those include two other films due out next month that were shot in 2003: Lasse Hallstrom’s “An Unfinished Life” starring Jennifer Lopez and Robert Redford and John Madden’s screen adaptation of the play “Proof” starring Gwyneth Paltrow. The Weinsteins also will promote and release Depp’s “The Libertine” through their new company, collecting a distribution fee from Disney.
With the imminent departure of the Weinsteins from the company they founded 26 years ago, Disney is eager to revamp Miramax, which it will operate under tighter financial restraints with a dramatically scaled-back staff.
Disney has already named one of its longtime international executives, Daniel Battsek, as the new head of the specialty film label. Although the Weinsteins don’t formally leave until the end of next month, the company has already relocated Battsek from his home base of London to Miramax headquarters in New York.
“We’re all excited about the prospects of the future and seeing where it all goes,” Cook said.
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The following are the current and remaining Miramax releases from Bob and Harvey Weinstein.
“The Great Raid” (opened Friday): Action film directed by John Dahl, starring Benjamin Bratt and James Franco
“The Brothers Grimm” (Aug. 26): Fantasy adventure directed by Terry Gilliam, with Matt Damon and Heath Ledger
“Underclassman” (Sept. 2): Comedy directed by Marcos Siega, starring Nick Cannon and Roselyn Sanchez
“Curandero” (Sept. 9): Horror film directed by Eduardo Rodriguez, written by “Spy Kids” director Robert Rodriguez
“An Unfinished Life” (Sept. 9): Drama directed by Lasse Hallstrom, starring Robert Redford, Jennifer Lopez and Morgan Freeman
“Proof” (Sept. 16): John Madden-directed drama starring Gwyneth Paltrow and Anthony Hopkins
“Venom” (Sept. 16): Horror film directed by Jim Gillespie, starring Agnes Bruckner and Jonathan Jackson
“Daltry Calhoun” (Sept. 23): Johnny Knoxville comedy directed by Katrina Holden Bronson.
“The Libertine” (December): Period drama directed by Laurence Dunmore, starring Johnny Depp