Disney agrees to Miramax sale
Ronald Tutor, Colony Capital acquire studio for over $660 milSix months after it was put on the market, Miramax Films has been sold for $660 million to Filmyard Holdings Llc., whose principals are construction executive Ronald Tutor and Colony Capital chairman Tom Barrack individually and through his company, the Walt Disney Co. announced late Thursday.
The sale, which is expected to close between Sept. 10 and year's end, includes rights to more than 700 film titles, according to the announcement, including Academy Award winners "Chicago," "Shakespeare in Love" and "No Country for Old Men."
"Although we are very proud of Miramax's many accomplishments, our current strategy for Walt Disney Studios is to focus on the development of great motion pictures under the Disney, Pixar and Marvel brands," Disney CEO Robert Iger said in the statement. "We are delighted that we have found a home for the Miramax brand and Miramax's very highly regarded motion picture library."
Speaking for the new partnership, Tutor said: "I am delighted and honored to acquire the Miramax library. On behalf of my partners Tom Barrack and Colony Capital, we look forward to sharing this high-quality content with the world in every form of media for many years to come."
There were few other details about the transaction, the financing or future plans for Filmyard, which is expected to launch a new movie company that will exploit the library and make at least some new films. Sources have estimated the library comes with outstanding receivables worth more than $150 million, which will help reduce the acquisition cost.
The press release did not mention any other minority investors, such as James Robinson of Morgan Creek, Gulf Capital of Dubai and actor Rob Lowe, who said last week that he was part of the group.
There was also no mention of Pangea Media Group CEO David Bergstein, who first brought the deal to Tutor and has been acting as a consultant on the sale. Tutor and Bergstein have been partners in various film ventures for the past six years, and both are caught up in an involuntary bankruptcy action involving five companies that Bergstein controls. Even as Tutor celebrates his acquisition, he also faces being deposed in the bankruptcy case.
The immediate question is how the new company will handle distribution, both in the domestic and international markets. There were reports that Disney would do the distribution for the first year, until Filmyard can set up its own infrastructure, and that Morgan Creek would handle foreign sales, but neither was confirmed in the announcement. There are at least three completed but unreleased Miramax movies that Disney is expected to bring to market on behalf of the new owners.
There was also no indication in the announcement of how the deal will be financed. It is clear Tutor, Barrack personally and Colony Capital will invest equity, but there will also be a sizable amount that will be borrowed, probably in excess of $200 million. Tutor, CEO of the Tutor Perini construction company, has a fortune estimated at more than $700 million.
Barrack earned a law degree, worked for Richard Nixon's law firm and early on had experience working with investors in the Middle East. He then worked for the Robert Bass investment firm, which was a big investor in Disney in the 1980s, and founded Colony in 1991. Colony has specialized in distressed real estate and is said to manage more than $25 billion in assets. It was previously known in show business for buying the $23.5 million mortgage on the late Michael Jackson's Neverland Ranch and helping the singer renegotiate his finances at the time. Forbes has estimated Barrack's fortune at more than $2 billion.
Tutor and Barrack have a long business history. It was Tutor who brought Barrack into the deal. A partner in Colony, Richard Nanula, former CFO of Disney, represented the buyers in negotiations with Disney but was not mentioned in the announcement.
A number of earlier potential buyers valued Miramax at only $550 million to $600 million, so the $660 million value is seen as top of the market. Investor Ron Burkle, working with brothers Harvey and Bob Weinstein, who first created Miramax and built it into a force in film, earlier this year lost out on Miramax when a bid of $565 million was rejected by Disney, which had indicated that it wanted $700 million.
The Weinsteins, who were also working with Fortress Investments, have been waiting in the wings in case the Colony Tutor group faltered, but now it appears this is the end of their dream of taking control back of the company they founded in 1979 and sold to Disney in 1993, before being shown the door by Disney in 2005.
Disney had begun reducing the staff at Miramax late last year and had all but shut it down this past January before putting the name and assets on the market.
To arrange the financing at a time when banks are being very strict about capital requirements, Tutor and Colony are expected to provide assurances that the debt will be repaid. Lenders may also be offered a chance to share in future appreciation of the assets.
Tutor had said last month that they would seek out an experienced executive to run the new company, create an infrastructure to sell rights to all markets and produce some new movies to keep the library fresh and invigorated. That will require an additional investment or a new line of credit. The new studio will also need staff and a rights management system to track sales and collect the money that is due for sales not just in theaters but also home video pay TV, free TV, digital and other rights.