Behind the Weinstein Co. Bid: Female Empowerment and a Key Backer's Baggage
Maria Contreras-Sweet and a women-majority board could bring a fresh start for the House of Harvey, but investor Ron Burkle's background isn't totally on-message.
A sale of the embattled Weinstein Co. may be imminent. But the leading bid — fronted by Obama administration alum Maria Contreras-Sweet and backed by billionaire Ron Burkle — is raising eyebrows in some quarters of Hollywood.
Sources say Burkle has remained in contact with Harvey Weinstein, who has kept a low profile since the first allegations surfaced in articles in The New York Times and The New Yorker in early October. And if Contreras-Sweet's bid wins at auction, it could give Burkle, who would be a minority investor among several others, a foothold in a company that has been rocked by dozens of women claiming that Weinstein sexually assaulted and harassed them.
"I find it profoundly disturbing, leaning toward sociopathy," says Rose McGowan, who was one of the first to call out Weinstein for sexually predatory behavior and has become an outspoken critic of Hollywood's culture of misogyny. "It makes me despise these replicants even more."
That sentiment is echoed by several former TWC staffers and filmmakers with ties to the studio. "Based on optics alone, this is a terrible move," says one producer who has made several movies with the studio.
Although the Contreras-Sweet bid could fall through, insiders say it is expected to close by the Martin Luther King Jr. holiday weekend. She is competing against several suitors, including Lionsgate (which is eyeing piecemeal assets rather than the company as a whole) as well as a Killer Films-Abigail Disney bid and one from Len Blavatnik, who is owed $49 million by TWC and likely would take assets in a debt swap. There are other bids on the table that are bankruptcy-contingent, though TWC is trying to avoid that scenario.
The price tag could be as high as the $500 million floated in a Jan. 4 Wall Street Journal report. But one bidder says his group's offer is a fraction of that. That bidder, who has seen the books, was pleasantly surprised to find there is more insurance to cover the Weinstein-related claims than was thought. So far, the company is facing four lawsuits: two class action suits and two from individuals.
A Burkle rep denies there is a deal in place with Contreras-Sweet, but multiple people involved with the bidding process say he has made a commitment to join the group backing the venture. A source says TWC's employees overwhelmingly support the bid fronted by Contreras-Sweet, whose plan is for a board controlled by women, and she is gathering a group of investors, many of them Silicon Valley females, for a 51 percent stake.
Burkle has a long-standing business relationship with Harvey Weinstein and his former company, having invested in such TWC films as August: Osage County and Crouching Tiger, Hidden Dragon: Sword of Destiny. In a 2012 profile in The New Yorker, Burkle spoke glowingly of his friendship with Weinstein and how they traveled together to the Cannes and Sundance film festivals. A knowledgeable source says that about a year ago, Burkle made a 90-day loan to TWC to shore up cash-flow issues (a Burkle rep strongly denies that such a loan was made).
Burkle's past investments could provide awkward optics for Contreras-Sweet, who said in her pitch to buy the company that she was "profoundly affected by the recent revelations surrounding the company's leadership." Through his founding stake in Wall Street firm Colbeck Capital Management, Burkle ended up reportedly becoming an investor in Manwin (now called MindGeek), the largest online porn purveyor in the world (a Burkle rep says that the fund had money in dozens of businesses and he was unaware of the $362 million investment in Manwin). Burkle also has an embarrassing association with Jeffrey Epstein, having flown on the convicted pedophile's so-called "Lolita Express" (his name appeared in flight logs as well as in Epstein's "little black book," both of which surfaced in 2015). A Burkle rep says that other moguls also flew on Epstein’s private jet, that Burkle took just one flight and that he has no current relationship with the disgraced billionaire.
Still, Burkle also is a noted philanthropist and has hosted the Rape Foundation's annual fundraiser on his Green Acres property in Los Angeles. A source close to the bidding process says the Contreras-Sweet group has vetted Burkle and has determined there is no cause for alarm.
Financial analysts who have been watching the sale process applaud the effort to install female ownership but question why Contreras-Sweet would try to buy TWC rather than launch a female-led studio in the vein of Megan Ellison's Annapurna Pictures. "All of this is fuzzy logic," says Wall Street analyst Hal Vogel. "This is a company that comes with a tote bag full of liabilities and lawsuits. The liabilities probably extend to individuals as well as to the corporation as well as to individual projects. It's a mess."
But having Contreras-Sweet, who ran the Small Business Administration under President Obama, as chairman — as her bid promises — might go a long way in helping soften the blow of the legal and reputation turmoil. "The company would be better suited to settle these claims with [Contreras-Sweet] — even as a figurehead — than with a group of men," says Larry Hutcher, co-managing partner at Davidoff Hutcher & Citron and a specialist in "corporate divorce." "That's a huge advantage that bid has. Will [an accuser] really want to fight to get the last dollar claim that they would have?"
But one impediment to a sale to any bidder, including Contreras-Sweet, is that Weinstein must sign off on it (like his brother, Bob Weinstein, Harvey owns about 23 percent of the company). That's where Burkle's association could be an asset, helping convince Weinstein to acquiesce.
Whatever group emerges as the new owner will have their work cut out for them and not a great deal of incoming revenue in the immediate future. On the film side, TWC has just five finished films that are ready for release: the Benedict Cumberbatch-Michael Shannon starrer The Current War and the Bryan Cranston-Kevin Hart pairing for The Upside (both of which made their world premieres at the Toronto Film Festival in September), as well as the India-set terrorist thriller Hotel Mumbai, the biblical drama Mary Magdalene and the Robert De Niro comedy The War With Grandpa.
The library rights are largely encumbered. On the TV side, TWC boasts the reality hit Project Runway, though that franchise, which launched in 2004, has likely peaked. "To restart this thing is a three-year process at a minimum," says Vogel. "Especially for someone who is an outsider to the business."
For her part, Contreras-Sweet has been looking for office space in Los Angeles, including the former Broad Green offices near the Paramount lot. A source says she wants to maintain Broad Green's campuslike space and create a more employee-friendly company, with three meals a day and health benefits that include acupuncture and massages. That would be a 180-degree change from the type of massages Weinstein was known for.
Jan. 11, 2018 Updated to include additional information from Burkle’s rep.
This story first appeared in the Jan. 10 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.