Disney's Sale of Miramax Completed



The $663 million sale of Miramax Films by Disney to Filmyard Holdings, the group led by construction exec Ron Tutor and investor Tom Barrack, was completed Friday, Disney confirmed.

Qatar Holdings, which invests for the Middle Eastern country's royal family, also is a major investor in the deal. Among the minority investors is actor Rob Lowe through a fund he created with Barrack's Colony Capital.

The investors put up about $200 million, while a group of banks led by Barclays raised debt of about $400 million. (Qatar Holdings holds a minority stake in Barclays). New York investment bank Jefferies & Co. helped raise the debt, while Mesa Global, an investment bank that includes Mark Patricof, formerly at CAA, was involved in valuating the assets. Mesa also has been a part of such deals as the sale of ContentNext and paidContent.org to the Guardian and recent funding for the theatrical troupe the Blue Man Group.

The buyers got about $50 million in cash that came with Miramax, another $10 million in adjusted fees and about 700 films in the library, many of which are licensed for theatrical, TV and video around the world for years to come.

The deal includes the Miramax name, some 300 development projects, 90 book rights and a handful of finished films waiting to be distributed. Two movies, Don't Be Afraid of the Dark and The Debt, are expected to be released in 2011 by a distributor other than Disney.

Mike Lang, a former News Corp. executive who has been a consultant on the deal, is CEO of the new venture. At News Corp., Lang played a role in the acquisitions of MySpace and the company's involvement in Hulu.

At least for the next year or two, the new Miramax is likely to look a lot different than the old Miramax, which was a specialty producer and distributor, mostly of art films including Shakespeare in Love, Chicago, The English Patient and exploitation product like Scary Movie and Scream.

The new Miramax is expected at least initially to focus on exploiting its library, especially on electronic platforms. Filmyard has been reported to have held talks with Google about making the library available via YouTube. It also is said to be in talks with Netflix about making its movies available for its fast-growing streaming service.

The L.A. Times reported that Filmyard plans to hire 60-80 people in the next year or so as the company staffs up.

David Bergstein, who brought the deal to Tutor and who has been his business partner in the movie business, is not expected to have an operational role in the company, at least initially. However, he is in line to be paid a substantial broker's fee, which sources placed at about $3 million.

Filmyard doesn't plan to produce new movies, which is usually necessary to keep a film library fresh.

The closing of the deal has been subject to much speculation, as many consider the price being paid very high. Earlier this year, there had been a number of potential buyers, including Bob and Harvey Weinstein backed by Ron Burkle, but they dropped out over the price. After Comerica Bank, Bank of America and Union Bank, which had initially been expected to handle the transaction, fell out, they were replaced by Barclays and Jefferies.

Attorney Josh Grode of the law firm Liner Grode was among those who represented Tutor and Colony in the transaction. Grode was assisted by Liner Grode partner Paul Swanson and firm associates Sam Kozhaya, Zach Smith, Chet Devaskar and Gerry Janoff.