Thursday, April 12, 2007

The New York Times
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April 12, 2007

Films From the Weinsteins Falter, but the Brothers Stay Focused

LOS ANGELES, April 11 — As last weekend’s box-office take for the heavily promoted “Grindhouse” tumbled in at just $11.6 million, a chilly realization came with the numbers: Not all is well with the Weinstein Company.

Indeed, the namesake entertainment boutique founded by Bob and Harvey Weinstein as they acrimoniously left Miramax and the Walt Disney Company two years ago has seen its highly visible movie operation suffer humiliations that might have sunk a less tenacious start-up.

Marquee filmmakers like Robert Rodriguez and Quentin Tarantino, with “Grindhouse,” and Anthony Minghella, with “Breaking and Entering,” have tanked. Michael Moore has yet to unveil “Fahrenheit 9/11.5” and “Sicko,” a pair of films that were supposed to yield tens of millions of dollars in profit by now.

Meanwhile, “Factory Girl” and “Shut Up and Sing” had plenty of media sizzle as last year’s awards season got going, but they missed the Oscars and sold barely $3 million in tickets between them.

“It could be better, obviously,” said Bob Weinstein, speaking by telephone from New York. “Our drive and ambition are to be better than perhaps we’ve been.”

Yet Mr. Weinstein was also markedly buoyant, insisting that the ministudio had not so much failed in its aims as succeeded in ways not widely understood. If “Grindhouse” had people asking “ ‘Wow, what’s going on with the Weinstein Company?’ ” he said, “I’ll use the opportunity to say, ‘Wow, the kids are all right.’ ”

More to the point, Mr. Weinstein described a strategic shift that, only shortly after its birth, began transforming the Weinstein Company. Instead of acting as a minor league film producer and distributor, exposed to market risk and filmmaker whims, the brothers are trying to create a somewhat less minor media conglomerate, one that may be equipped to survive the vicissitudes of show business.

The underlying logic has been somewhat obscured by a blizzard of announcements connecting the fledgling company to deals with partners as far-flung as Metro-Goldwyn-Mayer, Cablevision, Blockbuster, the aSmallWorld Web site, the Ovation cable channel and the Halston couture house, in which the Weinstein Company acquired a stake in March.

At least one of the Weinstein Company’s private investors — which include Goldman Sachs, the French television broadcaster TF1 and the advertising company WPP Group — expressed wariness at that flurry.

“My only concern is that they may be taking on too many challenges outside their core business,” said that investor, Mark Cuban, whose other interests include the Dallas Mavericks basketball team and the HDNet high-definition television network, in an e-mail exchange this week. He added: “That said, I have confidence in them.”

Asked if he was comfortable at this point with WPP’s investment in Weinstein, Martin Sorrell, the company’s chief executive, said: “Very much so. It’s the early days.”

Mr. Weinstein said that his company’s most significant step had been its acquisition last summer of a 70 percent stake in Genius Products, a Santa Monica, Calif., video distributor.

Genius, said Mr. Weinstein, distributes the company’s movies at half the 10 percent fee he would pay a major studio for the service. (In fact, the Weinstein Company paid no cash for the distributor, but received the stake in return for rights to its products, according to a person involved with the transaction.)

Genius has grown rapidly in the last year — and has predicted as much as $800 million in revenue this year — as producers like ESPN and Robert Halmi Inc. signed on, in part because high-profile Weinstein films had opened the doors to major retailers like Wal-Mart and Target. The operation provides the kind of stable income that larger film companies get from their film libraries, while providing a pipeline for the release of older films that have been acquired by the Weinsteins. In a further twist, the Weinsteins have quietly been building a direct-to-video business that is intended over the next several years to produce dozens of films that may not be distinguished. (Mr. Weinstein, who fostered the “Hellraiser” series while still with Miramax, talks of keeping a Romanian-based crew in permanent production.)

Such films, with an expected profit of $1 million or $2 million each on minuscule budgets, would provide regular income.

“We want to be very much like the bigger companies, in a humble boutique way,” Mr. Weinstein said. He called the direct-to-video gambit, helped by a deal under which Blockbuster contributes a substantial share of production costs for exclusive rental rights to the films, “a sneaky little business.”

That emphasis on the small was not widely expected when the Weinsteins parted with Disney in March 2005, in a highly public rift over spending at their Miramax unit, which Disney had acquired in 1993. Under an unusual arrangement, the brothers remained at Miramax for six months while building their own company, which amassed $1.2 billion in financing from various sources, including $490 million from its equity investors.

Mr. Weinstein said his company has sufficient financing and does not expect to recapitalize itself soon, despite widespread talk in the film industry that new money would be needed to maintain a release schedule that is still reckoned at 15 to 20 theatrical films a year.

He also pointed to bright spots in the box-office record, which, by his tally, added up to $311 million in ticket sales last year. “Scary Movie 4,” split with Disney, took in nearly $180 million in worldwide ticket sales last year. And “Hoodwinked,” he noted, cost the company less than $10 million, and far exceeded expectations when it took in $100 million at the global box office, showing a path toward success in animation, where the brothers had never been a presence.

But for all that, the theatrical film business remains the public face of the company, and that has been plagued by hitches aplenty.

Mr. Weinstein acknowledged, for instance, having delayed production on “Opus: The Last Christmas,” an animated film that has long been in the works.

Another such kink occurred when the director Kevin Smith, the director of films like “Clerks” and one of the Weinsteins’ showcase talent relationships, first delayed, then dropped out of the coming “Fletch Won” in a dispute over casting. It became another Weinstein Company film to falter on the way to the screen.

The film, set for release this year, was taken over by Bill Lawrence, the writer and producer of the “Scrubs” television series.

Mr. Smith, whose “Clerks II” became one of the Weinstein success stories when it took in about $24 million at the domestic box office last year, said he expected to work with the brothers on a pair of coming films.

“It really feels like the long, sharp knives are coming out,” Mr. Smith said, speaking on Wednesday of the shock that accompanied the failure of “Grindhouse.” “Everybody’s entitled to an off year.”