- The Washington Times - Wednesday, January 26, 2005

LOS ANGELES - Miramax Films sparkled at the Academy Awards nominations Tuesday, earning 20 high-prestige designations in what could be the studio’s swan song — at least under the leadership of founders Bob and Harvey Weinstein.

After months of public quarreling over finances, the Weinstein brothers and Miramax’s owner, the Walt Disney Co., appear close to ending their relationship.

Under the terms of the negotiations, which are in the home stretch according to people familiar with the talks, the Weinsteins would form their own independent production company while Disney would keep the Miramax name and the library of films, which includes Oscar winners such as “Shakespeare in Love” and “Chicago.”

Despite Miramax’s strong showing Tuesday and its history of prize-winning films, the breakup appears inevitable. Two Miramax films — the Martin Scorsese epic “The Aviator” and the smaller Johnny Depp vehicle “Finding Neverland” — were nominated for Oscars in the best-picture category. The French film “The Chorus,” which Miramax distributed, was nominated for best foreign-language film.

Much to Disney’s chagrin, Miramax’s success at the Oscars has not always translated into success at the box office. An Oscar may add several million dollars in ticket sales to a film, especially a smaller production or one that has yet to open widely, but not always enough to turn a profit.

Awards are important for other reasons, though, analysts say.

“It attracts talent,” says Paul Kim, an analyst for New York-based Tradition Asiel Securities. “There are tangential benefits. You always want to be perceived as a talent-friendly organization.”

Disney bought Miramax in 1993 for $80 million from the Weinsteins, who had named the studio for their parents, Miriam and Max. Miramax became famous for raising the profile of independent films and nurturing such directors as Quentin Tarantino and Robert Rodriguez.

For years, Disney left Miramax alone, happy with the Weinsteins’ ability to find small, quirky hit films and Bob Weinstein’s success with horror flicks released under his Dimension Films label.

However, Disney became disenchanted with Miramax as the company trended to more expensive films, some of which didn’t pay off, such as 2003’s “Cold Mountain.” Those disappointments escalated tensions between Disney’s corporate culture and Miramax’s penchant for risk-taking.

Last year, Disney refused to give Miramax more than its $700 million annual budget, forcing layoffs at the studio and widening the rift between Disney chief executive Michael Eisner and the Weinsteins.

Tensions intensified when Disney ordered Miramax not to distribute the Michael Moore documentary “Fahrenheit 9/11,” which is highly critical of President Bush. Instead, Disney agreed to sell the film to the Weinsteins for about $6 million. The Weinsteins then formed a separate company and distributed the film, which went on to earn millions — and garner critical acclaim — with Lions Gate and IFC Films.

The dispute also reached a new level of publicity, with executives disputing whether Miramax was profitable and Disney saying the company’s funding would be reduced this year.

The Weinstein brothers are under contract to run Miramax through 2009, but Disney has the right to revisit terms of the pact this year.

In recent months, talks between Disney and the Weinsteins have shifted from reconciliation to separation, sources familiar with the talks say.

Even as Miramax is once again competing for Oscar gold, the two sides are discussing which current projects will remain at Disney, which will leave for the Weinsteins’ new company and which will be developed jointly, the sources say.

Miramax spokesman Matthew Hiltzik characterized the discussions as “amicable” but would not comment on their substance.

“We’re grateful that the academy recognized a wide range of Miramax films, from foreign language to a modestly budgeted classic to the Scorsese epic,” the Weinsteins said in a statement. “We congratulate our nominees and are thankful that the focus is finally where it should be — on the movies.”

Analysts say the Weinsteins would face considerable risks in raising capital and starting a new independent studio.

Disney, too, faces risks. The company will be able to profit from the Miramax library, but it will need to find new executives to lead the label into future awards seasons.

“It’s not just about setting a strategy and a budget,” Mr. Kim says. “It’s about finding the people who can actually execute on it. That is the question mark.”

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