I’ve always loved the Weinstiens, and who hasn’t right? They pioneered the idea of mini-majors and basically created Tarintino, Soderberg, Kevin Smith and a slew of other Indie (now not-so-indie-anymore) directors. But WTF has been going on behind those doors at The Weinstien Company (TWC) since they split form Disney? Here is a the long and short of it aggregated from other media sources to ensure your reading pleasure..

Now through the magic of The New York Times and Anne Thompson’s Thompson on Hollywood, I can bring you a condensed version of what’s going on with TWC.

The Weinstein Company was founded in 2005 after Bob and Harvey Weinstein left Miramax – the company they created in 1979.
Last month, the company hired Miller Buckfire, an investment consultant that specializes in companies close to bankruptcy and those that have pressing needs, to help restructure their debt. It’s not to say that things are impossible or even bleak for the company, but they are definitely taking steps to make sure that the walls of their castle are reinforced.

Back in 2005, TWC partnered with Goldman Sachs for $500 million in equity and an additional $500 in securitized debt.
(Securitized debt is essentially a long-term loan that’s been repackaged into marketable securities that are purchased by investors).

TWC has had a few missteps – most notably Grindhouse ($53 million budget/$25 million gross) – without many huge money-makers.

This year (2009), and with this year’s economy, isn’t much different unless Inglorious Basterds and Nine can pull in a solid amount of money.

Also in this awesome economy, the debt that TWC holds as securities isn’t worth as much, and it matures in 2014 – which seems like a long way away unless you’re a company looking straight ahead through the 2012 filmmaking season, desperately needing a win.

The statement from TWC regarding Miller Buckfire is that restructuring will allow them to expand their animation department while keeping everything else going at the same pace.
Which makes sense – so TWC might not be in as bad of trouble as it might seem.

However, the guarantor for a portion of that devalued debt, Ambac Financial Group, is having difficulties of its own.
So that sucks.

Like most companies within the past year, TWC had to fire 24 of its employees (out of its 218-person workforce) back in late 2008 while it was pouring money into an Oscar-campaign for the film The Reader (which only brought in $34 million).
The cherry on top for perspective – no Weinstein film has hit $100 million at the box office.

This little layout is from The Filmschool Rejects site

And here a more updated story on what’s going down from Niki Fink’s Deadline.com

Eric Robinson, a senior production exec at The Weinstein Company, is in talks to exit the company after a decade. CFO Larry Madden has already left. Meanwhile, there’s another round of massive layoffs coming along with talk of another restructuring. Seriously, how is that place surviving? To get down to its goal of 90 employees from 112, The Weinstein Co has to do more firing. Even if Nine does eke out a win or two this Sunday because of its 12 Golden Globe nominations, the most of any studio, thanks to Harvey’s usual manipulation campaign of those faux foreign journalists who make up the Hollywood Foreign Press Association, it’ll be too late: Nine is losing a shitload of theaters this coming weekend. And it’s a financial disaster.

How bad were the economics of Nine and its impact on The Weinstein Co? When it was also heavily funded by Relativity? First, you have to understand that my experience is that these two companies have a huge problem telling the truth about anything money-wise. Oy vey. But, from what I understand, the Nine financing was rather unique.

TWC produced the feature but only took foreign rights. Given the pedigree of the project and cast, it did well “selling” the film to distributors around the world for an advance guaranty. (Unlike a major studio, companies like TWC sell off the foreign rights to distributors in each territory). Both TWC and Relativity claim $50 million in foreign sales was generated. But my sources not only very much doubt that number, they laugh at it.

But let’s assume for the moment that this is correct. TWC then sold the domestic rights to Relativity. TWC agreed to market and distribute the film on behalf of Relativity in the U.S. for a 15% fee. Relativity claims it put up up advance of $16 million, but my sources say it was close to $30 million for domestic.

Relativity insists it did not cover P&A on Nine, rather TWC did. My sources say the film will never recoup its P&A understood to be $45 million. (Relativity insists that’s a “very inflated and inaccurate” figure. But they also don’t correct it. My sources say it’s right.)

Both TWC and Relativity will get hurt together. And both companies say these projections on Nine are wrong. So let’s do the math: The film’s box office is currently $17+ million. Let’s be generous and say it ends up at $25 million. This is North American box office, so when you take out Canada (which was licensed to Alliance as a pre-sale), the U.S. will be around $22.5 million. Translated to gross film rental (what the distributor takes from the box office), there will be about $10.7 million taken in By TWC. Add PPV - $1.25 million, DVD/VOD - $17.5 million, Pay TV - $3.5 million, Free TV - $2.5 million, and the total is $35.7 million in revenue.

Now compare the costs: Theatrical P&A - $45 million, Residuals - $2 million, Gross Participations - ?, TWC Distribution Fee (15%) - $5.35 million, DVD Marketing and Distribution Costs - $7 million, and the total is $59.35 million (without any assumption for gross participations).

Since The Weinstein Co is responsible for the P&A costs, then they will lose at least $20 million on the film ($25 million shortfall, minus the $5.35 million fee they earn for distributing on behalf of Relativity).

As for The Weinstein Co, it’s supposedly considering several deals to restructure its finances yet again while its liquidity is on life support and its creditors breathe down their necks.

Isn’t moviemaking a fun business?

THANK YOU NIKI!

Isn’t moviemaking a fun business!