Weinstein and Eisner, the big guns of Hollywood, turn on each other

By Andrew Gumbel
Saturday 08 March 2003 01:00

The world is on the brink of war, and everyone in Hollywood knows it. Only the war in question is not between the United States and Iraq, it is between two of the most powerful and controlling men in the movie business, Harvey Weinstein and Michael Eisner.

Mr Weinstein and Mr Eisner work together. The former is the bulldog, take-no-prisoners super-producer whose company, Miramax, has been the quintessential Hollywood success story. Responsible for such prestige hits as Pulp Fiction, The English Patient and Shakespeare in Love, Mr Weinstein and his brother Bob have also been effective in harnessing the Oscar awards process to their advantage.

This year, Miramax has hit the jackpot like never before with three films – Chicago, Gangs of New York and The Hours – up for Best Picture and garnering 40 Academy Award nominations in all.

Mr Eisner, on the other hand, is having a rougher time. Having built up the Walt Disney Company from a dwindling, out-of-touch animation house into the world's first big multi-media conglomerate, he has seen his company's fortunes sputter and stumble over the past few years. Disney's theme parks are losing money and its main television network, ABC, can't seem to make programmes that anybody wants to watch. Its last big animation feature, Treasure Planet, was such a fiasco the company auditors assumed a $78m (£50m) loss on the film within days of its opening.

Why are the two men coming to blows? Disney bought Miramax in 1993 for a modest $80m. At the time, the move was denounced as the death of independent film-making, but in reality the arrangement suited both sides very well. The Weinstein brothers were given considerable leeway to do what they do best, with more financial muscle than they could ever have mustered on their own. Disney, meanwhile, could enjoy the fruits of Miramax's labours and use its successes to help package and sell its own feature films.

But the marriage is on the rocks. Since Miramax is one of the few profitable outlets Disney has left, bringing in as much as $1bneach year, Mr Eisner seems to be itching to exercise greater control and to take a greater cut of the profits. That is infuriating Mr Weinstein.

And he has let it be known he is casting around for new financial backers to help him achieve his dream of larger, move lavish productions.

Problems began when Mr Weinstein backed Gangs of New York, Martin Scorsese's historical drama believed to have cost as much as $120m. They were exacerbated by another costly production, Anthony Minghella's $84m adaptation of the American Civil War novel Cold Mountain, due out later this year. Miramax is still looking for a partner to share the risk on that film; MGM pulled out recently and Disney turned the Weinsteins down flat.

Mr Eisner ordered an internal company audit of Miramax which began a year ago and is still grinding on. Disney also started changing the rules governing its profit-sharing agreement with Miramax, insisting that a greater portion of production and marketing costs be deducted from Miramax's annual spending budget of $700m. All of that, according to recent reports in the entertainment press, greatly angered Mr Weinstein.

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Miramax let it be known that it was very unhappy with many of Mr Eisner's investment decisions – including a refusal to take on the Lord of the Rings trilogy, which was originally developed at Miramax but ended up at New Line, a subsidiary of AOL Time Warner. The company was also displeased with another Eisner refusal. He would not back the Broadway production of The Producers, the most profitable show ever staged in New York.

More telling is the lawyer Miramax selected to represent its interest in the audit dispute with Disney. Bert Fields has been a thorn in Disney's side for years. He represented Disney's former studio chief, Jeffrey Katzenberg, in a nasty and personal royalties dispute with Mr Eisner. He won a reported $250m for his client.

More recently, Mr Fields took on Disney in a fight over the royalties from Winnie the Pooh. He seems to be winning that contest too.

Publicly, Mr Eisner and Mr Weinstein are saying nothing. "We have a very good decade-long relationship with him," Mr Eisner said of his rival on television recently. "His 40 nominations aside, we get along very well. And there are always conversations in any business between partners on economic issues." Miramax issued a statement echoing these sentiments.

Quite where the dispute will go is uncertain. The Weinsteins can threaten not to renew their contracts with Disney when they expire in 2007. Disney can threaten to hold on to the highly lucrative rights to the Miramax library if the Weinsteins try to leave. Because there is so much at stake, observers predict that the marriage will survive.

"As strong as their personalities are, they recognise how valuable they are to each other," Joe Roth, a former Disney studio chief, told the Los Angeles Times. "They have too much good history to let it go awry."

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