Weinstein Co agrees to rescue investment from Colony Capital

The Weinstein Co headquarters in Tribeca, New York City. The studio is reeling from sexual harassment allegations against co-founder Harvey Weinstein, who was fired last week.
The Weinstein Co headquarters in Tribeca, New York City. The studio is reeling from sexual harassment allegations against co-founder Harvey Weinstein, who was fired last week.PHOTO: AGENCE FRANCE-PRESSE

LOS ANGELES • The embattled Weinstein Co has secured a financial lifeline - and possible new owner - from an investor with experience in distressed Hollywood assets.

But the fate of the studio, including whether co-founder Bob Weinstein would stay involved, remained far from resolved. The studio is reeling from sexual harassment allegations against the other co-founder, Harvey Weinstein, who was fired last week.

Mr Tarak Ben Ammar, one of three remaining Weinstein Co board members, said in a statement on Monday that the studio had reached a preliminary agreement with Colony Capital for an "immediate" cash infusion. The amount was undisclosed.

Mr Ammar also said Colony, which rescued Michael Jackson's Neverland Ranch from foreclosure in 2008, had entered negotiations to buy all or most of The Weinstein Co's movie and television holdings.

Mr Thomas Barrack Jr, founder of Colony Capital, said in a statement that he believed the sullied studio "has substantial value and growth potential". A deal is expected to take three weeks or more to complete.

Mr Bob Weinstein is fighting to remain at the studio, but some stakeholders believe he must leave, according to two people with knowledge of the matter, who spoke on the condition of anonymity.

Mr Bob Weinstein, who told The Hollywood Reporter on Saturday that he did not know "the extent" of his brother's actions, did not respond to a request for comment.

In turning to Colony Capital, The Weinstein Co and its advisers at investment bank Moelis & Co are reaching out to a firm with experience in Hollywood.

But some longtime media investors, noting the seriousness of the allegations against Harvey Weinstein, questioned what could be done with such a toxic asset.

"I don't think you can sell this company with all the litigation you're looking at," said Mr Amir Malin, founder of Qualia Capital, a media investment firm. He was referring to both existing commercial lawsuits and the vast number of potential lawsuits related to Harvey Weinstein's sexual behaviour.

Efforts are under way in Hollywood to end partnerships with the studio. Amazon pulled the plug on a major television deal late on Friday. Agents say they have been pressing The Weinstein Co to sell finished or near-finished films like The Upside, a comedy starring Kevin Hart and Nicole Kidman, and Mary Magdalene starring Rooney Mara; many of the stars involved with those projects want nothing to do with the Weinsteins.

The studio, already struggling in recent years because of box office misfires, has been imploding since investigations by The New York Times and The New Yorker revealed sexual harassment and rape allegations against Harvey Weinstein going back decades. Four board members have resigned in recent days.

As a private company - the brothers each own about 23 per cent - The Weinstein Co has never been particularly forthcoming about its revenue or debt load. In recent years, as talk of unpaid bills and an inability to finance marketing campaigns has occasionally surfaced, the Weinsteins insisted their company was, in fact, rolling in money.

But certain financial problems surfaced that Harvey Weinstein was unable to refute. Facing bankruptcy in 2010, for instance, The Weinstein Co sold rights to 200 older films to Goldman Sachs and insurance firm Assured Guaranty.

The Weinstein Co now has assets that fall into three groups: the remaining library of old movies, upcoming films and television. All three are problematic. Given the 2010 sale, much of the value of the library has "already been extracted" Mr Malin said.

The studio has seven completed movies, but some are art films with limited box office potential.


A version of this article appeared in the print edition of The Straits Times on October 18, 2017, with the headline 'Weinstein Co agrees to rescue investment from Colony Capital'. Print Edition | Subscribe