A Delightful Look at The Weinstein Company’s Financial Trouble

Posted by Dr. Cole Abaius (cole.abaius@filmschoolrejects.com) on June 11, 2009

It’s no secret that I’m living in poverty. FSR pays me in peanuts on a good month. Usually it’s cashews (which we all know there’s no market for anymore). But I still recognize that I’m lucky to be where I’m at as opposed to a ton of people completely out of work and more than a few companies that are staring at impossible quarter end balances.

One of those businesses is The Weinstein Company – a business that has had to be sadly public about its current difficulties. 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, 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.

Obviously, it’s difficult to extrapolate any reality from these facts. On the one hand, it might be easy to assume that the company is doing poorly (and who isn’t these days?), but it’s far from a certainty. Restructuring is a fairly common business practice that doesn’t necessarily signal financial difficulty. So who knows. What is clear is that a lot of people in the entertainment industry are talking and TWC could definitely use a win soon (and who couldn’t?).

Feel edified? Didn’t think so.

Read more articles by Dr. Cole Abaius