In the year since buying the most valuable contemporary film library on the market, the new owners of Miramax have closed $325 million in new licensing agreements while resisting the urge to start making movies, according to Miramax executives.
It's a smart if less-than-sexy business plan that seems to be working for a company that in the first week of December closed $500 million in new funding.
The funding is being used to refinance debt taken on when Colony Capital and billionaire investor Ron Tutor bought the library from the Walt Disney Co. for $660 million 11 months ago.
We're not smarter than the average studio, we're just less complicated, said Richard Nanula, a principal at Colony Capital, in an exclusive interview with TheWrap. Miramax is doing well because the whole team is focused. We're trying to do one thing, exploit our library. Miramax has an incredible library that was substantially unexploited.
In fact it's a bit of a stretch to call Miramax a studio. The company has 300 projects in development, but none is being actively pursued.
The company is now a team of about 50 people led by CEO Mike Lang focused exclusively on exploiting the library. Miramax has in the past year struck about $200 million worth of deals with Netflix, Hulu, Europe's LoveFilm and Net Movies for digital rights.
At Disney, the deals were complicated by the media company's multiple divisions and cable channels that competed with potential deals for the Miramax library. The independently-owned Miramax has no such barrier, and promptly set out to strike deals with the new digital players.
On the home entertainment side the company has sealed another $120 million in contracts for DVD and Blu-ray distribution, with partners like Lionsgate, StudioCanal and Echo Bridge.
In addition to that new business, the new owners inherited about $280 million in existing contracts from Disney.
The biggest unexploited area remains television. About 80 percent of the television market is open for domestic and international licensing deals. The opportunity is still massive on the international side, with more than half of the best Miramax titles -- from Shakespeare in Love, to Reservoir Dogs and Pulp Fiction and My Left Foot -- available to license abroad.
This was a decision to say, 'This is an unexploited gem of an asset,' said Nanula, a former CFO of Disney and Amgen. By being simple, staying focused, we could do well. And so far so good.
While making movies is nowhere on the horizon, Nanula says his expansion plans may lead to Miramax cable television channels. I have long felt that there could be a Miramax channel in a lot of countries around the world, he said.
Nanula said that the hundreds of millions in new deals demonstrate that Tutor and Colony didn't overpay for the asset, as some said at the time of the deal.
At the time, Colony and Tutor beat out other ardent bidders for the library, including founder Harvey Weinstein with partner Ron Burkle and the billionaire brothers Alec and Tom Gores. Many valuation experts said the company was not worth anywhere near $600 million (the deal included about $50 million in cash).
Meanwhile, controversial Tutor pal and movie financier David Bergstein seems to have fallen out of the picture since the acquisition.
The $500 million -- about $50 million less than Miramax was aiming to raise -- is being used to pay investors back $350 million and to lower the company's interest rate from 9 percent to just over 7 percent.
That will substantially improve the financial position of the company that seems to be puttering along with a disciplined focus that eludes most investors in Hollywood.
It is not a bad business plan in an industry where the odds for creating a successful slate seem slimmer and slimmer for independent studios and majors alike.
Miramax released three completed films it inherited from Disney: Last Night, starring Keira Knightley and Sam Worthington, completely tanked with $100,000 in U.S. box office and $8 million around the world; Guillermo del Toro's Don't Be Afraid of the Dark, took in $31 million worldwide through FilmDistrict; and The Debt, which was released through Focus and took in $45 million around the world.