Where Does the Weinstein Co. Go After Harvey Weinstein’s Exit?

Could a fire sale be in the cards for the independent studio?

Matt Pressberg | October 9, 2017

What’s to become of The Weinstein Company now that Harvey Weinstein, one of the brothers for whom its named, is gone? The Weinstein Company is al- ready looking into changing its name and removing Harvey Wein- stein’s credit from several upcom- ing TV series in an effort to scrub part of the stain from its its brand going forward. But how does that work when he essentially is the brand? “Maybe him not calling the shots anymore is a good thing,” Lloyd Greif, the president and Getty Images CEO of investment bank Greif & Rather than try to turn that ship board fired Harvey Weinstein Sun- Co., told TheWrap. “But when around under new leadership while day, three days after a New York Harvey’s not there, what do you dealing with a mountain of debt, Times report disclosed that he had really have at The Weinstein the Weinstein board may end up made payments to eight women in Company?” looking to cut bait. an attempt to resolve sexual mis- With his force of personality “I don’t know where this com- conduct accusations. Weinstein and Oscar track record, Harvey pany goes right now,” Greif said, said it contained inaccuracies, but Weinstein in many ways is Wein- suggesting the board has likely admitted he needed to change. stein Company, which he and Bob spoken to investment bankers. “It Ross Gerber, the president and own an estimated 42 percent stake probably goes into play again. This CEO of wealth management firm in. His loss leaves the independent time around, it’s probably a fire Gerber Kawasaki Inc., believes studio, which has already shed sale. Does it command sufficient that with the company’s suffocat- numerous senior executives and value to cover the debt? Doubtful.” ing debt, diminished output — and significantly trimmed its yearly The Weinstein Company did now loss of its visionary leader, film slate, almost rudderless at a not immediately respond to The- whom he called “a phenomenal time when the tide in Hollywood Wrap’s request for comment. The picker of art,” the Weinstein Com- is shifting. pany will now seek to sell off its mated $50.6 million in 2016 and of competitors like Amazon, Net- assets to get something for its $75.2 million projected for 2017 flix and Annapurna. shareholders. — a healthy margin, but not The Matthew McConaughey- TWC has had its TV business enough to overcome its debt. starring “Gold” grossed just $7.3 on the block for years. British Another individual close to the million on an estimated $20 mil- broadcaster ITV had agreed to ac- film finance industry told The- lion budget. Of the independent quire Weinstein’s TV business in Wrap he had heard TWC was distributor’s 25 highest-grossing 2015 in a deal that would have looking to raise even more debt, films, only one, last year’s Best valued the division at $950 mil- this time in a fourth lien position Picture nominee “Lion,” was re- lion, but pulled out. But time — an extremely rare and almost leased after 2015. TWC is set to could be increasingly of the es- certainly very expensive financing release “The Current War,” star- sence. arrangement that would indicate ring Benedict Cumberbatch as “I think they go bankrupt in six cash pressures. Thomas Edison, on November 24. months without a TV sale,” Ger- The bondholders control “It’s not the company it was ber told TheWrap. “Maybe even TWC’s assets, including its li- four or five years ago,” Greif said. with the TV sale. There is no com- brary, and will likely want $1 bil- “It’s gotten a hell of a lot more pany without Harvey.” lion or more to be made whole. competitive out there with the likes “Clearly the person who is the However, the longer they wait — of Amazon and Netflix. You’ve guiding light is no longer there,” and opportunistic investors watch got the other independents — Greif said. “You can change the TWC squirm under its debt load Searchlight, Annapurna. All of name, God bless you, but it’s not — that price could go down. these indies have basically taken a going to fool anybody.” “I think the idea was to sell TV page from Harvey’s book and done Two individuals with to get the bondholders off them,” it much better.” knowledge of the situation esti- Gerber said. The Weinstein Company may mated TWC’s total debt at about But such a sale could be easier finally be freed of a domineering $900 million, however insiders said than done, especially now. leader who was under a cloud of pegged it at closer to $300 million While its TV business generates sexual assault allegations — but outstanding. TWC re-upped a tens of millions of dollars after op- now it faces a new identity crisis, $500 million senior credit facility erating expenses, the company’s and likely impatient lenders. with a variety of institutions last debt payments are a huge burden. “It’s a mixed bag that he’s no year, which carries a 4 percent in- And with Harvey Weinstein’s old longer part of the company,” Greif terest rate. And the company is relationships with A-list talent in said. “In some respects he was an only releasing about six to eight serious jeopardy, at best, that sell- asset, in other respects he’s dis- movies a year. ing point has also evaporated. tinctly a liability. They basically According to a prospectus from Because Chinese money has traded one turmoil for another tur- investment bank Moelis & Co. largely run dry in Hollywood, moil.” obtained by Deadline earlier this Greif said any purchaser of all or year when the company was seek- parts of TWC at this point would ing an investor to take a stake, likely be a distress buyer who TWC’s TV division earned earn- would look for a big discount. ings before interest, taxes, depre- TWC’s film business, which ciation and amortization (or Harvey is known for, hasn’t exact- EBITDA, a common measure of a ly been on fire the last few years as business’ core profitability) of it finds itself increasingly muscled $31.6 million in 2015 with an esti- out of the way by the deep pockets