Entertainment Industry

Category: Miramax

Miramax and David Bergstein settle lawsuit

David Bergstein
Just two weeks after his lawsuit was filed, film financier David Bergstein and independent studio Miramax have reached a settlement ending their litigation.

Bergstein, who helped put together the agreement for an investor group to purchase Miramax from Walt Disney Co. in 2010, had claimed in the suit that the studio's new owners including Santa Monica private equity firm Colony Capital owed him more than $6.1 million for his work.

The settlement amount and terms were not disclosed.

In a statement, Bergstein said he was fully retracting all his claims in the lawsuit. "I am pleased that I was able to sit down with my counterparties in this suit, discuss our differences and resolve them," he said.

Richard Nanula, a principal at Colony and chairman of Miramax, who was named as a defendant in the suit, for the first time publicly credited Bergstein for his work on the deal. "We want to recognize the contributions David made that ultimately led to Filmyard’s ownership of Miramax," he said in a statement. "Without his efforts this very successful transaction wouldn't have happened." The group acquired the movie company — originally founded by brothers Bob and Harvey Weinstein and later sold to Disney — for $660 million.

Bergstein has been involved in a number of lawsuits related to his troubled tenure in the film industry. Just last week he filed a suit against two law firms which previously represented him in separate litigation.

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Photo: David Bergstein. Credit: Gary Friedman / Los Angeles Times

David Bergstein sues Miramax owners

David Bergstein
Troubled film financier David Bergstein has sued the owners of Miramax, alleging that they denied him money and an equity stake owed for his role in the acquisition of the film label from Walt Disney Co. in 2010, a law firm retained by Bergstein said Monday.

The suit, filed by Weingarten Brown (read a copy here), claims that Bergstein -- who has been involved in dozens of lawsuits, many related to his activities in the film business -- played a crucial role in the deal to acquire Miramax. It asserts that Santa Monica private equity firm Colony Capital, one of Miramax's new owners, and its principal Richard Nanula conspired to deny Bergstein a $6.1-million fee and 3.3% stake they agreed to provide him as part of the purchase.

"Defendants have lined their own pockets to the tune of tens of millions of dollars while reneging on the compensation promised to the individual who made the highly lucrative deal happen for them," the lawsuit alleges.

Bergstein sues over Miramax acquisitionColony and Nanula are named as defendants, as is Filmyard Holdings, the holding company that acquired Miramax in December 2010 for $660 million. The Qatari government's Qatar Holdings and Ron Tutor -- the chief executive of construction firm Tutor-Perini Corp. and a longtime associate of Bergstein -- also have stakes in Filmyard.

It was not clear exactly what role Bergstein played in the acquisition, except that he was working with Tutor before Colony joined the acquisition team in July 2010. In the suit, Bergstein says he initiated talks with Disney, which had already put Miramax up for sale, and negotiated the structure of the deal.

He claims that for his work, he was promised two separate $6.1-million fees, one at closing and another when certain conditions were met, plus a 5% equity stake in Filmyard. At the urging of Tutor and Colony chief Tom Barrack, the complaint says, Bergstein later agreed to reduce his stake to 3.33%.

Colony declined to provide Bergstein with any documentation as part of his stake or a share of profits when the company was recapitalized last fall, the complaint alleges. In addition, Bergstein says he was not paid his second $6.1-million fee when conditions were met, though he did receive the first payment.

Bergstein claims he was cut out because he has been the subject of negative press coverage related to his legal troubles from a string of troubled companies and business deals in which he has been involved. The financier's controversial past would have put off Qatar Holdings and a lender, the complaint says.

"Unable to alienate their lender and principal investor on the one hand and unable to make the deal work without Bergstein's efforts -- Defendants chose instead to merely lie to their lenders and investors and to Bergstein until they no longer needed him," the complaint states.

At a summer 2011 meeting, the document claims, "Nanula threatened Bergstein that if he continued to pursue his documented rights, Nanula would ensure Bergstein would 'never see a penny.'"

[Update, 3:18 p.m.: A spokeswoman for Miramax and Colony said her clients have not yet been served with the complaint and could not comment.] Reached by phone, Tutor said he was unaware of the lawsuit. "I don't know who owes what," he said. "I know there were machinations."

The lawsuit asks for at least $6.1 million plus the value of Bergstein's 3.33% interest. It comes three weeks after Miramax's then-chief executive, Mike Lang, unexpectedly departed after clashes with the company's board and staff. Although Lang is not named in the lawsuit, Bergstein's complaint asserts that Lang was fired.

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Photo: David Bergstein. Credit: Gary Friedman / Los Angeles Times

Miramax CEO Lang's departure followed clashes with board, staff

MiramaxMikeLang
Miramax Chief Executive Mike Lang's departure came after a rocky tenure during which he frequently clashed with the company's board of directors and staff, according to people familiar with the matter but not authorized to speak publicly.

The independent Santa Monica studio announced Friday that Lang had resigned after just 15 months on the job. The news came as a surprise because Lang has spearheaded a number of deals that Miramax's owners have boasted led to financial success. They included a DVD distribution agreement with Lionsgate and Studiocanal and digital partnerships with Netflix, Hulu and Facebook.

In a December interview, Richard Nanula, Miramax's chairman and a principal at its co-owner Colony Capital, said that since it was acquired Miramax has added $325 million in contracted cash flow from those deals. In addition, the studio raised about $500 million of new debt in the fall, which allowed its owners to get paid back for the majority of their investment when they acquired Miramax and its 700-title movie library from Walt Disney Co. in late 2010 for about $660 million.

But despite the owners' satisfaction with Miramax's performance, they apparently could not find a way to work with Lang for much longer than a year.

Lang did not respond to calls seeking comment. Through a spokeswoman, Nanula declined to comment.

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Photo: Miramax Chief Executive Mike Lang at the 2012 Consumer Electronics Show. Credit: Ethan Miller / Getty Images.

Miramax CEO Mike Lang unexpectedly resigns

MiramaxMikeLang
Miramax's chief executive Mike Lang has suddenly exited the company after little more than a year on the job.

Lang, a former News Corp. executive who specialized in digital ventures, was named head of newly independent Miramax in December 2010, soon after it was acquired for about $660 million from Walt Disney Co. by a consortium that included private equity firm Colony Capital, construction magnate Ron Tutor, and the Qatari government's sovereign wealth fund.

During his brief tenure, Miramax signed a number of deals to exploit its library of more than 700 films that include "Pulp Fiction" and the Oscar-winning movies "Shakespeare in Love" and "Chicago." Those transactions included DVD distribution agreements with Lionsgate and Studiocanal and partnerships to offer its movies online with distributors including Netflix, Hulu and Facebook.

Recently, Miramax's owners were among the final two bidders on "Twilight" studio Summit Entertainment, which they intended to merge with Miramax. However, Lionsgate ended up buying Summit.

Steve Schoch, Miramax's chief financial officer, has been named interim chief executive while the company seeks a replacement for Lang. Richard Nanula, a principal at Colony and former chief financial officer of Disney, remains Miramax's chairman.

Lang was known for writing updates on Miramax's corporate blog about the company's news and sharing his views on its strategy that he signed "ML." However, there was no post Friday explaining his departure.

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Photo: Miramax Chief Executive Mike Lang at the 2012 Consumer Electronics Show. Credit: Ethan Miller / Getty Images.

Miramax expansion plans revealed by failed Summit bid

Miramax co-owner Colony Capital may not have ended up buying Summit Entertainment, but its effort demonstrates that the private equity fund has big plans for the film library it bought from Walt Disney Co.
Miramax co-owner Colony Capital may not have ended up buying Summit Entertainment, but its effort demonstrates that the private equity fund has big plans for the film library it bought from Walt Disney Co. last year.

If it had succeeded in acquiring Summit, Colony had planned to merge it with Miramax, creating a studio with a library of 700 classic specialty titles, the "Twilight" franchise, a robust foreign sales operation and the ability to produce and distribute its own pictures, according to a knowledgeable person not authorized to speak publicly on the matter.

Colony, working with the Qatari Investment Authority and other partners, was one of two final bidders for Summit, but ended up pulling out in late 2011 as Lions Gate began to finalize the agreement that closed last Friday.

The strong push for Summit shows that Miramax's owners want to build their own full-service studio, the knowledgeable person confirmed. Don't be surprised to see Colony and its partners go after another similar acquisition, or invest in Miramax to create those capabilities, the source said.

Not that Miramax has fared poorly as a library management company since it was sold by Disney in late 2010 to a consortium including Colony, the Qatari Investment Authority and billionaire Ron Tutor. Financial data shared by Miramax Chairman and Colony partner Richard Nanula in December shows the company has added $325 million of contracted cash flow since it went independent, including $190 million from deals with digital distributors including Netflix and Hulu and $120 million from new DVD and Blu-ray deals.

As television deals put in place by Disney before the sale expire over the next decade, Miramax will also have the ability to generate new revenue from TV distribution.

The company's improved financial situation allowed it to issue debt in a $500-million recapitalization this fall that, Nanula said, has already returned the majority of the new Miramax owners' invested capital.

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Photo: Robert Pattinson and Kristin Stewart in "The Twilight Saga: Breaking Dawn Part 1." Credit: Andrew Cooper / Summit Entertainment

'Twilight' studio Summit poised for acquisition by Lions Gate

Jennifer Lawrence and Liam Hemsworth in "The Hunger Games."
Lions Gate Entertainment is putting the finishing touches on a deal to acquire rival independent studio Summit Entertainment in a deal worth about $700 million, according to several people with knowledge of the matter who were not authorized to speak publicly.

The agreement, which is expected to be announced within days, would bring together the studio behind "Saw," "Mad Men" and the upcoming "The Hunger Games" with the maker of the hugely successful "Twilight" films. The two companies are headquartered within blocks of each other in Santa Monica.

The consolidation of the studios probably would be bad news for filmmakers in Hollywood, as it would mean one fewer buyer of scripts and source of employment. But the combined company would be a more powerful player as it goes up against larger rivals such as Sony Pictures and Warner Bros. in the increasingly competitive and global entertainment market.

Lions Gate will pay just over $350 million in cash and issue about $50 million in new stock to the owners of Summit, the people said. In addition, Summit will still owe between $200 million and $300 million in debt once it becomes a subsidiary of Lions Gate.

The deal is expected to immediately add to Lions Gate's bottom line, as Summit is currently profitable based primarily on the cash generated by "Twilight" sequels.

The expectation of a deal comes after about two months of heated negotiations that included rival bidder Colony Capital, a private equity firm that is a partial owner of independent film studio Miramax, which Colony wanted to merge with Summit.

One person close to the talks said that Colony, which is controlled by billionaire real estate investor Tom Barrack, made an all-cash deal of the exact same value as Lions Gate's. However, Summit investors preferred taking some Lions Gate's equity, which would give them ownership of about 5% of the combined company.

Earlier this week, Summit entered exclusive talks with Lions Gate, putting Colony on the outs.

However, the people with knowledge said, it's still possible that Colony could come in with a higher offer at the last second, a bid that Summit would have to consider. Barrack is believed to be partnering on the Summit bid with the Qatari Investment Authority, which also owns part of Miramax.

Should the deal close, it would be a victory for Lions Gate Chief Executive Jon Feltheimer and his No. 2, Vice Chairman Michael Burns, who have long eyed Summit and held on-and-off talks to acquire it since 2008. Kristen Stewart and Robert Pattinson star in "The Twilight Saga: Eclipse."

The duo would remain in charge of Lions Gate after the acquisition, while Summit chiefs Rob Friedman and Patrick Wachsberger would take charge of the combined studio's motion picture group. As at Summit, Friedman is expected to focus on production marketing while Wachsberger oversees international business.

It's not yet clear what their roles would mean for Lions Gate's current motion picture group president, Joe Drake. Some people close to both companies have speculated that Drake may leave as a result of the deal.

If Friedman and Wachsberger bring over most of their staff from Summit, as several insiders suggested is likely, that could mean other other film executives and staffers at Lions Gate would lose their jobs as well. Already, people who work at Lions Gate have said there is widespread concern there about how many people might end up unemployed after an acquisition of Summit.

Lions Gate probably won't want to shake up its operations immediately, however, as "The Hunger Games," its biggest movie bet ever, will be released in March. The nearly $100-million production is the first of four planned films based on the bestselling young adult books and has been touted by analysts as the potential source of hundreds of millions of dollars in profits for the company.

The fifth and final "Twilight" movie, meanwhile, will be released in November.

Some details of the talks between Lions Gate and Summit were previously reported by Deadline and Bloomberg.

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Top photo: Jennifer Lawrence and Liam Hemsworth in a scene from "The Hunger Games." Credit: Murray Close / Lionsgate. Bottom photo: Kristen Stewart and Robert Pattinson in "The Twilight Saga: Eclipse." Credit: Kimberley French / Summit Entertainment.

'Twilight' studio Summit sale on hold until 2012

TwilightBreakingDawn
"Twilight" studio Summit Entertainment is still deep in negotiations with two potential buyers, but won't reach an agreement with either before the end of 2011.

The Santa Monica firm remains in talks to sell itself to fellow studio Lions Gate Entertainment and private equity firm Colony Capital, a co-owner of Miramax, people familiar with the matter but not authorized to speak publicly said.

Executives at Summit had hoped to close a deal by the end of the year because of certain tax and financial advantages, two of the people said, but that has virtually no chance of happening by Saturday.

Instead, talks with both parties have slowed down during the holiday season and are expected to pick back up next week. Summit is likely still looking to close a deal as soon as possible, as it is currently in a good position with one more "Twilight" sequel yet to be released and a significant pile of cash that, one knowledgeable person said, will be distributed to investors in the event of a sale.

Both Lions Gate and Colony are said to be offering about $350 million to $400 million to acquire Summit, along with the assumption of roughly $200 million in debt.

If Lions Gate were to take control, Summit chiefs Rob Friedman and Patrick Wachsberger are expected to run the merged studio's motion picture group, sources close to the negotiations said. If Colony, which is led by billionaire investor Tom Barrack, were to be the winning bidder, Summit would likely be merged with Miramax. In that scenario, it's likely that Friedman and Wachsberger would run the combined company, possibly alongside Miramax CEO Mike Lang.

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Photo: Robert Pattinson and Kristin Stewart in "The Twilight Saga: Breaking Dawn Part 1." Credit: Andrew Cooper / Summit Entertainment

Miramax looks to boost tiny Facebook movies market

MiramaxFacebook 
Miramax is making 20 of its movies available to rent on Facebook, even as new research shows the social network has yet to become a formidable competitor in the digital movie market.

The independent studio that spun out of Walt Disney Co. last year is offering films, including "Pulp Fiction," "Kill Bill," "Clerks" and "Swingers," on a new Facebook page called Miramax eXperience. Each movie costs $3 to rent for 48 hours.

It's not the first time movies have been made available to rent on Facebook, as studios seek to capitalize on the word's most popular social network. Warner Bros. began the trend with "The Dark Knight" in March, followed by others, including Universal Pictures' "The Big Lebowski." However, no other studio has launched its own Facebook page with so many movies offered together.

In addition, Miramax eXperience is available on iPads and Google TV.

That could prove valuable, as the inability to watch movies rented or purchased via Facebook off PCs has been an impediment to their success, according to Arash Amel, digital media research director for IHS Screen Digest.

IHS recently released data on Internet movie distribution in the first half of the year and found that Facebook Inc. did not register among the top five distributors. Apple Inc.'s iTunes continued to dominate the market, with 65.8% of revenue, up from 64.9% in the first half of 2010.

Vudu, owned by Wal-Mart Stores Inc., leaped from 1% to 5%. Microsoft Corp.'s Zune (available on computers and the Xbox 360 video game console) and Sony Corp.'s Playstation store each lost ground, falling to 16.2% from 18.5% and 4.4% from 8.2%, respectively. Amazon.com Inc. stayed roughly constant at 4%.

Vudu has made aggressive moves to expand its distribution on tables, televisions and the Wal-Mart website, which accounted for much of its growth.

"Movies on Facebook will struggle to even get near the top five without a TV-based or device-based ecosystem presence," Amel said. "It's no more than a marketing gimmick right now for studios."

Miramax's Chief Executive Mike Lang has been aggressive in putting his studio's library of about 700 titles online, forging digital distribution deals with outlets including Netflix and Hulu.

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Image: A screen shot of Miramax eXperience on Facebook.

Miramax movies come to Hulu

PulpFiction Miramax Films has signed a digital distribution agreement with online video distributor Hulu, as part of an ongoing effort to generate more revenue from its 700-title movie library.

Subscribers to Hulu's premium service Hulu Plus, which costs $7.99 per month, will get access to hundreds of Miramax titles that will be added over the next few months, with 27 available to stream starting Wednesday including "Pulp Fiction." The offering is very similar to one made in a deal announced last month that put Miramax movies on Netflix's Internet streaming service.

Hulu will also make about 15 Miramax films available each month for free on the advertising-supported section of its website beginning later this month, the first online platform to do so. That marks the first time that Miramax movies have been available to watch free online -- legally that is.

Hulu has been looking to boost the number of movies on Hulu Plus in a bid to better compete with Netflix, Amazon.com and other digital distributors. Currently, Hulu Plus only has several hundred independently produced films, including classics from the Criterion Collection. It does not offer any recently made movies from big Hollywood studios as Netflix does, though its collection of television shows is bigger.

Miramax, meanwhile, is pursuing a range of non-exclusive digital distribution deals in order to generate as much revenue as possible from the 700-plus title library that a consortium of investors led by Colony Capital and construction magnate Ron Tutor acquired from Walt Disney Co. in December for $663 million.

-- Ben Fritz

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Photo: John Travolta and Uma Thurman in "Pulp Fiction." Credit: Linda R. Chen / Miramax Films

Miramax movies to be available on Netflix [Updated]

KillBill Miramax has signed a multi-year agreement to make its movies available via Netflix online streaming, the first of what the independent studio's new management has promised will be multiple digital platforms for its library.

Under the deal announced Monday, dozens of titles at a time will be available via Netflix streaming, entering and exiting the service on a rotating basis starting in June. Among the movies from Miramax's 700-plus film library that Netflix subscribers will be able to see at varying times are "Pulp Fiction," "Shakespeare in Love," "Bad Santa" and "Kill Bill."

Mike Lang, chief executive of Miramax, has been talking to Netflix about a deal since he took over the company in December, when it was acquired by a consortium of investors led by Colony Capital and Ron Tutor. At the time, Lang said digital-distribution arrangements were a top priority to start generating additional revenue from the Miramax library.

The Netflix deal was not described as exclusive, meaning Lang will be able to sign agreements with other distributors. Among those he has been talking to are Google, Hulu and Amazon.com.

[Update, 7:57 a.m.: A knowledgeable person who asked not to be identified because of the confidentiality of the deal terms confirmed that the agreement is non-exclusive and said it guarantees Miramax at least $100 million in payments.]

-- Ben Fritz and Steve Zeitchik

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Photo: Uma Thurman and Gordon Liu in "Kill Bill Vol. 2." Credit: Andrew Cooper / Miramax Films

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