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Disney shifts focus from prestige to profits

Analysts say the split from the Weinsteins will hurt come Oscar time, but will pay dividends at the box office.

LOS ANGELES - The breakup of the 12-year relationship between the Walt Disney Co. and indie film pioneers Bob and Harvey Weinstein allows the company some new latitude: making less expensive family films and co-producing sequels to some of Miramax's biggest hits.

Yet Disney stands to lose the prestige that came from the Weinsteins' ability to make and market Oscar-winning films - including three Best Picture nods for Disney. And it must overcome the perception that it is unable to sustain relationships with partners, a central challenge to signing a new deal with partner Pixar Animation Studios.

The turbulent, yet successful, relationship ended Tuesday, with Disney and the Weinsteins agreeing to part ways. Disney will keep the Miramax name and vast film library. The Weinsteins will keep the Dimension Films label and start a new venture with private financing.

Financial analysts have shrugged off the departure of the Weinsteins, saying Disney is right to shift its attention to smaller budget pictures aimed at its traditional family audience.

"We think it is prudent for Disney to prioritize returns" over prestige films that make little money, Goldman Sachs analyst Anthony Noto wrote in a note to clients Wednesday.

Disney bought Miramax in 1993 for $80-million, hoping for the kind of inexpensive home runs the Weinsteins delivered, with hits such as Pulp Fiction.

But Disney's chief executive Michael Eisner chafed at the Weinsteins' ambitions to become a larger media company, bankrolling larger, costlier films and moving into book and magazine publishing.

The Weinstein brothers did deliver one thing Disney has not been able to achieve on its own - Oscar-winning films. Three Miramax films - The English Patient, Shakespeare in Love and Chicago have won Best Picture Academy Awards and the studio has garnered numerous other awards and nominations over the years.

This year, Miramax films received 20 nominations, including two in the best picture category for Martin Scorsese's The Aviator and the Johnny Depp film Finding Neverland.

But Disney Studios Chairman Dick Cook said Wednesday he intends to hire a creative team that will keep Miramax at the forefront of producing smart, edgy films.

"I think it's awfully important," Cook said. "It gives us an opportunity to find talented new filmmakers with fresh voices that are able to tackle new ideas in really thought-provoking and interesting ways."

Disney has scaled back the budgets of films produced under its Walt Disney Pictures and Touchstone labels and will release more movies aimed at family audiences.

Miramax will operate with less than half the budget of recent years. And the label will have to do without the talents of such Weinstein-nurtured director/writers as Quentin Tarantino, Kevin Smith and Robert Rodriguez. Those directors have said they will create their next projects with the Weinsteins' new company.

Cook said Miramax will remain a serious player in the independent film world.

"We're going to be looking to put together a team that is going to be able to ferret out great ideas, nurture filmmakers and do things that aren't traditionally in the box," Cook said.

Disney will name a new head of Miramax by July, the company said. The new unit will be much smaller, with a budget of around $300-million per year instead of the $700-million the Weinsteins had managed in recent years.

With one thorny negotiation out of the way, Disney now turns its attention to another creative partner, Pixar Animation Studios.

Pixar broke off talks with Disney about extending their lucrative relationship past the delivery of next year's film Cars. Disney's incoming chief executive, Robert Iger, has said he will reopen talks with Pixar.

[Last modified March 31, 2005, 01:27:20]