Published on Friday, July 2, 2004 by the Associated Press
Big Part of 'Fahrenheit 9/11' Profit Goes to Charity
by Bruce Orwall
After Walt Disney Co. refused to allow its Miramax Films unit to distribute the controversial Michael Moore documentary "Fahrenheit 9/11," Miramax co-Chairmen Harvey and Bob Weinstein paid $6 million from their own pockets to acquire the film from the company. Six weeks later, "Fahrenheit 9/11" is a smash sensation, and the Weinsteins are widely assumed to be laughing all the way to the bank.
If so, the laughter may be muted. Despite their personal investment, the Weinstein brothers will not be the biggest financial beneficiaries of "Fahrenheit." The real winner: a charity, or charities, as yet unnamed, that will receive about 60 percent of the net profit ultimately generated by the film -- a tally that could be tens of millions of dollars. The Weinsteins, meanwhile, will pocket about 40 percent of the net, according to people familiar with the deal.
And who will pick the charities that get the money? Disney, the company that refused to release the movie, without having to consult either the Weinsteins or Mr. Moore. It's all the unexpected result of yet another strange tussle between Disney and the Weinsteins, the corporate odd couple that has had a tough time getting along since Disney's 1993 acquisition of Miramax.
Over the years, Disney and the Weinstein brothers have fought over issues of control, compensation and budgets. But their relationship was pushed to the brink in May, when a public spat broke out over Disney's refusal to allow Miramax to release "Fahrenheit." As Mr. Moore made the media rounds accusing Disney of censoring his movie, Disney executives were furious that the Weinsteins seemed to side with him.
So when negotiations began for the Weinsteins to buy the film back from Disney, the discussions quickly took on the stern parent/naughty child tone that has characterized many moments between the parties over the years. According to people familiar with the matter, the media company was determined to punish the brothers for their alleged bad behavior by limiting the extent to which the Weinsteins could benefit.
In essence, Disney refused to sell the film to the brothers unless they agreed that they would not benefit personally any more than they would have under their employment agreement. That is still a lot of money: Under that complex deal, the Weinsteins typically pocket about 40 percent of the net profit from any Miramax picture, after the costs of distribution, prints and advertising and talent participations are deducted. But people close to the deal say that Disney demanded that the remaining 60 percent go to a charity or charities of its choice.
The Weinsteins, these people say, had little choice but to agree because they wanted to get the movie out quickly. After agreeing to Disney's terms, they negotiated a deal to distribute "Fahrenheit 9/11" through Lions Gate Entertainment Co. and Cablevision Systems Corp.'s IFC Films.
A Disney spokeswoman says no charities have been approached, as it isn't yet clear how much money will be available. It's likely that Disney will try to steer the money toward noncontroversial organizations benefiting children, education and the like. The arrangement was referenced obliquely in a press release announcing the sale of the film to the Weinsteins that said, "Any monetary benefit to Miramax or its parent company, the Walt Disney Co., as a result of the film's distribution will be donated to charity."
How much money the charity and the Weinsteins stand to make depends on a variety of factors, first and foremost the performance of the movie. It has already sold more than $35 million of tickets in six days of release at 868 theaters. With plans to greatly expand the screen count this weekend, many in Hollywood believe the movie could take in $100 million in U.S. theaters alone.
When other tallies are later added in -- including foreign ticket revenue, DVD and video sales, and licensing the film to TV networks -- it is expected to be an impressive bounty. One wild card is how much Mr. Moore himself will make via his own profit participation in the movie, which people close to the matter describe as generous. That amountwill be deducted from the take before the Weinsteins and the charities divvy up the rest. Mr. Moore's Los Angeles agent, Ari Emanuel, declined to discuss Mr. Moore's compensation but indicated it would be less than what the charities receive.
For Disney's critics, the charitable contributions will be a handy way to estimate how much profit the company missed out on by declining to release the movie. And few will shed a tear for the Weinsteins. The brothers have reaped an estimated $250 million in bonus compensation since joining Disney 11 years ago, including a windfall from the "Lord of the Rings." When Disney and Miramax gave up the rights to make the movies, it wound up with a 5 percent profit participation in the films that were eventually made by Time Warner Inc.'s New Line Cinema. People familiar with the matter say Disney let the Weinsteins keep half of that amount, which has generated about $25 million for the brothers and $25 million for Disney.
© Copyright 2004 Associated Press