Monday, 12 April 2010

Hollywood Babble On & On #487: Take-Over Tid-Bits & Other Business!

Welcome to the show folks...

We've got a couple of take-over tid-bits to gnaw on tonight.


There's been a slight shift in the bidding for Miramax.

The Weinstein Bros. have proven that they will not give up their former baby again without a fight as long as they have Ron Burkle's money to pay for it. They have increased their bid to an all-cash up front offer of $600 million in a not-so secret meeting with Disney honcho Robert Iger.

David Bergstein's wad of corporations are still in the bidding. Reports say he has the highest bid, but is not considered a serious challenger, considering every civil litigator in Southern California is sending his backers (Deutsche Bank & an as yet unnamed Saudi) their cards "just in case." Yet, I have a theory about why he's still in the game, which I will get to in a second.

The best challengers to the Weinsteins to not only buy Miramax, but turn it into a viable company again, is still the Gores Bros. As I mentioned before, the Gores are reported interested in buying distributor Overture Films which comes with home video company Anchor Bay and its diverse and considerably sized library.

Which means we need to take a little visit into the mind of Iger.

Iger is the man who makes the ultimate decision of the fate of Miramax. His main goal is to sell the company and its library and get as much as he can for Disney and its shareholders.

But what is his secondary goal?

Disney is an company with what I call an old-school feudal mindset. That means its corporate culture hates competition, because competition means that they have to work for their money instead of just steamrolling over a facet of the market place and dominating it through sheer bulk, and non-stop marketing assaults.

So you must ask this question:
Is Disney willing to sell Miramax to anyone that might succeed where they had failed?

That's why I think they're keeping Bergstein in the bidding. It's a longshot that he'll succeed, but if pigs start doing aerial cartwheels and he does win, Miramax will be immediately sucked into the vortex of litigation that's currently sucking all his other companies into the depths of bankruptcy court.

It's a similar story with the Weinsteins. Sure they founded the company, made it an indie powerhouse in the 90s, but they also drove it to the brink of destruction several times, and made truckloads of enemies, before moving onto their own company TWC, which has a better track record of wheedling, then evaporating investment capital and angering filmmakers than in making profitable movies.

The more I think about, the more I think that the sheer seriousness of the Gores Bros. bid might actually
hurt their chances of winning.

Sure, Disney's moving almost solely into entertainment that can made into toys and merchandise, and a revitalized Miramax would be mostly competing against Lionsgate, Summit, and Focus Features at this stage, but is Disney willing to bet on it staying that way?

We will just have to wait and see.


The management of Lionsgate sent out a letter to their shareholders that they should reject the bid being made by billionaire Carl Icahn, calling it "inadequate, opportunistic and coercive."

Let's look at the facts:

1. I think it's up to the individual shareholders to decide if it's inadequate. No one wants to sell their shares at a loss. So the best way to win this fight, is to increase the value of those shares out of Icahn's price range.

2. As for it being opportunistic, well, all business is opportunistic. You see a way to make money, called an "opportunity" and you take it. The key to avoid being the subject of an "opportunistic" take-over bid is to not create such opportunities.

3. Coercive? Really? Is it as coercive as writing codicils in debt covenants that could seriously screw up the company for millions of dollars to keep outsiders from buying 30% or more of the company? I don't know much about Icahn's practices, but if he was going around holding guns to shareholder heads, he'd be facing some legal difficulties. No one can legally force shareholders to sell their shares.

I wish that both sides would realize that this little war is distracting to management and harmful to the company, and its shareholders. I wish that they could come to some sort of mutually beneficial agreement, where they can both get what they want, a profitable company making money for all of them, rather than a battered battleground that's not doing anything for anyone.



PS- It's come to my attention that someone in Beverly Hills has been trying to find out who I am. Though it's not really as big a secret as, let's say, a weekend meeting between Bob Iger and the Weinsteins, I try to not make a big deal out of it.

If this person, and
you know who you are, is still interested, then you can drop me a line at screenanon(at)yahoo(dot)ca, and we can have a hopefully friendly chat.

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