Reader Nate Winchester sent me an e-mail asking me this question about the Weinstein Company's most notorious business practice:
Forget how they get other people to go along, why do they keep doing this???
HOW does a company survive a repeated business plan of "I'll cut off my nose to spite my face."
Satan just has to be involved.
Now the link is for this video from Good Bad Flicks investigating the cult film All The Boys Love Mandy Lane.
Here is the video, but be warned, he gets into spoilers after he talks about the film's troubled history.
If you're too lazy to watch the video, or want to avoid spoilers, I will give you the gist of what happened to the film, and then we'll try to figure out why it happened.
All The Boys Love Mandy Lane was made in Austin Texas by some aspiring filmmakers for around $750,000. It premiered at the Toronto International Film Festival where it became the darling of the 2006 Midnight Madness slate, which is normally seen as a great sign for it future success.
A bidding war ensued. Every indie distributor wanted to get their hands on it, but it was the Weinstein Company that won, paying out $3.5 million for the privilege.
TWC then held a test screening, and declared that the results were so awful, the film did not deserve to be released.
The film gathered dust on a shelf for a few years. But online pressure inspired TWC to sell it to another distributor, who promptly went bankrupt. Then more time passed, just about everyone involved in the film went on to bigger and better things, and after seven years in limbo it got a token theatrical release, and then was dumped on home video, with pretty much all momentum lost.
Which brings us to Nate's question:
HOW does a company survive a repeated business plan of "I'll cut off my nose to spite my face."
Satan just has to be involved.
Satan is probably not involved, as far as I know, but there are some theories as to how this keeps happening.
First the Weinstein's are masters at convincing people to go along with them. They can point to their Oscars, their hits, as well as their personal wealth, and say "Look at what we did for them, and we can do it for you."
The problem is for every Oscar winner or box office hit they probably have about a dozen films that either sink completely, or are just not released at all.
So why buy a film and not release it?
There are two reasons for the Weinsteins to do that. One is financial, the other is psychological.
The financial reason has to do with accounting rules. According to those rules a film that they bought for $3.5 million goes on their books as an asset worth $3.5 million.
If they release that movie, they must then deduct the cost of its release from that value, and then add any profits that comes in.
If the film bombs then it's considered a loss.
So it's better to just have it sit there gathering dust.
As I said, the second reason is psychological. From everything I've ever read or seen about how the Weinstein Brothers do business is that they must win EVERYTHING, even contests they're not truly interested in. Also, not only must they win, everyone else must LOSE.
The history of Miramax and the Weinstein Company shows a repeated strategy of buying films they have no interest in for the sole reason of making sure that no one else can do anything with them.
Now this business model isn't as successful as the Weinstein Brothers would like you to think. First they almost bankrupted Miramax, but was saved by selling out to Disney, only to have Disney force them out of Miramax when they repeated those antics. Just a few years ago TWC had to hand over the rights to almost its entire film library up to that point to its creditors to avoid getting crushed by the debt they piled up to acquire those films.
Basically, their entire business model is based on hustling. Hustling Wall Street for capital, hustling filmmakers for movies, hustling academy voters for prizes, and only occasionally hustling audiences for ticket sales.
TWC does not have a model for a self-sustaining film company. Either they will run out of steam, filmmaker goodwill, and other people's money, or an ill-timed heart attack will bring the whole house of cards down. Then TWC will be nothing more than a footnote in film history.
The financial reason has to do with accounting rules. According to those rules a film that they bought for $3.5 million goes on their books as an asset worth $3.5 million.
ReplyDeleteIf they release that movie, they must then deduct the cost of its release from that value, and then add any profits that comes in.
If the film bombs then it's considered a loss.
So it's better to just have it sit there gathering dust.
Ok, THAT'S what I was mostly wondering about (though of course nice to have all the other pontificating). I didn't know that bit and thought if it was just sitting around gathering dust instead of at least making SOME money that it was pretty much a sunk cost. That's what bugs me about some studios sitting on say... beloved TV shows and never releasing them to DVD where they could make money. Maybe not much money, but it would still be more than right now where people just pirate the thing because there's no way to legitimately enjoy them.
So here's another question raised by you and the vid: Why do the companies do a test screening when it premiered at the TIFF? I mean isn't a film festival itself a test screening?