Disney Tries to Sell Miramax – But What’s the Library Worth?

Interested bidders include Summit, Relativity, Studio Canal and an outsider billionaire, Nelson Peltz

Disney’s quiet shopping of Miramax has attracted interest from several bidders, though not merely the usual suspects. Several insiders think the $700 million price is too high.  

That’s because the library’s cash flow is not close to the $300 million estimated this weekend in The New York Times – more like a third of that sum, according to two people knowledgeable about the figures.

As WaxWord reported last week, Disney on Thursday essentially shut down the arthouse studio once owned by the Weinstein brothers. The studio closed Miramax’s offices in Los Angeles and New York, absorbed a few remaining empoyees into Disney while letting another 80 go.

What remains is a film library containing some of the best – though not necessarily the most lucrative – film titles of the last two decades. (See Miramax Dies: Rest in Peace  and slideshow to remind you of your favs: “The Piano.” “Pulp Fiction.” “Sex, Lies and Videotape.” “Clerks.” “The English Patient.”)

So what’s it worth?

According to two individuals who have had access to the financials, the library threw off about $100 million in net cash flow for the year according to the latest available figures. That’s a lot less than $300 million that analysts estimated for annual revenue, and a very different multiple for the $700 million sought by the studio. (And we all have to be aware that there will be spinning on both sides of this negotiation.)

Interested bidders include Summit Entertainment, Relativity Media, France’s cable giant Studio Canal and an outsider billionaire, Nelson Peltz.

A spokeswoman for Disney declined to comment on the library cash flow or the identities of interested parties.

I am told that the various bidders are valuing Miramax at somewhere between $380 million on the low end to about $500 million on the high end.

The oddest among that bunch is Peltz, an entrepreneur who once owned Snapple and who now owns a portion of Cadbury-Schweppes. No one is quite sure what his interest is in the movie industry, but Peltz – a former Bush supporter – apparently wants in to the glamour business.

Lionsgate, which has bid on MGM because of its valued library, has opted out of bidding on Miramax, having already determined that Disney wants too much money for the property. At the current level Lionsgate has “no interest,” according to one knowledgeable executive.

Savvy buyers will need to think deeply about the value of the 700-film library – whose precise number of titles I am still trying to verify. Most of the titles are toward the end of their revenue-producing lives. And Disney has little to nothing to replenish the list, including nada that will produce serious DVD sales or rentals.

That means the library has to be valued as diminishing over time.

At that low end, you have to wonder if Bob and Harvey might try to scrape together some alliance. Because in truth – they’re probably the only ones who can revive the value of that brand. Disney killed it.

See previous: Miramax Dies: Rest in Peace

Disney Shops Miramax, Bidders Emerge