Deal in Place for Disney to Offload Miramax for $660 Million

Walt Disney Company (DIS), the diversified media conglomerate, recently entered into a deal to sell Miramax Films for $660 million to Filmyard Holdings, a group of investors that include businessmen Ron Tutor, an investment firm, Colony Capital, and other individuals. The group has already paid a non-refundable deposit of $40 million.

The deal, which is expected to close somewhere between September 10 and December 31, 2010, includes rights to over 700 Miramax film titles, including famous titles such as “Chicago”, “Shakespeare in Love” and “No Country for Old Men”. The transaction also included the sale of non-film assets, such as development projects, book titles and the "Miramax" name.

Miramax was named after Miriam and Max, the parents of Harvey and Bob Weinstein, who founded the company in 1979. Later in 1993 the brothers sold the studio to Disney for $80 million but continued to remain part of the company. However, in 2005, due to differences with the parent company, Disney, the duo left and founded The Weinstein Company, which was also in the race to reacquire Miramax but lost to Filmyard Holdings. Another potential bidder seeking to acquire the studio was Lions Gate Entertainment Corporation (LGF).

Since the last six months Disney has been looking for strategic opportunities to offload Miramax Film Studio, to concentrate on the development of motion pictures under its other brands, such as Disney, Pixar and Marvel, the characters of which can be used for the development of video games. Miramax does not produce such type of films.

Disney intends to increase its investments in the video games industry, which has been generating higher sales compared to box-office sales in the United States. This is quite evident from the company’s acquisition of Tapulous, a software and video game developer and Playdom, one of the biggest makers of social games on the internet.

These acquisitions will help Disney to expand its market base in the digital gaming portfolio, as social gaming sees a growing trend in the networking world. Further, the deals provide Disney greater opportunity to extend its characters and brands to social games.