The Talented Messrs. Weinstein They built Miramax Films into a movie powerhouse. But how big can the company get and still be the Bob and Harvey show?
By Tim Carvell

(FORTUNE Magazine) – Every once in a while a young actress comes along who seems to have everything: good looks, talent, a killer smile. She appears on the cover of, say, Vanity Fair, wearing very little, next to a headline that is a pun on her first name. She is nominated for a Golden Globe. She presents an Oscar. Casting agents begin to look for the next one of her, and five clones crop up to take the roles that she's rejected. And then, 99 times out of 100, she stumbles. She makes one rotten movie, or maybe two. The media and the public turn on her--make fun of her earlier movies, decide they never liked her very much in the first place, and determine that she is talentless and full of herself. And she goes away. Let us call this Imploding Starlet Syndrome.

The point is that while failure in Hollywood may be hard, success is even harder. This rule applies not only to actors: It is also true for directors and producers and writers. And it is true for companies. It is especially true, in light of recent events, for Miramax Films. Certainly, the company has had a staggering amount of success: At its inception 20 years ago, it consisted of two brothers, Bob and Harvey Weinstein, with almost no money and even less experience in the movie business. Through will power, uncanny taste, and a knack for showmanship, the brothers have built their tiny firm into a highly profitable subsidiary of Walt Disney Co. They have also positioned their company smack-dab at the center of pop culture: Miramax released many of the past decade's touchstones, from Pulp Fiction to The English Patient to Scream.

But Bob and Harvey Weinstein have not simply built one movie company--they have, inadvertently, helped build or expand half a dozen more, as their success has prompted other companies to try their hand at independent film. Their success is also reflected in the releases of the major studios, as the large movie companies have cherry-picked the talent the Weinsteins discovered. What this means is that Miramax's job has become far more difficult, since it must now compete with the smaller indies for up-and-coming talent and with the studios to retain the people it has discovered.

Last year some signs of the difficulty of maintaining this balance appeared. The smaller upstarts that Miramax helped spawn had an exceptionally good year, led by Artisan Entertainment's smash hit The Blair Witch Project; at the same time, the studios released movies like Election and The Sixth Sense, directed by people who got their start at Miramax. For its part, Miramax released a lineup of mostly lackluster films, from Music of the Heart to Happy, Texas (the movie Miramax bought instead of Blair Witch at last year's Sundance Film Festival). Meanwhile, new Miramax ventures generated reams of bad press. The company launched a TV division, only to see its first show, Wasteland, disappear after just three airings. And Talk magazine, a high-profile joint venture between Miramax and Hearst Magazines, has been bedeviled by bad press and staff defections. Last year, Miramax saw its profits drop to $85 million, from $125 million in 1998. If the Imploding Starlet Syndrome holds, then 1999 should have been the beginning of a long, slow fade for Miramax: It had served its purpose; its moment was past.

But that is unlikely to happen: For every 99 starlets who retire to an NBC sitcom and a lifetime of dinner theater, there is a Julia Roberts. And while the mechanisms that determine stardom are obscure at best, there are certain qualities that allow companies like Miramax to endure. Indeed, after the weakness of 1999 the company has scored a major hit with Scream 3 and earned 14 Oscar nominations. The key thing to understand about the Weinsteins is that their success took ten long years, and unlike some people who immediately forget the lessons of hardship, they have impressed them upon the company. It took fear, paranoia, and an overwhelming passion for film to ensure Miramax's success; those same characteristics may well enable the company to survive.

The Miramax story begins with Harvey, hustling. In the mid-1960s, a time when most teenage guys wanted to be a Beatle, Harvey wanted to be Brian Epstein. Alan Brewer, Harvey's high-school classmate in Flushing, Queens, had started a band called the Goosemen, and Harvey signed on as its manager. "He wasn't an entertainer of any kind, but he had a deep desire to be involved in the entertainment business," Brewer recalls. "So he decided, 'Well, they'll play the music, and I'll be the manager.' " The band recorded its demos at a Manhattan recording studio that Harvey secured through a family connection. "He took a budget of $150," Brewer says, "and he was able to get us into a studio that probably cost four or six times that amount." The Goosemen never went anywhere, but Harvey kept up the music-promotion business when he went to college at the University of Buffalo. Within months of his arrival on campus, he had started a concert-promotion company with a friend, Corky Burger; they named it Harvey & Corky Presents.

A few years later, Harvey summoned his brother Bob, who was attending SUNY at Fredonia, to join in the business, and the Weinsteins and Burger put Harvey & Corky Presents at the center of Buffalo's rock music scene. Brewer, who'd joined Harvey at college and was part of the business, says that "one of the things that made Harvey & Corky successful was Harvey's willingness to do everything possible to sell the last ten tickets. We'd be out in the ice and snow putting fliers under windshield wipers in college parking lots, and Harvey would be out there with us." But by 1979 the brothers had had enough of the concert business and enough of Buffalo, so they headed for New York City and created a new company, which they christened Miramax, an amalgam of the names of their parents: Miriam, a housewife, and Max, who worked in Manhattan's competitive 47th Street diamond district.

The very first release of Miramax Films was a soft-core porn film called Goodbye, Emmanuelle, the third in the Emmanuelle series. If that seems like an odd debut, it was actually rather appropriate. For one thing, it was a skin flick--sort of--that drew the Weinsteins into the movie business in the first place: As the oft-told story goes, when the two were teenagers in Flushing, they headed off to their local theater to see Francois Truffaut's The 400 Blows, under the impression that it was an adult film. When they found otherwise, rather than leave the theater discouraged, they stayed and became enraptured. (Or at least Harvey was enraptured; Bob preferred Hitchcock thrillers and spectacles like Spartacus.) For another thing, the Weinsteins secured distribution rights to Goodbye, Emmanuelle by using the same hard-bargaining tactics for which they have become famous. Yves Rousset-Rouard, the film's producer, still remembers the scene: "I was in Cannes," he says in heavily accented English, "and two men pursued me every day, everywhere, and it was Bob and Harvey Weinstein.... They were on the floor, asking me for the movie."

The brothers' first few releases were fairly unremarkable, and on a level with Goodbye, Emmanuelle: They picked up dirt-cheap movies--usually ones that nobody else wanted--did what they could to market them, and hoped for the best. (Their nadir came when they bought Outer Touch, a lame British sex comedy set in space; they attempted to spiff it up by adding dialogue by Bob Saget and retitling it Spaced Out.) The company's breakthrough movie--and the one that set the pattern for Miramax to this day--came in 1982. At the 1981 Cannes Film Festival, they bought the rights to footage from an Amnesty International benefit featuring Sting, Phil Collins, and the cast of Monty Python's Flying Circus. Working with the film's producer, an ebullient Briton named Martin N. Lewis, they spent a year recutting the concert footage into a tight 90-minute movie titled The Secret Policeman's Other Ball.

The brothers had little in the way of funds to promote the movie, but that turned out not to be a problem: Lewis created a television ad that featured Monty Python's Graham Chapman, in panties, railing against the "lewd, lascivious" contents of the film. The local NBC affiliate refused to air the spot, citing, of all things, the presence of an American flag in the background, which somehow constituted desecration. Lewis and the brothers parlayed the contretemps into reams of free publicity about The Ad Too Racy for Television. The irony is that the film itself is rather tame; there's nothing lewd in it. (This ginning up of controversy has become a Miramax hallmark; the brothers eventually made such a habit of grabbing headlines by suing the MPAA over X ratings that Harvey once joked that they look upon lawyers' bills as "our advertising budget.")

Buoyed by the controversy, Secret Policeman's went on to gross $6 million in the U.S., a staggering amount for a tiny, unproven film company in 1982. It took seven more years for the brothers to have another hit that big; they spent the remainder of the decade learning the business by trial and error, moving from tiny hit to tiny flop. The company was so small that, at the beginning, Miriam Weinstein supervised the interns. "It was a making-a-living business then," Bob says today. "Literally, a making-a-living business." The brothers even took some time away from the company to co-write and co-direct a movie, 1986's Playing for Keeps, about which the kindest review would be that it was better than Spaced Out. Miramax employees from that era recall an intense but exhilarating atmosphere. "I was hired by Miriam fresh out of NYU Film School," recalls Robert Newman, now a top agent at ICM. "They had an opening for a messenger at $3.50 an hour. By the end I was running distribution, acquisitions, publicity, marketing."

In the late 1980s the brothers finally hit the jackpot once more. First, they hyped an avant-garde documentary called The Thin Blue Line into an art-house hit in 1988 (the film's subject matter--an innocent man on death row--lent itself to the Weinsteins' cause celebre techniques). Then they secured an investment from British Midland Montague and a credit line from Chase Manhattan, which they promptly spent on three exceptionally astute acquisitions: Cinema Paradiso, My Left Foot, and sex, lies and videotape. The last of the three is especially notable: Miramax bought sex, lies for $1 million at the Sundance Film Festival. At the time, the widespread assumption was that the movie was terrific but that Miramax had overspent for it. But the Weinsteins, to their credit, saw in it the ingredients for a smash hit: The film had a prurient title, sure, but it also had a critical pedigree and a smart, literate script that was a refreshing counterpoint to the excesses of late-'80s Hollywood. Through careful promotion, sex, lies went on to gross $26 million. At that moment, the indie world began to change: Suddenly, there was real money to be made in this business, and Miramax seemed ideally poised to make the most of it.

Then the company nearly blew it. Miramax took its earnings and plowed them into buying and co-producing pricier movies, which resulted in a string of flops. Few moviegoers will even recall Love Crimes, The Lemon Sisters, or Strike It Rich. Fewer still will recall them fondly. By 1992 the films had put Miramax in a bind: As one executive who worked with the company at the time says, "They had a credit line, and they'd run through it, with no hits. They were not paying filmmakers. They had bought films they hadn't paid for." Bob Weinstein says he can't recall the specifics, but acknowledges that the company was frequently short on cash and late with payments in those days--not because the company was ever near bankruptcy, he insists, but because its partners and suppliers were often late with their payments. "Everybody says we were almost bankrupt," he says. "But it wasn't that. Cash flow was a killer. We were actually always in profit.... Everybody was stretching out their payments for their own use of cash."

Nonetheless, this prompted the company's first brush with negative press. Imploding Starlet Syndrome kicked in, and Miramax, which had been able to work throughout the 1980s in relative obscurity, was now high-profile enough to warrant intense scrutiny from the industry and the media. The case against Miramax, which began to be made with increasing frequency, came to center on two key points. The first was speculation that the company was stiffing producers and heading for ruin. And the second was...the screaming. A word on the screaming. Over the years, the brothers have gained a certain notoriety for their loud management style--this magazine included them on its list of America's Toughest Bosses in 1993--but among Miramax employees both past and present there is a sense that two things should be understood: First, it comes out of the brothers' passion for the business; and second, there's usually no personal animosity behind it. Recalls Brewer: "If I'd say that some loud behavior was not cool, they'd say, 'I talk like this all the time; I talk like this to my wife; I talk like this to my mother.' It was amazing to them that it bothered people." (That's not to say that it never went too far: There was, for instance, the notorious incident at Sundance in 1996 when Harvey discovered that Fine Line had bought the movie Shine out from under him; he confronted Jonathan Taplin, who had sold the film, at a restaurant. As Taplin recalls, Weinstein shouted profanities at him, called one of his female companions a "bitch," and grabbed Taplin by the shirt before being escorted from the restaurant. "Harvey is a passionate guy," Taplin says. A Miramax spokeswoman declined to discuss the particulars of the incident.)

If competitors and the press were waiting for Miramax to fail, however, the company startled them--and most of America--with The Crying Game in 1992. Most of Miramax's competitors had passed on the movie, figuring that it was a "niche film"--distributorese for "love story involving a transvestite." But the Weinsteins spotted something that everyone else had missed. They acquired the movie for a mere $4 million, and then built an entire publicity campaign around the fact that there was a surprise in the movie; by the time audiences discovered that the surprise was Jaye Davidson's penis, the Weinsteins already had their money, eventually totaling $63 million.

The Crying Game drove a lot of cash through Miramax, but Harvey Weinstein--perhaps tiring of the perpetual cash-flow crunch--began exploring outside financing options. The company considered going public, and the brothers met with Paramount, but they sold the firm to Walt Disney Co. in 1993 for a price estimated at $60 million to $80 million. At the time, many observers thought that the union was insane--two rough-and-tumble independent-film guys who'd never worked for anyone in their lives becoming part of the most family-oriented and buttoned-down of the studios? But the deal worked out surprisingly well for both companies. Disney, which had had some difficulties producing smart films for grownups, bought itself a touch of class. And the Weinsteins were suddenly able to stop worrying about angry producers and devote their full attention to their movies, with the guidance of Disney. Says Bob: "There's nobody who understands a brand better than Michael Eisner." As for worries over Miramax's edgy style tarnishing the Disney brand, after a few initial skirmishes--like when the company released the gay-cleric drama Priest on Good Friday--the Weinsteins have been good corporate citizens; indeed, last year they proved their Disney bona fides by selling off Kevin Smith's Catholic satire, Dogma, in the face of protests.

Miramax's purchase by Disney, like most things in life, has had unintended consequences. As Dorothy Parker once observed, "The only ism Hollywood believes in is plagiarism." Thus, Disney's acquisition of the company turned out to be the first in a flurry of studios either buying or building indies: Universal scooped up October Films; Time Warner [parent of FORTUNE's publisher] acquired New Line and Fine Line as part of its purchase of Turner; Fox created its Fox Searchlight division; and so on. Suddenly, the money was everywhere, and prices for movies began to drift upward. Flush with cash, companies were staying in bidding wars past the point when they once would have bowed out. Whereas once the problem was that nobody had any money, now the problem was that everyone had too much. Miramax went on a several-year buying spree that it is still living down: At one point, in its haste to corner the market, it had 40 movies sitting on its shelf, unreleased. "Their acquisition strategy," says a former executive, "was to take everything that had a smidgen of a chance of doing business. They had Disney's money, and they took everything off the table for these other companies."

The more important impact of Disney's money, however, was that it allowed Miramax to produce its own pictures--and unlike in the early 1990s, the company now had the funds to spring for decent scripts and halfway-recognizable actors. Right after the Disney purchase, the brothers spent $8 million--a pittance by studio standards--to produce a movie that had been developed and rejected by TriStar Pictures: Quentin Tarantino's Pulp Fiction. The movie became a national phenomenon and grossed over $100 million in the U.S., the first indie film ever to do so. Along with The Crying Game, Pulp Fiction gave the Weinsteins credibility with a whole new level of the movie business: After seeing John Travolta reignite his career with Pulp, it became cool for A-list stars and name-brand directors to boost their credibility by appearing in independent films. Producers soon began bringing the Weinsteins projects that the studios had rejected: Fox had refused to make The English Patient without Demi Moore in it; Castle Rock had shelved Good Will Hunting; Universal had put Shakespeare in Love in turnaround. Miramax resuscitated all three with smaller budgets and lesser-known stars like Kristin Scott Thomas and Gwyneth Paltrow, and turned them into Oscar winners. The company also took on the studios by launching Dimension Films, a division devoted to Bob's beloved horror and sci-fi movies (known as "genre films"), which yielded hits with the first two Scream movies. Says Cary Granat, president of the Dimension division: "Dimension was started around the same time that a lot of the studios were doing startups to rival Miramax. And, conversely, we were starting Dimension to come up with a different formula to attack the studios' genre films."

Then, of course, the movie business being what it is, the studios flooded the market with teen-horror films. The latest iteration of the copycat game has been studios' attempts to replicate Miramax's upscale art-movie productions, at least in part by stealing Miramax favorites like Billy Bob Thornton and Matt Damon. And some of the most critically touted movies of last year, Three Kings, Go, Election, and The Sixth Sense, were made by filmmakers whose previous films were released by Miramax.

At the moment, then, Miramax is in a sort of in-between state, poised between the smaller distributors, which are picking up the tiny movies that used to be Miramax territory, and the larger studios, which would very much like Miramax to be a finishing school for actors and directors. All this makes it more difficult to acquire and retain talented people while keeping costs low. Says Meryl Poster, Miramax's co-president of production: "A lot of the time, people will come back to us. But the studios really pursue them, and after a certain point you feel, maybe we should just go launch the next person." There are, however, filmmakers the Weinsteins have worked hard to keep. Directors like Robert Rodriguez, Quentin Tarantino, Anthony Minghella, and Billy Bob Thornton are granted both artistic license and financial incentives to stay with the company, and in interviews they shower the Weinsteins with unnervingly similar-sounding praise. Says Rodriguez: "Filmmakers in general feel like traveling minstrels--here, I feel like we're making something together."

That family atmosphere, which was so key to building the company in the 1980s, endured throughout the 1990s. Indeed, to a remarkable degree, the company has preserved much of the flavor of its early years: Employees say that it still feels like a small firm, the kind of place where an assistant at the fax machine will be called into the Weinsteins' office to offer his opinion on a movie poster. Which is not to say that the assistant's word would be final; it is also still a company where all the big decisions are made by two individuals: the Weinsteins. Says Quentin Tarantino: "I have friends who ask me to get them a deal at Miramax, and I always tell them the same thing: If Harvey and Bob like your film, Miramax is the best place in the world to be. But if everybody in the company likes your film, but Bob and Harvey don't care for it, you'd be better off somewhere else."

The Weinsteins are also still keeping a close eye on the bottom line: Indeed, one of the reasons that their company can still make a substantial profit even in a weak year like 1999 is that they strenuously manage the costs of their business. How strenuously? Says Jack Lechner, who served as the company's head of production and development: "Let me put it this way: I'd be sitting at home on a Sunday afternoon, and I'd get a call from Harvey, who was going over travel authorizations for the following week." This cost cutting can, needless to say, be exasperating to some. For instance, even if a movie isn't working with test audiences, most studios will release it to theaters and hope for the best; Miramax, by contrast, is willing to cut its losses and move on. Saul Rubinek's dark comedy Jerry and Tom was bought by Miramax for $3 million at Sundance, and when the test scores came back mixed, the company sold it to Showtime. "They like to say that previews are for them to determine how to market a movie," Rubinek says. "It's more like whether to market a movie."

Of course, the brothers may not have much time to review travel expenditures in the near future, given that Miramax has launched two new divisions designed to extend the company's brand into other media. The first is Talk, a joint venture between Miramax and Hearst, in which the Weinsteins are involved largely in a supervisory capacity. (For more on Talk, see box.) The second is a TV division that will produce shows for the networks using Miramax's in-house talent. The division's first production, Wasteland, was created by Scream screenwriter Kevin Williamson for ABC, but don't look for it in your listings; loathed by critics and audiences alike, it was yanked from the air after three shows. The division is now developing a handful of other programs, including an updated What's My Line? and an animated show based on the Miramax movie Clerks. It is too soon to assess the division's prospects, but Bob Weinstein insists the company is being frugal in its approach: "We're starting this the same way we started Miramax," he says. "We're keeping overhead low, so that if something hits, great, but we don't need to have a hit."

Neither Talk nor the TV division has come up with a hit yet, but those familiar with the Weinsteins' modus operandi should probably not be surprised: It is the Miramax way to blunder into a new business, flounder for a while, and then work twice as hard in order to succeed. But in these latest ventures, there is a crucial difference. When they were building Miramax, the brothers were able to fully concentrate on whatever they were doing; now they're trying to build new ventures even as they continue their movie business.

This, then, prompts a question: How big can Miramax get and still be the Bob and Harvey show? The key to Miramax's growth so far has been the particular tastes and sensibilities of its leaders, and they can work only so many hours out of every day. Bob Weinstein says that the brothers plan to delegate many of their duties in their new ventures: "The divisions that Harvey and I will always run and be hands-on in are the software content, the film part," he says. "That's what we love most, and we're never going to give it up." As for the other divisions, "we'll have to choose qualified people to run those divisions and report to us." But already, as the company has grown, some of the strains of running a large multi- media enterprise are showing: Producer Richard Gladstein, who made The Cider House Rules for the company, commented in early December that "they used to be hands-on about everything.... [On Cider House,] I've been waiting for the hands-on part, and recently I wrote Harvey a letter and asked him to get his hands in the marketing." And Peter Abrams, whose Tapestry Films produced She's All That for Miramax, notes that "Harvey and Bob need to make most of the big decisions. And sometimes that can be frustrating when you're making a movie, because you need an answer on something and you can't get it because Harvey is off launching a magazine or something." Is it possible that the Weinsteins could gradually ease their hold on their business and become managers rather than moguls? Possible, but unlikely: Filmmakers expect personal attention from the Weinsteins, and besides, their temperament is better suited to being in the middle of things. Says Lechner: "They'd rather have a smaller company that they can control than a large one that they can't."

So the next phase of Miramax's expansion should be a fascinating one to watch; the brothers may finally have to choose between the two characteristics that have brought them this far: their passion for movies and their ambition for growth. In the end, perhaps the biggest challenge for the Weinsteins may be that their success will exceed their own capacity to manage it.

It is a problem that any number of imploding starlets would no doubt envy.