Has Harvey Lost His Way?

By Jess Cagle with Jeffrey Ressner

The annual Miramax pre-oscar bash looked like a frothy success. Lots of celebs (Nicole Kidman! Salman Rushdie! Diane Sawyer!) and rivers of Piper-Heidsieck champagne. And there were skits as always--send-ups of the company's Oscar-nominated movies, including a spoof of In the Bedroom in which Dame Judi Dench dressed up like Sissy Spacek and chain-smoked.

But something was amiss. The party seemed more crowded than cool. Kidman walked the red carpet, lingered on the fringes, then told friends she just wanted to go home and take a bath. And there was the final sketch of the evening. Miramax co-chairman Harvey Weinstein and DreamWorks co-owner Jeffrey Katzenberg, both players in this year's especially combative Oscar race, took the stage in gladiator uniforms for a mock therapy session that hit a little too close to home. "You fat f___!" exclaimed Katzenberg at one point, echoing a sentiment not uncommon in Hollywood but usually muttered behind Weinstein's back. The most uncomfortable moment, however, came when it was time to hand out "Max" awards to the studio's Oscar nominees, including Marisa Tomei and Renee Zellweger. Weinstein was joined onstage by his young daughter; he joked that she had to pitch in because there weren't enough Miramax employees left. Earlier in the week the company had laid off some 75 people, or 15% of its work force.

Has Miramax lost its magic? That's the question Hollywood has been asking for months, and it was posed yet again after the awards ceremony on March 24. Out of 15 nominations, Miramax received just one Oscar--for Jim Broadbent's supporting performance in Iris. It's not as if Weinstein and his brother Bob, who co-founded the Manhattan-based company 22 years ago, are going hungry. Last year, say the brothers, Miramax pulled in nearly $1 billion, with $161 million in profit, at the global box office. But in an industry where you are what you drive, perception is important. The paucity of awards, the firings, the closing of glitzy Talk magazine (which Miramax co-funded), the bouncing release date and swollen budget of Martin Scorsese's $95 million Gangs of New York, as well as dismal showings by its TV division and two recent box-office duds, Kate & Leopold and The Shipping News, all indicate that Miramax may have finally come to the end of an unparalleled winning streak.

The studio first hit pay dirt in the '80s with the success of small, quirky films like sex, lies, and videotape, then exploded with big hits, including The Crying Game and Pulp Fiction. It reached critical mass with Best Picture winners The English Patient and Shakespeare in Love during the late '90s. The brothers--Harvey especially--seemed to have a knack for seeing around the zeitgeist and an unerring eye for talent. Gwyneth Paltrow, Matt Damon and Ben Affleck became part of the Miramax stable, the newest cool kids' table in Hollywood.

Along the way, the company was acquired by Disney for $60 million, which gave the Weinsteins the clout (and the wallet) to hustle, bully and outspend the competition. Hit Man Harvey and Backroom Bob became as notorious as any WWF tag-team champions. For Harvey, a fearsome tank of a man with the temper and competitive streak of Bobby Knight, screams, threats and smears were simply standard operating procedure. Miramax executives, says a producer, "are like victims of abuse." Harvey became famous for his office tantrums, along with his combative intrusiveness during contract negotiations and his micromanaging of production. Add to that the fact that the brothers "spent money like it was water," says a source. Notes friendly foe Katzenberg: "I really do appreciate his passion and love of movies, but Harvey's greatest flaw is his insatiable capacity for competitiveness."

While Bob has remained focused on the Dimension label, which releases the company's more commercial films, Harvey has gone astray. He admits to being distracted, starting in 1999, when he was sidelined with a serious bacterial infection. He became focused on politics, campaigning for Hillary Clinton and Al Gore. But it was Talk magazine that became his white whale. A joint venture between Miramax and Hearst, the talked-about but uncompelling monthly died after less than three years. One Miramax executive says the company lost $27 million. Another says, "Talk was a constant distraction. Harvey wanted it to succeed as a magazine and financially, and every day was another problem." For a while, he seemed to lose interest in film-festival acquisitions. Instead of doing what he does best--ferret out small, arty indie films and promote them to the moon--he produced a list of teen movies that were safe (She's All That grossed $63 million domestically) but to varying degrees dreadful (Get Over It made just $12 million).

"Miramax is like the overnight sensation that for a little while bought into their press and moved away from the things that helped define them," says Kevin Smith, whose career as a cult filmmaker began after Miramax released his $27,000 indie Clerks in 1994. "They overextended and overreached, and now it seems like they're reining it all back in... This is the company that made Pulp Fiction, that put out The Piano and The Crying Game--why on earth would they make something like Kate & Leopold or She's All That?"

And yet Harvey--as you might imagine--will not admit defeat. Business, he notes, has been good in spite of all the colorful problems. Cost overruns on Gangs of New York have been softened by sales to foreign distributors, which, according to Harvey, should limit his company's investment to less than $30 million. The job cutbacks, he points out, have simply brought Miramax back to October 2001 levels. "We just didn't need to have all that staff around," he says. According to Disney CEO Michael Eisner, the Weinsteins still enjoy strong support from their parent company. "They may get under people's skin, including ours sometimes," says Eisner, "but the pain is worth it." Moreover, Talk Miramax Books, which is still run by former Talk magazine editor Tina Brown, has been successful. In a long-shot scenario, the publishing division will eventually cover Harvey's magazine losses by providing material for movies.

Harvey insists that he isn't disappointed about the outcome of this year's Oscars. "Nominations are everything," he says, citing their value as a marketing tool. Still, he's a man who likes to win. Even within the walls of Miramax, a friendly but intense sibling rivalry has put pressure on Harvey to re-evaluate his business strategies and bolster his share of the profits. His little brother's Dimension label has a nearly perfect track record at the box office. Last year Bob had two enormous hits--Spy Kids, which made $113 million at the domestic box office (the sequel comes out in August), and The Others, which made nearly $100 million. Bob, for his part, is sick and tired of reading stories that describe Miramax as Harvey's company. Now he's getting the word out that while Harvey wins Oscars, publishes magazines, campaigns for Democrats and raises money for charity, Bob is the firm's main breadwinner. "Over the last six years," says Bob, "Dimension has accounted for 65% of the company's profitability." He adds, with pointed pride and unmistakable insinuation, "I'm very focused on the movie business."

Harvey's extracurricular activities haven't been all bad (he has had mostly good luck investing in theater), but he does seem to have learned a lesson. Last January, as Talk was subsiding into silence, Harvey vowed to take Miramax "back to its roots" of smaller (read: cheap), artsy (read: more respected) releases. Bob too wants to go back to basics. "When Harvey and I started Miramax," he says, "the one thing we didn't want to have was a company so big that we would have to say, 'We need a hit, we need a $150 million-grossing movie.' That's part and parcel of the layoffs. I think we'd grown into just such a company." Now the brothers are resizing themselves. Agnes Mentre, head of Miramax acquisitions, puts it this way: "Our mission now is to find movies we're passionate about, even if they're very small."

While Harvey's rivals have enjoyed the spectacle of his comeuppance, his allies believe that the wanderlust may have been good for him. "I don't think you can put a creative executive in a box and not allow experimentation," says Eisner. "If Harvey wanted to experiment with a magazine or book publishing or with whatever, I'm fine with that. That gives us a long-term, positive, healthy Harvey."

At this year's Sundance Film Festival, Weinstein was back in force, wheeling and dealing and outbidding the competition for two movies everybody wanted, the powerful student-teacher drama Blue Car and the sprightly New York comedy Tadpole, both of which will come out later this year. "That's how sex, lies and Reservoir Dogs came to us," he says. "There's got to be a new generation of that." And a new generation of Harvey as well. "I'm back to being me," he says. Heaven help us.