Politics Makes for Bad Fiduciary Decisions
Those who laugh last laugh loudest and Harvey and Bob Weinstein are laughing all the way to the bank. After Michael Eisner of Disney got cold feet and backed away from Michael Moore's new documentary, Fahrenheit 9/11, the pair invested $6 million of their own money to purchase the famous flick; finance and control its distribution; and, market it through a new company, Fellowship Adventure Group. To facilitate this venture and maximize potential profits from Moore's award-winning documentary, the brothers put together a different kind of 'coalition' that counts Lion's Gate, Cablevision and Viacom as partners.
After an astonishing opening weekend that grossed $23.8 million showing on only 868 screens, the politically-explosive documentary looks to make upwards of $100 million for its domestic run and millions more in international sales, DVDs and pay-for views. Given that Fahrenheit 9/11 was a relatively inexpensive film to distribute, the Weinstein brothers will not only walk away with their pockets stuffed with cash, but they have also shown they know how to pick a winner -- a skill that could influence their ability to raise cash for future projects.
The good news also touched Lion's Gate Entertainment Corporation, whose shares reached a six year high of $10 yesterday before settling back to $9.21 at the end of the day. Although the details of the deal aren't yet public, the Toronto company stands to benefit from the publicity swirling around the movie regardless of it's financial take.
On the other hand, this is one more blow for Eisner who spent $91 million on 'The Alamo,' which after three months has grossed only $22.1 million. 'Around the World in 80 Days' is also being called a 'big budget flop.' Investors, regardless of political propensity, are concerned that Eisner passed on what's being called a 'Documentary Blockbuster.' Not only did Eisner's decision to pass on 'Fahrenheit 9/11' deprive Disney of potential profits, it also threw fire on the controversy that provided Moore with millions of dollars of free publicity. On top of that, it's possible that the Weinstein brothers will strike out on their own in 2005 when their contract is up, thus depleting Disney's creative brain trust.
As for Moore's movie, its fabulous first weekend insures that it will be shown in many more theaters in the coming weeks. In fact, the team has a strategy to keep it playing throughout the summer and fall.