Free Rebels on the Backlot by Sharon Waxman Page B

distribute the movie,” she said. The film’s half dozen producers and Soderbergh were all there when the Weinstein brothers strode in along with Eve Chilton, Harvey’s personal assistant and future wife—introduced as the head of development—in tow.
    At the time Miramax’s reputation was less than stellar. The Weinsteins were showmen, great at making the sale, at closing the deal, but less than reliable when it came to their finances, which were considered shaky at best. Harvey Weinstein dazzled the young Soderbergh with his passion for the film, spinning him a vision for promoting it; he would introduce it to the marketplace gradually, he said, getting it in front of key journalists first.
    Columbia-TriStar executives, who had ensured the loan to make the film and wanted their money back, were not as dazzled and worried about doing business with the Weinsteins. “No one trusted them,” said Tenenbaum. “People would say ‘Harvey and Bob are great, but they need a new accountant.’” Despite the rich sum Miramax was offering for domestic distribution—without even home video rights—the Weinsteins had to agree to put their million dollars in an escrow account before the deal could be concluded.
    In the end, Miramax made a very good deal on sex,
lies, and videotape.
The movie not only won the Palme d’Or at the prestigious Cannes Film Festival in 1989, which made an overnight sensation of Steven Soderbergh, but it also took in $25 million at the U.S. box office.
    By 1992 that windfall was not enough to keep Miramax going. The independent studio had had numerous succès d’estimes, small movies loved by critics and discerning audiences, all of them acquired rather than financed by the studio. There was the charming Italian tale
Cinema Paradiso
and the powerful
My Left Foot
, starring Daniel Day-Lewis, who won Best Actor at the Oscars for playing palsied artist Christy Brown. The company’s biggest hit thus far had been
The Crying Game
, a British noir drama with an anatomical surprise at the end. Miramax paid $4 million for the film and, supported by the critics, successfully teased out $63 million at the box office.
    But even so the company had serious cash flow problems. Miramax had made $28 million by selling the video rights to a handful of its movies to Paramount, but the studio was slow to pay out, and Miramax did not have the cash reserves to wait. Weinstein claims that the studio was making $4 million a year in profit between 1989 and 1993 and that the only problem was a temporary one of liquidity. “The cash flow problem was irritating us, and the competition was spreading it around more,” Weinstein claimed in later years. The rumors about Miramax’s financial insolvency were intense indeed, and Weinstein—ever vigilant when it came to his public image—went so far as to show
Variety
editor in chief Peter Bart the company’s Ernst & Young accounting statements one year to keep
Variety
from publishing a story that said the company was in trouble. But according to former Miramax executives, the company was in fact on the verge of financial insolvency when
Reservoir Dogs
came along.
    Harvard Business School graduate John Schmidt was brought in in 1989 to make some sense of the financials. “Miramax was maybe three to six months away from chaos,” he said of the spring of 1989. Schmidt pushed the brothers to consider a public offering to bring in new capital, while Harvey and Bob began talking to studios about buying the company. Unfortunately, Miramax promptly went into a two-year slump in 1990 and 1991, where everything they touched seemed to fail
—The Tall Guy, American Dream
, and Hal Hartley’s
Unbelievable Truth
—three movies that together took in less than $1.5million. The lone exception was Madonna’s
Truth or Dare
, which took in $15 million. Said Schmidt, “We proceeded to try to continue to grow the company through 1990 and 1991, but it just got tougher and tougher, because the