The Wall Street Journal reports this morning that Harvey and Bob Weinstein are discussing the possibility of acquiring Miramax Films from Disney. For those who do not know the history here, the Weinsteins sold the Miramax studio to Disney back in the early 1990s, and they continued leading the studio for many years thereafter. They earned a large number of honors and awards for films such as Pulp Fiction. Then, in 2005, Bob and Harvey Weinstein left Disney to launch a new studio. Disney continued to operate the Miramax studio.
Why would Disney choose to sell? The real question is: Why did Disney own Miramax in the first place? Yes, it was a hugely successful operation when the Weinsteins ran the studio. However, one has to wonder whether Miramax ever fit the Disney brand image. What precisely were the synergies between Miramax, and say... the theme parks? Miramax, after all, was known for making many R rated films with violence, sex, etc. I understand that Disney helped Miramax a great deal in 1993 by helping them secure much wider distribution for its films. However, other entertainment companies could have achieved this, without the image issues associated with Disney owning Miramax. Then, of course, the question comes up about how much value the Miramax studio had without the Weinsteins. Once they left, did Disney have the talent to run the studio as successfully as the two brothers had? After all, most Disney executives led businesses with a very different strategy and brand image.
The potential Miramax sale continues a refocusing that has taken place under CEO Bob Iger. He continues to go back to the earlier strategy of striving for synergies associated with character development. Thus, he has acquired firms such as Pixar and Marvel. He has not simply pursued a broader entertainment diversification strategy, as Eisner did in his later years at Disney. Disney's strategic reorientation provides more powerful linkages among its businesses and the potential for larger economies of scope. Moreover, the firm avoids many of the conflicts and risks associated with owning businesses that diverge significantly from the core animation business.