Disney set to U-turn on Miramax

DISNEY boss Michael Eisner is believed to be negotiating to sell 'independent' film studio Miramax back to its founder, Harvey Weinstein, only months after he failed to renew Walt Disney's lucrative contract with another movie partner, Pixar.

The move to sell Miramax is understood to reflect the virtual breakdown of the relationship between the Disney chief executive and Weinstein, who have conducted an on-again-off-again feud for several years.

When Weinstein suggested buying back the company several months ago, Eisner refused without referring it to the Disney board. But as Disney's relationship with Miramax has worsened, he appears to have changed his mind.

Conflict has been exacerbated by Eisner's refusal to allow Miramax to release a controversial film by Michael Moore that is critical of George Bush and his administration.

Although Miramax says it hopes to resolve the dispute amicably, most Hollywood insiders expect the company to find an alternative distributor for the movie.

Eisner also infuriated Weinstein by preventing Miramax from producing the Lord of the Rings trilogy, to which Miramax had the rights.

That decision cost Miramax and Disney more that $1bn (£557m) in revenues when the films turned out to be worldwide blockbusters.

Raising further doubts about Eisner's judgement, news of the possible Miramax sale emerged as Pixar, the digital animation company owned by Steve Jobs, said its first-quarter net profits had trebled to $26.7m.

The company, which created hits such as Toy Story, enjoyed a windfall from the massive success of last year's success Finding Nemo, which earned more than $800m worldwide.

While Disney takes a slice of this revenue under the terms of its existing contract with Pixar, Eisner failed to renew the contract which will now expire after two more films.

Again, the breakdown of his personal relationship with Jobs was blamed for the loss. Pixar and Disney currently split all costs and revenues on Pixar's films after Disney has received a distribution fee. Jobs wanted to renegotiate a more favourable arrangement for his company, but Eisner refused.

Disney shareholders critical of Eisner pointed earlier this year to his failure to renew the Pixar deal as evidence of his shortcomings as chief executive.

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