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Reeling From Scandal, Weinstein Company Gets a Financial Lifeline

Thomas J. Barrack Jr. is the founder and chief executive of Colony Capital.Credit...Peter Foley/Bloomberg

LOS ANGELES — The embattled Weinstein Company on Monday secured a financial lifeline — and possible new owner — from an investor with experience in distressed Hollywood assets. But the fate of the studio, including whether its co-founder Bob Weinstein would stay involved, remained far from resolved.

Tarak Ben Ammar, one of three remaining Weinstein Company board members, said in a statement on Monday that the studio, reeling from sexual harassment allegations made against the company’s other co-founder, Harvey Weinstein, had reached a preliminary agreement with Colony Capital for an “immediate” cash infusion. The amount was undisclosed.

Mr. Ammar also said that Colony, which rescued Michael Jackson’s Neverland Ranch from foreclosure in 2008, had entered negotiations to buy all or most of the Weinstein Company’s movie and television holdings. Thomas J. Barrack Jr., founder of Colony Capital, said in a statement that he believed the sullied studio “has substantial value and growth potential.” A deal is expected to take three weeks or more to complete.

Not mentioned by the Weinstein Company on Monday: Bob Weinstein, who insisted on Friday that speculation about a sale was “untrue.” Harvey Weinstein was fired by the company last week.

Bob Weinstein is fighting to remain at the studio, but some stakeholders believe he must leave, according to two people with knowledge of the matter, who spoke on the condition of anonymity to discuss private conversations. Bob Weinstein, who told The Hollywood Reporter on Saturday that he did not know “the extent” of his brother’s actions, did not respond to a request for comment.

In turning to Colony, the Weinstein Company and its advisers at the investment bank Moelis & Company are reaching out to a firm with experience in Hollywood. But some longtime media investors, noting the seriousness of the allegations against Harvey Weinstein, questioned what could be done with such a toxic asset.

“I don’t think you can sell this company with all the litigation you’re looking at,” said Amir Malin, the founder of Qualia Capital, a media investment firm. Mr. Malin was referring to both pre-existing commercial lawsuits and the vast number of potential lawsuits related to Harvey Weinstein’s sexual behavior.

Work has been underway in Hollywood to end partnerships with the studio. Amazon pulled the plug late Friday on a major television deal. At the same time, agents say they have been pressing the Weinstein Company to sell finished or near finished films like “The Upside,” a comedy starring Kevin Hart and Nicole Kidman, and “Mary Magdalene” starring Rooney Mara; many of the stars involved with those projects want nothing to do with the Weinsteins.

The Weinstein Company, already struggling in recent years because of box office misfires, has been imploding since investigations by The New York Times and The New Yorker revealed sexual harassment and rape allegations against Harvey Weinstein going back decades. Over the last week and a half, more than 30 women have come forward publicly with harrowing stories of encounters with him. Police in New York and London have started looking into some claims against Mr. Weinstein, who has denied “any allegations of nonconsensual sex.”

Four board members have resigned in recent days, leaving only Mr. Ammar, Bob Weinstein and Lance Maerov.

As a private company — the brothers each own about 23 percent — the Weinstein Company has never been particularly forthcoming about its revenue or debt load. In recent years, as talk of unpaid bills and an inability to finance marketing campaigns has occasionally surfaced, the Weinsteins insisted their company was, in fact, rolling in money.

But certain financial problems surfaced that Harvey Weinstein was unable to refute. Facing bankruptcy in 2010, for instance, the Weinstein Company sold rights to 200 older films to Goldman Sachs and an insurance company, Assured Guaranty. The exact titles that were sold are not publicly known. Goldman, in turn, sold its portion to AMC Networks in 2015.

The Weinstein Company now has assets that fall into three groups: the remaining library of old movies, upcoming films and television. All three are problematic.

Given the 2010 sale, much of the value of the library has “already been extracted,” Mr. Malin said.

The Weinstein Company has seven completed movies, but some of those are art films with limited box office potential, especially without Harvey Weinstein’s hard-knuckled efforts to strengthen audience interest through awards campaigns. Others are potentially tainted by the scandal that has settled over the studio.

One movie on the Weinstein Company’s release schedule is “Paddington 2,” for instance. The first “Paddington” took in a solid $76.3 million in North America in 2015. But marketing a family movie is going to be hard for a company associated with harassment allegations.

Anchored by “Project Runway,” the Weinstein Company’s television unit has been a bright spot recently. Upcoming series include three projects for the Paramount Network, the Viacom-owned channel formerly known as Spike. (A Paramount spokesman confirmed on Monday that those were moving forward.) But other television projects have died over the last week as networks have scrambled to sever ties with the studio.

“The question is whether the television division is a going concern or a liquidation,” Mr. Malin said. “Some will argue that the major asset of the television division was Harvey Weinstein’s ability to be a rainmaker — to line up deals.”

Colony Capital is the private equity arm of Colony NorthStar, an investment firm that controls $56 billion in assets. Mr. Barrack, its chairman, has gained attention recently for his longtime friendship with President Trump. Mr. Barrack was a fund-raiser for Mr. Trump’s presidential campaign and served as chairman of his inaugural committee.

Mr. Barrack, the grandson of Lebanese immigrants who owned a grocery store in the suburbs of Los Angeles, made his money by betting on out-of-favor assets. In the 1990s, Colony Capital bought bad loans during the savings-and-loan crisis and bet on Asian assets after the Asian currency crisis. The same strategy was used following the 2008 financial crisis. Colony Capital acquired billions of dollars of distressed commercial and residential property mortgages and loans that had been seized from failed banks by the Federal Deposit Insurance Corporation.

But Colony has also made a number of investments in distressed entertainment assets.

In the spring of 2008, Colony bailed out Michael Jackson, who was on the verge of default over a $24.5 million mortgage for Neverland Ranch, his 2,500-acre playground in Santa Ynez, Calif. When Jackson died in 2009, the ranch wound up in Colony’s hands. Renamed Sycamore Valley Ranch, the property was relisted this year for $67 million. That’s down from the $100 million original listing price two years ago.

In 2010, Colony acquired the debt of the celebrity photographer Annie Leibovitz after she was unable to make payments on a $24 million loan.

Colony’s biggest play in the entertainment industry also came in 2010, when it was part of a consortium that acquired Miramax Films and its 700-film library for $660 million. The Weinstein brothers founded Miramax in 1979 and sold it to Disney in 1993. Ironically, Colony was then a Weinstein foe: Harvey Weinstein desperately wanted Miramax back, and Mr. Barrack’s group outbid him.

The Miramax deal was criticized as exorbitant, but Mr. Barrack benefited from the unexpectedly fast rise of streaming services like Netflix, which licensed old Miramax films like “Pulp Fiction” and “Chicago.” “We have made more money than we ever imagined,” Mr. Barrack told The New York Times in 2013 about the deal.

Brooks Barnes reported from Los Angeles and Julie Creswell from New York. Michael J. de la Merced contributed reporting from London and Rachel Abrams contributed from New York.

A version of this article appears in print on  , Section A, Page 11 of the New York edition with the headline: Reeling From Scandal, Weinstein’s Studio Gets Financial Lifeline From Equity Firm. Order Reprints | Today’s Paper | Subscribe

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