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Jane Shepherdson Bites The Hand That...   Valentino Extravaganza
Jun 26 2007 6:17AM EDT

Harvey Weinstein Taken To Task Over Halston

Fortune is reporting that the board of directors at Weinstein & Co. is not at all happy with the company's recent performance. They are so unhappy that they are looking for a new C.E.O. For those with short attention spans, Nikki Finke sums it up nicely on Deadline Hollywood Daily. Part of the problem is that Harvey has made about $5 million in investments in things that are not related to film including aSmallWorld website and the fashion brand Halston. Fortune says Harvey and Weinstein & Co. put no money into the deal, but that the deal could be a good one.

Halston could have upside. The fashion house is a venerable -- although beaten down -- brand name, and the Weinstein Co. didn't put any money upfront, gaining equity from Neema Clothing, a New York apparel manufacturer, through a commitment to use the Halston name in Weinstein movies. The Weinsteins immediately brought onboard Jimmy Choo president Tamara Mellon to consult. The inspiration for the deal, per Harvey, was Israeli producer Arnon Milchan's investment in the sportswear company Puma. Milchan began buying Puma shares in 1996, and when he sold out in 2003, he made hundreds of millions of dollars.

I have been told by two sources -- one close to the former owner, Neema Clothing, and one at the private equity house Hilco that put up the bulk of the money -- that Harvey did put in money. Just not very much. The comparison with Puma is a bad one. Puma was a live brand when Aron Milchan invested in it. Halston is not. I have written before about my fears of the creeping invasion of Hollywood executives into fashion.

And how much money did Halston, a company with a big reputation but negligible sales, sell for anyway? More than $20 million. Apparently the former owner was initially looking for $20 million, but in the end he walked away with $20 million and an equity stake. Of course they're going to have to spend a lot more now to get it back on the fashion radar screen.

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