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August 31, 2004

I Can See Clearly Now...


If you've been among those lucky enough to witness the emergence of quality digital projection and HD filming, it should be clear that the future is digital. The benefits in production and editing alone (especially when the increased ease of CGI is factored in) convey a strong argument for the studios.

Of course, much like all interesting things digital like VOD, VOIP and Gibson's vision of cyberspace, imminent has become five years has become ten years. However, once the varied parties find an intersection of costs and benefits, taking into account the installation costs, cheaper distribution costs and increased annual maintenance costs, we should see a faster deployment of the technology than the stalled process of today.

My guess is that the studios are gonna have to kick in. The only technology widely embraced by the theaters has been the digital projection systems used for pre-show advertising (an increasing source of revenue for theaters).

The cost of the systems must be coming down these days as CNET moves to revisit the situation in a fairly complete account of present day circumstances (see article).


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August 27, 2004

3 Billion Dollars...


That's the estimate provided by Variety on the size of the straight-to-DVD market and the target for MGM's home entertainment group with their decision to begin producing sequels to library titles (See article).

Costing between $2 million and $8 million, by harvesting titles with existing brand equity MGM can hope to collect serious coin with less uncertainty about performance and less need for high advertising spend by piggybacking market awareness for the foundation title. Universal has employed this strategy with titles like "Bring It On Again" (2004), which seek to capitalize on the popularity of the first title ["Bring It On" (2000)] without the cost of a full-blown theatrical sequel release and marketing campaign -- especially when runaway box office (relative to budget) may not be in the cards again.


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Compression, Stat!


Proof that time can dimensionally shrink comes from the film industry. Variety today reports that Starz!, HBO and Cinemax are seeing films nine and ten months after initial theatrical release -- as opposed to the more recently traditional twelve (See article). While this is not due from any contractual wrangling, pay television generally receives releases a set time after home entertainment release, it can certainly help these networks rope in more viewers with material that feels more contemporary. And that could be a fiscal boon to Starz! which has been finding its studio contracts a little more expensive than it bargained for.

For the studios, this simply points out the trend of the shifting of the bulk of film revenue from theatrical to home entertainment: films slip out of theaters quickly and are slammed into the home entertainment chain to harvest those DVD dollars.


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August 24, 2004

Yay! It's Media Week in Germany


That's right kids, Filmboard Berlin-Brandenburg GmbH's annual German (and European) state of media extravaganza Medienwoche Berlin-Brandenberg 2004 kicks off tomorrow with sessions in Babelsberg. The more interesting financing sessions should be those taking place in Babelsberg on Wednesday, although the conference seems to be looking into alternative and future media platforms as well.

Why should this matter? Well, when the king of coproduction funding sits down to talk, people should listen...at least for a bit.


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Millions of reasons to ThinkFilm


Millions of more reasons today to believe that there is room in the distribution landscape for some more major minor players. ThinkFilm has received an eight-figure private placement investment from Canadian-based investment funds, Covington Capital Corp. and Dynamic Venture Opportunities Fund, through a deal brokered by John Grant of Royal Bank of Canada Capital Markets (see Variety article).

Launched at the 2001 Toronto Film Festival, ThinkFilm has scored some hits distributing such small fare as "The Dangerous Lives of Alter Boys" and last years docu breakout "Spellbound." It is currently distributing the well-received "Bright Young Things." The capital should aid ThinkFilm in acquiring more product and having deeper pockets for distribution efforts.

Covington Capital is a venture capital investment firm with combined assets of approximately $465 million under management, including a media and entertainment investment in Alliance Atlantis. Its other entertainment investments tend to be in more location-based entertainment companies.

Dynamic Venture is a "labour-sponsored venture capital corporation" -- a tax-advantaged investment vehicle for Canadian investors.


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August 16, 2004

Let the money flow...


As reported in Variety, Graham King's Initial Entertainment Group just pulled down a $210 million credit facility orchestrated by John Miller's JPMorgan entertainment banking group. A positive sign of the times, the facility was larger than what Intial set out to raise due to greater than expected demand. (See article)

For a more detailed history of the game King is pursing, peruse this December 03 Forbe's piece: The Player.


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Miram Axe


So the cuts were finally made at Miramax on Friday the 13th. According to Variety, "With most of the pinkslips flying in Gotham, 65 Miramax employees lost their jobs Friday; that's 13% of all employees. Company's headcount now stands at 420." (See article)

It appears to be the first step in the retooling of the company as most of the lost spots were reported to be in marketing, publicity and distribution.


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August 10, 2004

Miramax Minimized?


Seems like there's something up at Miramax. After months of speculation as to the future of the Walt Disney Co. subsidiary and the resolution of its brotherly cofounders' contract, Variety and The New York Times have speculated about what's in store. Layoffs and a thinner company to be headed by Bob, leaving Harvey with a distribution deal with the Mouse House.

Reinforced by a quick herald by Variety of impending downsizing at Miramax (see Article), the Times is convinced that Disney will look to amicably resolve its current contract renegotiation impasse with the Weinsteins (see Article). What does that future look like? According to "people involved with the talks," Disney would hold onto the content-rich Miramax library and name, Bob would be employed by Disney to continue running its box office-rich franchise machine, Dimension Films. That would leave Harvey free to obtain indpendent financing for whatever films and other ventures he desires. Disney still comes out ahead because Harvey-financed films will be off balance sheet product to fill its distribution pipeline.


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August 03, 2004

(re)Enter the banks


It would appear that the simple story of portfolio theory has been once again sold to Wall Street. According to Variety, Merrill Lynch is leading the charge into the fray with Paramount (see Article here):

"In a groundbreaking deal, Paramount Pictures will receive $200 million - $300 million in production funding through investment bank Merrill Lynch.

Deal is part of a trend in which banks are eyeing film slates as potential investment opportunities. Other studios have been trying to put together similar deals, but this is believed to be the first to come to fruition. Under the arrangement a group of investors will create a fund to back a slate of films."

Films can provide a reasonable (even attractive) return given two important considerations. The first is what the traditional Hollywood credit facility originators have always known: volume. Across a slate of enough quantity, films will perform. You should be able to get to the star that offset the dog(s).

The second is more difficult to obtain: good financing and distribution agreements. With the right terms and splits, more of the gross receipts will actually find their way into investors' pockets.


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