Image locks ThinkFilm distribution deal
Also receives contested BTP merger termination fee
By Susanne Ault -- Video Business, 7/2/2008
JULY 2 | Struggling Image Entertainment secured its $2 million merger termination fee from BTP Acquisition Co. and at the same time cemented its ThinkFilm DVD distribution deal.
Image will rely on ThinkFilm product, among other feature acquisitions, to jump-start a new rental business, as it tries to reverse several straight quarters of falling earnings.
BTP owner David Bergstein initially refused to pay the termination fee following the collapse of the two companies’ merger earlier this year. Bergstein also tried to block Image from releasing DVDs from BTP affiliate CT1 Holdings and its subsidiary ThinkFilm, as outlined in an output agreement struck in December 2007.
Los Angeles Superior Court enforced an interim output agreement in February, but now, Image and ThinkFilm’s original terms have been reinstated, according to a June 30 filing with the Securities and Exchange Commission. The filing also explained that Bergstein dropped his grievance with the termination fee.
Image is especially eyeing ThinkFilm’s star-powered films, such as the Sept. 2 release of Helen Hunt’s Then She Found Me, to build its rental operations. The company projects it will haul in $16.5 million in new rental business for fiscal 2009, representing 12% to 13% of its overall anticipated $115 million to $125 million in revenue for the period. That compares to recording little rental revenue in fiscal 2008, ended March 31.
Other upcoming Image/ThinkFilm releases include The Last Word with Winona Ryder in first-quarter 2009.
As major studios are closing their independent theatrical divisions, Image believes it can serve as a new distributor of quality, direct-to-DVD features that are especially coveted by the rental channel. Consumers tend to buy the latest theatrical blockbuster but might look to rent or test star-driven, but unfamiliar movies.
“There are less studios supplying rental product, especially within the indie” category, said Bill Bromiley, Image chief acquisitions officer, of such shuttered Time Warner operations as Picturehouse and Warner Independent Pictures. “We are looking for product that producers thought would be a theatrical film when they made it and for whatever reason didn’t quite turn out. These are bigger budgeted, cast-driven films. … There needs to be a home for them.”
Image expects to generate over half of its feature film revenue, at 55%, from the rental channel in fiscal 2009. During that frame, Image plans to release 40 features, which might have some theatrical support but primarily will be direct-to-DVD titles.
To handle its rental surge, Image hired five new sales staffers from ThinkFilm late last year. David Rand, ThinkFilm’s top rental executive, is now in a similar position at Image as its senior VP of sales for rental.
Bromiley said he’s acquiring product with rental concerns in mind, where titles are broadly appealing and span subjects not already heavily exploited by other suppliers.
“We are avoiding the horror genre, because Lionsgate has done a good job at securing that marketplace,” said Bromiley. “We will look for critically acclaimed, … commercially viable films.”
Also to support its rental drive, Image plans to occasionally provide rental accounts with exclusive versions of titles. These may contain added bonus features that aren’t available at retailers elsewhere.
