Ted Turner, who has long itched for a feature production outlet, is emerging as the frontrunner in the race to acquire Castle Rock Entertainment, sources close to the negotiations said Monday. The cable baron is reportedly offering as much as $ 200 million for the indie powerhouse.
Turner exex were unavailable for comment.
The suitors, which reportedly include Turner Entertainment Group, Bertelsmann Music Group and other companies, started wooing even before this year’s Cannes Film Festival, where Castle Rock exex stated their intent to autonomously produce bigger-budgeted films and get away from reliance on international and homevid presales.
Some even speculate that if the initial cash infusion created a winning streak, the venture could eventually grow, creating another TriStar-sized entity on the production scene with its own distrib wing.
“We would like to explore our upside on a global basis and get away from the production downside we were essentially forced into,” said Castle Rock founding partner Alan Horn, who insisted there are still several companies in the running to acquire Castle Rock.
Sources close to the talks told Daily Variety that while Turner is hot to trot, it might still take several weeks to hammer out a deal. And before the maverick cabler could seize the reins, he might face a showdown with Turner Entertainment Group board member Time Warner Inc., whose Warner Bros. feature division would essentially be competing with itself.
TW’s board reportedly also shot down Turner a few months ago when he was making overtures to acquire MGM. Tele-Communications Inc., the other major owner of Turner’s empire, would have less to lose, since it could use Castle Rock as a vehicle for the pay-per-view preems it hopes to do with Carolco — an idea so far shunned by MGM co-chairman Alan Ladd Jr.
Castle Rock, a partnership among director Rob Reiner, former studio exec Horn , producer Andrew Scheinman, movie development kingpin Martin Shafer and TV veteran Glenn Padnick, has explored at least three fundraising options, sources said: The public sale of stock, a buyout of minority owners Sony Pictures and Westinghouse, or a capital infusion that includes both owners in some form.
Horn added that whoever becomes the indie’s new owner, “nothing happens unless Sony is satisfied with it … Most likely, we will still use Sony for our domestic distribution.” In fact, Sony owns 44.5% of the company and has just signed a new five-year agreement to distribute Castle Rock features through Colpix and inked equally long exec contracts with the key Castle Rockers.
Some insiders thought the $ 200 million pricetag was too high, considering that Colpix owns the rights to Castle Rock’s most successful features in its six-year history, including “A Few Good Men,””City Slickers” and “Misery.”
Castle Rock only holds free-TV rights to its pictures. Showtime owns pay TV, New Line has homevid and foreign distrib rights, while Sony retains domestic theatrical.
A buyer would get free TV rights, and a library of fully exploited negatives, as well as talent and development.
A likely scenario for a prospective buyer would be gradually to funnel green into the eight-12 future productions Castle Rock has said it wanted to create for itself.
According to insiders, Castle Rock has been asking for $ 200 million cash, in return for which the investor would receive a 50% equity stake in the company. But Turner reportedly wants to acquire the company wholesale, which sources said could create a big battle with Sony.
Outside financing would allow Castle Rock to avoid the limited financial structure behind previous releases, where the company had to sell all worldwide rights to Columbia Pictures because the production budgets were too huge for the indie to take on by itself.
At the middle of the negotiations is fast-rising Turner Entertainment Group prexy Scott Sassa, who is attempting to secure Castle Rock for the cabler. Sassa was on vacation andcould not be reached for comment.
In New York, BMG brass remained elusive about the German music giant’s involvement.
“It’s no secret that we have been talking to several (Hollywood) people for a long time,” said BMG’s Gotham-based chief financial officer Tom McIntyre, “but we haven’t closed a deal.”
Describing current talks with Castle Rock as “more or less at a standstill,” he nevertheless added that they have had several discussions in the recent past.
Sources close to the talks say Turner has been cozying up to Castle Rock for about 3 months and has been performing its due diligence on the indie’s assets and books for the past few weeks.
When Castle Rock was founded in 1987, it was essentially structured as a TV production company. But its features have taken off since the smash hit “When Harry Met Sally …” in 1989, leaving “Seinfeld” the only profitable tube property.
Financial sources suggest that the pairing of Turner and Castle Rock would create good buzz on Wall Street. They say the TV savvy of Turner would be a good match for the indie’s feature know-how, with Turner taking his cue from the Castle Rock partners.