New Line bucks the trend

When it was sold last week to Ted Turner, New Line Cinema beat the odds against independent producer/distributors.

By relishing its role as a niche player and never trying to become the next Hollywood major, NL avoided the fate of so many other indies that went public in the 1980s and found themselves out of business in the ’90s — De Laurentiis, New World, Cannon, Weintraub, MCEG, Carolco and Imagine.

The TBS acquisition marks a new chapter in the evolution of New Line, whose long-standing motto has been “Solidly Independent.”

While the company is no longer truly independent, NL founder Robert Shaye and prexy Michael Lynne say they will continue to be involved in the company’s growth, pointing to five-year management contracts as evidence of that commitment.

The company will benefit from increased funding that will allow it to build its existing franchises while expanding beyond niche pictures.

Turner Broadcasting System bought the company Aug. 17 in a tax-free stock transaction valued at more than $ 500 million. TBS also bought Castle Rock Entertainment that day for $ 100 million.

For each share, New Line common stockholders will receive 0.96386 share of Turner’s Class B common stock, which was valued at $ 23.50 when the deal was announced. That represents a healthy premium: On Aug. 4, the day before Daily Variety reported that the companies were in talks, New Line had closed at $ 14. 625 a share.

New Line was founded in 1967 by Shaye and went public with a market capitalization of just $ 45 million in 1986.

NL significantly expanded its theatrical production and distribution operations only after the runaway success of its “Nightmare on Elm Street” series of slasher films.

Likewise, it set up a homevideo unit only after the tremendously popular “Teenage Mutant Ninja Turtles” and other films gave it a sure source of product to distribute in the homevid marketplace.

Even as it grew, New Line’s hallmark remained carefully structured deals that gave the company maximum upside potential but required minimal financial commitment and strictly limited risk.

In 1989, New Line paid only $ 2 million to distribute “Turtles,” which grossed more than $ 133 million domestically.

In 1990, Chemical Bank put up the bulk of the money and made possible New Line’s investment in RHI, which gave it access to RHI’s 1,000-title Qintex/Halmi/Hal Roach library.

In 1991, New Line locked up the North American homevideo and videodisc distribution rights to the 600-title Nelson Entertainment library, as well as domestic video and all foreign distribution rights to 13 big-budget Castle Rock Entertainment pix, for just $ 17 million in cash, stock and warrants.

And last year it walked away from Orion Pictures when it determined the terms of its prospective acquisition simply didn’t make economic sense.

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