Studios hunting for October

As Oscar time approaches, at least two Hollywood studios and at least two foreign companies are taking a closer look at arthouse distrib October Films, with an eye toward acquiring some or all of the indie film company, whose current releases include critics’ favorites “Breaking the Waves” and “Secrets & Lies.”

Universal Studios, which sold off its 50% interest in specialized film company Gramercy Pictures more than a year ago, has talked with October about buying the niche player, sources said close to the studio said.

Paramount, which has openly expressed its desire to start a classics division, also is said to be kicking the tires at October, which is filling the niche once occupied by Miramax Films.

However, Paramount has also held talks with the Sony Pictures Classics team of Tom Bernard, Marcie Bloom and Michael Barker, about starting an arthouse division. Sources close to Sony Classics say the group has not closed any doors with Paramount. Its contract with Sony is up in February.

Neither October nor any of the studios would comment.

Seven-year-old October has strong ties to Wall Street. Its investors include such blue-chip firms as Allen & Co., Carl Marks & Co. and Siegler, Collery & Co.

Sources said October has grown to the point where a new infusion of equity capital could take it to the “next stage,” particularly if the money came from a strategic player. Sources insisted the current investor group does not want to sell control of October, however, and that any deal is far off.

Wall Street sources add that they are not convinced that now is the time to sell. Some investors believe the market valuation for the distributor of arthouse fare will be significantly higher in a year’s time, after the ancillary sales for its 1996 theatrical hits “Secrets & Lies” and “Breaking the Waves” are booked.

The company also is betting that its upcoming slate, which includes the new David Lynch pic “Lost Highway,” will continue the winning streak. The Lynch pic debuts at the Sundance film fest, which begins Thursday.

While October’s 1996 revenues of $30 million are a drop in the bucket for major studios, the Gotham-based indie could provide either Universal or Paramount with the arthouse cache that seems to be in favor this award season. Warner Bros. has been toying with the specialized film biz by releasing films such as “Surviving Picasso” on an exclusive basis. The Walt Disney Co. already has a strong niche presence in the form of Miramax Films, while 20th Century Fox has entered the biz by starting Fox Searchlight from scratch.

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