New Regency enters Fox den

Arnon Milchan’s New Regency Prods. has entered into exclusive negotiations with News Corp. for a deal that would move the production company from its Warner Bros. home of seven years to the 20th Century Fox lot.

Rupert Murdoch is once again using his massive involvement in the sports business to entice moviemakers and other entrepreneurs to his News Corp. universe.

The sports card is an important component of the negotiations. In November, Milchan purchased a $60 million-plus stake in Puma AG, the German athletic apparel and shoe producer, and has been exploring ways to expand the company.

One source with knowledge of the negotiations said Milchan and Murdoch have been talking about a possible News Corp. investment in Puma via New Regency.

The talks between New Regency, Murdoch, News Corp. prexy and COO Peter Chernin and Fox chairman Bill Mechanic come after Warner Bros. and Milchan were unable to come to terms on a new agreement. On July 15, WB issued a statement, acknowledging that it had allowed its exclusive negotiation period with New Regency to expire, after talks had been extended from the original July 7 deadline (Daily Variety, July 14).

Milchan reportedly had been seeking a $200 million equity investment from a studio partner. One knowledgeable source said Warner Bros.’ lid on its offer was $100 million. Another pegged it at $130 million. Additional money, which would have pushed the total up to $180 million, was expected from Australian media mogul Kerry Packer, one of New Regency’s investors — but only if the deal stayed at Warners. The $180 million would have resulted in an 18% stake in New Regency.

News Corp. and Fox, on the other hand, have offered Milchan the amount he is seeking, in addition to what some called Murdoch’s “ace in the hole”: News Corp.’s considerable links to sports programming, professional teams and a global satellite network.

If a deal can be sealed, it would not take effect until next summer, when New Regency’s production/distribution agreement with Warner Bros. expires.

For Fox, the addition of New Regency brings a producer with a proven track record. (The company has produced more than 50 pictures at WB, including “JFK,” “The Client,” “A Time to Kill” and “Tin Cup.”)

Fox, with its four film divisions and television network, gives New Regency a broad landscape in which to work. New Regency — through its Regency Vision — has also been working on lower-budgeted, arthouse fare that would fit nicely with Fox Searchlight, for example.

Limited risk

More importantly, New Regency comes fully funded and has the resources to offset risks incurred on its films.

By pacting with New Regency, Fox would give up only limited territories on New Regency-produced films — territories assigned to Milchan’s partners, Packer, Germany’s Kirch Group, and South Korea’s Samsung.

Packer has been a longtime rival of Murdoch. However, the Aussie natives recently entered into pay TV agreements in Oz and seem to be putting their differences behind them.

A source close to the deal says it “goes beyond a film and TV deal. With the potential (Los Angeles) Dodgers acquisition, and other sports-related deals, this means the possible merging of two different brands (Fox and Puma/New Regency).” On a larger scale, the deal could create a link between three of the biggest sports rights holders in the world, namely Murdoch, Packer and Kirch.

It was known that about two months earlier, Milchan had been in discussions with Fox, but no deal had ever jelled.

Milchan reportedly also was talking to Paramount Pictures and Universal Studios, both of which were informed last week that he had entered into exclusive negotiations with News Corp. and Fox.

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