Epsilon about gone

Mediaset/Kirch joint venture slows prod'n

This article was corrected on Sept. 17, 2000.

Epsilon — Mediaset and Kirch’s pan-European joint venture launched in early 1999 as the first European entity intended to rival the Hollywood majors — was virtually killed Monday, with the Italian media company announcing a drastic downsizing of the alliance.

Born under an agreement spanning production, broadcasting and advertising, the 50-50 co-venture never delivered any significant titles. Epsilon will no longer be involved in broadcasting or advertising, but will continue its activities in film production and financing.

“To launch joint activities in the advertising and broadcasting sectors is taking more time than we thought. We will still do it, but we decided that we don’t need a joint venture,” a Mediaset spokesman said. “After the SAT1-ProSieben merger in Germany, the Kirch Group has changed.”

It remains to be seen what this change of heart will mean for U.S. companies like Hyde Park Entertainment, New Regency, Spyglass Entertainment and Wildwood Entertainment, all of which look to the joint venture for co-financing and/or foreign distribution.

But Hyde Park co-chairman Ashok Amritraj said the co-venture’s virtual demise “makes no difference.”

‘An ongoing relationship’

Amritraj declared, “We look forward to an ongoing relationship with Kirch and expect to be more active than ever.”

Hyde Park is in post on “Anti-Trust,” starring Ryan Phillippe, and is producing “Bandits,” starring Bruce Willis and Billy Bob Thornton, both of which were co-produced with Epsilon funding.

Epsilon’s only remaining operating arms are Emotion and Evision, which will produce and co-produce film and television product as well as uphold the current production deals.

Kirch Group subsid KirchMedia will get back 100% of PKS, the major shareholder in Germany’s TV web SAT1 and the only asset of Epsilon’s broadcasting unit. According to the original plans, this unit should also have included Italy’s TV channel Rete4 and Spain’s Tele Cinco and would broadcast the same programs and ad spots simultaneously in several countries.

Kirch gets catalog back

The German group will also buy back from Mediaset its 50% stake in leading distributor Betafilm, which controls Kirch’s 15,000-hour catalog, while Mediaset will regain full control of pan-European advertising arm Publieuros.

As the value of Betafilm and PKS value is larger than that of Publieuros, Mediaset will receive 391.3 billion lire ($190 million). Silvio Berlusconi’s company will use this cash to acquire a 2.48% stake in Kirch Media, transforming the industrial alliance into what’s essentially a financial agreement.

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