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Conglom synergy works for produce

To make and sell int'l pics, Sogecine plays its corporate card

MADRID — For most Spanish producers, it’s a brutally basic question: Where on Earth will my film get distribution?

But it’s one which Sogecine execs don’t have to ask. Snug at Spanish mini-major Sogecable, Sogecine has got this pretty well figured out — for Spain at least.

Julio Medem’s just-out carnal puzzle “Sex and Lucia,” for example, was released by Warner Sogefilms, teaming Warner Bros. and Sogecable distrib Sogepaq, which is in charge of world sales. Some prints played multis owned by cinema loop Warner Lusomundo Sogecable. Next up in early 2002: pay-per-view on Sogecable satcaster CanalSatelite. Sogecable’s premium service Canal Plus Espana has first-run pay TV rights. Vivendi Universal, which has a 21% stake in Sogecable, will handle homevid via U.

Conglom ownership has large upsides.

“We can talk to Warner Sogefilms as partners and, if appropriate, launch with as much force as the majors,” says Sogecine general manager Fernando Bovaira, naming just one advantage.

But being part of the family means sharing responsibilities. Like the rest of Sogecable, Sogecine has undergone through cost-cutting measures, streamlining ops with Sogepaq.

More than anything else, with Canal Plus Espana — whose general manager, Jose Manuel Lorenzo, has a passion for production — Sogecine leads Sogecable’s international charge.

Led by Spanish media giant Prisa (21%) and France’s Canal Plus Group (21%), Sogecable is Spain’s dominant pay TV operator, with net profits of 7.5 million euros ($6.9 million) off $452.6 million in the first half of 2001.

Analysts are generally upbeat about Sogecable. Despite cut-price competition from two main pay TV platforms — Telefonica Media’s Via Digital and digital terrestrial TV startup Quiero — “the competitive landscape is favorable (to Sogecable) as rival pay TV operators face funding and operational concerns,” says Neil Blackley, European media analyst at Merrill Lynch.

But Sogecable’s core concern, pay TV, remains a local business. There is little room, nor appetite, for expansion into the tight Latin America market. News Corp. and Vivendi Universal have largely kept the up European feevee pie to themselves.

Film production is another matter. For any ambitious company such as Sogecine, filmmaking becomes an inevitably international undertaking.

Sogecable CEO Javier Diez de Polanco suggested in July that if “The Others” and “Lucia” delivered, there could be even more ambitious pics in the pipeline. With “The Others” past $70 million Stateside, and “Lucia” the second-fastest-grossing Spanish pic this year, that door is open.

To make or sell larger international pics, Sogecine could play its corporate card. Beyond financial benefit, StudioCanal’s $43.2 million purchase of a 45% stake in Sogepaq in July may allow Sogecine to channel far more Spanish films through StudioCanal’s pan-European distribution network.

But distribution or co-production with StudioCanal is just one option, says Fernando Bovaira, G.M. of Sogecable, adding, “We finance films through own resources, plus deals in Spain and sales abroad.”

Aided by U.S. rep Sunmin Park, those overseas deals have become frequent: with Cruise/Wagner (“Vanilla Sky,” remake of “Open Your Eyes”), Dimension/Miramax (“The Others”), Good Machine Intl. (“Butterfly”), and Artisan/Summit (“Open Your Eyes” for domestic and intrernational).

After “Others,” Sogecine has caught the wave. It’s got the turns. It now has to ride it out.

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