Studio exercises veto against all deals involving its films
BERLIN — A movie sales deal that might have saved German media group Kinowelt, already reeling from soaring losses and a rock-bottom share price, has been crushed by Warner Bros.
Warner’s actions stem from a sale it made to Kinowelt in 1999. The publicly listed film group outbid local TV giants Kirch and RTL for a $300 million bundle that included “The Matrix” and “You’ve Got Mail.” Unable to unload the pics on either the Kirch or RTL webs, Kinowelt was forced to sit on its pile of pics and watch its share price plunge and its debts skyrocket.
Earlier this year Kinowelt inked a $30 million deal with pubcaster ZDF for 40 pics. Since it still owes Warner half the cash for the package, which includes 245 pics plus TV series, the studio has exercised its veto against all deals involving its films. Move has derailed the ZDF sale and torpedoed another potential deal with pubcaster ARD.
Kinowelt failed to get a bank guarantee for Warner in June. Company still has to cough up around $235 million by year’s end for outstanding debt. Kinowelt officials have refused to comment on the report.
The film group has recently laid off top execs and the staff of its film production division and written off its sports merchandising biz in a desperate effort to stay afloat. Kinowelt is banking on the success of the much-anticipated “The Lord of the Rings: The Fellowship of the Ring,” which will be released in December.