BERLIN — It’s all quiet on the European front. As little as a year ago, Euro players were racing to set up pan-European distribution networks and snapping up the rights to match. Now there’s hardly a whisper to be heard on the subject.
Think back two years to Vivendi division StudioCanal announcing grand plans to conquer the continent’s distribution biz. Company quickly set up a venture in Germany (Tobis), and established distribution pacts in France (Bac), the U.K. (Pathe), Italy (RAI) and Spain (Sogepaq). But since Vivendi’s merger with Universal, no one is quite sure where those plans are going.
“The European Commission made a huge mistake in leading Universal to close down Polygram, which is what happened when they gave the extension to UIP,” says one former Polygram exec. “With that, basically, they killed the only pan-European distribution operation. Now it’s a couple of years later and nobody has filled the gap.”
In addition, those German Neuer Markt players who were once raring to conquer the continent are now too busy tending to their balance sheets to take their pan-European distrib plans further.
One problem, as Artisan Entertainment CEO Amir Malin points out, is Europe can’t be seen as one cohesive territory. Artisan has three-year output deals with such foreign distribs as Spain’s Lauren Films, Germany’s Highlight Communications and Momentum Pictures in the U.K.
“Europe is unlike the U.S.; it is made up of disparate countries with different rules and regulations. There is not a countrywide sensibility that translates from Germany to the U.K. If you buy rights jointly for Europe you have to understand the idiosyncrasies of each territory,” he explains.
One player who believes that he understands those disparities and can make it work is Christian Halsey Solomon of Germany’s Helkon Media, which is pressing ahead with plans to go pan-European.
Helkon has just closed a deal to buy the majority 51% stake in the U.K.’s Redbus Film Distribution and the company is in talks with possible French partners. It is also exploring ways to expand its output deal partnerships with Italy’s Eagle Pictures and Spain’s TriPictures.
“There are savings in marketing and distribution costs and you have better leverage to acquire movies,” explains Solomon. “If we are essentially financing the movie it makes more sense for us to be the end user in as many territories as we can to maximize our revenues.”
While most Neuer Markt companies like Helkon, VCL and Kinowelt have, at best, been slow in expanding their pan-Euro empires, some companies’ plans have gone completely awry.
German licenser Intertainment, for instance, secured pan-Euro rights on 60 films from Franchise, and signed agreements with Fox and Warner Bros. to release pics Europewide. But on account of a legal spat with Franchise, the rights are in limbo, the films aren’t being released and several small indie distributors that bought the rights for their territories don’t know if they will ever see the product or get back their deposits.
Meanwhile, Kinowelt Medien, which once looked poised to cover the continent with distribution outlets, has instead focused its attention on Eastern Europe. Company has yet to complete its deal to take a 50% stake in the U.K. distrib Momentum Pictures, but has set up distribution ventures in Hungary, Poland, Russia and Bulgaria.
“It’s a fast-growing region and we will be making money in all of these regions by the end of the year,” says Kinowelt co-CEO Rainer Koelmel.
Like Helkon and Kinowelt, video/licensing player VCL started to fully finance films such as Woody Allen’s next three pics and 10 Francis Ford Coppola films for MGM, while concurrently moving into distribution across Europe. However, since its acquisition of distrib Scanbox last year, it hasn’t progressed further with its goal to become the leading European home entertainment company.
While more money has been funneled into Hollywood productions from these companies, the consensus is that it has ultimately changed very little.
“These companies did one thing (securing product) at excessive prices and they didn’t do the other,” says an insider. “Companies like Kinowelt didn’t act while they still had the money. In the film business, you make money in distribution and you can only survive if you are an integrated company.”
One pan-European alliance that seems to be working is the Kirch Group’s pact with Italy’s Mediaset to form the Epsilon venture — which has deals with Robert Redford’s Wildwood Enterprises, Spyglass Entertainment, Hyde Park and New Regency.
Kirch’s focus is to secure more European and international rights for its licensing sales division, while only theatrically distributing directly in German-speaking territories.
Meanwhile, Kirch rival Bertelsmann has become the latest to venture into the pan-Euro film biz. With a Europe-wide television and radio empire already in place, Bertelsmann is now planning to step into co-financing U.S. films, relying on its Europe-wide channels to pool financing in order to do so.
But the big question is will Bertelsmann be able to put these multiplatform Euro distribution synergies into action? (Cathy Dunkley in Hollywood contributed to this report.)