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APG, StudioCanal end joint venture

Duo call off prod'n deal

HOLLYWOOD — The joint venture between Artists Production Group and StudioCanal has been called off.

A settlement was announced Saturday, ending nearly 2-year-old joint venture between the French firm and the sister production company of Michael Ovitz’s Artist Management Group. Canal Plus is also ending its production deals with other U.S. partners to focus resources on Universal Pictures and USA Films.

The two companies said they had agreed “to modify the joint venture agreement signed in July 2000 to both parties’ mutual satisfaction” and noted that “there is no pending litigation.”

Under the terms of the breakup, StudioCanal will maintain a financial interest in all projects that were purchased for development by the venture, some 17 in all.

The settlement will pay out between $6 million and $9 million in development and overhead to APG — essentially, the bulk of what would have been supplied to the venture up to its expiration in 18 months. For now, APG is without production financing, but Jon Vein, chief operating officer for both AMG and APG, says there are advanced conversations with a potential domestic studio partner, and a deal could be announced “in a couple of weeks at the most.”

Insiders at both Universal and APG say that the operation will be dismantled, with topper Stephane Sperry likely returning to France, where he’ll supervise acquisitions for the label.

Things change

The two companies signed their agreement in summer 2000, when Hollywood’s landscape was decidedly different. U was still in the hands of Seagram and France’s Vivendi had not yet acquired Canal Plus and as such was busy with treatment of the French water supply, not reading treatments.

StudioCanal USA’s pact with APG called for the creation of a joint movie production subsidiary headed by Ovitz. The joint venture was to have produced around 15 feature films for the international market over three years.

Audit angst

Just as Vivendi Universal execs were wrestling at a corporate retreat outside Paris late last week over what do with StudioCanal and its clutch of distribution and production deals, news of a Universal audit of APG Universal surfaced in the New York Times.

The Times report on the U audit alleged that as much as $1.3 million in StudioCanal funds intended for APG/StudioCanal joint production ventures had been diverted to other APG projects, fueling questions that were already circulating about whether Vivendi U was looking for an early way out of its contract with APG.

Insiders at APG now say the U audit was never about money but about the use of staffers’ time on external projects.

A spokeswoman for StudioCanal parent Universal declined to discuss the communique, instead pointing to an awkwardly worded line in the APG/StudioCanal statement that reads, “Statements in the press regarding improprieties were uncorroborated.”

The Vivendi U audit was launched in late January as a routine affair but was subsequently expanded to examine how much time and effort the StudioCanal-funded APG execs were spending on other projects and to determine if costs associated with those projects should be charged back to APG.

Privately, APG insiders say the audit seemed like an attempt to induce a breach of contract that would permit Vivendi U to exit the pact early.

A Universal spokeswoman said, “Vivendi Universal conducted its audit as part of its standard business practice related to joint ventures” and called it “a standard business practice throughout the entire entertainment industry.”

Indeed, the APG pact was the highest profile — and the most prickly — among those made by StudioCanal, which also has a co-financing and distribution deal with Bel-Air Entertainment (with Warner Bros.) and an output deal with “Sixth Sense” financier Spyglass Entertainment.

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