This article was corrected on March 13, 2002.
SYDNEY — Village Roadshow is pumping $50 million into its L.A.-based production arm Village Roadshow Pictures via an interest-bearing loan, indicating an increasing commitment to the unit that has co-produced such hits as “Ocean’s Eleven,” “Cats and Dogs,” “The Matrix” and “Miss Congeniality” with Warner Bros.
The film production division has the “highest tangible growth potential of all divisions,” the company said Tuesday. It also disclosed that a strong turnaround in exhibition helped boost net profits in the six months ending Dec. 31, 2001, to A$45.3 million ($23.5 million), a 100% jump from the same period in 2000.
Chairman John Kirby told Daily Variety that in light of the “nervous” banking environment in the U.S., it was prudent to advance a loan to the production unit, drawing on VRL’s cash reserves of $156 million. The loan is separate from Village Roadshow’s revolving facility with a syndicate of U.S. banks of $750 million, which was upped last year from the original $500 million when the co-venture with WB was launched.
The production division contributed $8.5 million in pre-tax profit in the six months to December from production fees, $10.6 million less than the same period in 2000, reflecting a slight drop in production.
The company has $41.6 million in unearned income on its books from the 23 films made by the co-venture. But because all films are cross-collateralized, it won’t book profits until at least 35 have been produced, Kirby said.
Of those 23, he noted the only serious loss-makers have been “Red Planet,” “Space Cowboys” (which did OK domestically but flopped overseas) and “The Majestic.”
The exhib division returned to profitability after dipping into the red, notching $4.4 million in pre-tax profit. Attendance across all 15 territories in which Village is active jumped by an average of 10%.
The company has shrunk its exhib empire from 20 territories a year ago and has written down the value of its cinemas in Malaysia and Austria, pending a selloff in both markets. The eventual aim, Kirby said, is to cut back to eight to 10 countries.