Distrib unit may be put on block in fall
Senior Alliance Atlantis execs said Wednesday that its film distrib, Motion Picture Distribution, won’t be on the block until fall at the earliest.
And they refused to confirm if they had received a bid from London-based Marwyn Investment Management (Daily Variety, Aug. 8).
During a conference call with financial analysts after unveiling poor second-quarter numbers for MPD, chairman of the board and Alliance Atlantis chief financial officer David Lazzarato said Alliance was conducting a review that it hoped to finish by the fall and would not consider offers until then.
“Expressions of interest or formal firm bids from outsiders are significantly different things,” he added, in what is taken to be the first public acknowledgement that there had been interest from buyers. “Further speculation on this subject is premature.”
Marwyn is said to have submitted a formal bid — in the C$10 to C$11 ($8.92 to $9.82) range — following the ouster of MDP management last month. The bid, supported by Citigroup and in writing, was rejected outright.
Contrary to previous reports, Goldman Sachs did not submit a bid because Alliance told it not to bother, sources report.
Both Goldman Sachs and Marwyn had been working with the previous MPD management on bids — chairman Victor Loewy and CEO Patrice Theroux were ousted July 20.
Alliance Atlantis owns 51% of MPD, with the remaining 49% held by Movie Distribution Income Fund, an income trust that Alliance spun off three years ago and trades on the Toronto Stock Exchange.
In 2004, the Toronto-based film and TV company wanted to sell MPD because it doesn’t fit its core business of owning and operating specialty channels in Canada.
But execs now feel that film distribution rights may provide important revenue thanks to new-media applications on, say, cell-phones or the Internet.
Execs were less-than-forthcoming on the status of output agreements for Canada with U.S. mini-majors, including New Line, Miramax and the Weinstein Co.
Analyst Adam Shine, from National Bank Financial, has already written that the “New Line loss is a matter of when and not if.”
New Line could exercise its 30-day option to quit by Aug. 18 — and therein lies the gamble for Alliance. An MPD without New Line will be worth significantly less than the offer from Marwyn.
Shine says Alliance “is likely to divest its European assets” — Momentum Pictures in the U.K. and Aurum in Spain — shutter the income trust and keep the Canadian distribution operations.
Revenue for MPD in the second quarter was down $3.4 million to $76 million. Net earnings for the quarter were $2.8 million, down from $4.1 million a year earlier.
Poor results were blamed on “a quiet slate in Canada and less than expected results from Europe.”