Joint venture expected to cut overhead

Peace Arch and ContentFilm will merge their U.S. home entertainment units next month in a joint venture expected to cut combined overhead by 30%.

Merger comes four months after Toronto-based Peace Arch dropped its bid for U.K.-based ContentFilm. Both companies will retain ownership of their existing catalogs.

Deal puts Peace Arch topper Jeff Sagansky back in control of a homevid operation he previously shed. Sagansky acquired Allumination Filmworks, formerly known as Ardustry, with Kerry McCluggage in 2005 and sold it a year later to ContentFilm. He was named Peace Arch’s interim CEO in November and launched the failed bid for ContentFilm the following month.

The joint venture, to operate as Peach Arch Home Entertainment, will be managed by its prexy, Berry Meyerowitz. It will have international distribution rights on theatrical titles, while ContentFilm will have overseas distribution rights on TV fare, international library titles and direct-to-DVD.

Peace Arch has said it intends to quadruple annual DVD releases to about 50 through acquisitions, while cutting back its production of straight-to-DVD titles to between three and six a year from five to eight previously.

Meyerowitz estimated this month that U.S. sales would double in 2008, though he declined to give a revenue forecast for the company. The unit doubled sales to C$22.2 million (US$21.8 million) while almost quadrupling operating profit last year.

Sagansky, who has helped run companies such as CBS, Sony Entertainment and TriStar Pictures, became Peace Arch’s interim CEO after former chief exec Gary Howsam resigned because of a federal investigation into transactions involving Comerica Bank that took place before he joined Peace Arch.

Peace Arch said in December that it bid $35 million for U.K.-based ContentFilm but ended its exclusive period of negotiation three months later, with Sagansky citing “turmoil in the credit markets and market conditions in general.”

Allumination has distribution rights to almost 200 theatrical DVDs as well as more than 4,000 hours of TV content.

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