Euros can’t take stock

Film companies launch on exchange

MADRID — Content is king — unless you’re a continental European film company launching on the stock exchange.

Underscoring the point this Christmas were Spain’s Vertice 360, a film-TV holding, and Luc Besson’s EuropaCorp.

Vertice sought a stock-market listing Dec. 19. on Madrid’s bourse — the first Spanish film-TV house to do so. It encompasses Manga and Notro, two key Spanish indie distributors; pic producer Telespan 2000, maker of hits “The Other Side of the Bed” and “Football Days”; plus Telson, Spain’s largest post-production facility.

“Vertice management is very well regarded. There are synergies between production and post-production. There will be enormous demand for new TV content in the future,” says Glen Spencer Chapman, at Ibersecurities.

Analysts predicted an initial share range of $4.40-$5.10. After a first-day flutter, rising 28% to $3.90, Vertice’s shares slid to $3.20 Jan. 2.

EuropaCorp is one of France’s few movie companies that has made mainstream hits for France and, more modestly, the world. It produced Gaul’s biggest 2006 B.O. movie, “Arthur and the Invisibles,” which grossed $56 million on its home turf.

Launching a 21% free float last July, EuropaCorp’s shares fell 40% from an initial $22.80 to $13.65 by Jan. 2.

Several factors are at play. In Vertice’s case, parent Avanzit gave out Vertice shares as a dividend to all Avanzit shareholders.

“Some, having received the stock free, will have offloaded it at any price,” says Spencer Chapman.

Both companies are already trading at high multiples to profit. EuropaCorp’s initial stock price valued the company at $453.2 million. Six-month profits through Sept. 30 stood at $1.95 million. In a larger picture, the sub-prime credit squeeze also sapped investors’ confidence in uncertain values.

“Vertice’s not high-risk but it is unknown,” says Spencer Chapman.

One large question is whether the financial world will ever care to get to know film and TV content suppliers better.

Besson told French financial daily Les Echos last month that investors fail to comprehend the vagaries of distribution: how family film releases are heavy-loaded around Easter, for example.

“Vertice’s just too small to register on many investors’ radar,” says another analyst, who doesn’t cover it for investor clients.

But Vertice and EuropaCorp want to build muscle.

Besson says he’s in talks to purchase all or part of “three-to-four” Gallic indie production houses.

Over Christmas, Vertice integrated facilities house Apuntolapospo for $8.2 million, expanding Vertice’s post- production presence to Barcelona. It will launch film distribution operations in Mexico and Argentina.

Having found its TV production groove — Vertice produces reupped series “La familia Mata” (16.9%) and TV drama “Cuestion de sexo” (an above-channel average 10.3% on Cuatro) — it aims to double TV revs this year.

“In Spain, TV production’s a far less mature sector than film,” says Adolfo Blanco, Vertice head of film.

Vertice plans to integrate more companies, says exec prexy Jose Maria Irisarri.

“Our strategy is contents and size,” he says. Likewise, EuropaCorp aims to double revenues in the next three years.

For Europe’s few listed film-TV companies, content may not yet be king, but size matters.

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