McGurk, Rosett explore management buyout of Liberty Media unit
As John Malone’s Liberty Media looks to refinance or sell Starz Media, Overture Films toppers Chris McGurk and Danny Rosett are exploring a management buyout of the unit that houses Overture and other production entities, according to knowledgeable insiders.
Duo have begun talking with investors as part of Liberty’s effort.
Under the proposal, Overture would remain intact, including its 75 employees, library, lucrative pay TV deal with Starz channels and homevid pact with Anchor Bay. Liberty could retain an interest in the company.
Liberty began indicating six months ago that it wanted to lessen its financial obligations to Starz Media, the production and distribution entity within Starz LLC that includes Overture, homevid company Anchor Bay, toon house Film Roman and Starz Animation.
While a single partner is in theory a possibility, it’s more likely in this market that the funds would come from a combination of partners who would bring their own assets to the table, such as a foreign sales company, a foreign distributor or private equity investors.
A company spokesman said McGurk and Rosett declined comment on the proposed buyout but confirmed that the company’s release schedule is moving forward and that no changes in staff are planned.
If the buyout succeeds, it would be great news to those here for the Sundance Film Festival. Though showbiz always has a healthy dose of schadenfreude, indie filmmakers, agents and others do not want to see another unit disappear.
“We need them to stay in business. The fact that they are a fully integrated company with an infrastructure makes them a very attractive option,” said ICM head of international and indie film Hal Sadoff.
Rumors about the company’s fate reached a crescendo last week after Overture execs quietly told their filmmakers that they should put pre-production plans on hold for a few months, but they didn’t explain the big-picture financial talks they’ve been having.
Despite the global economic woes and the contraction of the capital markets, some in the film biz believe the company could be an attractive investment. Many feel there’s a need for American indie distributors that can handle specialty titles after the fadeout of such banners as Miramax, Paramount Vantage and Warner Independent.
The company would presumably continue to juggle its platform biz and its wider releases (such as the recent “Law Abiding Citizen”).
Overture was launched three years ago by the pair, who brought on a stable of veteran studio execs, including Peter Adee, Overture’s prexy of worldwide marketing and distribution.
With Chris Albrecht arriving as prexy-CEO of Starz LLC in December, it became apparent that priorities were shifting within Starz companies. Albrecht’s signing was a signal of changes for Starz Entertainment, in particular, which now wants to get into the production biz.
HBO originals flourished during Albrecht’s time at the cabler. Starz Entertainment has already made a hefty promo push for its “Spartacus: Blood and Sand,” and there seems to be an accelerated interest in original programming rather than continuing to rely mostly on airing theatrical films. While HBO and Showtime mix theatrical films and originals, their series have put the channels on the map.
Overture’s fate speaks to the volatility of being an independent film distribution and production company in today’s marketplace. Such companies require a substantial amount of overhead, a commitment that parent companies are nervous about making in tough economic times.
Anchor Bay is an important asset, since it ensures another distribution stream for Overture product. And even with the downturn in the homevid market, DVD sales still account for as much as 50% of a film’s income. Anchor Bay has a library of 3,500 titles.
Overture has deals with four production companies. Last week, McGurk and Rosett told its small stable of producers that it was putting a handful of projects on hold.
Since sources said Starz Media execs have signed nondisclosure agreements concerning those financial talks, the producers — including Don Cheadle, Michael Stipe, Philip Seymour Hoffman and George Tillman — received minimal explanations for the freeze, which sparked widespread industry rumors that Overture was in trouble.
Overture is sticking to its release schedule, including wide openers “The Crazies” on Feb. 26 and “Brooklyn’s Finest” on March 5.
Under the original business plan signed off on by Malone, Overture was never designed to make big marketing commitments, which hampered its ability to release bigger films.
Company has had success with specialty releases including “The Visitor.” Its biggest box office grosser was 2009’s “Law Abiding Citizen,” which earned $73 million domestically. It also has seen more modest grossers, but execs in the past have stressed that the “low” box office for “Sunshine Cleaning” and “The Men Who Stare at Goats,” for example, offered a healthy profit from their modest initial investments ($2 million and under-$5 million, respectively).
While Overture has primarily focused on distribution, it produced “Traitor” and “Crazies” inhouse. Company has “Let Me In” currently in production.Overture opened its doors for business at the same time that Summit Entertainment, formerly a foreign sales company, expanded into the domestic distribution game.
Summit has had blockbuster success with the “Twilight” franchise, creating something of a perception problem for Overture.