North London arson will disrupt distrib biz for weeks

With London bracing for a fourth night of riots after gangs wearing masks, scarfs and hoods embarked on a looting spree over the past three days, the city’s entertainment sector was caught up in the disruptions as an arson attack destroyed the Sony Digital Audio Disc Corp. building on Monday and various legit and movie theaters in the nearby suburbs shuttered on the advice of police.

Up to 30 million discs are believed to have been lost in the fire at Sony’s 215,000-square-foot warehouse in Enfield, North London. It was torched by arsonists who are said to have attacked the building thinking it contained PlayStations and TVs. The blaze was extinguished Tuesday at around 9 a.m. local time.

The Sony facility was used by PIAS Entertainment Group, the U.K.’s largest distributor of independent music, as the primary U.K. and Ireland distribution hub for more than 150 labels, including Beggars Group (which includes XL, 4AD, Matador and Rough Trade), Drag City, Jagjaguwar/Secretly Canadian, Domino, Warp and Sub Pop. The site also contains a replication plant and servers, which Sony uses to record retail transactions in the U.K. and Ireland so that distributors can be paid.

The riots also saw a handful of suburban venues close their doors temporarily.

The Theater Royal Stratford East canceled a comedy gig on Monday on police advice as a precautionary measure following rumors of riots spreading to the area. There are no further performances scheduled until September. Hackney Empire, a historic venue at the center of the Hackney riots, is also closed for the summer, with performances not resuming until September.

The Cineworld multiplex in Wood Green, North London, closed Monday as violence escalated in the area. Two multiplexes belonging to the chain in the south London neighborhoods of Wandsworth and Feltham closed Tuesday on the advice of the police.

The Picturehouse chain closed its theaters in London’s Brixton and Stratford districts on Monday and Tuesday, along with those in Clapham and Greenwich, all following police advice.

London’s West End, the city’s entertainment hub, is away from the areas hit by rioting and is not suffering any immediate effect. But if the rioting continues, it could impact tourism, which could seriously damage box office.

A spokesman for the Society of London Theaters told Daily Variety, “We are liaising with theater managers in case this situation changes.”

Rioting first erupted on Saturday in Tottenham, North London, after a peaceful protest against Thursday’s fatal shooting of a local man, Mark Duggan, by the police turned violent. It quickly morphed into an expression of wider discontent in a city where very poor neighborhoods rub shoulders with very rich areas, making it easy for mobs to go on looting sprees in London’s wealthier suburbs.

Reed Business Intl.’s 24-hour-a-day IT office in the town of Sutton, on London’s southern outskirts (servicing Daily Variety, among other titles), was on notice to close as gangs of youths gathered Tuesday evening.

But the loss of the Sony disc facility will likely have the most immediate impact on the local entertainment biz.

“Most of the people in the independent film world have been hit,” said David Wilkinson, CEO of distributor Guerilla Films, which lost 60,000 DVDs in the fire. “Companies larger than mine will have cash flow problems. I have spoken to friends who say they may have to lay off people because the DVDs keep the business going.”

Wilkinson predicted there could be months of disruption before the supply chain returns to normal.

In a statement Tuesday, Sony said no staffers were injured in the fire, adding that the building was still “smouldering, consequently no one can enter the facility. At this time we are unable to confirm the extent of the damage or the cause until a full investigation can be carried out by authorities.”

It is believed that Sony, which keeps the masters for discs at plants in Sussex, southern England, and Austria, has already identified another London warehouse that will start shipping out DVD and CD titles early next week.

On the music front, even if inventory losses are covered by insurance, the cash-flow disruption to indie labels — particularly the smaller or more U.K.-centric ones — could be significant.

Beggars Group chairman Martin Mills, whose labels are home to the Strokes, Vampire Weekend and Thom Yorke, told Daily Variety that the company had lost around 750,000 units in the blaze. Thanks to the size of the company and a multitude of other distribution centers, Mills is confident Beggars will recover quickly, but he said the effect on the smaller labels could be severe.

“For smaller labels reliant on a single (distribution) location, this could be extremely prejudicial,” Mills said from London. “This is one of those times when the music community needs to band together.”

Darius Van Arman, prexy of Indiana-based labels Jagjaguwar, Secretly Canadian and Dead Oceans, said, “We have other warehouses, so it doesn’t cripple us on the stock front” and noted that insurance should cover the labels’ losses, which he estimates are “in the five figures.”

However, he added: “Even in this economic climate, PIAS is one of the healthier distributors, and we don’t know what kind of disruption this will have on their bottom line. … We are certainly concerned.”

British Prime Minister David Cameron promised that an extra 16,000 police will be put on London’s streets to prevent additional rioting and to contain any disturbances that do emerge.

(Andrew Barker in Hollywood, and David Benedict and Leo Barraclough in London contributed to this report.)

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