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GERMAN PIC DEAL: A BAER TRAP

A bizarre round of negotiations to acquire the German broadcast rights to some of last year’s hottest movies, including “Four Weddings and a Funeral,” “The Mask” and “Dumb and Dumber,” is all but over.

Result: The agent licensing the titles has forfeited them to a different seller. The interested buyer will instead settle for a package of B pics for $20 million and the entire inscrutable affair will be remembered like one of those obscure German arthouse films that few people saw and fewer understood.

But there is good reason to wade through the complex story, since it reveals some of the craftier practices of international film distribution, particularly those of the German variety.

Last year, Willi Baer concluded a series of agreements with Polygram and New Line that blessed his Hamburg-based sales and distribution company, Connexion, with the right to license “Four Weddings,” “The Mask” and “Dumb and Dumber” to the German TV market. The collective box office cume of those three movies is now north of $55 million in Germany.

Acquisition sources say Baer was eager to seek nearly that much when he began shopping the films to German networks late last year in a 100-film basket.

Instead, Baer has now relinquished the blockbusters – at the price he paid for them – to billionaire Swiss businessman Otto Beisheim. Minus those hot titles, Connexion is finalizing the sale of 40 other films to its interested buyer, Germany’s junior pubcaster ZDF, for around $20 million.

In February, Baer agreed to discuss the “Four Weddings” deal, but later refused and has dodged weekly phone calls. During the Cannes Film Festival, Baer again left unanswered a written request to explain his side of the story. Baer is hardly a novice dealmaker. In the late ’80s he sold an equity stake in trade magazine Cinema, remarried a fruit-juice heiress and went into show business with a major player, Rolf Deyhle and Deyhle’s ex-partner, Bodo Scriba. Since then, his commercial entertainment interests have marched forth into film production (with Marty Bregman at Paramount) as well as film rights sales and theatrical distribution.

Four years ago, the erstwhile partners Scriba, Deyhle and Baer grossed about $250 million by selling more than a thousand films to Beisheim.

Though Baer made the least of the three, that “thousand picture deal” left Beisheim with extraordinary privileges on future titles handled by any of them.

Beisheim is a wealthy man. Last year, Forbes estimated his retail goods empire and sundry fortunes at $2.8 billion. In the mid-’80s, he helped Leo Kirch out of a liquidity crisis by purchasing 2,500 films for a reported DM350 million ($249.9 million) – a deal which made him a de facto player in Germany’s tightly controlled film rights market.

Beisheim and Kirch have been partners ever since.

For Beisheim, buying a big library gave him weight as a player, but ultimately he needed staying power. So in addition to writing a big check, he laid down some intriguing terms for Baer and his partners.

Baer, Deyhle and Scriba have A-list contacts in Hollywood – Scriba, for example, exclusively represents the Arnon Milchan-produced New Regency titles in Germany. Beisheim knew that access to their future titles would be more important than buying up their catalog.

So Baer, Deyhle and Scriba each agreed not only to give Beisheim the right of first negotiation, they also promised him the right of last negotiation on future product. If Beisheim is interested in a film one of the three is selling, he can make an offer; should anyone else outbid him, he can ultimately top the better offer by a nominal margin and walk away with the goods.

It is that kind of uncommon leverage – the ability to cherry-pick films over the heads of other buyers – that keeps a big stakes market like Germany held in an unshifting orbit: It keeps Beisheim in the game with continued access to good films; it helps his partner, Leo Kirch, consolidate his position further; and it discourages small-timers and newcomers from upsetting an ordered universe.

But the German first-refusal/last-negotiation system is a double-edged sword. Used cleverly, it can help a seller inflate prices because bidders may be unaware that the seller has promised someone else last look and is merely using the intermediate bid to pump the price.

At the same time, the seller risks a lot in playing this game. When Baer offered to sell the big “Four Weddings” package to ZDF first, Beisheim found out and threatened to scuttle the deal. Beisheim now owns rights to the pics.

The Beisheim deal expires in 1997, but in many ways this latest episode seems to have been a costly one for Baer: He is now said to have made the transition to a figurehead role in his various partnerships, with operational and executive power transferred to his former number two at Connexion, Andreas Lindstroem.

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