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First Independent on Block

'Jane' brings co down, United News lets it go

LONDON — First Independent Films, the struggling U.K. theatrical and video distrib, has been officially put up for sale by its owner, United News & Media.

The move has been widely expected since United took over First Independent’s parent company HTV last summer.

United’s decision to sell reflects both the tough conditions generally for indie distribs in the U.K. theatrical market and the poor performance of First Independent in particular over the past couple of years. The flop of “G.I. Jane” last October was the final straw for United.

Dresdener Kleinwort Benson started circulating an offer document on behalf of United several weeks ago. The first deadline for bids was Feb. 23, and United is understood to have received around a dozen preliminary expressions of interest.

Pattern of retreat

United’s withdrawal from the theatrical distribution business after such a brief exposure follows the pattern set last year by rival British media group Carlton Communications. Carlton bought Rank Film Distributors for its library in April, and pulled out of active distribution after a matter of months.

Given this vote of no confidence in U.K. indie distribution by such deep-pocketed British TV groups as United and Carlton, the most likely candidates to bid for First Independent are likely to be North American or European film groups that want a foothold in the U.K. market. A management buyout cannot be ruled out, however.

According to a copy of the offer document obtained by Daily Variety, the company has a library of 450 films, with projected revenues of £7.8 million ($12.8 million) over the next three years. But a large number of the titles expire at the end of 1999.

“G.I. Jane” partly to blame

In 1997, First Independent reported an operating loss of $490,000 on sales of $15.7 million. But that doesn’t take into account an exceptional charge of $12.3 million, including a $3.3 million hit against “G.I. Jane,” which resulted from the switch to United’s more conservative amortization policy.

Under the old HTV accounting standards, First Independent made a profit of $1.3 million in 1996 on sales of $20.5 million. The company’s bumper year was 1995, when the success of “Dumb and Dumber” drove it to a profit of $2.1 million on sales of $19.5 million.

First Independent started life as the British arm of U.S. indie Vestron. It was bought by HTV in 1990 and renamed, continuing under the founding father-and-son management team of Michael and Martin Myers. Peter Naish took over as managing director in 1994, with Michael Myers taking a back seat as chairman and Martin Myers remaining as theatrical director. Michael Myers died Feb. 22 after an illness.

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