CANNES — Nobody should be happier about the boom in German distribution than U.S. sellers. But many of them are wondering when the bubble will burst.
Over the past year, a new generation of German buyers has emerged, flush with funds from the “new market,” the German equivalent of the Nasdaq, and they’ve developed a penchant for investing in media stock.
Distribs that have gone public include Kinowelt Medien, Intertainment and, this week, Highlight Communications. Another distrib, Advanced Communications, has a stock offering in the cards.
At Cannes, the first foreign distrib to buy a big studio pic was, predictably, German. Helkon Media completed its acquisition of Paramount Pictures’ “Rules of Engagement,” starring Tommy Lee Jones and Samuel L. Jackson. Seven Arts Intl. is handling foreign sales on the pic.
Sales agents’ attitudes vary between those who believe that good times lie ahead, indefinitely, and those who caution that German buyers could easily become over-extended.
Germany is already the most important foreign market for U.S. indie product. The advent of the new market has availed German distribs of even more cash. And their ambitions appear to be as big as their bank balances.
“These companies were always there,” Intertainment topper Barry Baeres said. “They just never had the high profile of players like Kirch, and now the stock market has put them into the spotlight.”
The indie distribs are becoming the focal point for U.S. sellers as other major territories — including the U.S., Japan, France and the U.K. — only get tougher.
Intertainment, which went public in February, has secured rights to 13 pics for Germany, France, the Benelux and Eastern Europe from Franchise Pictures, including “Battlefield Earth,” “The Whole Nine Yards” and “Hospitality Suite.”
On the back of its public offering in May 1998, Kinowelt Medien went on to become the leading German indie and favored partner of New Line and Miramax. Its biggest single deal last year was a $120 million output deal from New Line, securing the studio’s pics through 2001. Kinowelt plans to spend $92 million on licenses this year.
Advanced Medien Group is also expanding. It bought five pics from Overseas Film Group at last year’s London Screenings. Previously known as TSC Communications, the name of its parent company, Advanced is forging relationships with British production companies such as Natural Nylon.
Helkon Media, which has not gone public but is 51% owned by Holland’s Endemol Entertainment, is pursuing partnerships with U.S. companies, and said its interest is being reciprocated.
“At the AFM we were approached by top-name, studio-based producers,” Helkon topper Werner Koenig said. “For the first time you really have access to the big guys.”
Over the past year, Helkon has bought pics from Joel Silver and Robert Zemeckis’ Dark Castle Entertainment, Behaviour Worldwide, Seven Arts and Intermedia Films, among other companies.
While the new kids on the block are getting their act together, the grand daddy of German licensing, Kirch Group, is concentrating on being a larger partner for the studios. Kirch has pacted with Italy’s Mediaset to form Eureka, a European broadcasting, advertising and production alliance.
Following an output deal signed late last year with Spyglass Entertainment, Eureka has committed to three pics from Robert Redford’s Wildwood Enterprises, starting with “The Legend of Bagger Vance.” It is now looking to back other U.S. producers.