At a time when some hedge funds are getting nervous about their film-slate financing investments, another major player is diving into the entertainment biz with plans to acquire pic production and distribution entities and their libraries.

Beacon Pictures chairman Armyan Bernstein has teamed with Chicago-based Citadel Investment Group to form Beacon Media Partners. Goal is to build a diversified media company financed by Citadel, one of the world’s largest asset-management firms.

Bernstein began introducing Citadel execs to Hollywood talent agencies this week to scout investment opportunities. He said his intention is to either start or acquire assets to build a company that will include production and distribution in film and television, as well as in new media.

Founded by Kenneth Griffin, Citadel Investment Group has $16 billion in hedge-fund assets. While Citadel holds stakes in such media companies as Google, its first major entertainment acquisition was a majority stake in Ion, the network and station group formerly known as Pax TV, from NBC Universal.

Partnership came about after Bernstein and Griffin were introduced by a mutual friend. Griffin, interested in the entertainment sector, preferred to create and accumulate assets rather than take advantage of the slate-financing opportunities that have enticed other investors. After six months of talking, they struck a deal to launch the venture.

Citadel Investment Group would not say what its investment will be, but both the company and Bernstein said they’re ready to commit the resources necessary to build a viable player in film, TV and new media businesses. Citadel’s deal to bring Bernstein in to help scout for entertainment properties comes soon after financier Ted Forstmann enlisted former HBO topper Chris Albrecht to help his Forstmann, Little & Co. banner raise $250 million for media-centric investments.

Citadel’s Griffin “feels that this ever-changing media sector is a great long-term opportunity,” Bernstein said. “Many of the funds that came to town without guidance have found steep learning curves. I’ll be Citadel’s tour guide into this business.”

Given all the upheaval in the traditional business models of film and TV production and distribution, the time is ripe for new entrants into the biz, Bernstein said.

“The next decade is going to be a time of great change throughout the media business,” he said. “There’s going to be opportunity to create new companies and buy existing companies and help them adapt and grow with these changing times. Although we are obviously keenly interested in the creation of films, television series and all forms of content, our initial effort will be to invest in companies and to buy existing assets.”

As a result of his venture with Citadel, Bernstein is restructuring his arrangement with longtime Beacon partner Charlie Lyons. Lyons will take the projects he was developing and shepherd them under his Holding Pictures banner, which has its own library. Bernstein will run his development through Beacon Pictures and Television, with the latter unit based at ABC Studios. Beacon’s first-look film deal with Disney ended in July.

Bernstein grew up in Chicago and began his career as a broadcaster. He penned the scripts for “Thank God, It’s Friday” and Francis Ford Coppola’s “One From the Heart” and directed several films before starting Beacon 18 years ago (he also co-wrote 1999’s “The Hurricane”).

In 1994, Lyons, chairman of Denver-based Ascent Entertainment, spearheaded the acquisition of Beacon. Ascent owned On Command, Spectravision and the Denver Nuggets and Colorado Avalanche teams. Lyons became Bernstein’s partner, and when Liberty Media acquired the pay-per-view assets and sports teams in 1999, Bernstein and Lyons bought back Beacon Pictures.

The duo remain partners in a Beacon Pictures library that contains more than 30 titles, including “The Hurricane,” “Air Force One,” “Family Man,” “Spy Game” and “Bring It On.”

Beacon’s next release will be Jay Russell-directed fantasy “The Water Horse,” which Beacon financed with Revolution and Walden Media. Sony opens that pic on Dec. 25.

Both Bernstein and Lyons will continue to operate from Beacon’s Santa Monica headquarters.

Griffin, who began trading stocks from his Harvard dorm room, formed Citadel in 1990 and grew it from $4.6 million to $16 billion in assets, with additional offices in Hong Kong, Tokyo, London, San Francisco and New York. Griffin will remain in Chicago. Joe Russell, the CIG senior managing director who’ll work directly with Bernstein, will stay in New York.