PARIS — A red brick hulk, the Saint Denis Power Station, rises up in the rundown northern Paris district like a proud survivor from a bygone industrial age.
Starting in May 2012, it will get a second life as the centerpiece office complex in Luc Besson and Tarak Ben Ammar’s €30 million ($42.3 million) Paris Studios, a nine-soundstage combo at the heart of Cite de Cinema, a €130 ($189 million) campus that houses a studio, office and production facilities as well as a cinema and the Louis Lumiere Film School.
The power station is a symbol of regeneration for Luc Besson’s own EuropaCorp, one of Europe’s most powerful film companies — and one that has recently been beset by an exec shakeup and financial uncertainty.
Soon after it launched in 2000, EuropaCorp has been, along with StudioCanal, pretty well the nearest thing that Europe has to a Hollywood studio.
It has produced seven of France’s 15 highest-grossing movies internationally, led by “Taken” ($236.4 million), “Transporter 3” ($117.0 million) and “Transporter 2” ($90.4 million) — 86 films in all, 20 in English.
But on Jan. 27, EuropaCorp rocked the French film world when it announced that co-founder Pierre-Ange Le Pogam had resigned as a company board member.
Investors don’t like such change, particularly within a company that had turned a profit throughout the past decade. A short time later, EuropaCorp announced profit warnings, with more warnings coming on April 21.
The company knew it had to right the ship, and last week, Besson and new CEO Christophe Lambert gathered media analysts and journalists at the Royal Monceau Hotel in Paris to present a four-year strategic plan, aimed at taking the company into a new age.
Peppered with clips from 2012 releases “Lock Out,” “Colombiana” and the animated 3D “A Monster in Paris,” the 90-minute PowerPoint presentation was largely aimed at reassuring investors.
It also outlined recent production and distribution trends, especially at companies seeking to court high finance.
While restructuring, EuropaCorp hasn’t stopped dealmaking: 20th Century Fox has taken rights for North America and most of the world outside France and Germany on “Taken 2” with Liam Neeson back onboard. Olivier Megaton — who “did a good job on ‘Colombiana,’ said Besson at the confab — will helm. It’s also got some commercial Gallic fare in the wings: “Love Lasts Three Years,” from helmer Frederic Beigbeder and starring Louise Bourgoin; and Virginie Silla’s drama “A Butterfly Kiss,” toplining Elsa Zylberstein. .
The fledgling EuropaCorp TV has also pre-sold the “Transporter” TV series to HBO, helping to completely cover the costs of that project.
But Besson and Lambert’s growth gameplan focuses largely on targets and governance:
n EuropaCorp aims to move into profit over 2011-12, hitting 15% margins by 2014;
nIts animated franchise pics “Arthur and the Revenge of Maltazard” and “Arthur 3: The War of Two Worlds” went into production with only 48% and 29%, respectively, of their budgets covered, a huge risk on movies costing $65 million-plus. Going forward, EuropaCorp will try to ensure 80% of coverage before greenlighting films.
nHaving closed an output deal with Germany’s Universum, EuropaCorp aims for similar pacts in Japan, Scandinavia and the U.S., and hopes to launch distribution operations in Russia, Italy and the U.K.
“Our films are extremely popular in Russia,” Lambert says. “For profitability, it makes sense to control their distribution there.”
nLambert said EuropaCorp hopes to close a theatrical distribution deal for its films with a Chinese distributor at Cannes. Despite China’s quota system for importing films, EuropaCorp has already had 10 films distributed theatrically in China.
“Chinese people love EuropaCorp’s English-language films,” he says. “They look American, but to the Chinese authorities they remain European productions.”
n EuropaCorp also wants to consolidate English-language movie production, repping at least 30% of annual production, while significantly hiking TV production.
Profitability has become even more important to EuropaCorp ever since it listed 21% of the company on Paris’ Euronext stock exchange in July 2007. Since then, its stock has plunged from €15.8 to €4.25.
“French investors don’t think movie companies should go public,” says Thomas Jorion, of French bank Natixis. “The movie business, they think, is too volatile, there’s low visibility and movies are prototypes.”
Investors regard movies as very high-risk, so a risk-aversion plan — including checks on greenlighting and priming output deals that ensure stability — was naturally welcomed by analysts.
Two-thirds of EuropaCorp’s losses this year were attributed to “Arthur 3,” says Jean-Baptiste Sergeant, of stockbroker Gilbert Dupont.
Given that, a return to the 80% objective on all movies is very important” as it reduces EuropaCorp’s exposure to just 20% of a film’s budget.
Otherwise, EuropaCorp’s strategy reflects wider market trends, like containing budgets on most English-language pics.
In Europe, EuropaCorp plans one $100 million-plus movie production a year.
But Besson will continue overseeing the company’s forte: delivering U.S. theatrical action pics at moderate prices. That remains its cornerstone.
At Cannes, EuropaCorp will be selling the $40 million “Colombiana,” starring Zoe Saldana as an assassin and the high-octane actioner “Lock Out,” which rings in at about $30 million.
But EuropaCorp is rapidly building another cornerstone: television.
“We’re applying the same recipe to TV that EuropaCorp uses for films: Good stories, strong characters and contained production costs,” Lambert says. Currently, 9% of its 2010-11 revenues, TV should rep around 16% by 2011-12, he adds.
EuropaCorp Television co-topper Edouard de Vesinne says the fact that broadcasters first aim is to attract younger viewers is a benefit to the company, “thanks to Luc Besson’s profile and the company’s (film) franchises.”
A smallscreen adaptation of EuropaCorp hit “Taxi” is in development, he adds.
Other projects include “No Limit,” a six-seg action drama to be directed by Besson himself. EuropaCorp TV is also co-producing Gwyneth Paltrow starrer “Marlene,” a two-part Dietrich bio, with the BBC and HBO.
“TV looks more profitable and less risky than movie production,” says banker Jorion.
Another revenue stream with potential is the Paris Studios complex, owned by Europacorp (40%), with key partners Quinta Communications (25%) and pan-European facilities company Euro Media Group (25%).
La City du Cinema, where the studios are located, will help EuropaCorp, like other French companies, save on production costs, enabling it to shoot projects closer to the firm’s base.
But some doubts still swirl around EuropaCorp, which started out as a pure-play movie outfit and a talent hub for young filmmakers.
Some observers ask if, with Pierre-Ange Le Pogam gone, talent and studio relationships will have to be rebuilt. Besson and Lambert have already spent time in Los Angeles, taking meetings and shoring up alliances.
While EuropaCorp maintains it has 40 films in development and has “re-established contacts with many great producers,” according to Besson, last week’s event gave little guidance as to EuropaCorp’s theatrical productions beyond 2012.
Above all, says Gilbert Dupont’s Sergeant, “The merits of EuropaCorp’s 2011-14 strategic plan will really only be seen when it kicks in.”
Having talked the talk, a regenerating EuropaCorp still has to walk the walk.