C/FP buy

Cinepix...

Cinepix

takes

over

Cinepix of Montreal has bought out Famous Players’ 49% stake in C/FP Distribution.

Last month, Cinepix president Andre Link quietly negotiated Famous out of the picture, renamed c/fp Cinepix Film Properties, and made it a 100% Canadian- and Cinepix-owned property (Cinepix formerly owned 51% of the company).

Under the new regime, management structure will remain unchanged, with offices operating in Montreal, Toronto and New York. Link continues as president and Christian Larouche and Jeff Sackman as senior vice-presidents. John Dunning is chairman.

Production

Link says the incentive to buy out Famous was spurred by a desire to get more involved in production. Link also mentions a differing of ‘spheres,’ referring to Famous’ primary focus on theatrical and c/fp’s interest in other markets (such as video).

When Cinepix and Famous formed c/fp in 1989, Famous was looking for a prime supplier of independent films in order to compete with Cineplex Odeon’s strategic relationship with Alliance Communications. Famous picked Cinepix, a 27-year-old distribution company known for successful commercial product (including direct-to-video action titles, Meatballs and two early Cronenberg films, Rabid and Shivers).

Formal relationship

Link says the new cfp will still have a formal relationship with Famous as a primary theatrical customer. ‘We have always been a main supplier to Famous and I don’t think that will change.’ He would not comment on any terms of the deal, except to say that it was ‘by mutual agreement.’

Although there is speculation the relationship between c/fp and Famous changed significantly with the departure of c/fp senior vice-president Andrew Emilio in 1992, and was thought to be over when c/fp moved out of the Famous Players building in Toronto last year, Sackman maintains the relationship did not change, either formally or routinely. The move, he says, was simply a need for more space.

Sackman says cfp plans to increase investment in production, which he sees as a way to increase cfp’s revenues ‘We think that we can generate more profit from controlling the product rather than from acquiring the product.’

As for Canadian productions, Sackman says he is interested in supporting the Canadian film community, but only if the profit component is there.

‘A lot of the films I would like to get involved with have primary video potential. A lot of the films that the agencies support, their mandate seems to be theatrical-oriented. The problem with that is that if it doesn’t work, which it so often doesn’t, you’re left with a film that has very little video value and very little foreign sales potential, with the occasional exception. So what you’re left with is Canadian television, and to me each film should be able to stand on its own.’

Sackman has plans of his own for Ontario producers, namely First Ontario Film Distributors, a company he started this summer and owns privately with some undisclosed investors.

The new distribution company is geared toward productions that qualify for the Ontario Film Investment Program (which cfp is not eligible to tap into) and highly commercial product, preferably with star names attached.

Sackman, who is still awaiting word from the Ontario Film Development Corporation on ofip approval, says: ‘I comply with ofip requirements in every respect, so Ontario producers who require ofip now have another alternative to Alliance, Cineplex and Norstar.’

First Ontario will be able to handle about six pictures in its first year, says Sackman. He already has three productions onside: The Donor (shot this summer), Law of the Jungle (slated to start production in September) and Stanley’s Boys (in development). All productions are in conjunction with Damian Lee of Rose and Ruby Productions.

Sackman says First Ontario is ‘a completely separate entity from cfp’ and he plans to sell to either Cineplex or Famous. The only connection, he says, is that cfp will sub-distribute First Ontario titles on video.

As for business at cfp, the recent buzz about the status of C/FP Distribution – largely focused on the Canadian distributor’s loss of an exclusive deal with New York-based Miramax Films to Alliance Releasing in March – is white noise, says Sackman.

There is no suggestion from within the company that any sort of ‘recovery’ from the loss is in order, although Miramax accounted for nearly half the product last fiscal year and helped to bolster c/fp’s $25 million-plus revenues with such titles as The Crying Game and The Piano.

Sackman says c/fp bid very aggressively to renew the Miramax deal, but ‘when it got totally outrageous we perceived it would be extremely difficult, if not mathematically impossible, to generate a profit.

‘It was and continues to be very prestigious product and there is a perceptual loss (for cfp). But we felt we were not willing to absorb the degree of financial loss we envisioned in order to maintain a positive perception from the industry and from the community. So we made what I consider to be a prudent business decision.’

As far as Sackman is concerned, there are ‘only a couple of hundred of independent films made every year and most of them seem to be tied up by the Miramaxs, the New Lines and the other American companies. So, as far as what is left, it’s very little. But you go to the markets and look for those needles in the haystack.’ says Sackman.

He says cfp is going directly to producers, ‘but it’s the same old problem: (they) are hesitant to sell Canada separately because they are afraid it will impinge on their ability to close a u.s. (distribution) deal.’

By jacking up prices, are the American distributors turning another screw into the coffin of the Canadian distribution industry? Yes, says Sackman, but it’s not only our southern neighbors that are to blame.

‘I think (Canadian distributors) have all been guilty of contributing to the abuse of the Canadian distributors by the Americans. The only way for that to stop is for people to say, `No more.’

‘In a sense, we took a stand and we said, `You know, Canada is only worth what it’s worth. It’s a marketplace of 25 million people. It’s not expanding, or if it is, it’s expanding at a very slow pace. Whether there are new tv channels or not, it’s only going to fragment the audience and thereby fragment the guarantees paid by the tv stations.’ ‘

Sackman argues that a stronger Canadian distribution industry will ultimately strengthen the Canadian film industry.

‘Even though the production industry as an economic contributor is quite strong now, it is primarily because of the dollar and other incentives, as opposed to being quite strong because we are making great films in Canada.

‘You need a strong distribution sector in order to promote and establish Canadian films, and we have never been able to because we are competing with one another. We are overpaying for rights to films, we are being manipulated by the Americans who are buying up North American rights and then selling them in excess of their fair market value, and market value is determined by the results. I’m talking about after the fact, what it has proven to be worth.’

So how is cfp going to stay afloat all alone in the big pond? ‘You try and be creative in the kinds of deals you structure,’ says Sackman.

cfp, he says, does not have any output deals. On its slate are two pictures acquired directly from the producers: Double Dragon and Yankee Zulu, and a seven-picture agreement with Sony Classics (which includes A Pure Formality, I Don’t Want to Talk About It, Call Me Victor and Mi Vida Loca). Sackman says the distributor is also in discussion with a couple of other American distributors who own rights to Canada. The French-language side of the distributor’s business, run by Larouche, is humming along beautifully, says Sackman.

For the year ending Jan. 1, 1994, c/fp’s box office receipts were $12 million. This year, Sackman says the distributor is looking at box office receipts in excess of $13 million ($10 million in English Canada and approximately $3 million in Quebec).