Behind the stabilizing of the video market, the flux in pay television, the changed definition of ‘independents,’ new studio affiliations and the limited amount of cash in the market, the distribution sector is in the process of what Jeff Sackman, president of the now Frank Guistra/Lions Gate-owned cfp, calls ‘a game of musical chairs.’

‘But the music has stopped, a few chairs are being pulled out and the music will start again with less chairs.’

The shakeup has seen a change of guard at Alliance Releasing, cfp and Malofilm, and a new distribution company called Red Sky emerge in Vancouver with Tony Cianciotta at the helm, while back in central Canada Norstar lies dormant, Everest Entertainment is free-falling and Cineplex Odeon Films is servicing cfp’s English product.

Who lives and dies at the end of the sea change in progress is to be determined. Larger firms with diversified interests, a large capital base and international marketplace, like Alliance, cfp, Motion International and cof, are well positioned to weather the storm, say execs across the board. Mid-sized players are in a more precarious position, with some, including Norstar, already struggling and others like Everest on deathwatch.

But evidently prepared to take the risk in an industry that has seen at least 10 distribution companies come and go over the last few years are former Alliance executives Cianciotta, Mary Pat Gleeson, Dave Forget and Anna Maria Muccilli with Red Sky, based in Vancouver.

With no word from Cianciotta yet as to product or a business plan, the competition is finding it difficult to gauge impact of the new West Coast initiative on the industry.

Early speculation, which had Cianciotta taking one of Alliance’s output deals with Miramax and New Line/Fine Line with him, has been quashed by Alliance, which claims secure contracts with both u.s. majors until the year 2000. However, industry insiders continue to suggest that Red Sky may have an output deal in the works with Fox Searchlight. Cianciotta did not return phone calls.

In the wider industry, also thought an asset in play is Everest’s output deal with Live Entertainment. Everest, long on the block via Greenlight Communications, remains in limbo.

Earlier this month, Everest exec Tim Bishop went to PolyGram Filmed Entertainment, following on the heels of gm Paul Gardner, who went to Live’s l.a. office. Adrian Herscovici is the only distribution employee remaining at Everest’s Toronto office. The company’s output deal with Orion has gone to MGM Canada.

In addition to Red Sky, cof and reportedly well-financed up-and-comer Equinox (Compagnie France Film) are thought to be looking for the Live coup.

Toronto’s Paragon Entertainment was perhaps the most seriously interested party in the Everest purchase, but president Jon Slan says Everest’s large debt was the major factor in not doing the deal.

‘Paragon is looking for some partner or acquisition in distribution,’ says Slan. ‘There was a lot of debt associated with the company [Everest]. It wouldn’t have been a simple sales transaction, there was a parent company and there were debts owed to Norstar and various other people.’

Adding to Everest’s low salability is the inability to develop a profit margin in the Canadian market alone. Andy Myers, senior vp and managing director of Malofilm, says Canadian theatrical distribution is more a necessary evil than a reliable, bankable revenue source.

‘Theatrical is rarely a revenue stream. It’s rarely a profit center, but it’s necessary to properly set up your ancillary revenues,’ says Myers, adding: ‘That’s true of every company in the business including the studios. Theatrical is routinely a cost, though from time to time pictures pop.’

As for Norstar, its absence of new releases until 1998 is causing some to question its long-term viability. Adding to the conversation was the fact that Norstar has yet to replace Myers who jumped ship to Malofilm, bringing over the Sony Pictures Classics deal, which Norstar president Peter Simpson contends had expired and was chosen not to renew.

‘We chose not to further our relationship because we lost money in the franchise for two years,’ says Simpson. ‘We didn’t try to save it.’

But although Simpson confirms they will not have a release in Canada until ‘at least late January,’ he says Norstar is not out of the distribution game yet and ‘has been in chats and negotiations with various companies about future things.’

‘Obviously the industry is in a state of flux, there are too many distributors chasing too few franchises. Can we stand alone without a franchise or another strategic merging partner? I don’t know.’

As to a plan for the company, Simpson says: ‘Have I got a five-year plan for Norstar Distribution? No, more like a five-month plan.’

Norstar is currently concentrating on production with four films planning to shoot although Simpson feels that screens are not currently available for their ‘kinds of films’ that include Regeneration, Kari Skogland’s Men With Guns, and Dinner At Fred’s.

CFP turns away from Cdn. distrib

At cfp, Sackman confirms that the company has entered into an agreement with Cineplex that will see cof providing the physical distribution services (booking, shipping, etc.), with cfp doing the marketing.

With the departure of senior vp of Canadian distribution Shane Kinnear, cfp is down to a bare-bones domestic distribution operation.

‘Our particular focus now is not in the theatrical distribution business for Canada,’ says Sackman.

At the other end of the spectrum are distribution entities with the infrastructure size of cof. The incoming merger of Sony and Cineplex leaves the future of cof’s licence to distribute in Canada somewhat unclear, but senior vp of cof Bryan Gliserman says, ‘It is our intention to have Cineplex Odeon Film remain a Canadian distribution company and not only Canadian but viable and vibrant.’

Responding to the idea that Red Sky’s West Coast location could leave them in good position to capitalize on Vancouver-based product, Gliserman says the location of a distributor has little to do with a good relationship with regional producers. He cites cof’s successful work with Halifax’s Thom Fitzgerald, Montreal’s Arnie Gelbart and Louise Garfield of Toronto’s Triptych Media on the Nova Scotia production of The Hanging Garden.

‘I’m a little tired of hearing people intimate that the job cannot be done long distance. The idea of being able to walk into your distributor’s office as opposed to doing it over the phone might be pleasurable though I don’t believe it’s necessary.’

A case in point is centrally located Motion International, which recently hired Jim Murphy as director of theatrical distribution, signed an output deal with Dreamworks skg for the Quebec market, and according to vp distribution Dan Lyon, has just solidified relationships with three major b.c. producers.

‘We’ve always known that distribution is a tough business,’ says Lyon, who adds to the Red Sky situation, ‘I’ve never felt that change is a bad thing, it presents new opportunities. When one company closes another one opens up.’

While wishing Cianciotta and Red Sky well, Myers notes, ‘The Canadian marketplace is not undergoing growth. In home video and television, if anything the Canadian marketplace has imploded, and that’s why I say it’s a daunting proposition for any upstart company that isn’t well capitalized. They’re [Cianciotta et al] seasoned enough to recognize that whatever they do, it ain’t gonna be easy.’