More consolidation makes sense

Canada’s theatrical distribution companies are making moves in an effort to reinvent themselves as reasonably effective competitors. Last year, apart from Alliance Atlantis Releasing, which competes directly with the major studios for market share in Canada – aar recently announced renewed output agreements with both Miramax Films and New Line Cinema – no single Canadian distributor had more than a 1% share of the Canadian theatrical market.

As such, renewed efforts at growth by companies like Blackwatch Releasing, Remstar Distribution, Red Sky Entertainment and Film Tonic are a welcome development.

Behaviour Distribution senior vp Pierre Brousseau says he supports Remstar’s buyout of Behaviour’s distribution asset because it means more consolidation in the marketplace ‘where it is near to impossible to have a profitable operation unless you have real synergy with many satellites involved in television, North American rights, world rights and production.’

The point being, in distribution, players are as effective as the sum of their existing partnerships.

‘If you take a look at the competition issue at Cannes, for example, where we are bidding on product and a company like Lions Gate Films, which right away offers to take North American rights, you as a buyer of [only] Canadian rights are immediately out of the picture. They [the seller] won’t even talk to you,’ says Brousseau.

In the West, management at Red Sky Entertainment, seemingly pushed by investors, is actively looking to a more mainstream approach with the intention of building tv distribution and a better diversification of revenues and shareholder value.

Based on his observations of this year’s afm and Cannes International Film Festival, Blackwatch Releasing president Yves Dion says consolidation is happening in many markets. ‘There are fewer companies around and the wisest and most experienced people will remain and the other companies will just fly,’ says Dion. ‘In Canada, at one point we had something like 14 or 15 [distribution] companies, which didn’t make any sense. I think we’re going to end up with three to four serious companies by the end.’

‘You [the distributor] have to think bigger,’ adds Brousseau. ‘You have to be aggressive and you have to take into account risk management because it is at the core of this business. And if you want to operate as an insurance company then you should be doing something else. So what the Remstar people are doing is, in fact, good for the industry at large and we’ll probably see more of the same in the next year or so.’

Richard Paradis, president of the Canadian Association of Film Distributors and Exporters, also sees Remstar’s bid as positive.

‘We’re seeing consolidation between one company that was having difficulties and another that is coming up and will be stronger, that is Remstar,’ says Paradis. Both Remstar and Blackwatch have active Toronto operations.

‘There is a problem with one-stop shopping and Alliance Atlantis can’t be everything to everybody,’ says Paradis. ‘We need other companies, and we think with the companies there now there’s good potential for other competitive services.’