Image and Criterion

[Buttery Jeb]

Image says to distribute Relativity's films on home video, DVD

Aug 14 (Reuters) - Image Entertainment Inc. (DISK.O: Quote, Profile, Research) on Monday said it has agreed to distribute movies independently financed and produced by Relativity Media LLC on all home video and digital formats.

As partial consideration for the 10-year output deal, Image has granted Relativity 3.4 million common shares, making Relativity one of its largest shareholders, Image said in a statement. Image expects the deal to generate DVD and digital revenues in the hundreds of millions of dollars over the next few years, said the company which licenses, produces and distributes home entertainment programming in North America. (Reporting by Tuhin Kar in Bangalore)

Complete article from BusinessWire via Google news.

The agreement calls for Image to exclusively distribute all home video and digital video formats for motion pictures controlled by Relativity that are not part of a finance package provided to a major studio or their respective subsidiaries or affiliates, propelling Image beyond its existing position as a leading supplier of independent programming to become a significant provider of theatrical motion pictures to the home entertainment industry. Currently, Relativity intends to finance up to twenty wholly-controlled major motion pictures each year after 2007, to be granted to Image under the agreement. Each title distributed throughout the ten-year output term will carry a ten-year exclusive distribution term from the date of release.

Image will oversee post production matters relating to home video and digital video formats -- specifically authoring and compression and development of ancillary materials -- menu design, creative design, replication, marketing and advertising, sales, distribution and collections for each motion picture released. With respect to distribution, Image will be managing inventory levels and stock replenishment requirements at the retail store level for all participating key customers. These vendor managed inventory (VMI) services are a critical part of today's distribution landscape, maximizing the sales potential of each title, decreasing returns, and reducing inventory obsolescence.

"The Relativity deal may be the single most significant agreement we've signed in the history of Image Entertainment," said President and CEO Martin W. Greenwald. "For the past 25 years, Image has developed an internal distribution platform and forged direct retail relationships that have become the foundation for our success. As we now move into the exclusive distribution of major motion pictures, our distribution capabilities and retail network will continue to be a core asset of our Company and the basis for fully realizing the potential of this agreement."

Mr. Greenwald continued, "Image now has a significant new programming category for sale to the home entertainment universe. By releasing major motion pictures into traditional and non-traditional retail locations, Image will be the beneficiary of hundreds of millions of dollars in revenues. This will also dramatically enhance the value of our large and diverse library."

Mr. Greenwald continued, "What makes this even more exciting for Image and its shareholders is the grant of digital video distribution rights in the agreement. This will secure the long-term viability of our distribution model as digital distribution takes its place alongside the traditional sales of packaged media."

"The entire Image team looks forward to working with Relativity in the coming years and we will strive to exceed our mutual expectations," said Mr. Greenwald in closing.

From the Image Entertainment website:

Image Entertainment Signs Definitive Agreement to Sell Company for Approximately $132 Million

CHATSWORTH, Calif.--(BUSINESS WIRE)--March 29, 2007--Image Entertainment, Inc. (NASDAQ:DISK), a leading independent licensee, producer and distributor of home entertainment programming in North America, announced today that it has entered into a definitive agreement with BTP Acquisition Company, LLC, an investor group led by David Bergstein, to sell Image in a transaction valued at approximately $132 million, including the assumption of a replication advance in excess of $9 million and the repayment of approximately $24 million of debt.

Under the terms of the agreement, Image stockholders will receive $4.40 per share in cash. The agreed-upon acquisition price represents a 27% premium to Image's closing share price of $3.46 on March 29, 2007, and a 35% premium to the 30-day average price ended March 29, 2007.

Stockholders owning a total of approximately 38% of Image's outstanding shares of common stock have agreed to vote their shares in favor of the transaction.

Completion of the transaction is subject to customary closing conditions, including regulatory review and the approval of the transaction by Image stockholders. The transaction is expected to close by July 31, 2007.

The buyer group is led by film financier and producer David Bergstein, who recently purchased U.K.-based Capitol Films, an international film distributor, and Thinkfilm, a North American film distributor.

"We are very pleased to announce a transaction that provides excellent value for our stockholders, representing a significant premium to our recent stock price and the certainty of cash," said Martin W. Greenwald, Chairman and Chief Executive Officer of Image Entertainment. "Our Board of Directors firmly believes that this is the right transaction for our stockholders, employees and customers. The transaction allows Image to remain a viable and important force in the entertainment industry, and to continue leveraging our strong home entertainment operations."

David Bergstein, principal of the purchasing investor group, said, "Image's executive management team has built a first-rate company, and we are pleased to be able to provide a strong cash price to the Image stockholders and maintain Image as the leading independent home entertainment distributor."

The Board of Directors of Image unanimously approved the merger agreement and has recommended that Image stockholders vote in favor of the transaction.

Both debt and equity financing for the transaction are committed by Mr. Bergstein and his investor group and by D.B. Zwirn & Co., a global merchant capital provider and alternative investment fund.

Lazard acted as financial advisor to Image and Manatt, Phelps & Phillips, LLP acted as legal advisor to Image in connection with the transaction. In addition, Raymond James & Associates, Inc. provided a fairness opinion to the Board of Directors of Image in connection with the transaction.

The investor group was advised by Barnes Morris Klein Mark Yorn Barnes & Levine and Bingham McCutchen LLP.

According to the release, BTP owns Capitol Films in the U.K., and ThinkFilm in the States.

-BJ

[Tribe]

According to this, "Capitol Films [is] one of Europe's most formidable international film production, financing, and sales companies."

From the capital of the UK to a multiplex near you - that's the idea behind Capitol Films. Capitol Films is an international film production, financing, and sales company. Founded in 1989, Capitol Films has distributed more than 100 feature films and continues to increase its library by five to 10 films a year. Credits include Robert Altman's A Prairie Home Companion, the third Altman movie in a row to be handled by Capitol after Gosford Park and The Company. Capitol Films' library of more than 100 titles includes Drowning Mona and Simple Men. Los Angeles-based entrepreneurs David Bergstein and Ron Tutor own Capitol Films.

See here and here.

Tribe

[Dr. Mabuse]

Image agrees to $100 million buyout
Digital delivery company Nyx Acquisitions to buy indie supplier
By Susanne Ault -- Video Business, 11/20/2008

NOV. 20 | After a couple of misfires, Image Entertainment has secured another buyer, Nyx Acquisitions, which has agreed to purchase Image for $100 million.

Under this definitive merger agreement, Nyx will assume Image’s outstanding debt, and Image shareholders will receive $2.75 per share in cash. That represents a nearly 300% premium over Image’s closing 69¢ share price on Thursday.

Although advantageous to shareholders, especially considering poor overall U.S. economic conditions, this pact grants shareholders less money than the previous terms with BTP Acquisition Company. In that proposed merger arrangement, which collapsed earlier this year, Image shareholders at one point stood to receive $4.68 per share.

Still, Image stockholders owning 38% of its outstanding shares have already voted in favor of the merger transaction with Nyx. Image’s board of directors also have unanimously approved the deal.

Pending regulatory review and final approval by stockholders, Image expects to close the acquisition by the first quarter.

Image management hopes the merger will boost the company’s emerging digital business. Nyx is a subsidiary of privately held Q Black LLC (also known as Q Black Media), which is an investment group that works to produce content that converges digital and traditional delivery methods.

“This deal allows Image to expand its overall business and grow as a vertically integrated entertainment company,” Image president David Borshell said. “By combining Image’s established infrastructure and highly regarded home video, digital and TV distribution capabilities with Q Black’s content creation and digital technology expertise, the parties create a much larger and exciting organization, one very much focused on feature films and well prepared to take advantage of evolving distribution strategies.”

Image has long sought an acquisitions partner that sees value in its entire business. Recently, Lionsgate aggressively pursued an Image purchase, but that was ultimately tabled largely due to Image's concern that the company would be gutted after the acquisition. It was understood that Lionsgate would keep Image’s 3,500-title DVD library and discard much of the rest.

Q Black Media CEO Joe Q. Bretz indicated that Image will continue to roll out new titles under its umbrella. He said he was impressed by Image’s financial gains of late. For the first six months of fiscal 2009, Image posted $1.2 million net income. That compares to $6.3 million in red ink for the same frame the prior year.

“The accomplishments of its senior management team over the past several months are undeniably impressive,” said Bretz. “They’ve built a solidly growing revenue base by leveraging their distribution capabilities across all formats and platforms. Our international reach and digital expertise in conjunction with the drive and vision of the current management team makes Image a force to be reckoned with. Image will continue to acquire high-profile programming, develop new and exciting original content from concept to completion and, of course, utilize its vast library.”

Martin Greenwald, Image’s chairman of the board, believes Q Black will continue to fuel Image’s turnaround.

“Joe is committed to keep Image Entertainment a well-respected content and distribution entity and has designed an exciting and aggressive road map to expand Image’s reach into new and growing technologies,” said Greenwald.

Although past acquisition hopes have fizzled, Image’s Borshell noted that the company has always worked in the best interest of shareholders.

“Executive management and the company’s board of directors never gave up on finding a way to maximize shareholder value, even during a challenging financial environment,” said Borshell. “We have been successfully executing the business plan we put in place about a year ago and, by doing so, developed a strong and healthy business, which obviously kept potential suitors interested.”

[Cinephrenic]

This certainly kills the hopes of more Criterion foreign films from Image's catalog. I wouldn't be surprised if some titles go out-of-print soon.

[Narshty]

Why? I can't claim to understand every point in that article, but it seems that they're buying Image because they like what the company is already doing, but while moving them over into online-based "entertainment platforms" as well. I don't think this'll have much effect on Criterion, except an extra boost for their downloads which we know they're already thinking about.

[HerrSchreck]

I don't think it's going to "kill" foreigns/eclectics but I do think this will add even more "pressures" for the Bottle Rockets and even Chungking Expresses. No coincidence this past year saw the mass escalation of color films.

[Antoine Doinel]

Although the question is, what fraction of Criterion's business actually accounts for Image's overall business? My guess? Not that much. What Image does in a quarter is what Criterion does in a year, maybe. I would think they are left to their own devices for the most part. I would imagine the "more color films" this year has more to do with moving to BD than anything else. If you're going to launch a new format, generally you want to dazzle first, as well as make a strong sales start to offset the initial investment (hence Bottle Rocket, Chungking Express, Last Emperor etc) before moving into older catalog material.

[Narshty]

Those "pressures" have always been there (also known as "market pressures") and have always been balanced by Criterion from the days of Silverado on laserdisc onwards. It shouldn't surprise anyone that Bottle Rocket and Chungking Express (and The Spy Who Came in from the Cold) are being released in the run up to Christmas.

But the idea that this year has seen a "mass escalation" towards colour has no resemblance to the facts at all. There were 42 black and white films released in 2008, versus 25 colour ones at a rough tally. Last year, there were 50 black and white films, versus 28 colour films (I'm talking about brand new releases, including Eclipse, not just re-releases of existing discs or masters in various guises). Numbers of overall films have dropped, but not to one end of the spectrum or the other.

[HerrSchreck]

Narshty you almost sound like John McCain (the fundamentals of our economy are sound)-- market pressures have always been there? Sure there's always pressure to perform, but have you been paying attention to the past few quarters? There's something a little unprecedented going on around here nowadays... and being the producers of what are generally considered to be the most expensive dvd's in the world, which also are generally considered to be the titles with the least public recognition-- this is going to create pressures.. especially if the mother company is faring poorly. Any company producing luxury items right now is doomed to Marketing Meeting Hell, and potential business model vamping.

Perhaps we're talking about two different things. I'm talking (and whenever I say that snide comment about 'a bunch of color films' viz the direction the line is going, I mean this) about Criterion releases... not inlcuding reissues, busted boxes, repackaging old titles into new boxes, and I'm not counting Eclipse either. I've always meant "films that get the rollout, the heavy investment, the new transfer... the treatment". New titles from Criterion.

Using Image Ent's site and sorting by release date I (quickly, sloppily) come up with 21 new color releases, and 22 black & white releases. Of those, I think about 6 were from prior to 1950. Anyone who hasn't noticed a trending towards more recognizable, more modern, more color-ish films in the flagship line, I'll have to just amicably disagree with you (E doesn't count to me and I'll explain why: they include no extras, they don't run the transfers, they have nothing to do with what makes Criterion Criterion... except that they're eclectic films, but that's no different from many other lines... not to mention they have given themselves the freedom to not release when they feel they can't: they have no 'obligation' with E, whereas with the CC line they don't have that luxury. If the model is tight for funds they can't skip a month.. they must adjust and keep the model profitable-- therefore this is where changes will be demonstrated).

[Narshty]

Narshty you almost sound like John McCain (the fundamentals of our economy are sound)

Now there's your John McCain tactic.

Perhaps we're talking about two different things. I'm talking (and whenever I say that snide comment about 'a bunch of color films' viz the direction the line is going, I mean this) about Criterion releases... not inlcuding reissues, busted boxes, repackaging old titles into new boxes, and I'm not counting Eclipse either. I've always meant "films that get the rollout, the heavy investment, the new transfer... the treatment". New titles from Criterion.

That's the exact methodology I used, except including Eclipse (I'd say that Eclipse is as much a part of Criterion as anything else). I know a few instances where the titles were originally intended to be full Criterions but supplements couldn't be mustered (Lubitsch Musicals, for one). I was counting individual films within their 2007 schedule (stuff like all seven films in the Paul Robeson boxset). Not Essential Arthouse or repackagings or anything like that. I did include stuff like the Kurosawa reissues, Agnes Varda, Salo, etc, because those were new versions from the ground up.

Times are tougher, but I still haven't noticed this great change in their systematic selection. 2007 was far more filled with "name" titles in the kind of circles that Criterion does best in. You may not think the 2008 slate is particularly strong, and nor do I (though it wasn't the wasteland some have claimed), but "I don't like" and "fundamental shift" aren't the same thing. I just don't see the 2008 schedule as a deliberate courting of the masses to the detriment of diversity. Of course they're going to release The Last Emperor or Chungking Express or Bottle Rocket if they get the chance (and they're all significant movies), but I don't see their selection of comparatively recent films like Walker, Before the Rain, White Dog or Brand Upon the Brain! as being mainstream picks (the Maddin is the closest, I'd say).

[HerrSchreck]

Well certainly I don't think in terms of "no personal faves this year" = "biz model change". I'm not talking stylistic content i e school of cinema, merely era of production, and color/b&w.

Sadly, no one is inoculated against the eonomic winds... and while I think CC, as a producer of luxury items (technically speaking.. dvd's not being milk or gasoline) is somewhat insulated via the fanaticism of collectors and devoted completists, sadly, the collectors and completists are not. Hi end wine or watches may be somewhat insulated by the wealth of the core group of buyers, but the fanatics who are devoted to CC are spread evenly across all classes.. therefore I'd think that those with enough/steady-enough income to be unaffected by the present condition represent, on a CC sales flowchart, only a moderate increase vs the percentile they comprise in the general census population. Because of course so many members of film culture and production are devoted buyers, and are thus-- some of them-- truly wealthy.

But the bulk of them I daresay are folks like those who travail this board. Students, folks in some daily grind or other. Folks who buy in stores, wait for sales online, etc.

[Narshty]

I think part of any change in era of production would be down to all the studios now licensing them titles - this year, we've had contributions from Sony, MGM, Fox, Paramount, Universal and Miramax - and those are doors you want to keep open. It's not like they're still picking Ghostbusters and The Prince of Tides.

[Perkins Cobb]

I don't use milk or gasoline, but I need my Criterions.

[HerrSchreck]

I think part of any change in era of production would be down to all the studios now licensing them titles - this year, we've had contributions from Sony, MGM, Fox, Paramount, Universal and Miramax - and those are doors you want to keep open. It's not like they're still picking Ghostbusters and The Prince of Tides.

It's not like their licenses are chosen by the licensees. They release first and foremost 1) what they ask for a) that they can get. If more modern/recognizable films are coming from the licensees, it's because they're asking for more recognizable films. They put out what they ask for... and certainly there are many films that they have licenses for that they release when they're good and ready to. Enough to where one can conclude that they release what they want to release when they want to release it.

Guys they're not superheroes or invulnerable. It's a tough market right now for hi-end, pricey product. They're as vulnerable as anyone to economic recession, and any smart company saw this coming a mile away. Personally, if it helps them survive completely intact, I'm glad to see them widen their tent of consumers a bit, rather than see them spend six figures on stuff like Rublyov that might sell a thousand units tops, and sink or be forced to loosen their production values.

[Tribe]

Guys they're not superheroes or invulnerable. It's a tough market right now for hi-end, pricey product. They're as vulnerable as anyone to economic recession, and any smart company saw this coming a mile away. Personally, if it helps them survive completely intact, I'm glad to see them widen their tent of consumers a bit, rather than see them spend six figures on stuff like Rublyov that might sell a thousand units tops, and sink or be forced to loosen their production values.

On the other hand, Image is reported as having the best fiscal year in its history:

DEC. 9 | LOS ANGELES—Image Entertainment is enjoying a record fiscal year, supported by a new feature film business, according to management at its first ever retailer conference on Tuesday here.

The supplier acknowledged its past troubles, including a collapsed merger with BTP Acquisition Co. and a hostile takeover attempt by Lionsgate, before underscoring the fact that its future is bright. Image is especially satisfied with its business direction in light of struggles many other indies have had this year. Both First Look Entertainment and Genius Products are among smaller suppliers that have undergone major layoffs.

Seventy-five retailers and distributors were in attendance, spanning all classes of trade, including Best Buy, Netflix, Blockbuster, Wal-Mart distributor Anderson Merchandisers, Borders, Hastings Entertainment, Redbox and VPD, among others.

“We are in the enviable position where this will be our best year in our 25-year history,” said David Borshell, Image president. “This bucks the trend of many independents having a difficult time.”

Image has previously estimated that it will earn between $120 million and $130 million during its current 2009 fiscal year. That should top its past best annual performance to date, the $118 million tallied in 2004.

For the last couple of years, Image has unsuccessfully tried to find a buyer for its company after scrapped negotiations and filed lawsuits involving BTP and Lionsgate.

However, last month, Image agreed to be purchased by Nyx Acquisitions for $100 million.

Image plans to continue to operate much as it always has under its new ownership. A large part of Image’s business during its current fiscal year will come from high-profile feature film releases headlined by a recognizable cast. Three to four such movies will premiere on DVD each month. One to two will bow first theatrically, before Image distributes them on disc.

Over the course of its prior fiscal year, Image didn’t have a significant stake in this area. Now feature films make up 27% of its revenue, Image’s largest business category.

On deck for 2009 theatrical and/or DVD premieres are Management starring Jennifer Aniston; Incendiary, Michelle Williams and Ewan McGregor; $5 a Day, Christopher Walken and Sharon Stone; The Edge of Love, Kiera Knightley and Sienna Miller; Powder Blue, Jessica Biel and Forest Whitaker; and In the Electric Mist, Tommy Lee Jones.

To underscore to retailer attendees its commitment to star power, Image presented conference guests with an appearance by Jack Nicholson. The star wanted retailers to know how important it is to support indie films from companies such as Image.

“He talked about having more creative freedom when working with an indie over a major studio,” said Bill Bromiley, Image chief acquisitions officer. “Also, the filmmakers have more financial control with indie projects.”

Nicholson appeared after a screening of In the Electric Mist, which is produced by the star’s friend, Michael Fitzgerald.

Another key area for Image business going forward is comedy, which represents 16% of its business. Next year, Image will release a DVD of comedian Terry Fator, who is positioned as a follow-up to the company’s successful Jeff Dunham franchise. Dunham’s most recent release, Nov. 18’s Very Special Christmas Special, shipped 750,000 units, a hefty amount for non-feature/non-TV product.

Like Dunham, Fator is a puppet ventriloquist. Fator also has a built-in fan base, winning the series America’s Got Talent in 2007 as well as recently signing a $100 million deal to perform his act at the Mirage casino in Las Vegas for the next five years.

Image’s remaining business segments break down as Criterion Collection at 17%; Discovery Channel, 15%; music DVDs, 8%; classic TV, 8%; and other, 9%.

Overall, Bromiley hopes Image’s retail customers came away with confidence about the supplier’s ongoing business.

“In a marketplace as difficult as it is, we wanted to show people how much we’ve accomplished,” said Bromiley. “This will be our biggest year yet in terms of revenue.”

[ianungstad]

Looks like the merger with NYX is in serious trouble:

Image Entertainment Declares Nyx Acquisitions in Breach of Merger Agreement

Image stock has dropped like a rock the last two days.

[Perkins Cobb]

Looks like the merger with NYX is in serious trouble:

Image Entertainment Declares Nyx Acquisitions in Breach of Merger Agreement

Image stock has dropped like a rock the last two days.

Dix Nix Nyx Fix?

[domino harvey]

Amazing =D>

[Tribe]

Has there been something screwy going on with Image's stock the past several days? Looks like insiders were getting rid of it before any public announcement of the Nyx breach of the merger agreement.

[Matt]

What the heck happened to DISK today? So called buyout at $2.75, and the stock gets crushed to close at $1.35??

I am the last person to speak with any authority on this, but don't mergers usually involve one company paying a little more than the per-share market price for the stock? And doesn't the stock of the target company usually drop a little on news of a merger? Considering the performance of Image stock over the last year (hell, over the last month), $1.35 still seems pretty good.

[Tribe]

Image Entertainment Stockholders Vote to Adopt Merger Agreement

Image Updates Status of Pending Acquisition

CHATSWORTH, Calif.--(BUSINESS WIRE)--Image Entertainment, Inc. (NASDAQ: DISK), a leading independent licensee, producer and distributor of home entertainment programming in North America, announced that at its special meeting of stockholders held today in Los Angeles, California, Image Entertainment’s stockholders voted to adopt the agreement and plan of merger providing for the acquisition of Image by Nyx Acquisitions, Inc, an affiliate of Q-Black, LLC.

Under the terms of the merger agreement, Nyx agreed to acquire 100% of the outstanding common stock of Image Entertainment for $2.75 per share in cash.

By obtaining stockholder approval, Image has fulfilled all of its conditions to closing, and has requested that Nyx close the transaction on February 26, 2009. Representatives of Nyx have reconfirmed its intention to close the transaction at the earliest possible time and have requested additional time to finalize its financing for the transaction. Image’s board of directors has indicated its willingness to grant this request for approximately two weeks if Nyx satisfies certain conditions. Image has informed Nyx that it is reserving all of its available rights and remedies under the merger agreement in the event the acquisition does not close, including termination of the merger agreement and the collection of the business interruption fee.

Image continues to believe that this transaction is in the best interest of its stockholders and is working with Nyx to promptly complete the acquisition.

[ianungstad]

They've been having problems with the merger. NYX has been slow in delivering the payments to Image....they seem to be a bit cash strapped? When the press release came out from Image that NYX hasn't made a 1.5 million payment, the stock dropped down to 80c a share from the 1.80 it was trading at. It jumped again when NYX made the payment (several weeks after it was due)

I was lucky enough to buy shares at 80c and sold them at 2.15...so I'm happy. I'm sure a PR will be issued later this week regarding more problems with the merger. It seems like insiders dumping shares...which isn't good.

Image's financials are solid though...so if anyone wants to make some easy money, buy shares in Image.

[ianungstad]

Merger is dead. Image filed paperwork citing NYX as breaching the merger agreement this morning. This is like the third time that a merger/buyout has failed in almost as many years.

Anyways, once the share price drops to 70 cents or below via the mass selling that'll surely happen over the next few days, it would be a good time to load up.