Advertisement
YOU ARE HERE: LAT HomeCollections

Film Companies Intermedia and Spyglass to Merge

Entertainment: The deal, expected to close by the end of next month, is the latest in flurry of mid-size consolidations.

January 14, 2002|ALEX PHAM | TIMES STAFF WRITER

Intermedia and Spyglass Entertainment Group on Sunday announced plans to merge, in a deal that would create one of the world's largest independent film companies with more than $600 million in annual revenue.

The deal, expected to be completed by the end of February, is the latest in a flurry of consolidations among mid-size film companies seeking sufficient scale to ride through the peaks and valleys of big-budget film production.

The companies declined to disclose financial details.

Spyglass, a closely held Los Angeles company, financed and produced "The Sixth Sense" and "Unbreakable," while Intermedia, which is publicly traded on the German Neuer market under its Munich-based parent Internationalmedia, produced "K-PAX" and "The Wedding Planner," among others.

Film industry veterans say the merger would bolster the financial health of both companies.

"I think it's an excellent idea," said longtime independent film financier Lewis Horwitz. "It's a very difficult time right now for all independent filmmakers because of the softness of the world economy."

For Spyglass, the merger would give it wider access to capital. Spyglass, which is 10%-owned by Walt Disney Co., last February filed to go public on the German bourse, but later pulled its filings after the market's once voracious appetite for entertainment companies waned.

The deal also would give founders Nigel Sinclair, Guy East and Moritz Borman a chance to cash in on significant holdings. Sinclair and East together own about 25% of Intermedia valued at roughly $120 million, while Borman owns about 20%.

Founded in 1996 by Sinclair and East, Intermedia in 2000 merged with Pacifica, a film company owned by Borman. Later that year, the three took their company public in Germany, raising more than $250 million in operating cash.

At its peak, the company was valued at about $1 billion. Last week, the company was valued at about $630 million. In December, Intermedia acquired Santa Monica-based Initial Entertainment Group, which financed such films as "Ali" and "Traffic."

Spyglass founders Gary Barber and Roger Birnbaum collectively own 80% of the company, which gets well over half of its revenue from an exclusive contract to distribute films from Disney's Buena Vista Pictures in the United States.

Barber, Birnbaum and Borman will be co-chairmen of the combined company. Sinclair and East will relinquish their seats on the board of Intermedia, but will remain with the company to produce films.

Advertisement
Los Angeles Times Articles
|
|
|