Intermedia, the independent giant which floated on Frankfurt's Neuer Markt 18 months ago, is in discussions to buy Graham King's Initial Entertainment Group (IEG), the independent maverick which has backed mega-projects such as Steven Soderbergh's Traffic, Martin Scorsese's Gangs Of New York and Michael Mann's Ali.

Buyers at London Screenings this week were abuzz with talk of the union which would see King and IEG become an autonomous production label of Intermedia alongside such other high-profile companies as Outlaw Productions, Scott Free Productions, Mark Johnson Productions and Baltimore/Spring Creek.

Intermedia has kicked the tires of several companies of late such as Good Machine and Summit Entertainment but no acquisition has come to fruition. IEG is 49%-owned by troubled German distributor Splendid Film, although it has financed its films principally through its credit lines with Chase Manhattan Bank. Intermedia would offer King and IEG access to new funds to finance its ambitious development and production funds.

IEG has strong talent relationships with Catherine Zeta-Jones' production outfit Milkwood Films and Leonardo DiCaprio's Appian Way, both of which it houses, as well as with Zeta-Jones' husband Michael Douglas, with whom it is developing a starring vehicle (Smoke And Mirrors) and a producing vehicle (Racing With Monsoons).

IEG has co-financed other films including Jodie Foster-produced The Dangerous Lives Of Altar Boys which is expected to world premiere at the Sundance Film Festival in January and Robert Altman's Dr T And The Women.

King also unveiled plans this week to co-finance another Scorsese/DiCaprio collaboration, an epic film about Alexander The Great based on a script by Christopher McQuarrie.