France's StudioCanal appears to be forging ahead with talks to create a pan-European distribution network - a releasing apparatus that would effectively run alongside United International Pictures (UIP) should Canal Plus and its parent Vivendi succeed in their planned takeover of UIP partner Universal.
According to well-placed sources, StudioCanal expects to conclude talks to establish a UK distribution outlet through Pathe Distribution by next month or August. StudioCanal also aims to raise its involvement in the financing of British films.
The sources added that StudioCanal's Europe-wide operations would not be impaired in the event of a three-way merger between Vivendi, Canal Plus and Universal parent Seagram. That merger would result in a new Paris-based giant called Vivendi Universal which would rank among the world's five top media and entertainment behemoths with a projected $65bn in annual revenues.
Few observers are contemplating a Canal and Vivendi-controlled Universal pulling out of UIP, with which Universal has just signed a five-year deal. But, while Canal could decide otherwise as it hammers out the finer details of the pending takeover of Universal, the current strategy appears to be to maintain StudioCanal's distribution network for smaller or European films, and use UIP for larger pictures, mostly from the US.
Ironically that was a strategy pursued by Universal after Seagram's acquisition of PolyGram Filmed Entertainment (PFE). PFE operated as Universal Pictures International alongside UIP before being closed down as a theatrical distributor last year.
Canal Plus ultimately aims to create StudioCanal UK, an operation modelled after its presence in other key European territories. In Spain, StudioCanal Espana is a partnership with Sogepaq and Warner Sogepaq on the distribution front, while, in Germany, StudioCanal Deutschland is built around Tobis, in which Canal is a majority shareholder. In France, Studio Canal France has ensured distribution through a joint venture with Bac Films.
Studio Canal, which recently raised $200m on the stock exchange, is already involved in UK production with Pathe. The two companies also co-acquire US titles through the C+P joint venture. Pathe Distribution handles UK distribution for C+P titles such $60m animated feature Chicken Run.
Additionally, C+P has a 12-picture, three-year output deal with Mandalay Pictures, which kick-started with Tim Burton's $100m Sleepy Hollow.
Adam Minns IN LONDON contributed to this report