Germany's CineMedia and TeleMuenchen have entered into a strategic alliance to develop digital cinema. TeleMuenchen will take a 7% stake in CineMedia as part of the deal.

CineMedia recently launched a division to research digital film-making, post-production and film conservation.

TeleMuenchen, which is involved in licensing, production and distribution, is the second major player to hold a stake in CineMedia following German studio Bavaria Film.

CineMedia, originally a post-production group, used proceeds from its February 1999 IPO to branch out into co-production and licensing. In January the company acquired rights to product with a total production budget of around $240m, headed by Icon Entertainment International's What Women Want, starring Mel Gibson. It later struck an output deal for theatrical distribution in German-speaking territories with Buena Vista International.