Graham King, the chief executive of Initial Entertainment Group (IEG), has stepped down from the board of Splendid Medien, the public German distributor which owns a 49% stake in IEG.

The move comes as no surprise since the two operations have been somewhat estranged in the last few months, especially since the slumping prices of many companies on the Neuer Markt which fuelled Splendid and so many other entertainment companies. IEG did not sell German rights on Michael Mann's Ali to Splendid, seen as indicative of the relationship and Splendid's financial situation. Splendid paid a reported $13m for German rights to IEG's Gangs Of New York.

In Jan this year, Splendid decided not to exercise its option to acquire a further 2% in IEG which would have given it a majority stake. In an adhoc statement to Frankfurt's Neuer Markt, Splendid said that "the conditions currently prevailing in the film market advocate a US majority in IEG". Unconsolidated sales for Splendid in 2000 were around $24m - well short of a target of $46m.

King has long insisted that IEG is not dependent on Splendid, pointing to the credit line he has with Chase Manhattan Bank as his principal financing mechanism. Whether Splendid will retain its share in IEG is now up for speculation.