Following last week's announcement of pre-tax losses of $36.1m in the first nine months of 2002, production and finance group IM Internationalmedia has unveiled an extensive cost reduction programme to reduce expenses by Euros 28.7m and predicted that revenues for 2003 would be between Euros 330m-350m, well above this year's estimated result of Euros 250m-260m.
According to CEO Moritz Borman and CFO Andreas Konle, around Euros 11.1m will be saved by reducing staff from 99 to 62 as well as cutting other overheads. An additional Euros 17.6m will be saved "due to a valuable stock of existing film projects and lowered costs for producer alliances for the coming year."
Konle stressed that the cost reduction programme is "not a strategy of shrinking but one of adapting to the market" and "this will not have any negative efect on the development of films. The No. 1 focus of the management is to get the company back into profitability."
Borman explained that IM had not extended its producer partnerships with Sydney Pollack and Anthony Minghella's Mirage Enterprises or Barry Levinson and Paula Weinstein's Baltimore Spring Creek Productions, but had renewed the partnership with Robert Newmyer's Outlaw Productions whose Mindhunters is one of IM's 2003 releases. IM's cash expenditure on its production alliances would be reduced in 2003 to $12.8m and $8m-$10m in 2004.
Borman said that in future IM's focus would be on "tentpole films" with budgets over $75m and below $25m after experience had shown that films in the $25m-$75m had performed badly in comparison.
Changes were already being planned for IM's future strategy for selling its films to the US and elsewhere by having a domestic distribution deal with a studio for 4-5 films per year and looking for fixed distribution partners in another 2-3 countries as well . "In those territories where the independent distribution sector is weak at the moment such as Germany, France or Spain we would make deals with a US major", Borman suggested, arguing that this strategy was in response to the market situation "where since the AFM it has been difficult for single territory sales." Thus, for example, instead of selling individually to Brazil, Argentina, Chile and Peru, IM would sell - as it had done for one film at MIFED recently - in a package for Latin America.
Borman added that IM had 15 projects with directors or directors and stars already attached for its 2003 production slate of 5-7 films with a total production volume of $400m-$450m.
The forecast for next year's revenues is based on releases including Terminator 3, Mindhunters, Life Of David Gale, Basic and Suspect Zero as well as continuing overages from such films as Traffic and The Wedding Planner as well as revenues from the Largo library.