'If there is any growth in this business globally it's in international,' says Tim Bevan of the UK's Working Title Films. One company that has consistently underlined the truth in Bevan's remark over the last 25 years is United International Pictures (UIP).

In late 1981, when UIP was formed in London, the Hollywood studios were still making the vast majority of their revenues at home. As UIP's president and chief operating officer Andrew Cripps recalls: 'Certainly in 1986, when I joined, international was an afterthought. It was domestic and then international came three to six months later - it really was a secondary ancillary market.'

Slowly, multiplexes began to be built. In the 1980s, when UIP was posting international grosses of over $200m on Bond films, Hollywood pricked up its ears. Tom Cruise had helped blaze the way with Top Gun, which racked up $180m internationally in 1986. 'Then you had the Indiana Jones film in 1989, which did almost $300m,' remembers Cripps. 'When you got to those numbers, people really did start to realise how big the potential was.'

UIP slowly helped transform some of the old assumptions about where the
opportunities are to be found. No longer do the studios make 70% of their profits at home. In 2004 and 2005 UIP passed $2bn at the international box-office - and 2006 is also shaping up as a spectacular year with the company crossing the $1bn mark by mid-summer.

Now, though, the old model UIP is in its final throes. In September 2005 it was announced that UIP partners Paramount and Universal were re-thinking their international strategies. Although UIP will continue to distribute fare from the joint partners in 20 territories, from January 2007, 16 key territories will be handled separately. At this stage, it's not so much a divorce as a separation and the two companies will continue to work closely together (see below.)

If there is a certain irony in the fact that UIP is being overhauled in a period when it is enjoying huge financial success, there is a logic too. The fact that the company has been so successful has given its studio owners the confidence to strike out on their own. Not only is there the opportunity to grow yet further the market in Western Europe, but there is also huge potential in Eastern Europe, Russia, China and India.

'The American market is relatively stable and mature in all sorts of ways,' UIP's chairman and chief executive Stewart Till points out. 'They (in the US) have had good multiplexes for decades. They've had good distribution and video retailing and very mature and developed pay-television channels. None of those things can you say about international. The multiplexes have only been built recently and are still
being built. Video retailing is patchy, good in certain places like the UK and poor in others, and obviously pay-television has nowhere near the penetration that channels like HBO and Showtime have got.'

Back in November 1981, prospects looked markedly less rosy. There were four partners in UIP - MGM, Paramount, Universal and United Artists. The new company was the successor to the Cinema International Corporation (CIC) the company formed in London by Paramount and Universal in 1970. UIP opened up shop under joint presidents Pana Alafouzo and Norbert Auerbach at a time when cinemagoing in the UK was in the doldrums. In 1984, British cinema attendances fell to an all-time low of 54 million.

It might be stretching it to say that UIP single-handedly lured back cinemagoers in the UK and in the other territories where the company set up offices. Nonetheless, it certainly played its part in the transformation.

'We must have aggressive, inventive and original marketing,' proclaimed UIP's then managing director Jim Higgins. This, arguably, is what has characterised UIP ever since as it has brought Bond movies, Rocky films, such breakaway box-office hits as Beverly Hills Cop and countless other blockbusters from Back To The Future to King Kong to the international marketplace.

It hasn't all been plain sailing. In 1989, there were demonstrations against UIP in Korea, where the local industry feared that 'direct distribution' would damage a local system that had existed since the end of WWII. 'Korea was a unique case where we were opening up an office where up to then, about 10 distributors had a government-imposed monopoly on the distribution of foreign films that was incredibly lucrative,' recalls Andrew Cripps. 'They were trying to protect their own interests. It caused us some problems but we're very proud of the operation we built there.'

In 1993 rivals in Europe took exception to the special exemption that UIP had been given from the Treaty Of Rome's anti-Trust clauses. The company was accused of block booking. One observer angrily told the trade press that 'UIP's vertical and horizontal integration amounted to illegal abuse of market position.'

UIP also had its fair share of legal spats: for example a well-publicised dispute in 1991 with satellite TV operator BSkyB. (The TV company accused UIP of acting like a cartel and imposing more onerous conditions on the broadcaster than the studios would have if they acted independently.)

All these disputes were eventually resolved. Meanwhile, UIP was growing ever more imaginative in its operations, whether geographical or in terms of new technology. For example, there was a 1991 deal with the Soviet-British Creative Association for the exclusive distribution of UIP films in the Soviet Union. (This deal came after UIP re-released Gone With The Wind in Russia, clocking up eight million admissions.) More recently, in the autumn of 2005, it signed a deal by which three of its films, Doom, Aeon Flux and Serenity, would be promoted on an online video game.

The UIP machine was smooth and well-oiled. 'It was full of a lot of very talented people that knew their skillset and worked well at distributing their films across a very, very broad base of territories,' recalls David Kosse, who heads Universal's new foreign theatrical distribution arm, Universal Pictures International (UPI).

The corporate culture wasn't ostentatious. Although such UIP executives as
Anne Bennett, Hy Smith, Ken Green and others were immensely well-respected, they rarely sought the limelight. 'They wouldn't put their heads above the parapet and have a media profile in any way,' says a UK Film Distributors' Association spokesperson. 'They were unknown, unsung heroes.'

As one admirer says: 'Despite their formidable achievements, the company is actually quite unassuming.' It is striking how nostalgic old UIP executives are about their time at the company. For example, Ken Green, who was with UIP from 1981-2002 heading up marketing in the UK and Ireland, speaks fondly of 'the teamwork and the personalities and the willingness to try new things...it was a unique atmosphere. We innovated and we had the freedom to do so.'

For example, UIP was pioneering in its use of commercial radio to promote movies. The company was imaginative in developing the idea of 'tie-ins' with brand name films like James Bond, Indiana Jones or Star Trek. Green also notes that the gap between US and international releases was sometimes an advantage. 'We were able to get access to talent that we wouldn't have been able to get if the releases had been day-and-date.'

On the one hand, UIP's achievement has been one of logistics. As a rival distributor points out, 'the release schedule that they had to deal with has been phenomenal - 30 or 40 films a year. Who handles that volume of product and does their best for every single one of them''

Cripps and Till are at pains to point out that every campaign was unique. 'The fun of this business is that every film is different. You don't go, 'it's Children Of Men we'll pull out marketing strategy 11b',' Till says.

There were certain rules of thumb: action played well in Latin America, so action elements were highlighted. Similarly, emotional content was played up for Japan. Nor did UIP slavishly follow release campaigns devised by its Hollywood parents.

One common - and arguably unfair criticism - was that UIP couldn't handle specialised fare as well as some of its leaner rivals. 'That has been a common criticism of UIP over the years. I never really believed it,' says Cripps.

'We had some tremendous successes with some smaller films.' The Working Title bosses praise the way that UIP helped turn Billy Elliot into a full-blown phenomenon. 'That was Paul O'Neile's baby,' recalls Tim Bevan of the former UIP boss. 'With a specialised film, if you're with a single source distributor, whoever is the boss has to decide they want that film to work. Paul O'Neile backed very strongly by Chris Hedges decided that they loved Billy Elliott.'

In 2006 itself, UIP posted box-office figures of around $15m for Al Gore's
An Inconvenient Truth - a considerable achievement for a film that was essentially an illustrated lecture about climate change.

One movie which didn't travel as far as Working Title had hoped was Shaun
Of The Dead. UIP decided not to release it in certain territories. 'The senior managers didn't 'get' Shaun Of The Dead. It was a shame because I suspect we left some money on the table,' says Bevan.

'A film that was that successful [in the UK] and in America would definitely have found some business round the world.' Nonetheless, Bevan says UIP 'did a terrific job for us.' He points out that Working Title tends to use the UK as a platform for its films. The British box-office performance is the litmus test as to how well they are likely to perform elsewhere. 'In the run post-Notting Hill up to now, we've done £250m at the UK box-office which is a huge amount of money.'

Why the UIP split'

To be a joint venture or to go it alone, that was the question.

UIP's Stewart Till insists that there were no hidden agendas or backstage conspiracies behind the restructuring. 'Both Paramount and Universal believed going forward that the benefits of doing it yourself outweigh the advantages of being in a joint venture,' he says.

To some observers, UIP was simply becoming too big and unwieldy. 'The number of films UIP was putting out, particularly in the major territories, was beginning to make it impossible to work because you're competing against yourself all of the time,' says Working Title's Tim Bevan.

'This decision for Universal was always about growth,' insists David Kosse. 'It was always about positioning ourselves to grow and getting more involved in the international business - in having all the strategic decisions made by the studio and not by a joint venture. It wasn't necessarily about cost, although cost was a consideration. It was driven by our belief that the international marketplace is a growing one.'

Kosse adds that local acquisitions will now play a far bigger part in UPI's growth. In the past, acquiring a local film in a UIP territory was slowed down by having to go through UIP or the two partners. Now, Kosse and his team will be more flexible and more nimble. 'As a wholly owned company, we've always believed that local acquisitions will fuel further growth. In a market where local production might be 30% of the market, we want to be participating in that.'

UIP's rivals, especially those in the UK, have mixed feelings about the separation. They may see an opportunity but many regret the break-up of an organisation that has been so successful in driving up ticket sales. 'In many ways, they've set a benchmark over the years in the way that films are released,' says a UK Film Distributors' Association spokesperson. 'It's the sheer panache with which they've brought films into the marketplace. What they have left is an extraordinary legacy of driving cinemagoing.'

Restructuring one of the industry's largest distribution operations is no mean feat.

Inevitably, there has been a case of musical chairs as key executives take up positions at one or other of the companies. Stewart Till's intentions are yet to be revealed -although it is now known that he won't become the head of UK broadcaster ITV.
Andrew Cripps will take over as president of Paramount's international theatrical distribution arm. In the spring, David Kosse announced he was recruiting Simon Hewlett from 20th Century Fox to run Universal's UK distribution arm.

Although UIP will continue to distribute fare from Paramount and Universal in 20 territories, from January 2007, 16 key territories will be handled separately.

Paramount will wholly own and operate in Australia, Brazil, France, Ireland, Mexico, New Zealand and the UK. Universal will wholly own and operate in Austria, Belgium, Germany, Italy, Netherlands, Russia, Spain, and Switzerland. In addition, under the restructured agreement, Paramount and Universal will have the option to sub-distribute films through each other's operations for a term of up to two years. Paramount will continue to distribute DreamWorks theatrical product internationally. Meanwhile, Universal's new international arm, Universal Pictures International is setting up distribution arms in the UK and in Australia/New Zealand.

Paramount Pictures International (PPI) also recently announced that CJ Entertainment will become the exclusive distributor of Paramount titles in South Korea from February 1, 2007. The announcement followed news that UIP's South Korean branch office will transition to a Universal Pictures International operation as of Jan 1, 2007.

The new Sydney office of Universal Pictures International Australasia, under managing director Mike Baard, handles his first film, Evan Almighty, from June 28. 'We will then segue into the Universal slate,' he says. Some time later he will take over New Zealand. Baard reports to Duncan Clarke and joined on October 1; he moved from South Africa, where he headed Nu Metro Distribution, four years ago. UIP becomes Paramount Pictures. Australia from January 1, still under Mike Selwyn, but continues to hold the reins until mid-year. SANDY GEORGE

In Brazil, Paramount will set up its own international distribution unit and will handle all Universal titles through 2007. Jorge Peregrino, who has been VP of sales and marketing for Latin America and the Caribbean for UIP for seven years, will head up the new company, that will become Paramount Pictures Brazil and will remain based in Rio de Janeiro.

Peregrino, who will become VP for Latin America and the Caribbean for
Paramount, will report directly to Andrew Cripps. 'Because we will use the same structure of UIP, which has been in Brazil for 25 years, the transition will be very smooth for us,' he says. 'The company will be formed by the same people.'

It hasn't been confirmed when Universal will launch a standalone operation in Brazil. ELAINE GUERINI

In January UIP Italy will become Universal Pictures International Italy with Richard Borg staying on as head of operations.

As top executive for the Rome based distributor, Borg will report directly to David Kosse. Borg says UPI Italy will continue to distribute Paramount and DreamWorks films in a 'sub distribution deal at least through July 2008.'

Borg expects a 'soft transition' for his team since they will continue to handle the same amount of product. Under Universal, Borg announced, they will be involved in local film co-productions and acquisitions with details expected mid 2007. Borg confirms those pictures will be 'commercial' productions, rather than art-house fare with a production target of two to three films per year. Borg plans to maintain the same level of operation as before: 'UIP has played at the top levels for years in terms of admissions and quality of product.' SHERI JENNINGS

Yevgeny Beginin, general manager of Universal Pictures International Russia, says that the company will continue to distribute Universal, Paramount and DreamWorks titles under a two-year contract valid until July 2008 and no release plans for Russia have changed.

UPI Russia, based in Moscow, was established in late 2006 on the basis of United Pictures International's branch in Russia, which opened in Russia in
2004, employing the personnel of one of Russia's oldest distribution companies, East-West. Plans are under discussion to open regional offices of UPI Russia, particularly in Eastern Russia. KIRILL GALETSKI