Afterspending a year making a noise at international film markets through blanketadvertising campaigns and huge slate announcements, David Dadon's GiantsEntertainment has been sold to a tiny publicly-quoted Internet company that hasbeen operating until now as a minor-league entertainment-themed portal.
The merger with Hollywood Partners.com Inc - no relation to the German filmproduction fund also known as Hollywood Partners - means that Dadon hassucceeded in his stated aim of going public in the US without having to risk aninitial offering in today's calamitous stock market climate.
Hollywood Partners.com will now change its name to Giants Entertainment and startfocusing its activities on producing and marketing films under Dadon, who willreplace Gene Scher as chief executive officer. Dadon has also been namedco-chairman of the newly-merged outfit (alongside Mark Beychok) and been issueda tranche of preferred shares convertible after 24 months.
Hollywood Partner's share-price shot up more than 40% upon news of the deal to finish at around 81 cents, a large jump in the context of how other on-linecompanies have been faring of late but still significantly down from the $7price range its shares were trading at last April. With nearly nine million sharesoutstanding, the company has a market capitalization just shy of $5m accordingto Bloomberg's data.
Key assets acquired in the merger include the worldwide rights to TonyVitale's Very Mean Men, a black comedy starring Matthew Modine, Ben Gazzara,Charles Durning, Burt Young, Scott Baio, Louise Fletcher and Martin Landau thatscreened at the American Film Market last month. Hollywood Partners also getsfirst option on an additional ten recently-completed Dadon-produced films, aswell as eight others that are currently in production.
These projects have been among the many that have been paraded at recent markets, either via an aggressive poster campaign along the Croisette in Cannes lastyear or though 40-page advertising supplements carried in trade publications.
Among the higher-profile films are: a new comedy directed by Blake Edwards, HouseRules, starring his wife Julie Andrews alongside Christopher Plummer and Jack Lemmon; Revolution Now, a comedy with David Arquette, Lukas Haas and Mira Sorvino all attached; Into The Flames, a US-European Holocaust drama alsostarring Sorvino; and at least three films featuring Michael Madsen.
In a statement yesterday, Dadon suggested that the merger would provide him "with the necessary infrastructure to produce higher budgeted films that will have agreater opportunity to become Hollywood blockbusters." Moreover, he added, "the major studios are increasingly looking to independent producers for productthat they can pick up after production and distribute on a national andinternational scale."
For his part, Beychok said he was looking to Dadon to lead "our company into themulti-billion dollar entertainment industry" by feeding both foreign and US distributors with what he termed as "efficiently produced films."
This is the second major corporate mutation for Beychok's company. Previously in the snack food business, the outfit launched its initial website under the HollywoodPartners.com URL as a venue for offering sweepstakes contests across a number of industries include food manufacturing, entertainment, publishing, sports and concerts. Last May, it added an on-line magazine that focused on movies and television, although the news site effectively shut down last November and otherinformation resources such as a running list of upcoming releases seemed to have ground to a halt by the New Year.
In its last 10Q quarterly report to the Securities & Exchange Commission that was filed in November, the company alluded to the difficulties faced by suchportals. "Revenues to date have been minimal for the company's newbusiness model and both the financial market conditions and the Internet marketconditions have changed considerably since our initial launch. It has becomeextremely difficult to attract investors to a pure Internet business model withno immediate revenue and profit. In addition, advertising and promotionalopportunities driven by a pure Internet model have also become harder tosecure. Due to these precarious market conditions, management has identifiednew opportunities."
Before this week's deal with Giants Entertainment, these opportunities seemed torevolve around proprietary software programmes that allowed sales professionals to better manage their customer relationships though automatic responses and follow-up messages. To this end, Hollywood Partners signed letters of intent earlier this year to acquire both BambooBiz and Pipeline Technologies. It isnot known how these sales communications tools might now fit in with Giants'film production and sales business - assuming both these two transactions willcontinue to close.