Kinowelt has yet to acquire a 50% stake in Momentum Pictures, chief executive officer Michael Koelmel told Screen Daily on Friday, contradicting a popularly-held belief that the UK distributor is already a jointly-owned venture between his German company and Alliance Atlantis of Canada.
"Either we will become a shareholder or use [Momentum Pictures] as a distribution platform," revealed Koelmel, adding that Kinowelt and Alliance Atlantis, Momentum's current sole shareholder, are "still working intensively on drawing up a final decision on the strategic orientation." Koelmel did not elaborate on a time frame for sorting out Kinowelt's exact relationship with Momentum.
The revelation, which came during a briefing on Kinowelt's financial results for 2000, also coincided with the formal confirmation that Kinowelt has abandoned any plans to establish its own TV network in Germany. In future, Kinowelt wants to concentrate on being a content provider rather than a small screen end-user - a strategy that it wants to extend to the Internet, where it is looking for strong partnerships to share the burden of its on-line operations.
In the meantime, even as those discussions continue with Momentum, the German company continues to be active in UK distribution through its relationship with the Canadian-owned distributor. Kinowelt Home Entertainment, for example has already delivered more than 300,000 DVD copies of the five titles it has released so far from the 240-strong StudioCanal back catalogue. A full 120,000 units of Reservoir Dogs alone were sold by Kinowelt in the UK, where Quentin Tarantino's debut remains an enduring cult favourite.
Kinowelt acquired the European rights to the StudioCanal catalogue last year and now, says Koelmel, it intends to further internationalise its DVD activities using those titles as a springboard. Releases mastered at the company's own plant in the East German town of Halle will then brought into the market in Italy, Spain and other European territories in co-operation with local partners.
Meanwhile, Kinowelt's announcement that its earnings before interest and taxes (EBIT) would be $22.3m (DM 49m) for the financial year 2000 ($7.3m below the figure for the previous year), on group turnover of $276.3m (DM 608m) led to further drops in the company's share price during trading on Frankfurt's Neuer Markt on Friday.
Kinowelt's chief financial officer Eduard Unzeitig explained that the drop in EBIT had largely been caused by unbudgeted depreciation of the football merchandising activities where the valuation of licenses and stock had been adjusted downwards by $7.7m (DM 17m). Moreover, the investment in four new multiplexes and the closure costs for six unprofitable Arthouse cinemas last year had resulted in a non-recurring charge of $5.9m (DM 13m) against the results for Kinowelt's theatrical exhibition operations.
Presenting the provisional figures for the 2000 financial year, Unzeitig pointed out that, according to targets set in November 1999, the license trading division had planned to post turnover of some $154.5m (DM 340m). The $59.1m (DM 130m) shortfall - the actual figure was $94.5m (DM 208m) - was the combined result of three factors: the decision not to acquire the remaining 90% of the sports rights agency Sportwelt had meant $22.7m (DM 50m) less in turnover; the postponement of a large US film by Kinowelt's US production arm which would have generated another $22.7m (DM 50m) in revenues; and, finally, film sales to German TV stations came in at between $13.6m - $18.2m (DM 30m - DM 40m) less than anticipated.
At the same time, some of that shortfall has been compensated over the last year by higher than expected growth in other business areas such as home entertainment (especially DVD), theatrical exhibition and inflight entertainment .
Koelmel stressed that the company plans to concentrate future growth on the core businesses of license trading and production; theatrical distribution and exhibition; home entertainment; TV licensing; and the internationalisation of distribution activities in Eastern Europe as well as of DVDs throughout Europe. He added that Kinowelt will not be acquiring the remaining 90% stake in Sportwelt or undertake any further investments in the Fanworld merchandising chain and will be looking for a strategic partner for this business.
Looking ahead to the financial year 2001, Unzeitig expected that group turnover would increase to $318.2m (DM 700m) with an EBIT of $50m (DM 110m) without the inclusion of any licensing revenue from deals with private German stations.