In a deal it describes as a move to find a workable business modelfor the digital era, Pathe UK is scaling down its theatrical operation and teaming with Warner Bros Entertainment UK to distribute Pathe productions in the UK and Ireland. Pathe will continue to devise the marketing campaigns for its titles.

20th Century Fox will continue to handle Pathe films in the home entertainment market.

The new arrangement kicks off with Stephen Frears' Cheri in May.

Pathe and Warner Bros. Entertainment UK (WBEUK) will also work together to identify co-production opportunities.

The agreement does not include the activities of Pathe France. In addition, Pathe UK will continue as international sales agents for both Pathe's own productions and third party titles.

Speaking to ScreenDaily Pathe UK's managing director Cameron McCracken described the move as a strategic response to the need for a new look at distribution models in the face of the challenges presented by the digital era.

'We are genuinely forming an alliance to reinvent a business model that does not work at the moment. We are in this for the strategic longhaul. Revenues are being squeezed across the industry under the traditional business model and Darwinism is the survival of those most able to adapt. This is not short term cost cutting, it is taking a strategic mid to long term view,' said McCracken.

However McCracken did confirm that 'it seems likely that there will be redundancies' once the theatrical sales distribution role is assumed by WBEUK from April 13 but did not specify possible numbers involved.

Pathe UK has started a process of possible redundancies involving working through a period of consultation with employees.

McCracken pointed to Pathe's existing relationship with Fox for video distribution and their production relationship with Warner Bros. as making the move 'more organic' than it may at first appear.

The two companies have already been working together for months on The Jungle Books - a big budget live action version of the classic Kipling novel.

Neil Marshall who is deputymanaging director at WBEUK was previously sales director at Pathe UK.

'Economic crisis aside, the new digital era is a difficult period for finance and distribution, you need powerful allies,' he added.

Francois Ivernel, executive vice president of Pathe said, 'To address the challenges of a rapidly evolving digital world, we felt the most rational response was to develop an alliance with a US Studio'.

Pathe UK will focus increasingly on the development and production of its own titles rather than the acquisition of third party films.

The company intends to produce a slate of four to five English language films a year, to be supplemented by productions from Pathe France.

Pathe UK will handle the marketing campaigns for the films, with WBEUK taking on the exploitation of the titles across all media outlets and platforms with the exception of the video rights, which will continue to be handled for Pathe by Twentieth Century Fox.