Universal Pictures and Paramount Pictures are to set up their owndirect distribution operations in 15 key territories beginning in January 2007,the studios announced jointly on Tuesday.
The move comes as part of a long-term agreement that extends andrestructures their UIP international distribution joint venture, originally setup with MGM, and UA in 1981.
Universal and Paramount became sole partners following thedeparture of MGM and UA in 2000.
UIP will continue to manage all countries outside of North Americathat are not covered individually by Paramount and Universal, and will continueto operate under its current structure and management led by chairman and chiefexecutive officer Stewart Till and president and chief operating officer AndrewCripps through Dec 31, 2006.
Beginning in 2007, Universal and Paramount will each assume soleownership and operation of multiple countries currently overseen by UIP.
Paramount will wholly own and operate in Australia, Brazil, France,Ireland, Mexico, New Zealand and the UK, while Universal will wholly own andoperate in Austria, Belgium, Germany, Italy, Netherlands, Russia, Spain, andSwitzerland.
The two studios will have the option to sub-distributefeatures through each other's operations for a term of up to two years.Universal will continue to distribute DreamWorks theatrical productinternationally.
Also beginning in 2007, the restructured UIP joint venture willoversee the direct distribution of feature films in 20 countries, compared tothe 35 countries it currently operates, and will continue to manage allexisting licensed countries.
Currently there are no plans to shut down any country office inwhich UIP operates. The 20 countries in which UIP will continue to distributeare: Argentina, Chile, Colombia, Denmark, Greece, Hungary, India, Japan, Korea,Malaysia, Norway, Panama, Peru, Poland, Singapore, South Africa, Sweden,Taiwan, Thailand, and Turkey.
Paramount will base the headquarters of its new internationaloperations in Los Angeles, while Universal's international operations will beheadquartered in London. Paramount will also establish a European regionaloffice.
"This marks the end of an era, but also the beginning ofsomething new and exciting for each of the partners and for UIP,"Universal vice chairman Marc Shmuger said.
"Today's announcement ensures that UIP will continue tooperate for many years to come, while recognising the long-term strategicimportance for us as a studio to directly control our own internationaldistribution and marketing operations."
"This new venture creates an opportunity for both Paramountand Universal to launch new operations throughout the world from thefoundations built by our successful UIP partnership," Paramount's presidentof worldwide marketing and distribution Rob Moore added.
"Our goals of utilising our global assets to maximiseinternational growth can only be fully realised with this exciting newstructure."
"UIP has a long and proud history as the premiere distributorof motion pictures internationally," UIP's Till said.
"This success has been driven by our tremendously loyal anddedicated staff around the world. Our immediate objective is to continue toachieve uniquely impressive box office results while supporting our partners asthey pursue their new long-term strategic objectives."
Some kind of re-structuring had been expected for some time byindustry executives, with talk even of a full-scale dissolution of UIP.
However, the timing is ironic: UIP has enjoyed extraordinarysuccess at the international box office this summer, grossing more than $350.2mfor Paramount's War Of The Worlds and more than $260.1m for DreamWorks International's Madagascar.