Canal Plus Pulls Back : French Firm to Ease Out of Hollywood Partnership

Canal Plus, the European pay television heavyweight that has been pouring money into Hollywood to become a major entertainment player, is about to turn down the spigot.

Canal Plus this week struck a deal to gradually withdraw from its equity partnership with Warner Bros.-based producer Arnon Milchan, which has resulted in both big hits (“Under Siege”) and misses (“Memoirs of an Invisible Man”).

The Paris-based company, which is also an investor in financially troubled Carolco Pictures, will almost exclusively become a buyer of films rather than a producer.

“We are above all broadcasters, and buying rights is more important,” Chairman Andre Rousselet said in an interview in Los Angeles this week.

Canal Plus’ move suggests that the European money some believed would flow freely into Hollywood, easing a tight cash environment, may not come so easily. An explosion in Europe’s entertainment market created an insatiable thirst for films and television programs, prompting European companies such as Canal Plus to become more directly involved in Hollywood.

But Canal Plus has been criticized as having scattershot entertainment investments that lacked focus and proper oversight. People close to Canal Plus speculated that a recent financial bailout arranged for Carolco accelerated the company’s strategic review. Canal Plus and two other foreign partners in December agreed to pump an additional $60 million into Carolco and provide $50 million more in co-production funds. Canal Plus also operates a small, independent production company called Hexagon.

Rousselet confirmed that Canal Plus this week modified its 2-year-old deal with producer Milchan, who supplies a sizable percentage of Warner Bros.’ films.

Sources familiar with the new agreement say Canal Plus will continue as one of Milchan’s equity partners through this year. After that, Canal Plus will stick to buying rights, but with the flexibility to occasionally invest in films it likes.

The 1991 deal called for three European media companies--the others are Germany’s Scriba & Deyhle and Milchan’s Regency International Pictures--to put up more than $600 million for film production at Warner Bros. for movies to be developed and produced by Milchan. The highly publicized pact at the time was said to be the largest agreement between an American studio and European companies.

The group was buoyed by hits such as “JFK,” “Under Siege” and the new “Sommersby,” which is off to a strong start. But it also produced such box office bombs as “Memoirs of an Invisible Man” and “The Power of One.”

The highly anticipated Michael Douglas film “Falling Down,” scheduled to be released this month, is also produced by the alliance. The amount of money Canal Plus has put into each film varies. Sources say it typically ranges from $5 million to $10 million.

People familiar with the revised agreement say Canal Plus’ decision poses no threat to the venture. Milchan is expected to substitute funds from an expanded credit line from his European banks and cash generated by his recent hits. Canal Plus and Milchan will also form a new company to acquire European rights to films, a move that will require less money from Canal Plus.

Rousselet denied that the company is unhappy with the venture, which he called highly successful. Warner spokesman Rob Friedman said the venture has been financially and creatively successful. Milchan said both he and Canal Plus are happy with the new arrangements.

Canal Plus Box Office

The French TV giant Canal Plus has invested in six films so far under its deal with producer Arnon Milchan. The films have been distributed domestically by Warner Bros. Hits:

Domestic Movie gross to date “Under Siege” $82,304,365 “JFK” $70,405,498 “Sommersby” (opened 2/5/93) $9,835,554

*Misses:

Domestic Movie gross to date “Memoirs of an Invisible Man” $14,358,033 “The Mambo Kings” $6,742,168 “The Power of One” $2,827,107

Source: Warner Bros.