Peace Arch set to take on the world

Company looks to expand sales, theatrical businesses

Looking to beef up its international sales arm as well as its domestic theatrical distribution and home video businesses, Peach Arch Entertainment is making an aggressive effort to acquire worldwide rights as it dives into this year's AFM.

And with its Jean-Claude Van Damme starrer "JCVD" opening in limited release in theaters stateside on Friday, "we're hoping that the theatrical business becomes a real business for us in the next year," PAE president and COO John Flock said. That, in turn, is expected to further power the company's burgeoning DVD business.

"That's where the most growth is in the U.S.," added Gerry Noble, newly installed PAE CEO.

Along with its commitment to acquisitions -- PAE has just snapped up such titles as the dark comedy "Nobel Son," starring Alan Rickman and Danny DeVito; the drama "Explicit iLLS," starring Paul Dano and Rosario Dawson; and thriller "Two: Thirteen," starring Mark Thompson -- it's also beefing up its sales team. PAE announced Wednesday that Julie Sultan, an exec vp since April 2007, has been promoted to the newly created post of president, international motion picture sales to lead the expanded sales effort.

Sultan in turn has promoted Suzanne Barron to executive vp, international motion picture sales; Caroline Dubourg to vp, international motion picture sales and business affairs; and Nicole Jelovic to manager, international motion picture sales.

Simultaneously, PAE has scaled back in-house film production, especially direct-to-DVD genre pictures. (The latter move prompted film write-downs after an extensive financial audit last spring.)

"By lowering our production output, we have been able to focus more of our resources on economically acquiring quality films to meet growing demand both internationally and from our own expanding direct DVD and theatrical distribution businesses in North America," Flock said.

PAE's new strategy includes pushing about 500 film titles acquired last year from Castle Hill Prods. and Dream LLC through the Calif.-based DVD distributor Trinity Home Entertainment, also bought in 2007, which extended Peace Arch's distribution network stateside.

The home entertainment push continued with the recent merger of PAE's U.S. home entertainment division with British-based ContentFilm Plc's Allumination FilmWorks unit.

PAE also initially hoped to acquire ContentFilm outright, but that deal fell through this summer thanks to poor market conditions.

PAE also is looking to raise its profile "as a viable theatrical distributor," according to Flock, who predicted that "JCVD" could put its distribution efforts on the map. Amidst the shutdown of several studio specialty divisions and the disappearance of some smaller indies, he sees an opportunity for PAE to step in "since people have vacated this space."

"If we keep overhead down and P&A under control and don't reach for the stars, there is an opportunity to market unique films to specific audiences," he said.

Increased theatrical visibility spurs DVD sales, and it's home entertainment and TV production that is designed to drive PAE going forward, Noble added.

The company scored with Showtime's "The Tudors," a Canadian-Irish co-production. But even though Showtime has renewed the series, King Henry only had eight wives, so looking beyond "Tudors," Peace Arch has launched a scripted TV division in Los Angeles, where exec Marla Ginsburg is developing new series aimed at basic cable and likely structured as international co-productions. "Right now we have 40 projects in active development for TV," Flock said.

Peace Arch also maintains a factual programming arm based in Vancouver, The Eyes, and has dramas in development with all the major Canadian broadcasters.

Noble added that Peace Arch will take the next year to 18 months to clean up its balance sheet, not least to restore a stock price heavily beaten down by the current market meltdown and the company's small-cap status.

By refocusing its activities, PAE has rebounded from an unexpected turn at last year's AFM when its then-CEO Gary Howsam was arrested for allegedly creating false contracts with international distributors in order to secure more than $7 million in film loans from Comerica Bank.

Howsam's arrest rattled PAE, but the company quickly regrouped under lead investor and former co-president of Sony Entertainment Jeff Sagansky, who replaced Howsam as interim CEO until Noble could be recruited.

As for Howsam, the former exec's trial on seven counts of fraud is set for Feb. 3. Federal prosecutors claim Howsam partnered with international sales agent Hilltop Entertainment to create fake and forged documents that appeared to be real international distribution deals with foreign companies for the film "Going Back."

Howsam has pleaded not guilty. His attorney, Donald Randolph, did not return calls for comment on the case. If convicted, Howsam faces a maximum of 30 years in federal prison.

Leslie Simmons contributed to this report.
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