Cinram to stop making DVDs for Warners

Toronto company and Hollywood studio to end six-year pact

TORONTO -- A tightening home entertainment market on Monday caught up with Canadian DVD maker Cinram International.

Toronto-based Cinram said it will stop making DVDs for Warner Home Video on July 31, 2010.

The end of a six-year DVD pact with the Hollywood studio sent stock in Cinram down CAN$1.71 ($1.60), or by 60%, to CAN$1.20 ($1.27) in afternoon trading on the Toronto Stock Exchange.

Cinram's long-term deal with Warner began in 2003 when then AOL Time Warner sold its Warner Music Group's DVD and CD manufacturing and distribution operations to the Canadian company for $1.05 billion.

That deal included Cinram making and distributing DVD and CD titles in North America and Europe for Warner Home Video, Warner Music Group and New Line Cinema.

Supplying DVDs to Hollywood studios and other foreign customers makes up around 80% of Cinram's global business, and the Warner Home Video supply deal accounted for around 28% of its overall revenue in 2009.

Cinram CEO Steve Brown said his company would work with Warner Home Video to ensure "an orderly transition of the services," which likely will include job cuts at facilities in the U.S., Mexico and Western Europe.