Japan distributors face uncertainty

Usen selling Gaga Communications

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CANNES -- More question marks hover over Japanese distributors after it was announced Tuesday that Gaga Communications is to be sold by its parent, communications group Usen.

The sale of Gaga follows confirmation of bankruptcy for another Cannes regular, distributor Wise Policy.

Usen is seeking to dispose of its 58% stake in the distributor and the remaining Gaga shares held through its real estate subsidiary Almex. It has said that it will give Tom Yoda's TY Ltd. and property firm Kinoshita first options on the business.

Gaga, an aggressive indie that was once famous for the number of executives it took to meetings at film markets, dipped into the loss column in recent years and halted investment in local Japanese movies. Recent successes with "Slumdog Millionaire" and "Burn After Reading" and a policy of sharing distribution with other players may have returned Gaga to profit, but Usen cited "volatile market conditions" as reason for the planned disposal.

News of Wise Policy's closure emerged last week after the company, previously known as Cinema Parisien, filed bankruptcy papers with a Tokyo court in mid-April. The company previously handed Ang Lee's "Lust, Caution," "Brokeback Mountain" and James Ivory's "The Golden Bowl."

While the past year has seen the Japanese yen strengthen against the U.S. dollar, potentially putting Nippon buyers in a stronger position in film sales negotiations, rights prices have instead continued to fall. Distributors handling imported indie films have been squeezed by the growing popularity of blockbuster Japanese movies, the increasing dominance of distribution-exhibition giant Toho and costly and exceptionally tough conditions for marketing.

Nor have new ancillary markets emerged as viable commercial propositions. Synergies between Gaga and the GyaO broadband video operator have failed to materialize and Usen recently sold both GyaO and content creation firm Showtime.