Peace Arch banking on growth


TORONTO -- Boasting the hit Showtime series "The Tudors" as just one of its crown jewels at the American Film Market, Canadian production outfit Peace Arch Entertainment is banking on DVD distribution and TV production to drive a blueprint for growth.

While the company's new theatrical releasing division will be spotlighted at the Santa Monica confab, Los Angeles-based president and COO John Flock said that the Peach Arch's "bread and butter business is home entertainment." He adds, "We do movies because it gives Peace Arch a higher profile."

Flock said that the challenge is to make movies for the right budget and sell them widely internationally. "If the numbers don't stack up for us, we're not reaching for it," he said.

Peace Arch intends to annually produce four to six indie movies for North American theatrical release, each budgeted in the $2 million-$5 million range, and to acquire another four to six titles for its distribution pipeline. But Flock insists that Peace Arch is risk-averse when it comes to moviemaking and releasing.

"I don't want to be making a lot of money on home entertainment and television and spending it on P&A for movies that we hope will be great. That's not our business," he said.

Toronto-based Peace Arch recently launched its movie distribution arm after it bought producers Castle Hill Prods. and Dream Llc. and picked up U.S. DVD distributor Trinity Home Entertainment as part of its continuing U.S. market expansion (HR 5/10).

Peace Arch began its current expansion from film production into home entertainment and TV production in August 2005, when an investment group led by former Paxson and TriStar Pictures executive Jeff Sagansky and former Paramount and Universal TV executive Kerry McCluggage invested $2 million in the company.

Suddenly, the doors to acquisition opened. Peach Arch first picked up Canadian DVD distributor ka-BOOM! Then it bought Castle Hill and Dream for $9.5 million and followed that with a $10 million cash and stock deal for Trinity.

In August, Peace Arch began releasing theatrical titles in the U.S. market, with New York-based Mark Balsam as head of the new division. It also bought the Toronto studio complex Dufferin Gate Prods. for $6 million.

To understand Peace Arch's recent growth, look for a model in Lionsgate, another Canadian-based ministudio that relies on library revenue and TV production to sustain its high-profile film production business.

"Our revenues this year look a lot like Lionsgate's did seven or eight year ago," Flock said.

"We have similar shareholders who see the same analogy: Canadian-based, publicly traded, building a DVD operation, releasing movies theatrically, international sales operation, doing both film and TV production."

A recent game-changer for Peace Arch on the TV front came with "Tudors," a steamy soap opera set during Henry VIII's reign that aired on Showtime and the CBC in Canada. Peace Arch co-produced the 10-hour miniseries with Ireland's TM Prods. and holds worldwide rights outside the U.S.

Flock said the upside potential to Peace Arch is limited after it licensed "Tudors" to Sony Pictures Entertainment for DVD, TV and new-media distribution outside North America. That said, "Tudors" remains a calling card for the Canadian production outfit as it looks to broaden relationships with international broadcasters.

Peace Arch also has high hopes for another CBC miniseries, the Elisha Cuthbert starrer "Guns," for which it recently acquired film, TV and DVD rights for worldwide distribution.

Recent Peace Arch film titles include "Chapter 27," starring Jared Leto and Lindsay Lohan; the romantic comedy "The Deal," toplined by William H. Macy and Meg Ryan; and the romantic comedy "Watching the Detectives," which stars Cillian Murphy and Lucy Liu.

Peace Arch also is looking to raise film financing less from hedge funds and more from high-net-worth individuals who are eyeing the movie business after having made their money elsewhere.

"There's so much money available out there, but it's expensive," Flock said. "People are expecting significant returns. We could step up quickly. We could put together a huge production fund, a huge P&A fund, and start doing big movies and be gone in a year."

He also envisions Peace Arch similarly at work on fewer but bigger direct-to-video titles. And the success of "Tudors" has the Canadian producer looking to get deeper into the TV movie business and even try its hand at dramas.

"Everyone is afraid to make TV movies. We're not. That's our background," Flock said.