Toronto 2012: Industry Optimistic in Wake of eOne-Alliance Films Merger Announcement

Those polled by THR are split over whether the loss of another big buyer means less competition or leaves a vacuum for midsize distribution players to step up.

TORONTO — The initial reaction to the eOne-Alliance Films merger unveiled Friday is positive, as the industry sees inevitable post-takeover job cuts followed by the birth of a Canadian global-distribution giant.

To be certain, eOne’s audacious $230 million play for Alliance Films has rattled Canadian and foreign producers by removing one less film buyer from the domestic market.

STORY: Canada's Entertainment One Agrees to Acquire Alliance Films for $230 Million

“It’s just makes everyone feel like these guys basically own the shop,” one major Canadian producer said privately.

The loss of Alliance Films as an independent player also will be felt overseas -- especially in Britain, where Momentum Pictures will join the eOne fold.

“It means one less big buyer in the U.K. and Canada, which means less competition,” said Susan Wendt of Scandinavian sales giant TrustNordisk. “We’ll have to see if it means fewer films get bought.”

But others predict a host of midsize Canadian distribution players stepping forward to fill the vacuum as the eOne-Alliance combo does a Lionsgate and becomes a global giant after its acquisition of Summit Entertainment.

“There may be other players that jump into the business -- we will step up as well,” said Hussain Amarshi, president and CEO of Toronto-based movie distributor Mongrel Media.

“This opens up the field to new distributors and different ways to distribute movies,” said David Miller, head of indie film producer A71 Productions in Toronto, whose Blackbird debuts this weekend at the Toronto International Film Festival.

With the Alliance takeover, eOne is aiming to become a global indie giant able to negotiate multiterritory deals for rights and welcomed by Canadian producers looking overseas for new markets for their product.

“There’s an inevitability to all this,” said Canadian filmmaker Richie Mehta, whose latest project, I’ll Follow You Down, is handled by eOne. He foresees the combined entity facing down Focus Features and other U.S. players in North America or becoming a pan-European player across the Atlantic.

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Here the Canadians see advantage in eOne coming in and striking multiterritory deals for their films.

“You have a $10 million movie, they come in and pay $4 million for seven or eight territories -- that’s what Universal Pictures [International Entertainment] does,” said one Canadian boutique distributor who is happy to see eOne leave the lower end of film market to upstart players as it pursues bigger movies to back and release.

That’s precisely the carrot eOne is dangling in front of Canadian producers as it consolidates the domestic distribution sector.

“It’s wonderful to have it as a Canadian title, and we love Canadian film, but we really need to continue to contemplate ways to get those films into the hands of consumers in other territories,” eOne CEO Darren Throop told The Hollywood Reporter on Friday.

That sentiment is shared among European players who sense that eOne -- with its expanding post-takeover presence in the U.K., Benelux and Spanish with Aurum Producciones -- will be able to challenge the major studios and European majors across the pond.

“For the big indie titles, the $80 million-plus stuff, they could be a real competitor to a StudioCanal or a Sony Pictures,” said one German seller. “But for the smaller films, I don’t think there will be as much of an impact. On the lower end of the scale, there’s still plenty of competition.”  

More immediately, there’s the question of who will stay and who will go once Alliance Films is folded into eOne.

Throop, who will remain at the helm, said his company has yet to open discussions with the Alliance Films senior management on hammering out a post-takeover management structure.

“There’s no possible way we can run this combined business without the help of [Alliance’s] very talented staff,” he said. “But at this point, we haven’t made any decisions on what that will look like.”

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That includes a decision on the future of Alliance Films topper Victor Loewy, who was not immediately available for comment Friday.

Sally Caplan, managing director of eOne’s London-based international film sales division, said the plan was for eOne and Alliance to run side by side as normal for six months as the new corporate structure is worked out.

She said eOne plans to do bigger films like romcom The F Word, starring Daniel Radcliffe, which is shooting in Toronto and will be released in multiple territories.

Caplan added that the U.K. distribution business is looking to release as many as 25 films a year, more than the other distribution operations of eOne and Alliance.

Canadian observers expect the U.K. output from eOne to come mostly from U.S. supply deals that Alliance Films brings to the table.

And that heralds a host of pink slips and buyout, especially on the acquisitions side, so eOne can secure promised synergies and cost savings from its acquisition to investors.

“In this purchase, they must have done detailed analysis of what kind of overhead to bring in to justify the price they paid,” said one Canadian distributor, dismissing talk at eOne of going slow to digest Alliance Films.

Decisions on who goes and who stays also will depend on severance packages that senior management at Alliance have.

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