Source : Globe & Mail

A rising player in the Canadian entertainment industry is in talks to acquire the domestic assets of North American movie distributor ThinkFilm, which has been offside of federal ownership regulations since it was bought by a U.S. business last year.

Thinkfilm's Canadian assets, which include the rights to dozens of domestic movies, have been forced onto the auction block by Ottawa following the company's 2006 sale to Los Angeles businessman David Bergstein.

After months of wrangling, film industry sources say a deal to finally sell the Canadian assets is now in the works with Entertainment One, a Toronto company that has spent upwards of $100-million in less than a year buying film distribution assets and movie libraries around the world.

Under Canadian rules, foreign-owned distributors in Canada are not allowed to distribute domestic films, meaning the sale of Toronto-based ThinkFilm's Canadian operations to a U.S. buyer violates federal regulations.

Critics within the film industry have been calling for the federal government to enforce its policy on such deals for more than a year, and many have been angered the company has been allowed to operate so long under U.S. ownership.

Unlike Alliance Films, the Canadian movie distribution business bought by U.S. investment bank Goldman Sachs Group Inc. last year, ThinkFilm is now predominantly run out of New York. After Goldman bought Alliance, it partnered with Toronto-based EdgeStone Capital Partners Inc. to abide by federal ownership rules.

The ThinkFilm transaction would mark the fifth significant acquisition for Entertainment One since it moved from a Canadian-traded income trust last March to London's AIM exchange. The company, run by former Alliance Atlantis executive Patrice Théroux, acquired Montreal-based Seville Films in the fall, and this week announced the takeover of European distributor RCV Entertainment BV.

Reached yesterday, Mr. Théroux would not comment on ThinkFilm, but said, "We're interested in consolidating businesses in territories where we're operating, and buying competitors or libraries in territories where we are."

ThinkFilm's Canadian library includes roughly 50 titles including independent films such as Everything's Gone Green from director Paul Fox and writer Douglas Coupland.

A battle over unpaid loans from Telefilm Canada appears to have been a catalyst for the deal. Telefilm loaned funds to ThinkFilm to cover distribution and marketing costs for a dozen movies. Sources say ThinkFilm owed Telefilm roughly $1-million.

Telefilm, with help from Heritage Canada, got Ottawa's Justice Department to file an injunction demanding ThinkFilm pay up. Repayment terms are being negotiated, smoothing the way for the Canadian ThinkFilm assets to be sold.

When ThinkFilm was sold in October, 2006, its president Jeff Sackman anticipated he would sell off its Canadian titles in a month.

Heritage Canada spokeswoman Josianne Jalbert declined yesterday to comment on Ottawa's role in forcing the sale, saying "the government will ensure that the provisions of the Investment Canada Act and Canada's film distribution policy are respected in this transaction."

Other homegrown distributors have been rumoured to be interested, including Toronto's Maple Pictures, and Montreal's TVA Films.

© Globe and Mail
A rising player in the Canadian entertainment industry is in talks to acquire the domestic assets of North American movie distributor ThinkFilm, which has been offside of federal ownership regulations since it was bought by a U.S. business last year.

Thinkfilm's Canadian assets, which include the rights to dozens of domestic movies, have been forced onto the auction block by Ottawa following the company's 2006 sale to Los Angeles businessman David Bergstein.

After months of wrangling, film industry sources say a deal to finally sell the Canadian assets is now in the works with Entertainment One, a Toronto company that has spent upwards of $100-million in less than a year buying film distribution assets and movie libraries around the world.

Under Canadian rules, foreign-owned distributors in Canada are not allowed to distribute domestic films, meaning the sale of Toronto-based ThinkFilm's Canadian operations to a U.S. buyer violates federal regulations.

Critics within the film industry have been calling for the federal government to enforce its policy on such deals for more than a year, and many have been angered the company has been allowed to operate so long under U.S. ownership.

Unlike Alliance Films, the Canadian movie distribution business bought by U.S. investment bank Goldman Sachs Group Inc. last year, ThinkFilm is now predominantly run out of New York. After Goldman bought Alliance, it partnered with Toronto-based EdgeStone Capital Partners Inc. to abide by federal ownership rules.

The ThinkFilm transaction would mark the fifth significant acquisition for Entertainment One since it moved from a Canadian-traded income trust last March to London's AIM exchange. The company, run by former Alliance Atlantis executive Patrice Théroux, acquired Montreal-based Seville Films in the fall, and this week announced the takeover of European distributor RCV Entertainment BV.

Reached yesterday, Mr. Théroux would not comment on ThinkFilm, but said, "We're interested in consolidating businesses in territories where we're operating, and buying competitors or libraries in territories where we are."

ThinkFilm's Canadian library includes roughly 50 titles including independent films such as Everything's Gone Green from director Paul Fox and writer Douglas Coupland.

A battle over unpaid loans from Telefilm Canada appears to have been a catalyst for the deal. Telefilm loaned funds to ThinkFilm to cover distribution and marketing costs for a dozen movies. Sources say ThinkFilm owed Telefilm roughly $1-million.

Telefilm, with help from Heritage Canada, got Ottawa's Justice Department to file an injunction demanding ThinkFilm pay up. Repayment terms are being negotiated, smoothing the way for the Canadian ThinkFilm assets to be sold.

When ThinkFilm was sold in October, 2006, its president Jeff Sackman anticipated he would sell off its Canadian titles in a month.

Heritage Canada spokeswoman Josianne Jalbert declined yesterday to comment on Ottawa's role in forcing the sale, saying "the government will ensure that the provisions of the Investment Canada Act and Canada's film distribution policy are respected in this transaction."

Other homegrown distributors have been rumoured to be interested, including Toronto's Maple Pictures, and Montreal's TVA Films.

© Globe and Mail