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March 2003
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TOP 5 U.S.
DISTRIBUTORS

The top 5 domestic distributors as of the end of last month were as follows
(dollar figures in millions):

1) NEW LINE
$229.5
15.17%

2) MIRAMAX
$180.6
11.94%

3) BUENA VISTA
$180.3
11.92%

4) DREAMWORKS
$173.6
11.48%

5) WARNER BROS.
$164.1
10.85%


VIVENDI UNIVERSAL MULLS BUYOUT OFFER

After a meeting in Paris last month, Vivendi Universal SA is thinking over a $20 billion bid for the company's U.S. entertainment assets presented by Marvin Davis and his equity partners. There had been speculation that the Davis camp wouldn’t be unable to come up with the cash for all of the entertainment assets, but it’s been confirmed that Bain Capital and Texas Pacific will partner with Davis on the equity funding, with Deutsche Bank AG providing debt financing for the assets. It now appears that Vivendi Uni is deciding between the Davis bid and selling off its assets individually. But Davis has warned he may withdraw his offer unless Vivendi agrees to deal exclusively with his investment group.


DISNEY STOCKS REBOUNDING

Shares of the Walt Disney Co. are on the profit rise again after investors shrugged off a 42% drop in profits for the first quarter. Surprisingly strong theme park results and rating gains at ABC mean that Walt Disney Co. is finally beginning to deliver on a long-promised rebound. Fiscal first-quarter income plunged 42% primarily because of one-time financial items and Disney promised investors they would see a rebound. Adjusting for those one-time items, Disney said first-quarter earnings per share rose 13% to 17 cents, exceeding Wall Street projections. "We still have a number of challenges ahead of us, but we remain convinced of the extraordinary potential of our businesses," chairman and CEO Michael Eisner said in reiterating that Disney will have 25%-35% earnings growth this fiscal year.



REGAL TAKES PRESHOW DIGITAL

Advertising before a feature movie begins has been around almost as long as the movies themselves, but Regal Cinemedia, the theater chain subsidiary of Regal Entertainment Group has now taken it digital and is making a bundle. Last month, Regal announced a multiyear agreement with Vivendi Universal Entertainment (VUE) to advertise during Regal's new digital preshow scheduled before the theater chain's feature presentations. The deal is rumored to be worth a minimum $2.5 million. VUE joins advertisers NBC and Turner Broadcasting in developing digital content for the Regal preshow. One of the advantages of Regal’s digital preshow is the advertiser’s ability to quickly and inexpensively update or completely change what moviegoers see on the screen.


FOX TO RUN PROMOS ON TIVO

TiVo and 20th Century Fox have struck a deal to promote five of the studio's upcoming films, beginning with "Daredevil." While TiVo’s 1 million-plus viewers in about 510,000 households is not that impressive when compared to the audience of 88 million viewers that Fox advertised to during the Super Bowl, both Fox and TiVo executives emphasize that the demographics of TiVo users are extremely targeted and attractive to movie marketers. TiVo subscribers will be able to watch trailers and special behind-the-scenes footage of each upcoming film.


SAG, AFTRA CREATING NEW UNION

The national boards of SAG and AFTRA have taken the first step towards creating an entirely new performers union by jointly endorsing the principle outlines of a new union. SAG's national board unanimously endorsed the plan while 72 members of AFTRA's board voted in favor and three members in opposition. The new union will have three "affiliate" organizations each tailored to the needs of recording artists, broadcasters and actors, respectively. The next step in the creation of the new union will be the drafting of a constitution, a business plan and a strategy for implementation and transition. The joint boards meet again on April 5 in Washington to approve the new constitution and okay a membership vote. The new union must be approved by at least 60 percent of the SAG/AFTRA membership. SAG currently has approximately 117,000 members while AFTRA has about 80,000 members. Approximately 40,000 people are members of both.


BLOCKBUSTER WANTS "DVD WINDOW"

While Blockbuster, like other video rental companies, reportedly want a "DVD window" in which studios would make their DVD releases available exclusively for rental for a period before putting them up for sale, it doesn’t seem likely to happen, and Blockbuster chairman and CEO, John Antioco, appeared to downplay the proposal last month. "If no rental window emerges," he said, "we are certainly happy with how it is today." He made the remarks in discussing the company's fourth-quarter report, which indicated that it amassed $30.7-million in net income versus a $4.5-million loss during the comparable quarter a year ago.



JANUARY BOX OFFICE WORISOME

Despite New Line's "The Lord of the Rings: The Two Towers" and DreamWorks' "Catch Me If You Can," 2003 got off to a sluggish box office start in January, compared to the previous two years. The total for the national box office in January was $643.8 million. That’s down 3% from last year's record $662.9 million and the $646.3 million collected in 2001. But dollar figures are less worrisome than ticket sales. Estimated admissions in January were down nearly 7% from last year, 8% from 2001 and 9% from the record 117.1 million tickets sold in 1998, when "Titanic" debuted. The percentage drops in box office income don’t loom as large as drops in admissions only because of increases in ticket prices. This year's admission total is only the fourth best showing for the month.


DVD RENTAL IS A SUCCESS

Netflix recently announced that it has surpassed the million-subscriber mark just 3 1/2 years after the company’s launch. The online company charges $20 a month to subscribers who rent DVDs over the Internet and has a Wall Street reputation as one of the Internet’s truly successful dot-coms. The company boasts a $360 million market cap, is cash-flow-positive and will move "in and out of profitability over the year," CEO Reed Hastings said, predicting that Netflix will surpass 5 million subscribers in an another four to seven years. "DVD is exploding, and that's what's propelling us forward," Hastings said. About 40 million homes had DVD players at the end of last year and with that figure still on a steady upward spiral, Netflix profits are expected to follow suit. Netflix has also begun advertising movies on the DVD envelopes they mail to subscribers. But the ads are free. "If we do nice things for studios without nickel-and-diming them, they'll return the favor," Hastings said. Example: Studios helped arrange a recent Netflix promotion at electronics retailer Best Buy. But success breeds imitation and both Blockbuster Video and Wal-Mart launched competing services last year, the former at FilmCaddy.com and the latter at WalMart.com.


NEW CINEMA AD COUNCIL

National Cinema Network, Regal CineMedia and Screenvision have joined forces to create a national trade association, the Cinema Advertising Council. With the content potential of digital preshows and other theater advertising growing all the time, the Council may help by providing uniform guidelines.


BALTIMORE-SPRING CREEK RETEAMS WITH WARNERS

Baltimore-Spring Creek Productions, headed by Barry Levinson and Paula Weinstein, has signed a three-year, first-look production deal with Warner Bros. Pictures. The company had been with Warners from 1997-2000, but switched over to Intermedia. But after recent successful collaborations such as "Analyze That," the two companies decided to reinstate a more permanent arrangement. Weinstein is also a producer on Warner’s upcoming action-adventure comedy "Looney Tunes: Back in Action," scheduled for release this year.