Deseree Stukes ([email protected])
Tue, 4 Aug 1998 12:09:35 -0400
PolyGram/Seagram meet film bidders, face lawsuit
LOS ANGELES (Reuters) - Seagram Co. Ltd. moved closer Monday to selling
PolyGram NV's film unit as part of its strategy in the $10.4 billion
merger, but a laser and digital video disc firm filed a $100 million
lawsuit to stop the deal.
In a July 31 lawsuit filed in U.S. District Court in Los Angeles, Image
Entertainment Inc. claims a Dec. 23, 1996, agreement giving Image
Entertainment the DVD and laser disc rights to PolyGram Video's titles
over a five-year period, is in jeopardy due to the proposed
Polygram-Seagram merger and the pending sale of PolyGram Filmed
Entertainment.
PolyGram received offers for the film unit from 10 bidders late last
week and is providing these bidders with access to more detailed
information to the studio this week, a person familiar with the
situation said.
"The next step will be to narrow these bidders down. I would expect this
would take a few weeks," the source said, adding it was a priority to
sell the studio intact.
In a court filing dated July 31, Image said it agreed to pay PolyGram
Video advances of $6 million for the rights to distribute all new films
produced by all PolyGram affiliates, including major new video releases
of prior movie releases such as "Sleepers" and "Mr. Holland's Opus."
"The acquisition of PolyGram by Seagram and the plan to split off the
film unit would be a violation of these contracts," said John Kirkland,
the attorney representing Image Entertainment, which has paid $3 million
of the $6 million in advances it agreed to pay to PolyGram.
"Our clients are not litigious and would only file a lawsuit as a last
resort, but they were unable to get a reasonable response from
PolyGram," Kirkland said.
PolyGram and Seagram officials declined to comment on the lawsuit, the
pending unit sale or any other asset sales.
The Wall Street Journal reported Monday that Seagram also was
considering the sale of various non-core assets and real estate to raise
$750 million to reduce debt.
This move to dispose of assets follows the sale of its Tropicana juice
business to PepsiCo Inc. for $3.3 billion and comes as Seagram solicits
bids for the film unit.
One source familiar with the company said most of the bids for PolyGram
Filmed Entertainment, with its coveted film library and European
distribution system, ranged between $700 million and $1 billion.
Sources said investment bank Goldman Sachs, which also declined to
comment, had mailed information regarding the film unit to more than 20
interested parties, and had received 10 formal bids by late last week.
The bidders include French pay TV broadcaster Canal Plus, British
entertainment company EMI Group Plc, Carlton Communications and Los
Angeles-based Lakeshore Entertainment.
Officials at these companies were unavailable late Monday.
Neil Braun, who steps down as president of the NBC Television Network in
September, announced last week that he had made a bid with Los Angeles
entrepreneur Marty Tudor and Bank of America.
PolyGram Filmed has three different business segments that appeal to
entertainment companies: a film production group, film library and
European distribution system.
Polygram's 1,500-title film library is particularly attractive to
would-be buyers, analysts said.
Reuters/Variety ^REUTERS@
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