As anticipated, Marvel's net sales decreased over last years first quarter period due in part to film licensing revenue. The year-ago quarter included a non-refundable advance from Sony Pictures Entertainment for the feature film license of Spider-Man, as well as an advance from Universal Studios for a feature film based on The Hulk. Also, year-ago first quarter revenues reflected strong initial distribution shipments for the Toy Biz divisions new line of World Championship Wrestling (WCW) products.
The continuing tribulation around the merger of Time Warner and America On-line now includes impending separate fines looming over the two firms. The Los Angeles City Attorneys Office and Information Technology and General Services Committee are looking to the recent dispute between Disney and Time Warner, which resulted in Time Warner pulling ABC from its cable service. The move affected some 400,000 subscribers for 36 hours, which included the sweeps week celebrity broadcast of WHO WANTS TO BE A MILLIONARE.
Nelvana Limited announced that it has filed with the Ontario Securities Commission to offer 3.75 million subordinate voting shares of the company in the U.S. and Canada. A portion of the money gained from the new offering will be used to repay loans for the purchase of Klutz Publishing, a leading U.S. childrens book publisher. The remainder of the funds will be used to pay off borrowings under the firms credit facilities. The producer of children favs BABAR and FRANKLIN is selling 3,684,032 shares and the remaining 65,968 shares are being sold by two unnamed shareholders.
Quebec Animation, an alliance of animation companies in Quebec, announced that Oscar award-winning Productions Pascal Blais has joined the group. Productions Pascal Blais THE OLD MAN AND THE SEA recently won the Oscar for best animated short. Formed in 1999, the organization highlights the creativity and mastery in animation and visual effects of its members, while each company stands as an independent entity. "The rise of Montreal as an internationally recognized shooting center in the past ten years has been impressive," said Pascal Blais, President of Productions Pascal Blais.
A Canadian Television Fund (CTF) commissioned report calls for stiffer conflict-of-interest rules for the distribution of their CA$200 million in funds. Two reports, one by consultants François Colbert and David Silcox for CTF and one by KPMG for the Heritage Ministry, pointed out several serious administrative problems in the way Canadian funds are handed out to production companies. Both reports recommend that Telefilm Canada, a second government agency that helps fund and produce Canadian productions, should get out of the funding business and concentrate on producing feature films.
Cinar has been quiet about an internal investigation looking into the use of company funds to renovate the co-founders Montreal home. No comment, was all Suzan Ayscough would give the press about co-founders Micheline Charest and Ronald Weinberg using almost CA$500,000 (US$348,000) of company funds to touch up their home without the knowledge of the board of directors. In March, Charest stepped down from her positions as co-CEO and chairman and Weinberg left his post as president and co-CEO.
Station X Studios Project: Messiah 3D animation development team, composed of Station X president and co-founder Fori Owurowa, Station X co-founder Dan Milling and software developer Lyle Milton, have spawned a new Santa Monica-based visual effects production facility. The yet-to-be-named new companys business plan is to enhance and expand the character animation tools introduced with Project: Messiah at SIGGRAPH 99. The new production house will keep close ties to Station X and the three principals will remain shareholders.
Independent film producers are calling foul over the amount of funds going to Quebec. French-language productions are guaranteed at least a third of the CA$200-million a year provided by the Canadian Television Fund (CTF) and Quebec-based film companies this year are receiving nearly 40% of the federal funds. Another sore point is that in years past Cinar Corp., the Montreal-based producer of childrens series, has received as much federal funding as the entire Alberta industry. Currently, Cinar is under investigation for using false Canadian names on scripts by U.S.
Canadian securities watchdog, the Ontario Securities Commission (OSC), has barred officers, directors and insiders of Cinar Corp. from trading in shares of the troubled children's television production company. OSC issued a temporary cease-trading order against 57 Cinar individuals as a result of the Montreal-based company's failure to meet regulatory filing requirements. On April 18, 2000, Cinar missed the deadline of filing the results for the year ended Nov. 30, 1999.
Harvey Entertainment Company announced that The Chase Manhattan Bank is arranging a US$25 million, five-year revolving credit facility and that Harvey has completed the acquisition of 100% of the capital stock of PM Entertainment Group Inc., an independent entertainment production and distribution company. The PM Entertainment Group purchase consisted of $6.5 million in cash and $1.45 million in Harvey Entertainment Common Stock paid at closing, as well as a $2.05 million subordinated note, payable over the next five quarterly periods.
Humongous Entertainment, a leading publisher of children's entertainment products, announced a donation of US$228,000 to the Make-A-Wish Foundation, the largest wish-granting organization in the world. The donation was the result of a specially created holiday promotion appearing on 16 of Humongous Entertainment's popular children's CD-Roms. With more than 105,000 holiday consumers participating, this promotion became the largest rebate program in the company's history.
Mexico City-based Ollin Studio has opened a new office in Toronto, Canada. The animation and post-production studio's new facility will offer computer animation, post-production, Internet and multimedia services. Ollin Studio is one of the top animation, post-production, Internet and multimedia houses in Mexico. Ollin has brought high quality animation/post-production to the Mexican market and hopes to do the same in North America. The company's international business representative in Canada is Jose Luis Monzon.
The Royal Canadian Mounted Police (RCMP) filed their first documents in the CINAR Corp. tax fraud case. According to the report CINAR received at least CA$7.8 million (US$5.4 million) in Quebec provincial tax credits by allegedly placing false Canadian names on scripts written by U.S. writers to receive tax credits. In the report, RCMP says that several executives, including former co-CEO and co-founder Ronald Weinberg, asked former CINAR employee Thomas Lapierre to create subcontracts that would be used to pay U.S. scribes.
GT Interactive Software Corp. announced that in an effort to boost its Humongous Entertainment children's software division, it would fold the company's existing operations into the GT Interactive arm. The New York-based gaming company will adopt a unified corporate direction, similar to that of GT Interactive's majority owner Infogrames Entertainment. Infogrames hopes that the new arrangement will increase shareholder value and produce a re-energized company.
Time Warner Inc. reported operating income before amortization of intangible assets (EBITA) of US$1.17 billion on revenues of $6.55 billion for the first quarter of 2000. In the first quarter of 1999, EBITA was $1.24 billion on revenues of $6.09 billion. EBITA grew 13% for the first quarter when normalized for certain items described below affecting the comparability of operating results. Revenue grew 8% for the quarter on a normalized basis.
On Wednesday, April 12, 2000, Nelvana Limited announced it has acquired privately held Klutz, one of the leading branded children's book publishers in the U.S., for US$74 million. The Toronto-based company plans to integrate Klutz into Nelvana's Branded Consumer Products business, which includes established operations in publishing and merchandise licensing. Under the terms of the agreement, Nelvana will acquire 100% of the stock of Klutz.
An event has happened that comic book fans have been debating over late night games of Dungeons and Dragons for decades -- What would Batman be like if Stan Lee created him? DC Comics announced the teaming of living legend Stan Lee, the co-creator of Spider-man, the Hulk and the X-Men and founder of Stan Lee Media, with longstanding rival DC Comics to present Lee's alternative interpretation of such super-heroes as Batman and Superman.
Stan Lee Media, Inc. (SLM) announced a strategic alliance with Canadian-based Toon Boom Technologies for the development of Web-based animation software, which SLM will utilize in constructing its episodic Web comics. Jamie Wilkinson, executive vice president, Internet strategy for SLM, will oversee Beta testing in late summer/early fall 2000, to take place in Montreal and at a number of animation houses throughout the world. Pentafour Software & Exports Ltd., a leading developer of 2D/3D graphics and animation, special effects and software, will also participate in the project.
PuppetTime, Inc. and Prosoft Engineering, Inc. announced a strategic development partnership that will provide PuppetTime with access to Prosoft's engineering resources to accelerate the development of PuppetTime's patent pending Web 3D storytelling technologies.
Canadian-based TV and film company Alliance Atlantis Communications and Munich-based kids producer TV Loonland have joined to create animated joint ventures. The German producer will supply CA$110 million (US$ 76 million) over the next three years to co-create up to nine new children's series. As part of the deal, TV Loonland will hold all European rights, while Alliance will control the remaining worldwide rights. For an additional $14 million, TV Loonland has acquired European rights to Alliance's portfolio which includes YVON OF THE YUKON.
Film Roman Inc. and The Harvey Entertainment Company announced an agreement whereby The Harvey Entertainment Company will serve as Film Roman's international sales representative. As part of the deal, Harvey will handle sales and distribution of the Film Roman library beginning at MIP and will manage all servicing and collections for Film Roman. Jon Vein, Executive Vice President of Film Roman said, "Our companies both share the belief that independents need to combine their sales and distribution efforts in order to successfully compete internationally.
3Dlabs, Inc. Ltd., a high-end 3D graphics tool creator, announced that it has acquired the assets of the Intense3D operations of Intergraph Corporation. The stock transaction is expected to add to earnings on a goodwill (EBG) basis from the third quarter of 2000 onwards. Under the terms of the agreement, 3Dlabs will issue up to US$3.69 million common shares of 3Dlabs to Intergraph as initial consideration for the acquired assets and goodwill, with an earn-out provision totaling up to an additional $25 million, payable in stock and/or cash.
Fraud troubles for CINAR Corp. increased as RCMP agents seized four boxes of the ARTHUR TV-series producers' tax documents. With a warrant in hand, a joint team from the RCMP (Royal Canadian Mounted Police) and provincial police searched the Old Montreal offices of the Société de développement des entreprises culturelles (Sodec) on the morning of Thursday, April 6, 2000. The search was part of an ongoing investigation launched by the RCMP on October 19, 1999 [AF 10/19/99] after a Bloc Québécois MP made tax fraud allegations in the House of Commons.
On Wednesday, March 29, 2000, Disney lobbyists helped deliver Gemstar's FCC complaint against the America On-Line and Time Warner merger to members of the U.S. Senate and House of Representatives. Gemstar has agreements with TV stations in every market in the U.S., which allows the company to engrave program information into broadcast signals. VCRs equipped with Gemstar's VCR-Plus technology can then decode the signal, making it easier for users to record TV programming.
Montreal-based CINAR Corp. has come to an interim deal with Globe-X Management, which halts the pending lawsuit against the investment firm. The agreement allows CINAR Corp. to look into investments made, without board approval, in Globe-X Management's affiliate Globe-X Canadiana. However, the deal does not finalizes the terms in which CINAR will be able to recover the nearly US$76 million invested in Globe-X. The lawsuit was filed on Monday, March 20, in an attempt to recover the funds, which were signed by former co-CEO Ronald Weinberg and senior executive VP Hasanain Panju.