Business

Disney Earnings Decline. The Walt Disney Co. has reported its earnings for the third quarter, and the nine months ended June 30, 1999. Net income for the fiscal third quarter ended in June fell to $367 million from last year's $415 million. The figure includes a pretax loss of $87 million from the November purchase of a 43% interest in Internet search engine Infoseek Corp. Net income for the nine month period ended June 30, 1999 fell to $1.215 billion from last year's $1.554 billion. "While we are not satisfied with our current operating trends, we firmly believe in the long-term strength and growth potential of the company's brands and franchises," said Michael Eisner, chairman and chief executive officer. "Our reorganization strategy is focused on ways to leverage marketing and sales efforts, streamline operations, develop new markets and reposition distribution channels, including our Internet sites, cable and television networks, and our Disney Stores. I am confident that, when completed, our operating units will be in a better position to capitalize on our brand strength and generate long-term growth."

IMAX's Richard Gelfond.

IMAX Invests In Mainframe. IMAX Corporation, owner of the large format film theater chain, has announced the closing of its strategic investment in Vancouver, Canada-based Mainframe Entertainment Inc., a producer of CGI animation. Under the terms of the agreement, IMAX invested CDN$8 million to acquire a 19% equity stake in Mainframe and CDN$8 million to acquire convertible senior debt which, if converted, could bring IMAX's ownership up to 30% of Mainframe. Simultaneously, Mainframe announced that two leading Canadian financial institutions, Royal Bank Capital Corporation and Working Opportunity Fund, have made a combined CDN$9 million investment to acquire convertible notes in the company. IMAX and Mainframe have also established a joint venture to co-produce 3D animated films for release to IMAX Theatres and other markets. Their first film, Gulliver's Travels, is currently in production and is scheduled to be released to IMAX Theatres by summer 2001. Other animated projects currently in development include films based on The Pied Piper and Pandora's Box. "We are convinced more than ever that 3D animation will play a significant role in IMAX's future," said IMAX co-Chief Executive Officers Brad Wechsler and Rich Gelfond. "Our relationship with Mainframe allows us to create, produce and distribute our own large-format 3D animation content cost-effectively and to then cross-platform that content into other markets." IMAX continues to move forward on its animation strategy. On January 1, 2000, The Walt Disney Company will release Fantasia 2000 exclusively in IMAX Theatres for four months. IMAX is also in production on Cyberworld, a collection of computer generated animated shorts, scheduled for release in summer 2000. Mainframe Entertainment is the producer of television series such as Reboot, Beast Wars - Transformers, and War Planets and will debut its newest series, Weird-Ohs and Beast Machines this fall on YTV in Canada and Fox Family Channel and Fox Kids Network, respectively, in the U.S.

A New Performance Animation Studio Is Launched. Newly launched Atlanta, Georgia-based Giant Studios is a performance animation studio. Their proprietary Motion Reality? system utilizes the latest advancements in microprocessor technology and interfaces with the best animation software. A state-of-the-art motion capture studio is available with a 50' x 50' x 24' open floor space. The system can capture and process multiple, subject-object interactions in real-time, as well as the intricate detail of hand and facial captures. The studio offers fully integrated concept-to-completion services, and can also provide production support to animation companies. Additionally, the powerful Nuance? motion enhancement software tool utilized by Giant Studios is available for license. The studio also holds the worldwide license for the Biomechanics, Inc. Motion Reality? motion capture system for use in all forms of entertainment. The Biomechanics, Inc. system has over 20 years of research and development with more than 10 years of application in sports analysis, defense, and the entertainment industry through a now-defunct partnership with Acclaim Entertainment. The company plans to open other studios in London, Los Angeles and Canada beginning in the first part of next year. For more information contact Rand Cabus, Director of Marketing, at Giant Studios tel. (404) 659-6611; or e-mail: rand@giantstudios.com.

Silicon Graphics Cuts Jobs And Spins Off Cray. San Jose, California-based Silicon Graphics Inc. has announced that it will cut up to 3,000 jobs and spin off its Cray supercomputer division. According to SGI, the cuts and reorganization will help it focus on selling software and computers related to the Internet. SGI bought Cray Research Inc. in 1996 for $740 million. Since its acquisition by SGI, Cray's supercomputers have competed with SGI's own powerful systems in a small market. Earlier this year SGI reorganized and divided Cray off into a subsidiary. This latest move further breaks Cray into a separate unit. While announcing no buyers, SGI says it will pursue discussions "with potential partners to assume the operation of this business." Rick Belluzzo, SGI's chairman and chief executive, said the company will lay off between 1,000 to 1,500 employees. Another 1,500 employees will be reassigned to partnerships or small companies breaking off from SGI. SGI's business has struggled in recent years against competition by workstation manufacturers such as Hewlett-Packard Co., IBM, and Sun Microsystems Inc., as well as less costly workstations and high-end personal computers using Intel chips and Microsoft's Windows NT operating software.

Aeon Flux. Courtesy of (Colossal) Pictures.

(Colossal) Pictures Closes Its Doors. (Colossal) Pictures ceased operations on August 31, 1999 after 23 years in business. According to the San Francisco-based production and design studio, the decision was made in order to liquidate property and honor outstanding debts. (Colossal) has filed for Chapter 11 protection before on May 30, 1996, and emerged from bankruptcy on December 1, 1997. It enjoyed a successful year in 1998, employing a lean work force. However, the beginning of this year saw a downturn in revenue. Financially weakened by the bankruptcy, as (Colossal) waited to be awarded some significant contracts it could not sustain its overhead. (Colossal) first made its mark in branding and design, cultivating a youthful expression for clients such as Levi's, Sega, and MTV. Film work followed, with special effects and opening sequences produced for such films as The Right Stuff, Top Gun, and Bram Stoker's Dracula. In 1990, for MTV, (Colossal) developed the animated anthology series, Liquid Television, and in 1995 it produced Peter Chung's Aeon Flux series, a spinoff of Liquid Television. The company has won every major industry award, including the Clio, Emmy, Grammy, Cannes Gold Lion, and Interactive Academy Arts & Sciences Top Honor. In the past few years, (Colossal)'s Chief Creative Officer and co-founder, Drew Takahashi, has focused on melding his experience in advertising, branding, and new media through strategic creative design for emerging, cross-media technologies, with projects for Excite, Americast, WebTV, Microsoft, Real Networks, and Replay Networks. He will continue to work on ongoing interactive projects originated at (Colossal), participating with Creative Director Margeigh Joy, and will announce more formal plans at a future date. Other employees' plans are varied, but a core group of directors and digital artists are forming their own production shop. CFO Jan Bauman says, "We tried our best to keep the company afloat. What we feel good about is the integrity we have maintained all along, and the lessons we learned. And, of course, there's the massive, fine body of work that (Colossal) Pictures contributed to almost a quarter century of American media culture, sure to be remembered and respected for many years to come."

Film Roman Reports Losses. North Hollywood, California-based Film Roman has reported second quarter losses of $266,215, or 3 cents a share, which is an improvement over the losses for the second quarter of 1998 of $718,439, or 8 cents a share. Revenue for the first half of 1999 increased by 58% to $27.5 million from last year's first half's $17.4 million. Film Roman produces Fox's The Simpsons and Warner Bros.' upcoming new series, Mission Hill (previously known as The Downtowners). In recent months, Film Roman has been making significant strides to enter the original content creation market themselves.