Reselling surplus stock has made Media Distributors Inc. a force

When Steve Klein got a bad case of burnout in 1982 from his job editing for film and television, his longtime friend Stuart Wallach had an idea: join him in his new venture of reselling surplus film stock.

"It was kind of a crazy idea, but I thought Stuart was on to something," said the 52-year-old Klein, who today is a videotape and film stock dealer. "He would buy cans of unused and undeveloped film that was left over from one film and then he would resell it to another. It was great."

Wallach taught him the ropes and a few years later, Klein struck out on his own. Today, he owns Media Distributors Inc., a $12 million (revenues) reseller of videotape and film stock.

"It's all due to the relationships we've been able to build over the years," said Klein, who credits the company's success to a growing customer list derived from word of mouth and a knack for ferreting out cheap film and videotape.

Klein sells his surplus film for about 15 percent below what it would cost to buy directly from the manufacturer. Though more than two-thirds of his revenue is still derived from the sale of surplus materials, he has moved to audiotape and digital data storage disks for the entertainment industry.

Reselling videotape

Just last month, the company signed a five-year agreement with Sony Electronics to resell Sony professional quality videotape. Klein said the deal is worth $10 million to Media Distributors over the life of the agreement. Klein also distributes film for Fuji Photo Film Co. and surplus film for Eastman Kodak Co.

Audiotape sales to radio stations and recording studios make up 25 percent of the company's revenue. Videotape accounts for 35 percent, film 25 percent and the growing field of computer storage hard disks the remaining 15 percent.

"I've been very fortunate to be able to make it in a very difficult business," said Klein.

Shelly Christy, co-owner of Burbank-based film and video supplier Christy's Post Digital Film and Video, said the video business has grown tenfold in the past five years and figures to double by next year.

"There are a lot more productions going on today than five years ago and there is a constant demand for product," she said. Christy said TV producers are turning more to video instead of film to reduce costs.

A high-quality video cassette capable of taping an entire show costs $20, while a 1,000-foot reel of 35 millimeter surplus film runs $500 (or $590 from the manufacturer), and would only record 10 minutes worth of action, Klein said.

Though film stock sales continue to shrink, Klein has a small group of sales people on the lookout for surplus film they can purchase from production companies or studios at a reasonable price. "It's still a pretty good business for us," Klein said.

Wide range of customers

Klein's customers include the producers of TV shows like CBS's "Yes, Dear" and USA Network's "Danny." Post-production firms, advertising agencies, colleges and universities and film students also patronize Media Distributors. "We don't do any advertising; only now have we started to market ourselves," he said.

But with the advent of digital filmmaking and its high definition digital film cameras making inroads in the industry, Klein says he's ready to make the switch to digital video as soon as Hollywood is ready.

"There's no problem in getting the digital tape or the disks. But I just don't think the industry is quite ready to abandon film," he said.

Bob Mayson, general manager of Eastman Kodak's Cinema Operations Division, said the digital technology's expense has kept it from replacing film altogether. But he added that once it happens, the company must adapt to the new technology. Eastman Kodak produces most of the estimated $1.5 billion worth of film stock used in U.S. films each year.

Klein said that also presages an increase in the sale of digital storage tapes and disks. "It's going to be phenomenal. I can't even think how much it's going to grow. It'll be huge," he said.

For reprint and licensing requests for this article, CLICK HERE.