Movie-Music Distributor Likes What It Sees, Hears

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Speculation about another acquisition attempt sent the stock of movie and music distributor Image Entertainment Inc. soaring up by 100 percent last week.

The Chatsworth-based company’s share price jumped from a low of $1.25 per share to a high of $2.49, topping 1.5 million shares changing hands on the Nasdaq by the close of trading last Wednesday.

Image executives refused to comment on the spike in trading activity. Wall Street analysts ceased coverage of Image last year when BTP Acquisition Co. first offered to pay $4.40 a share for the company, which owns more than 3,000 movie titles and 4,500 songs. Image has an estimated book value of approximately $1 per share. The BTP deal collapsed in January.

Industry observers speculated that Lions Gate Entertainment, which had made a run at Image in 2006 with a $4-per-share stock buyout offer to its board, may be getting ready to make another play for Image now that the BTP merger has failed.

Neither Santa Monica-based Lions Gate nor Image executives would comment on the takeover speculation.

Prior to last week’s stock spike, Image Chief Executive Martin Greenwald told investors during a conference call that his team planned to increase shareholder value with a new strategy of acquiring films featuring A-List talent and aggressively expanding the company’s digital distribution initiatives.

After several extensions, the BTP merger agreement fell apart last month because of a lack of financing, according to Image’s Securities and Exchange Commission filings. BTP has not addressed Image’s allegations of failed financing.

Image is seeking $4.2 million in damages from BTP, while BTP is demanding $1.5 million over the failed deal.


Movie Money

A new independent film investment company called FlickInvest.com recently began advertising on Southern California news radio stations touting the virtues of investing in the Hollywood movie business.

Los Angeles-based FlickInvest directs radio listeners to its Web site, where the company is pitching an investment opportunity with its affiliate New Cinema Scope Pictures and a slate of seven independent films in early development stages.

Bobby Ballas, FlickInvest chief executive, said that the broadcast and online solicitations are exempt from SEC solicitation guidelines.

But Andrew Katz, a transactional securities attorney at Mitchell Silberberg & Krupp in Los Angeles, said that “it certainly appears that FlickInvest.com is pushing the envelope when it comes to solicitation regulations.”

Ballas claims that his investment opportunity is only open to “accredited investors,” meaning that prospective investors need to have a net worth of at least $1 million and an annual income of $200,000. Whether or not this falls under SEC guidelines for “specific” or “general” solicitations is subject to interpretation.

FlickInvest is offering accredited investors 240 units at $25,000 a pop in order to raise an estimated $6 million for a movie called “Thrillseekers,” being directed by New Cinemascope Chief Executive Robert Pfitzner. Pfitzner was a writer on the television series “CyberKids.”

“Investing in a film is a very risky business at best,” said Jonathan Handel, entertainment attorney with Los Angeles-based TroyGould. “As we’ve witnessed recently, if sophisticated hedge funds can’t even make a profit, individual investors should take notice.”

Several hedge funds recently reported losses related to film investments.

Ballas said that because New Cinemascope’s films are made for less than $10 million and fall in the prime selling horror and thriller genres, the risk is limited.

Ballas added that Cinemascope’s filming techniques, which incorporate real-time computer-generated green-screen technologies, reduce costs and risks even further.


Up to Spec?

After sitting out the high-def DVD format battle, quality control company My Eye Media will offer Blu-Qual, technology that detects and analyzes flaws in the Blu-ray DVD production processes.

Until recently, Sony’s Blu-ray and Toshiba’s HD-DVD had been battling in the retail marketplace. When Warner Bros. Home Entertainment shifted allegiances to the Blu-ray camp in January, it signaled the end of HD-DVD. All six major Hollywood studios now back Blu-ray.

My Media Eye Chief Executive Michael Kadenacy said that he had been waiting for the format war to end before investing in the advanced high-definition equipment and program planning required to ensure that Hollywood’s suppliers of HD entertainment are getting what they pay for.

The Burbank-based company has long been an auditor of production, editing and replication facilities throughout Southern California, but this is its first foray into the world of Blu-ray.


Staff reporter Brett Sporich can be reached at (323) 549-5225, ext. 226, or at

[email protected]

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