"There's a revolution going on," said a London-based major company distribution executive as people woke up Sept. 7 to learn that Paramount Pictures and Universal Pictures have struck a deal to radica


VENICE, Italy (The Hollywood Reporter) -- "There's a revolution going on," said a London-based major company distribution executive as people woke up Sept. 7 to learn that Paramount Pictures and Universal Pictures have struck a deal to radically overhaul U.K.-based United International Pictures, their joint overseas distribution arm.

Chins began to wag among the international buyers and sellers remaining in Venice as details of Universal and Paramount's shock decision to divide up choice international territories filtered through.

UIP chairman and CEO Stewart Till remained tight-lipped over his future with UIP, although industry insiders say he is unlikely to stay on after 2007 when the key territories begin to break away.

Speaking from UIP headquarters in London, Till would only say he remained committed to maximizing revenues from upcoming releases -- including "Elizabethtown," which unspooled in Venice earlier -- and to ensuring the transition period for both the studios caused "minimum disruption" to the releases.

The announcement of the UIP overhaul comes at a time when the overseas distributor is enjoying a successful run. Industry analysts are predicting UIP will beat its own record-breaking year in 2004, which saw the company collect more than $2 billion internationally.

Much Lido talk centered on what exactly will happen post-2007 when the new deal see Universal and Paramount go it alone in the territories that formerly fell under the UIP umbrella.

Universal Pictures vice chairman Marc Shmuger said in an interview that the studio's long-term goal would be to establish local offices in the territories that Paramount has secured in the draft process from UIP's portfolio.

But he stressed there was no rush. "The plan we (Universal and Paramount) have put in place provides a comfortable mechanism so that both partners have the assurance that they will continue to distribute movies in the territories with people they know and trust," Shmuger said.

The territories on Universal's post-2007 agenda are Australia, Brazil, France, Ireland, Mexico, New Zealand and the U.K.

Shmuger, currently on a tour of UIP European territories, said Universal, which plans to base its new-look international operation in London, will expand its international marketing and distribution operations, currently under the watch of marketing president David Kosse. But he said the company had not yet prioritized the list of territories.

Paramount Pictures president of worldwide marketing and distribution Rob Moore said in an interview that the studio's two priorities now are to build a management team in Los Angeles to run the future international operation and to evaluate the individual territories, assessing how other Viacom-owned units like MTV and Nickelodeon will fit.

"I think having an executive to run a team in Los Angeles who is overseeing international distribution when you are making casting decisions or any creative decision is really important," Moore said. "They need to be a part of those early conversations to increase the participation of the international executives quickly."

Paramount will run the numbers before establishing a strategy for Austria, Belgium, Germany, Italy, the Netherlands, Russia, Spain and Switzerland, following Universal's draft picks.

Both Shmuger and Moore stressed the importance of the transitional arrangement that allows both studios to sub-distribute films through each other's operations for up to two years. Universal, which is in talks to acquire DreamWorks, will continue to distribute that company's theatrical product internationally.

With both studios seemingly determined to establish long-term operations in each territory, pickings will be slim for indies hoping to pick up product from either studio.

Italian indie distributor Andrea Occhipinti said: "If their [Paramount] movies are available that would be interesting because a number of distributors would want those films. There are quite a few players [distributors] that do the job well here and maybe they would consider using some of those for the releases."

"It's going to make far more difference to their [Universal and Paramount's] business than the existing businesses in each territory," added another European-based distributor. "UIP is a powerful distributor, but Universal and Paramount, unless each decides to up output, will be pushing the same volume of product out into the marketplace, just under a different label."

Peter Kiefer contributed to this report.