Video rental chain Blockbuster Inc. is ridding itself of its film acquisition and distribution subsidiary.
(The Hollywood Reporter) -- Video rental chain Blockbuster Inc. is ridding itself of its film acquisition and distribution subsidiary.
The chain has entered into a "definitive agreement" with First Look Studios to sell DEJ Prods. for about $25 million in cash.
DEJ executives Andy Reimer and Steve Break will join the First Look team.
The deal was negotiated by First Look Studios CEO Henry Winterstern and Blockbuster head of strategic planning Frank Paci. Funding was provided by Prentice Capital, a New York-based hedge fund.
"Given the way that the cost of rental product has fallen over the past couple of years, Blockbuster is in a different situation compared to when it launched DEJ to get product on its shelves cheaply," said industry analyst Tom Adams, president of Adams Media Research. "At this point, rental fodder can be had for less than $10 a disc, and at this point, frankly, they're in a better position just playing the field than trying to own it outright."
DEJ Prods. had operated as an independent rights acquisition and distribution arm for Blockbuster Video stores as well as such other video chains as Movie Gallery, Hollywood Entertainment Corp. (now part of Movie Gallery) and even Wal-Mart. It was also a financier of such movies as "Monster" and "Crash," among others.
As the need for low-priced rental product diminished, DEJ gradually distanced itself from Blockbuster. Late last year, First Look Studios president Bill Lischak and senior VP home entertainment Bill Bromiley negotiated a multipicture joint-venture arrangement for First Look to sell and distribute the DEJ library. In addition, certain films have been jointly acquired, including the upcoming Wes Craven horror-thriller production "The Breed," directed by Nick Mastandrea.
"We are ramping up," Winterstern said. "We now have 750 titles in our library, we have the infrastructure and the capital to move into the theatrical business. Our plan is to put together a slate of films now to release theatrically."
According to Winterstern, in the next 2-3 months First Look expects to announce a slate of 8-10 films for theatrical release.
Nicole Sperling contributed to this report.