96.5 F
San Fernando
Thursday, Mar 28, 2024

CORPORATE FOCUS—Panavision Goes Digital to Catch Up After Strike Stall

After a rough six months that saw its stock price plummet nearly 10 points (mostly because of last year’s commercial actors strike), motion picture camera maker Panavision, Inc. is regaining some of its value. Now trading at a robust $5.91 per share, up from its $2.50 low in December, the Woodland Hills-based company is on the comeback trail as it begins a drive to once again be a pioneer in the film industry this time with digital technology. While its stock price went up, its loss per share for the quarter ending Sept. 30, 2000 went up too, to 44 cents a share from 27 cents in the same period in 1999. That, however, apparently does not douse optimism. Just last summer, the company agreed to a partnership with Sony Inc. to develop new digital cameras that could ultimately eliminate film cameras altogether from Hollywood. “This synergistic combination will enable us to vigorously elevate digital cinematography to a higher plane,” said Edward Grebow, deputy president of Sony Electronics. Unfortunately, the pact came just as the company was sent reeling by a Screen Actors Guild strike that stretched from May to November, effectively shutting down TV commercial production, almost all of which was scheduled to be shot with Panavision equipment. Typically, Panavision’s revenues come from the rental of the equipment it manufactures, not its sales. Analyst Bob Berzin of Lehman Brothers Holdings Inc. says the company’s revenue, along with investor confidence, took a hit as the six-month strike dragged on through summer and into the fall. Moreover, he said, investor doubts over Panavision’s $479 million debt and declining revenue added to the stock’s decline. “It was a tough time in the market for a lot of other stocks, so it didn’t help,” he said. The company has been saddled with the nearly half-billion dollar debt due to a costly 1998 restructuring and acquisition plan led by company chairman Ronald O. Perelman. Panavision owes $218.6 million under a credit agreement with Chase Manhattan Bank. Most of the rest is owed to PX Holding Corp. in a financing arrangement brokered by Perelman, who also heads Revlon Corp. Analyst Berzin says the company hopes to eliminate much of its heavy debt load through its deal with Sony. While its finances remain a question mark, Berzin said the company could be further hurt by a possible writers and actors strike, which would postpone production on many features and television series. The Sony agreement helps fulfill Panavision’s commitment to digital filmmaking, once said to be impractical and too expensive for Hollywood’s needs. “Panavision’s purchase of 24P high definition equipment goes a long way towards the validation of this system within the motion picture community,” said John Farrand, Panavision president and CEO. The pact allows feature filmmakers to use Sony’s new 24P CineAlta camera with Panavision’s Primo Digital lenses. Already, director George Lucas has begun using the equipment on the latest of his “Star Wars” series, now in production in Great Britain. Panavision is the world’s top manufacturer of movie cameras, lenses and camera accessories. The equipment was used on about three-fourths of all films in 1999. The equipment is rented by Panavision or its agents, accounting for the vast majority of the company’s earnings. Its subsidiary, Lee Filters, manufactures and sells lighting and color correction equipment and diffusion filters. The company’s stock price steadily declined through December when it hit its low of $2.50 but, as revenue increased, so did its stock price, now near the $6 mark after peaking at $11.75 last February. Increased rental activity and sales in its lighting unit, along with the high-profile use of its digital equipment by Lucas, has spelled a turnaround for the company’s stock price, analysts say. Through Sept. 30, 2000, the company reported a $3.7 million net loss compared to a $2.2 million net loss for the same period last year. Revenues for the quarter were up slightly, $54.2 million compared to $53.5 million for the same quarter in 1999. During the four quarters through Sept. 30, 2000, Panavision’s revenues increased by $3.1 million compared to the same period in 1999. That was primarily the result of increased rentals for film production in France and Canada, countered by decreases closer to home because of last year’s Screen Actors Guild strike.

Featured Articles

Related Articles