Distractions End for Image with Nyx Acquisition

The deal that sold Image Entertainment Inc. to a privately-owned media company ended what had been a distracting year for the Chatsworth-based producer and distributor of home entertainment programming. As part of Q Black LLC, headquartered in San Francisco, Image can now re-focus on what it does best and expand its digital distribution. The $100-million deal with Nyx Acquisition, a subsidiary of Q Black, caps a lengthy period where Image was the target of an unwanted buyout, as in the case with Lions Gate, or a signee to a merger deal, as which happened with BTP Acquisition last year; a deal that fell apart in February because BTP could not arrange the financing. Image CFO Jeff Framer called the Q Black deal a relief as the fallout from the BTP affair was distracting and costly to the company through the end of its 2008 fiscal year. “We spent so much time on the BTP deal but at the same time we were building a feature film infrastructure that has benefitted us since April 1,” Framer said. Image has seen improvement in its finances since April. The company ended the 2008 fiscal year with a net loss of $23 million. In the first six months of the current fiscal year, the company reported net income of $1.2 million. Still, that improvement was not reflected in the share price, which dropped below $1 over the summer resulting in non-compliance with Nasdaq rules on minimum market value and the threat of de-listing. Image shares were valued at $0.69 the day of the Nyx deal, which then jumped the following day to $1.55. Not that share amount will matter to the company as it will now be in private hands. Had the BTP deal gone through, Image would have remained a publicly-traded company, an arrangement that Framer described as “unusually structured.” If there were lessons learned from the BTP deal, which ended in accusations from both sides about breaches of contract, then Framer is keeping them to himself. The only similarity between BTP and Nyx was that they wanted to buy Image. “Every deal is unique in its own way,” Framer said The Rob Schneider movie “The Chosen One” turned out to be the connection that brought Image and Q Black together. The former licensed the film from the latter (which has a collaborative venture with Schneider) and that made Q Black CEO Joe Q. Bretz familiar with the Image distribution infrastructure. What Bretz’s company gets out of the deal is total control of how their content gets distributed to television, through DVD, and digitally. “He must have loved what he heard and proceeded on the course of making an offer for the company,” Framer said. Image has a strong foothold with digital distribution, with programming available through iTunes, Hulu.com and Netflix. A deal between Image and Jaguar Distribution Corp. in Studio City makes short form, theatrical and non-theatrical releases available for in-flight movies and aboard merchant sea vessels. Framer considered what Image offers in terms of digital distribution was impressive but that the deal with Nyx will add to that. Rather than seeing employee cutbacks at the Chatsworth facility, Framer anticipates more workers to be added. 3D Summit The Valley was well represented at the 3D Entertainment Summit on Dec. 1 and 2 in Century City. Scheduled to speak at the expo were DreamWorks Animation SKG President and CEO Jeffrey Katzenberg; Mark Zoradi, President, Walt Disney Studios Motion Pictures Group; Jason Brenek, Senior Vice President, Worldwide Digital Cinema and Cinema Programming, Walt Disney Studios; Chuck Viane, President of Distribution, Walt Disney Studios Motion Pictures; Steve Schklair, CEO of 3ality Digital Systems in Burbank; David Seigle, President & CEO, In-Three in Westlake Village; John Fithian, President and CEO, National Association of Theater Owners, with an office in North Hollywood; John Nicolard, Head of Digital Production, FotoKem Digital Film Services in Burbank; Encino-based entertainment industry consultant Marty Shindler, who moderates a panel titled “Will 3D Win Over Wall Street;” and Vince Pace, whose Burbank company develops cameras for 3D films and television programming, interviewing director James Cameron. The 3D Entertainment Summit is presented by business-to-business communications company Unicomm LLC, and Bob Dowling, an entertainment and technology consultant and former editor-in-chief and publisher of The Hollywood Reporter. Staff Reporter Mark Madler can be reached at (818) 316-3126 or by e-mail at [email protected] .