Deal will see larger studio overseeing “backroom” services
Cinedigm has reached a deal with Universal Pictures to outsource certain home entertainment distribution services to the larger studio, TheWrap has learned.
Under the pact, Universal will handle so-called “backroom services” for the indie label. These include shipping its physical discs and overseeing billing related to those sales. Cinedigm will continue to handle all “front-end” operations, such as sales, marketing and acquisitions and will also be in charge of all of its digital distribution efforts.
Cinedigm has looked at one independent operator and three other studios. Universal will get specific fees for its distribution efforts, but will not receive a percentage of the profits.
Bill Sondheim, president of Cinedigm's entertainment group, confirmed that a deal had been reached.
“We're continuing to evolve as a major independent distributor,” Sondheim said. “We're going to benefit in particular from shipping efficiencies and will have access to more sophisticated system than we've had or can afford.”
Prior to the deal, the distribution was being handled by a team from Gaiam Vivendi, the home entertainment company it acquired for $51.5 million last year. Sondheim said that no one in the company's Los Angeles office will be laid off because of the deal with Universal. Some transitional workers who were handling back room duties while the companies merged may not be hired permanently, however. The deal with Universal has not gone into effect and Cinedigm expects the switchover will happen some time in June.
Cinedigm handles more than 10,000 physical titles and 30,000 digital titles in its library, Sondheim said, which generate $220 million in wholesale revenue. The company gets a percentage of those sales. Its films include “Short Term 12,” “The Act of Killing” and “Ernest & Celestine.”
“Universal understood our business, showed the most flexibility and was eager to partner with us,” Sondheim said.
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