Technicolor Set to Acquire Cinedigm’s Delivery Business

CEO Chris McGurk says the deal will allow the digital programmer to focus on its “core business”

Last Updated: July 27, 2011 @ 4:56 PM

(Updated, 4:23 p.m. PST)

Cinedigm will sell its physical and electronic distribution business to Technicolor, the two companies announced on Wednesday.

In addition, Technicolor will work with the programmer and distributor to create new software.

Auctioning off its film delivery arm will allow the company to concentrate on content creation, Cinedigm CEO Chris McGurk told TheWrap. 

"We're not getting out of the distribution business, we're getting out of the physical delivery business," McGurk said. "We thought it would be better for us to partner with someone who has that as a core business."

"We just decided, 'Let's use someone else's pipes.'"

For its part, Cinedigm will make Technicolor its preferred post-production and distribution partner. 

A binding letter of intent has been signed and the companies said they anticipate the deal will close within 45 days.

The deal comes on the heels of a massive post-production pact that Technicolor inked with its longtime rival Deluxe earlier this week. Under that arrangement, Technicolor will subcontract its 35mm bulk-release printing business to Deluxe in North America, while Deluxe will subcontract its print distribution business to Technicolor.

Technicolor also acquired the post-production house Laser Pacific. 

Cinedigm has had great success recently offering filmed versions of concerts and sporting events for movie theaters. The company has also made a name for itself converting theaters to digital exhibition. 

It takes in about $80 million in annual revenue. 

Yet McGurk told TheWrap that the company had made the mistake of being too diverse in its offerings. 

"We tried to be all things to all people," McGurk said. "We're shedding our non-core [assets] to focus on our core."

As part of the pact, Technicolor will partner with Cinedigm on software design. It also license Cinedigm's production software and trailer distribution software.

Financial details of the deal and partnership were not released.