Cinram buys AOL Time Warner CD/DVD manufacturing and distribution for $1.05 billion
07-18-03, 09:29 AM
#1
DVD Talk Hero
Thread Starter
Cinram buys AOL Time Warner CD/DVD manufacturing and distribution for $1.05 billion
Breaking News from The Globe and Mail
Cinram buys AOL's DVD-CD unit
Friday, July 18, 2003
Cinram International Inc. said Friday it is buying AOL Time Warner Inc.'s CD-DVD manufacturing and distribution business for $1.05-billion (U.S.) while signing a long-term deal with the New York-based media giant.
With the move, Toronto-based Cinram, already a leader in DVD and CD manufacturing, will swallow a businesses that towers over its own revenue and profit performance. It also scoops up another major customer Warner Bros., adding to its already swelling lineup.
In early trading, its shares shot up 24.6 per cent to a new 52-week high of $21.25 (Canadian).
Cinram says it will have an exclusive long-term deal with AOL-owned Warner Home Video, Warner Music Group and New Line cinema. Cinram will manufacture and distribute DVD and CD titles in North America and Europe.
The businesses are expected to generate $1.1-billion (U.S.) in annual revenue and $230-million in earnings before interest, taxes, depreciation and amortization for the year ended November, 2003.
In comparison, Cinram reported annual 2002 revenue of $878.6-million (Canadian) and earnings before items of $78.5-million. The new company would have 2003 revenue of $2.33-billion on EBITDA of $479-million, Cinram said in a conference call Friday.
"This transaction affords us the opportunity to benefit even further from the dramatic worldwide growth in DVD sales," Isidore Philosophe, Cinram's CEO, said.
In a call with analysts, the company said the combined business will boost its DVD capacity to 1 billion units. Cinram says first-quarter sales of DVDs rose 62 per cent from a year ago.
It said the acquisition would be "significantly accretive" to earnings growth with pro forma EPS forecasts to grow 31 per cent to $1.44 a share.
The assets Cinram is buying from AOL includes related businesses in both the United States and Europe. They include manufacturing facilities in Olyphant, Pa., Commerce, Calif. and Alsdorf, Germany. It will also take over Ivy Hill Corp., a provider of packaging and printer and Giant Merchandising that is "engaged in entertainment merchandising, retail licenses and private label marketing and distribution."
"We are extremely pleased to be acquiring these quality assets and to be entering into these long-term agreements with AOL Time Warner, with whom we have had a long-standing and excellent relationship," Mr. Philosophe said.
One of the highlights of the deal would be Cinram's addition of AOL's customers, in particular Warner Bros., Patrick Tomalin of Orion Securities Inc. wrote on Thursday as reports of a possible deal surfaced.
"Warner is the leader in the U.S. home video market. Video Business News recently estimated their market share for the first half of 2003 at 21 per cent," Mr. Tomalin wrote.
"The addition of a deal with Warner would nicely complement Cinram's existing major contracts with Twentieth Century Fox and Artisan. Furthermore, since taking on the exclusive manufacturing and distribution business for Fox in North America Cinram has demonstrated its ability to handle a major studio contract."
Cinarm, according to reports Friday and earlier this week, had been believed to be one of two bidders.
"The agreement ensures these businesses and their employees a great home while continuing to provide Warner Music Group, Warner Home Video and New Line Cinema with the highest quality manufacturing and distribution services in the industry," Dick Parsons, AOL Time Warner's CEO, said.
© The Globe and Mail
Cinram buys AOL's DVD-CD unit
Friday, July 18, 2003
Cinram International Inc. said Friday it is buying AOL Time Warner Inc.'s CD-DVD manufacturing and distribution business for $1.05-billion (U.S.) while signing a long-term deal with the New York-based media giant.
With the move, Toronto-based Cinram, already a leader in DVD and CD manufacturing, will swallow a businesses that towers over its own revenue and profit performance. It also scoops up another major customer Warner Bros., adding to its already swelling lineup.
In early trading, its shares shot up 24.6 per cent to a new 52-week high of $21.25 (Canadian).
Cinram says it will have an exclusive long-term deal with AOL-owned Warner Home Video, Warner Music Group and New Line cinema. Cinram will manufacture and distribute DVD and CD titles in North America and Europe.
The businesses are expected to generate $1.1-billion (U.S.) in annual revenue and $230-million in earnings before interest, taxes, depreciation and amortization for the year ended November, 2003.
In comparison, Cinram reported annual 2002 revenue of $878.6-million (Canadian) and earnings before items of $78.5-million. The new company would have 2003 revenue of $2.33-billion on EBITDA of $479-million, Cinram said in a conference call Friday.
"This transaction affords us the opportunity to benefit even further from the dramatic worldwide growth in DVD sales," Isidore Philosophe, Cinram's CEO, said.
In a call with analysts, the company said the combined business will boost its DVD capacity to 1 billion units. Cinram says first-quarter sales of DVDs rose 62 per cent from a year ago.
It said the acquisition would be "significantly accretive" to earnings growth with pro forma EPS forecasts to grow 31 per cent to $1.44 a share.
The assets Cinram is buying from AOL includes related businesses in both the United States and Europe. They include manufacturing facilities in Olyphant, Pa., Commerce, Calif. and Alsdorf, Germany. It will also take over Ivy Hill Corp., a provider of packaging and printer and Giant Merchandising that is "engaged in entertainment merchandising, retail licenses and private label marketing and distribution."
"We are extremely pleased to be acquiring these quality assets and to be entering into these long-term agreements with AOL Time Warner, with whom we have had a long-standing and excellent relationship," Mr. Philosophe said.
One of the highlights of the deal would be Cinram's addition of AOL's customers, in particular Warner Bros., Patrick Tomalin of Orion Securities Inc. wrote on Thursday as reports of a possible deal surfaced.
"Warner is the leader in the U.S. home video market. Video Business News recently estimated their market share for the first half of 2003 at 21 per cent," Mr. Tomalin wrote.
"The addition of a deal with Warner would nicely complement Cinram's existing major contracts with Twentieth Century Fox and Artisan. Furthermore, since taking on the exclusive manufacturing and distribution business for Fox in North America Cinram has demonstrated its ability to handle a major studio contract."
Cinarm, according to reports Friday and earlier this week, had been believed to be one of two bidders.
"The agreement ensures these businesses and their employees a great home while continuing to provide Warner Music Group, Warner Home Video and New Line Cinema with the highest quality manufacturing and distribution services in the industry," Dick Parsons, AOL Time Warner's CEO, said.
© The Globe and Mail
07-18-03, 04:40 PM
#6
DVD Talk Limited Edition
Join Date: Jan 2000
Location: Fascination Street
Posts: 6,521
Likes: 0
Received 0 Likes
on
0 Posts
Originally posted by Iron_Giant
Wow, how much $$$ does WB make every year from DVD?
Does anyone have the answer?
Wow, how much $$$ does WB make every year from DVD?
Does anyone have the answer?
07-18-03, 05:52 PM
#7
Member
Join Date: Jun 2002
Location: Washington State
Posts: 116
Likes: 0
Received 0 Likes
on
0 Posts
It's bad news for consumer's actually... If Cinram manufactures the current Fox and Artisan releases then I guess we'll see a lot more floaters, scratched, fingerprinted and defective DVDs and special metal slip cases that chews up DVD cases...
07-18-03, 07:08 PM
#8
Needs to provide a working email
Join Date: Jun 2003
Posts: 191
Likes: 0
Received 0 Likes
on
0 Posts
I agree with iove. This isn't exactly good news.
Remember Artisan's transfer of High Noon? If this happens with Warner's (hopefully) future classic film releases, we're in for some pain.
Hopefully, they'll just ruin The Matrix.
Remember Artisan's transfer of High Noon? If this happens with Warner's (hopefully) future classic film releases, we're in for some pain.
Hopefully, they'll just ruin The Matrix.
07-19-03, 09:19 PM
#10
DVD Talk Special Edition
Join Date: Oct 1999
Location: Minneapolis, MN
Posts: 1,277
Likes: 0
Received 0 Likes
on
0 Posts
Originally posted by Der Zorn Gottes
I agree with iove. This isn't exactly good news.
Remember Artisan's transfer of High Noon? If this happens with Warner's (hopefully) future classic film releases, we're in for some pain.
Hopefully, they'll just ruin The Matrix.
I agree with iove. This isn't exactly good news.
Remember Artisan's transfer of High Noon? If this happens with Warner's (hopefully) future classic film releases, we're in for some pain.
Hopefully, they'll just ruin The Matrix.
07-19-03, 09:47 PM
#11
DVD Talk Special Edition
Join Date: Apr 1999
Location: Toledo, Ohio
Posts: 1,705
Likes: 0
Received 0 Likes
on
0 Posts
God, how sad is that? The first thing I thought of was, "Hmm, does this mean no more snappers?" and then I read the replies and the first 3 or 4 posters all had my exact same thought. It's pretty sad that Warner would keep producing something that is so universally hated. Anyways... if I had to bet, not that I'm a betting man, but I would bet this does mean no more snappers unless Warner made the continuation of the snapper as a part of the deal.
07-21-03, 03:18 AM
#14
Member
Join Date: Apr 2003
Location: i don't know any more
Posts: 80
Likes: 0
Received 0 Likes
on
0 Posts
i think all that they do is make the boxes and discs for mass distribution, while the studio and privately hired companies make the transfers and cover art, etc. all that CINRAM has to do is make billions of copies for the market, which they can improve upon, or make more floaters and stuff.
07-22-03, 03:45 PM
#16
Member
Join Date: Jul 2002
Posts: 193
Likes: 0
Received 0 Likes
on
0 Posts
The Matrix Reloaded looks to be the first of the discs produced under this new deal and will be the first Warner release in a keep case.
DVDFile had this news on 7/21/03:
DVDFile had this news on 7/21/03:
Guess who's finally getting hip to the keepcase? Long a point of contention even among the most ardent of DVD supporters, Warner Home Video has favored the slim cardboard "snapper case" created and produced by AOL Time Warner subsidiary Ivy Hill. Roundly scorned for its flimsy appearance and lack of durability, Warner has decided to take the keepcase plunge on October 14th with the release of The Matrix Reloaded.
Fans hoping for a sea change at the studio may be disappointed, however. "We evaluate each product and its packaging configurations," a Warner spokesperson told Video Store Magazine. "For Reloaded, we felt the Amaray was the right packaging. There is no overall change in our packaging strategy. Future titles may be packaged in a digipak. We'll evaluate on a title-by-title basis."
But will the likely smash success of Reloaded on DVD help push Warner to reconsider the long-term viability of the snapper? Watch this space...
Fans hoping for a sea change at the studio may be disappointed, however. "We evaluate each product and its packaging configurations," a Warner spokesperson told Video Store Magazine. "For Reloaded, we felt the Amaray was the right packaging. There is no overall change in our packaging strategy. Future titles may be packaged in a digipak. We'll evaluate on a title-by-title basis."
But will the likely smash success of Reloaded on DVD help push Warner to reconsider the long-term viability of the snapper? Watch this space...
Last edited by msbailey; 07-22-03 at 03:47 PM.
07-22-03, 05:33 PM
#17
DVD Talk Hall of Fame
Join Date: May 2000
Posts: 9,379
Likes: 0
Received 0 Likes
on
0 Posts
OK. So if I buy the Matrix Reloaded in October, it is not going to look very well next to my Matrix snapper. Damn! I hope they are going to do something about the current Matrix packaging, like they did to Austin Powers.
