The big news in distribution so far this year was the shuttering of Tartan USA and Tartan UK, followed by the libraries of both companies being acquired by Palisades Media. Palisades started life as a small production company ten years ago, but in 2003 it appointed Vincent "Vin" Roberti as Chairman and CEO of Palisades Media Corp. and the company transformed into a P&A (print and advertising) financing firm. In 2006, it billed its clients $650 million for its services providing media planning and buying, with well over half that amount coming from companies like IFC, Magnolia, New Line and the Weinstein Company.

When Palisades Media Corp. acquired the Tartan libraries they started a separate division, Palisades Tartan Film Acquisitions, to house and service them. There's been a lot of speculation over whether Palisades was simply a holding company looking to sell off the Tartan library piecemeal, whether they were in over their heads getting into video distribution at all and just what on earth they were doing with these libraries in the first place.

Vin Roberti talked with Kaiju Shakedown about what happened with Tartan and what Palisades' plans are for the future.

How did this deal come about with Tartan? It seems like it happened awful fast.
We had a long-term financial arrangement with Tartan, and we were their lenders for a long time. We’re in specialty financing, doing P&A financing for indie films, and we’ve been doing that for a while. In fact, it’s our tenth anniversary this year. We had been waiting for an appropriate time to move back into the content business, and we think that now is the time with affordable content becoming a hot commodity. The key word being: affordable.

Tartan had some financial trouble, as everyone knows, and here in the US, as their largest secured creditor, in January we made them one last loan so they could try to get out of trouble, but they couldn’t make it. So in May we foreclosed on the loan and took their assets. We have a lot of respect for Hamish McAlpine and we think he’s very bold. Their problems were not necessarily because of him, they were really a combination of the financial markets and financial issues with buyers who had defaulted over the past year. Not all the problems were attributable to him.

Then, I was in Europe when these problems also developed with Tartan UK and it was placed in the hands of an administrator. We, along with several other companies bid on the assets, and because we made the most uncomplicated bid out of the bunch we were successful. "We also acquired the rights to Tartan Limited, Tartan Films LTD, which was a separate company that held about a third of the UK Library."



We’re getting ready to do a tour and we start the planning for it today. We’ll go to Hong Kong, Korea, Japan, Tokyo and swing back through India. We are very heavily involved in Asia – we believe it’s a great market and the West is hungry for Asian movies. Our job now is to meet with each of the sales agents and producers and production companies that provide product and let them know what we’re doing.

Here’s the bottom line: when I go to Asia I will look at a company in the eye and I can tell them that I can get their product out with the least amount of damage, I can funnel them through our system directly to big box retailers and end customers in an effective and transparent way. We’ve always been a transparent company. We don’t acquire a movie and then immediately send an invoice billing them for marketing costs that amount to 80% of the revenue. We deliver, with the least amount of expenditure and the optimum amount of marketing, so the person or company providing us with the product is getting an accurate statement from us and they are having their product monetized in ways they can only dream of doing. Our whole strategy is not, “Who’s the end distributor?” but “Who’s the person receiving the goods? Who is the end customer?" We also have a big box strategy, going to the big outlets and taking the pulse of what their clients want. On one end we have the producers delivering product in Asia and in Europe and on the other end is the person who’s watching these movies, our customer.

Will you be staying with Genius Products as your video distributor?
Right now we’re in negotiations with everybody. We’ve been contacted by every major distributor in the UK and the US and we’re talking with all of them. We’ll be getting titles ready, coming up with the marketing and doing all of that in house, but we are looking, for lack of a better word, for a partner. It may very well be Genius. It may not. We have a lot of respect for Trevor Drinkwater at Genius. He’s a great guy, and very talented. As are Vivendi – we also met with the folks there and talked with them.

After the shake-out in the market over the last few years, only the best are left. We know that whoever we work with will be the right fit and it will happen, literally, in the next few days and then we’ll make an announcement. But we’ve got a lot of work to do and there won’t be any sunshine until September or October. We’re doing a lot of grunt work. I’m reading all of our contracts myself, one by one, and we’ve got our legal team and our legal teams in LA and the UK working on it, too.

Will you be keeping the Asian Extreme line?
Will we be keeping it? We’re looking to grow it to a 2000 title library by 2010.
Are you hiring new people to do this in house, or will you be outsourcing this work and partnering with other companies?
We’re doing it. We’ve hired a CEO to oversee Palisades Tartan and that will be announced in a few weeks. We’ve got Debbi Berlin running PR in the US. We’ve got a woman in place who will be in charge of Operations. We’re building a global delivery system and this is a serious endeavor by us, and we’re working with serious people.

A lot of vendors and distributors are owed money by Tartan. How will you be dealing with that?
In the US it’s already been addressed. A majority of titles have been put aside and while there will be disputes I don’t think there will be that many. We were actively involved as lenders in this business, we had put money up front from our investors and we moved to protect them. We went through an excruciating, transparent process and whatever claims there are at this point, we’ve already dealt with 90-95% of them.

In the UK it’s a different story. There are two entities, one that was not in the administrator’s purview and we acquired it the way we do in the normal course of business. The other entity was from the administrator who was paid a significant amount of money, we struck the deal and wired it in just a few days, paid in full. The man we were dealing with was an extraordinary individual, a tough negotiator, but straightforward and I believe that he’ll do everything he can to protect our rights.

Have you reached out to overseas distributors yet? Media Asia claim that they have taken back the rights to some of their titles and some Japanese distributors are reportedly shopping around their titles, which were previously licensed by Tartan.
No one has taken their titles back. They have to go to court to do that. There is a lot of misunderstanding because this all happened very quickly. In the US, we own the titles. In the UK the administrator sold the authority to administer these titles. Now it’s my job to go to these companies and tell them that they have the best distributor yet. Look, they can make a claim but that doesn’t mean that they have these titles.

In the US and the UK people are getting the message about how strong we are, little by little. There were quite a few months of miscommunication about the library. There may even be titles we don’t want, but at this point in time we want all of them and we will defend them to the letter of the law. This is not meant to be contentious. We have little if any debt and we are not going to be an insignificant company. We’re going to be big buyers. We’re going to be out there buying everything that isn’t nailed down.

As for Media Asia, we haven’t even had any discussions with these folks. My goal in the next five days is to call these people, make an appointment with them, then get on a plane and go over there and sit in front of all of them. There’s a lot of titles and a lot of work right now. There are over 400 titles in the UK library, and Media Asia sent their notice before they even got our notice that we had the library. Our notices crossed. We have nothing but respect for the product they have and I'm told they're good people. I’m sure that when we sit down with them we will be able to clear up all the smoke.

People familiar with Tartan UK have said that the amount of debt and outstanding invoices is very large, larger than it was at first represented to be. They're claiming it's in the $6 - $10 million range and that there was some tricky bookkeeping going on to make it seem lower. Do you have any comment on this, and is Palisades prepared to deal with this amount of debt?
Let’s be frank. We didn’t go in and recover our collateral in the US because everything at Tartan was wonderful. We took our collateral and our rights because they owed us seven figures plus and we had to recover that for the benefit of our investors. Whatever was in the past is in the past. I’m going forwards, not backwards. We’re going to build this into a serious company. We’ve got very qualified, talented people involved here, we’ve got the financial wherewithal, full credit and the faith of top financiers in us. We know what we’re doing. When you do P&A financing you’re the last guy in, and if the chain of title isn’t right you’ve got major headaches. We know this stuff better than anyone.

Are you worried about the state of the home video market ? It's not doing well, it's glutted and too many companies are fighting over shelf space. Why get into this market now?
Home video sales are down 3.5% – personally I’d love it if the real estate market was only down by that much. We’ve got a 24-picture slate coming out that will be announced in the next week or two. But most importantly, at the end of the day there will be a change of the delivery system. Not this year, but in the next several years there will be a change in the delivery system. I don’t mean people will stop buying DVDs or Blu-Ray or hard products but an additional system will come out and at some point it will become apparent to everyone that it actually works. It’s coming. When that comes, whoever is sitting on quality titles will do extraordinarily well. We will be in that position in a way no one else can be in the Asian Extreme market and the European arthouse market. We will be in those markets better than anyone. Those are our two markets: Asia and European arthouse.

We are cautious about everything we do, and we are reticent about every decision we make, but we do our homework and we had a 2 ½ - 3 year relationship with Tartan. The reason we were best situated to do this is because we understand our portfolio. We did due diligence on this for years. We are never bullish unless we have our arms around something, and we have our arms around this. This will work. The library that Hamish built has legs and it has longevity.

The reason I’m in this business is because I wanted to bring transparency to a non-transparent process. People worry that the numbers are never really the numbers. But we want the people supplying the content to know that the numbers will be the numbers. And we want the consumer to get a quality product. And beyond that, who cares?.