By Bloomberg News

December 11, 2000, 10:15 a.m. PT

http://news.cnet.com/news/0-1006-200-4098935.html

PARIS--Thomson Multimedia, the world's fourth-largest consumer electronics maker, agreed Monday to buy Carlton Communications' Technicolor unit for $2.1 billion in cash and shares.

Thomson, which makes RCA televisions, wants to use the purchase to expand the electronic delivery of movies to broadcasters.

France's Thomson will pay $1.35 billion in cash and 15.5 million new shares for the unit. Carlton will own about 5.5 percent of Thomson.

Technicolor, the company that first brought color to movies in the 1920s, is developing systems that will allow movies to be delivered by satellite to theaters and stored on discs, rather than the reels of film used today. That will bolster Thomson's newly created unit that focuses on providing services to television networks.

"They're gaining expertise in movie-to-disc digital transfer, as well as a business that makes money,'' said Nicolas Martin, an analyst at Aurel-Leven in Paris. "It's another building block in Thomson's digital technology portfolio.''

Technicolor, founded in 1915 and now based in Camarillo, Calif., is the biggest maker of DVDs and the largest processor of motion picture films. It had revenue of $1.6 billion and operating profit of $249 million in its fiscal year ending Sept. 30. It employs 1,400 people.

Carlton will also invest $15 million in Tak, Thomson's interactive television venture with Microsoft.

Last week, Thomson bought control of Royal Philips Electronics' professional broadcasting business. In August, Thomson formed a digital unit to help companies shift to digital broadcasting and distribution systems.

Technicolor in June formed a joint venture with Qualcomm, a developer of mobile-phone network standards used by 65 million people, to distribute feature films to movie theaters through satellite transmissions.

Analysts had questioned whether Carlton would find a buyer for Technicolor because its main rival, the Deluxe film-processing company, has also been put up for sale by its parent, Rank Group.

Carlton "got a price that's at the very top end of expectations,'' said Paul Richards, an analyst at WestLB Panmure. "People were skeptical about (Carlton) finding a buyer and whether they were going to get a good price for it.''

Carlton built up Technicolor, which it bought 12 years ago, with the $264 million acquisition of compact disc maker Nimbus CD International in 1998. Carlton boosted its production of DVDs to meet the needs of Hollywood movie studios such as Walt Disney, which release their new films on video and DVD simultaneously.

The worldwide market for DVDs is expected to grow from 128 million units in 1999 to 432 million in 2001, according to Technicolor. The company has drawn up plans to expand its capacity to 150 million units annually.

Copyright 2000, Bloomberg L.P. All rights reserved.

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Colin Wiseley
Lyric Theatre
Blacksburg, VA
www.thelyric.com

They have also recently expanded the FILM side of their business too (e.g., purchase of Covitec in Montreal and CFI Lab in Hollywood).

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How much larger are these companies going to get before they become monopolies? The rich are getting richer, and the workers are getting poorer.

Do you guys think that these big companies are seeing the end of film, and are unloading the businesses (CFI, DeLuxe, etc) before they cant give them away? I think that we are going to see major changes in the entertainment business after the marriage of the computer, and broadcast television is completed. We are being forced to go with this new technology that will be obsolete in no time requiring all new equipment over and over again.

What can we do? Not much, except continuing the fight for quality film presentations, and properly trained operators. It's the shoddy operators that are ruining it for the rest of us.

Film has not yet been surpassed by this junky video/digital technology, and I WILL NOT go to a "theater" to watch a projected TV image.