PolyGram Filmed Entertainment

The music company PolyGram (owned by Dutch-based Philips and Germany's Siemens) created PolyGram Pictures in 1979 as a partnership with film producer Peter Guber. It was a spin-off of sorts to Casablanca FilmWorks, the film unit of PolyGram's Casablanca Records which Guber previously ran and had success with The Deep and Midnight Express. PolyGram reserved the finances and Guber would run as CEO. Guber would form a partnership with Barbra Streisand's hairdresser Jon Peters, who co-produced his client's A Star Is Born remake. Peters would produce PolyGram's films, and eventually become a stockholder with Guber.[2]

Its first film was King of the Mountain (1981), which was a box-office flop. More money-losers followed. Ancillary markets such as home video and pay television were not yet established, and broadcast television networks were paying less for licenses to films. PolyGram's European investors were not happy; they had lost about $80 million on its film division. Not long after, Siemens parted with Philips. Guber and Peters left PolyGram Pictures in 1982, taking their plans for a new Batman movie with them, along with a few other projects. The duo eventually found a home at Warner Bros. A part of their exit proceedings, PolyGram would still own 7.5% of profits from some of its projects, including the 1989 Batman film.[2] Also that year, PolyGram launched a syndicated television division PolyGram Television, both the film and TV units would eventually close down by 1983.[3]

In the early 1980s, PolyGram Video was launched. PolyGram Video, headed by Michael Kuhn and David Hockman, was created to distribute concert films and feature films acquired from third-parties, as well as long-form music videos, and even had a video label, originally set up as a joint venture with Heron Communications, that was called Channel 5 Video.[4] Kuhn and Hockman were able to parlay PolyGram Video's success into financing feature films. The first film produced by PolyGram's new film division was P.I. Private Investigations in 1987.[5] During the late 1980s and early 1990s, PolyGram continued to invest in a diversified film unit with the purchases of individual production companies.[6] In 1989, PolyGram launched Manifesto Film Sales to handle the licensing of films outside North America.[7] In 1991, PolyGram's Michael Kuhn became the head of PolyGram Filmed Entertainment,[6] with US$200 million pumped in with the intention of developing a European film studio that could produce and distribute films internationally on a scale to match the major Hollywood studios.

Following the style of its music business, the company produced films through a number of creatively semi-autonomous 'labels', such as Working Title Films in the UK and Propaganda Films and Interscope Communications in the United States; It also built up its own network of distribution companies.

Film production within PolyGram differed from traditional Hollywood studios, in that power to make ('green light') a film was not centralised in the hands of a small number of executives, but instead was decided by negotiations between producers, management and marketing. Kuhn claimed that "movies sort of green lit themselves."

In 1993, PolyGram purchased the video arm of Virgin Group from General Electric Capital for $5.6 million and remodeled the label as Vision Video Ltd.

PolyGram also built up a sizable film and television library that could be profitable. In 1995, the company purchased ITC Entertainment for $156 million.[8] Through this purchase, PolyGram acquired 350 feature films, several thousand hours of television programming, and gained further access into the television market.[6] That same year, PolyGram Filmed Entertainment acquired a 75% majority stake in British home video distributor Abbey Home Entertainment. In 1997, PFE agreed to purchase the Epic film library, which included a thousand feature films, from Crédit Lyonnais for $225 million.[9] PolyGram also attempted purchasing MGM[10] and The Samuel Goldwyn Company's library,[11] but to no avail. In July 1998, Polygram was in talks to sell their stake in Abbey Home Entertainment back to Ian and Anne Miles, letting AHE trade independently again. On December 7, 1997, PolyGram and Warner Bros. reached a deal to co-finance films produced by Castle Rock Entertainment.[12]

PFE was based in the United Kingdom, and invested heavily in British film making — some credit it with reviving the British film industry in the 1990s. Despite a successful production history, Philips decided to sell PolyGram to the beverage (liquor) conglomerate Seagram in 1998.

Only interested in PolyGram's music operations, Seagram, which at the time controlled Universal Pictures, looked forward to divesting in PFE. After being dissatisfied with offers to buy the studio (including a joint venture between Canal+ and Artisan Entertainment), Seagram opted to sell off individual assets and folded whatever remained into Universal.[13] In October 1998, Metro-Goldwyn-Mayer[14] paid $235–250 million to acquire 1,300 films released before March 31, 1996, from PolyGram.[15] In 1999, the ITC library was sold to Carlton Communications (later known as ITV Studios) for $150 million.[16] Some of PFE's North American distribution assets were sold to USA Networks.[17] Universal would later take over the remaining titles which included a third of the pre-1996 films as well as PolyGram Television's library. Universal would eventually set up their international arm on the ashes of PFE's international division on February 9, 1999, that included theatrical and video distribution when its contracts with United International Pictures and CIC Video expired.[18] After Mickey Blue Eyes flopped, which served as UPI's last film (one of the few titles that were self-distributed by Universal internationally), being inherited from PolyGram, all the theatrical assets of Universal Pictures International was merged with United International Pictures, which remained through 2007.[19]

PolyGram Filmed Entertainment took over the distribution of Manga Entertainment's titles in Australia and New Zealand in late 1996 after Siren Entertainment's license to the Manga Video catalogue expired, but PolyGram lost the license to the Manga Video catalogue in 1998 after Madman Entertainment took over the licenses. This was due to Manga Entertainment being moved from Island Records to Palm Pictures.