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UPDATE: USA Entertainment Dissolving Home Video Unit

12 Mar, 2002 By: Stephanie Prange

USA Home Entertainment is being dissolved, and Universal Studios Home Video will take over distribution of USA Films titles, according to a USA Entertainment spokesperson.

Approximately 20 people were told last week they will be laid off, the spokesperson confirmed.

USA Home Entertainment president Joe Amodei, who was promoted to the position from VP and general manager last June, declined comment.

The Universal deal begins with seven-time Oscar nominee Gosford Park, the spokesperson said. It is unclear if the deal is a result of the pending acquisition of USA Networks' entertainment assets by Universal Studios Home Video parent Vivendi Universal, the spokesperson said. However, industry insiders had speculated that Universal would take over USA Home Entertainment's business with the buyout.

A Universal spokesperson had nothing to add.

It is also unclear what will happen with USA Home Entertainment's other video distribution agreements, including USA's professional sports deals, she said.

Patti Fallick, VP of NHL Productions, said the league had no comment about the development last week. NBA and NFL officials did not comment by presstime.

Robert Baruc, president of Screen Media Films, which had recently signed a distribution deal with USA Home Entertainment to market its films, said he hasn't heard from anyone at Universal yet about his deal.

“It's too early to say [what will happen]. We haven't heard from anyone at Universal, but we certainly look forward to talking with them,” Baruc said. “Needless to say we were not happy to hear about USA. They were a wonderful match up for us, a wonderful group of people to work with, and, I think, a great success.”

The USA spokesperson said the home video unit is in a transition period and no date has been set for completion of that transition.

Vivendi Universal in December announced the deal to acquire the entertainment assets of USA Networks for more than $10 billion in a bid to broaden the reach of the French conglomerate in the U.S. market. The media giant earlier this month reported a more than $11 billion net loss in 2001, in part due to its buying spree.

USA Home Entertainment had less than 1 percent of the sellthrough market based on units sold last year, according to VideoScan, and just 2.6 percent of the rental market based on rental turns, according to Video Store Magazine market research.

Tom Adams of Adams Media Reseach based in Carmel Valley, Calif., said this consolidation is different from past changes. “The business has been through several waves of consolidation but they've typically come with slowed growth rates in home video,” he said. “This is just a byproduct of a big, big deal. Certainly it was not driven by video market considerations.” While he doubts “this is handwriting on the wall for other deals to come,” he said the “drumbeat of media acquisitions” could have other home video fallout.

“Further consolidation of the supply side of our industry is not what I welcome, and hearing of further layoffs during our industry's current boom in activity seems contradictory to our business' needs,” said Dan Gurlitz, VP and general manager, home video, of fellow New York supplier Wellspring Media Inc.

Additional reporting by Kurt Indvik.

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