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Universal Severs Distribution Agreement With Alliance in Canada

26 May, 2011 By: Thomas K. Arnold

Facing a surge of its own product, Universal Studios Home Entertainment has ended its two-decades-long distribution agreement with Alliance Entertainment in Canada, which now is setting up its own distribution network there, Home Media Magazine has learned.

Canadian customers already have been notified of the separation, which takes effect July 1, sources close to Universal told Home Media.

Insiders say the change also was prompted by a steady decline in revenue generated from the sale of Alliance product, which at one point was responsible for upwards of $250 million a year. But with some of Alliance’s top sources of product, including New Line (now part of Warner), no longer with the distributor, sales in recent years have been less than $100 million.

In light of the separation, Universal also is restructuring its Canadian operations to be more in line with those of other studios, the source said. Universal reportedly is the only one of the six U.S. majors to still maintain an expansive Canadian operation instead of just a smaller, sales-oriented team, but effective May 26, that is changing, to accommodate the decrease in Alliance product. Workforce reductions will be staggered and begin June 30, continuing through the end of the year. About 40 positions will be eliminated, the source said.

When contacted for comment, Universal officials offered the following statement:

“Universal Studios Home Entertainment has terminated its long-standing arrangement with Alliance Films to distribute home entertainment products in Canada. This move best satisfies Universal’s current business needs in the territory. As a result, we are adjusting our workforce in Canada to accommodate this transition. Going forward, Steve Dorman will remain executive vice president and managing director and will continue to effectively lead Universal’s Canadian home entertainment operation.”

Universal is coming off of a strong fourth quarter, led by Despicable Me. The studio also has three major theatrical features in the home entertainment pipeline: Hop, Fast Five and Bridesmaids.

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