Mohammed Fayed, the controversial ex-owner of Harrods department store in London, has emerged as a surprise contender to buy Britain’s premier movie studio Pinewood Shepperton, best known as the production base for the James Bond franchise. Fayed says that he is considering making an all-cash offer for the studio group. He sold Harrods last year for £1.5 billion ($2.5 billion). “It’s very early stages,” Fayed’s spokesman tells me. According to reports, Fayed thinks the James Bond studio needs investment to return it to its glory days. Ridley Scott is currently shooting Prometheus there until mid-July, and sets are being built for Dark Shadows starting May. Fayed’s bid would throw a spanner in the works for lead Pinewood shareholder Peel Holdings, which has just made a bid worth £88 million for the studio. Peel would have to increase its offer if it is to prevail over Fayed, say analysts. The market certainly likes what it’s hearing: Pinewood Shepperton’s shares were up 11% this morning to 224p per share. This is not the first time Fayed has gotten involved in the movie business. Back in the early 80s, he was an early investor in Chariots of Fire. His son, Dodi, also spent time in Los Angeles as a producer.
Peel Holdings is a property investor, and it wants to get Pinewood Shepperton’s sprawling 150-acre grounds and backlot working harder. Around 300 indie film companies are currently based at the 3 sites of Pinewood, … Read More »
Talk about life imitating art. Julian Fellowes, Oscar-winning screenwriter and creator of ITV snob drama Downton Abbey, which PBS will show in January, has been made a Tory peer. Fellowes, who’s complained that the problem with success is that it’s very time-consuming, will now have even less time to pen the 2nd series of Downton if he’s to be fulfilling his duties in the House of Lords, the Brit equivalent of the Senate. At least he’ll be at home. Fellowes is utterly posh – his wife was lady-in-waiting to Princess Michael of Kent. He once remarked that she was the only woman at the 2002 Oscars who didn’t need to borrow her jewels. Michael Grade, the ex-chairman of the BBC and ITV, is joining Fellowes as a Conservative peer. Grade is currently chairman of Pinewood Shepperton and of management company James Grant Management, whose clients include Piers Morgan.
Stage Entertainment, the London-based theatre chain, was also bidding but has now dropped out, I’m told. Grade has teamed up with theatrical agent Michael Linnit and private investors to acquire the New London, Her Majesty’s, Cambridge and Palace theatres. Of the four, the New London needs the most renovation – although the sightlines of the Palace are dreadful. Theatre producers I’ve spoken to have welcomed the deal. “I think it is good news,” says Matthew Byam Shaw, producer of Enron. “They will probably be decent owners.” Grade’s uncle, Lord Delfont, was a famous theatrical impresario who owned the prestigious London Palladium which Lloyd Webber now runs. Back in 2005, Grade and Linnit attempted to buy Lloyd-Webber’s Really Useful Group before the theatre mogul decided not to sell. Lloyd-Webber’s other “crown jewel” venue remains the Theatre Royal Drury Lane. Lloyd-Webber bought his theatre empire for £90 million in 2000 before selling four venues to Nimax Theatres in October 2005. His Phantom of the Opera sequel Love Never Dies opened in March here to mostly negative reviews. It’s looking unlikely that the Phantom sequel will open on Broadway in the spring of 2011 as planned. Its director and choreographer have defected to rival production Catch Me If You Can.
First half operating profits after exceptional items have also fallen 3% to £3.2 million. Total revenue fell 6.4% in the first 6 months to £19 million. Film production revenue fell by 8.5% to £10.8 million, while TV shooting income fell 7.3% to £5.1 million. Martin Scorsese’s Hugo Cabret was the biggest production to use Pinewood Shepperton between January and June. Other productions using the studios included Disney’s John Carter of Mars and Ruby Films’ Jane Eyre. Pinewood Shepperton has been hit by several Hollywood productions being delayed.
Crystal Amber, which yesterday became Pinewood Shepperton’s biggest shareholder, characterises chairman Michael Grade as “clueless” and called on him to stand down. The investor complains that Pinewood’s revenues have fallen, costs have risen and profits broadly halved since the group raised £50 million at flotation in 2004.
James Lee, former chairman of Scottish film agency Scottish Screen, has written to UK culture secretary Jeremy Hunt proposing all £15 million of lottery funding be injected into a single distribution label. BBC Films and Film4 would be obliged to release all their films through this “British National Distribution Company.” Indie producers would then apply to have their films fully financed. This is a revival of an old idea. Back in the late 90s, a government report recommended that all lottery funding be spent on a distribution-led studio aping the Hollywood model. Fine in theory but the government immediately saw the impossibility of using public money to fund a commercial rival to existing film companies. John Woodward, current CEO of the Film Council, was one of those who shot the idea down. Woodward, then CEO of UK producers’ lobbyist Pact, realised that the Middleton Report proposal would leave too many of his producer members hungry for cash.
Michael Grade has also weighed in to the UK Film Council debate, suggesting producers get to be the ones distributing lottery funds. “Could we introduce a system whereby internationally established UK producers, who have had success in both commercial and cultural terms, play a role in distributing lottery funds?” Grade wrote in the Times of London. “Surely they are more likely to pick winners than the bureaucrats.” But wait, the government has already … Read More »
The publicly-quoted studio facility faces a renewed attack by shareholder Crystal Amber on Wednesday, when it announces its half-year results. Pinewood is expected to announce operating profits have fallen from last year’s £3.3 million ($5 million). Crystal Amber thinks that all the value of the company is locked up in its property portfolio. But Michael Grade, chairman of Pinewood Shepperton, insists Pinewood is a media company, not a property developer. Crystal Amber counters that the studio group hasn’t been paying its property assets enough attention. Stockbroker Investec has calculated that 82% of Pinewood’s value lies in its property assets, not studio operations. The group could make a lot of money selling off some of its portfolio.
Grade and his team are thinking about taking Pinewood Shepperton private again, says the Sunday Times. Crystal Amber has been quietly building up its shareholding to nearly 27% — just edging past second-biggest shareholder Peel Holdings. One idea might be to spin off Pinewood’s property management to a Peel executive, freeing up Grade and CEO Ivan Dunleavy to concentrate on running the studio. Hollywood movies shooting in Britain this summer include Disney’s Pirates Of the Caribbean: On Stranger Tides, X-Men: First Class – both at Pinewood – and Captain America, filming at Shepperton.
Pinewood shares floated at 180p back in 2004, but today are worth only 168p.
The former ITV chairman has survived a shareholder rebellion at this morning’s annual general meeting of the company that owns Pinewood and Shepperton film studios.
Crystal Amber, an activist investment fund with 18% of the shares in Pinewood Shepperton has attacked Grade’s “poor stewardship” as chairman of the company. The fund says the board needs fresh leadership.
Grade led the management buyout from Rank in 2000. Profits and return on capital have fallen by more than half since the business was floated in May 2004.
The fund first invested in Pinewood Shepperton 18 months ago because it felt the studio was undervalued. It then put forward its own proposals as to how market perception of the value of the business might be improved. Richard Bernstein, Crystal’s investment adviser, said that although initially well-received, nothing has happened and subsequent meetings with Grade have been “unproductive”.
Pinewood Shepperton says that most shareholders are behind it, which “gives us confidence that they support the board, its stewardship and strategy”.
The group has invited Steven Underwood of investor the Peel Group, which holds 26.6% of the company, to join the board.