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Thomson MM Acquires Technicolor For $2.1B

12/18/2000 02:00:00 AM Eastern

PARIS -Thomson Multimedia, French parent of Thomson Consumer Electronics, agreed to purchase Hollywood film processing house Technicolor from Carlton Communications in a deal valued at $2.1 billion.

As part of the deal, Carlton will receive a 5.5 percent stake in Thomson, along with $1.35 billion in cash, $600 million of which will be paid over the next four years.

Additionally, Carlton and Thomson will collaborate on the development of interactive television content and services. Carlton has agreed to invest $15 million in a Thomson/Microsoft interactive television venture for Europe called TAK.

The move came one week after Thomson announced it would acquire Philips Electronics' professional broadcasting business.

The Technicolor deal is viewed as strategically important acquisition because it will give Thomson the ability to facilitate the delivery of digital content through the distribution chain. Thomson executives pointed out that the company will not become a content producer, but will enable producers to deliver their productions to consumers "in a more direct fashion," said a Thomson spokesman.

In an official statement on the agreement, Thomson said, "After having successfully contributed to the launch of digital satellite television in the mid-1990s, Thomson intends to position itself as a leader in digital terrestrial television technologies and products in Europe and in the rest of the world.Thomson wishes to leverage the additional expertise of Carlton, a leader in the launch of digital terrestrial in the U.K."

Technicolor will become the foundation of Thomson's new Digital Media Solutions Group, which is billed as a business-to-business service for the digital delivery of entertainment. Thomson looks to be an enabler of future delivery-secure entertainment distribution such as video on demand and MP3 music over the Internet and other broadband pathways.

The company is currently working to help movie and television producers in Europe, and eventually elsewhere, shift from analog to digital broadcasting and in the wireless digital distribution of films to movie theaters.

Technicolor had reportedly already taken steps to distribute films digitally and had formed with Qualcomm a joint venture called Technicolor Digital Cinema, to wirelessly deliver digital content and provide encryption and compression technology to secure that content with high-quality resolution.

In addition to film processing, Technicolor has become one of the world's largest producer and distributor of DVDs and videocassettes.

Thomson senior executive VP Frank Dangeard said the deal would lift earnings by some 30 percent from year one.

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