The recent closure of bicoastal The End (SHOOT, 2/23), a subsidiary of Harmony Holdings, took a $900,000 bite from the bottom line of publicly traded, Minneapolis-headquartered iNTELEFILM, majority owner of Harmony Holdings and a service provider for the TV commercial production industry.
That contributed to a net loss of approximately $10.9 million in calendar year 2000 for iNTELEFILM, which reported around $67 million in revenue. According to figures released by the company, the magnitude of the net loss in 2000 resulted from several factors which won’t recur this year, such as the six-month-long strike against the advertising industry by the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists. Other factors from last year not expected to recur in ’01: operating losses of $2.1 million; the aforementioned asset impairment charge of $900,000 related to the shutdown of The End; lawsuit and inventory write-offs of approximately $500,000; a corporate restructuring accrual of $600,000 related to a plan to reduce ongoing annualized corporate expenses by some $2 million; and start-up funding of approximately $2.5 million for subsidiary webADTV, which is now self financed following a recent private placement of its common stock.
The chapter on The End, though, may not be entirely closed. As reported earlier this month, director Steven Ramser, whose former shop Unscented operated as a satellite of The End, claims to be owed some $300,000 for work completed at Unscented. He has filed suit against iNTELEFILM and The End. In response to SHOOT queries, iNTELEFILM general counsel Judite Fluger stated: "iNTELEFILM does not have an agreement with Ramser. We believe we have been wrongly identified in the suit" (SHOOT, 3/16, p. 1).
Immediately after The End closed its doors, Ramser launched Los Angeles-based spot production house Lotion, in partnership with his executive producer, Rossi Cannon. Lotion also features directors Frank Samuel, Luca Maroni and Jelle Oortman Gerlings.
CEO ASSESSMENT
Looking back on his company’s performance last year, iNTELEFILM CEO Christopher T. Dahl released a statement reading: "While our 2000 year-end results were hugely disappointing, our remaining operating companies, [bicoastal] Curious Pictures and [bicoastal/ international] Chelsea Pictures, have been historically profitable. We feel we have made considerable progress at both corporate and operating company levels to contain costs and focus on enhancing existing profit centers. The expected non-recurring factors discussed above [in the year-end report] accounted for approximately $8.6 million of the 2000 loss before consideration is given to the impact of the strike. Also, included in the 2000 loss is ongoing depreciation and amortization of approximately $2.3 million."
Dahl added that "our webADTV subsidiary has obtained its initial outside funding and is making progress with its vertical market software which is designed to increase productivity and communication in the advertising industry. Recently webADTV announced an agreement with Microsoft’s Digital Media Division to co-market and promote Windows Media technologies as the preferred platform for webADTV’s video archiving and retrieval solutions, ‘iNTELESource.’ "
Dahl concluded his assessment of 2000 by stating: "Many of the strategic moves made by iNTELEFILM during the year were costly, but were designed to bring the company together in a cohesive way and provide us with the collective strength to move the company toward profitability, with anticipated improved operating and cash flow results in 2001. Additionally, the company is exploring various strategic alternatives with a focus on maximizing shareholder value."
Also under the iNTELEFILM umbrella is DCODE, a New York-based firm offering strategic planning, creative, and production of commercials and emerging ad forms to advertisers and agencies.
