Outsiders hang up phone on toons
IDT's deal with Liberty comes as co. gets features on track
IDT, which built its business primarily by selling phone cards to immigrants, spent the past three years putting together one of the biggest animation outfits the industry has seen, dubbed IDT Entertainment, only to offload it to John Malone's Liberty Media in a deal that surprised even insiders.
Ironically, the deal -- closed last week -- came just as IDT Entertainment had gotten its slate of feature toons on track.
First release, "Everyone's Hero," comes out Sept. 15 via a "rent-a-system" deal with Fox. Budgeted in the mid-$30 million range, IDT is hoping to do as well as other modest pics, like Par's "Barnyard," and end up with a domestic gross just north of $60 million.
Two more low-budget toons, "Space Chimps" and "Sheepish," are already in production as part of a four-pic distribution pact IDT signed with Fox last year.
But all of the content-related assets IDT rolled up in the past year have now gone to Liberty-owned Starz Media.
That includes toon powerhouse Film Roman (producer of "The Simpsons"), Toronto-based f/x and animation studio DKP ("Everyone's Hero" and "Sheepish"), homevid distrib Anchor Bay, genre TV and film producer New Arc ("Masters of Horror"), and Japanese animation distributor Manga, along with a minority stake in toon studio Vanguard Animation (which is making "Space Chimps").
In addition, IDT Entertainment recently brought on former MGM vice-chairman Chris McGurk to build a theatrical distribution and live-action film arm.
Deal with Malone makes sense, since pay cabler Starz gets a new source of content, along with homevideo and, soon, theatrical distribution.
"We were constantly having to go to networks to sell things," notes John Hyde, the Film Roman topper who became chief operating officer of IDT Entertainment and now has the same title at Starz Media. "Now, thanks to Starz, we're in a position where we basically have all the assets of production and distribution available."
There may be non-strategic reasons for the deal as well.
Malone, a longtime associate of IDT founder and chairman Howard Jonas, owned about 17% of parent IDT through Liberty Media, a stake he gave up as part of the acquisition of IDT Entertainment.
But whatever the strategic rationale for the sale, execs never thought they were building IDT Entertainment for the sake of a quick flip.
In fact, IDT Entertainment had spent the past year making deals that made more sense for its own long-term growth than they necessarily do under the Starz structure.
The pact with Fox, for instance, puts the next four IDT toons on HBO, rather than on Starz. And McGurk spent months working on a plan to finance live-action pics with outside money. Now he's revamping that plan to use funds from Starz for production.
Morris Berger, the former CEO of IDT Entertainment, liked to brag he was building an empire. But when the acquisition by Liberty was announced in May, he was away at the Cannes Film Fest, indicating that Malone and Jonas may have surprised even key lieutenants.
If anything, the Fox and McGurk deals, along with the recent success of New Arc's "Masters of Horror" series on Showtime, indicated that IDT Entertainment was getting on solid footing for the first time.
Whether the parent company let go of IDT Entertainment due to a loss of interest or the appeal of ridding itself of Malone's stake, investors seemed to like the deal. Shares in the telco shot up 14% the day the deal was announced.
Although his brief foray into showbiz is over, Howard Jonas will end up with one thing that many Hollywood outsiders pine for: his name on the bigscreen. The IDT topper has a "story by" credit on "Everyone's Hero."
