Marchand's walking papers

By ADAM DAWTREY

Xavier Marchand is one of the most popular and respected execs in the international film biz.

So when news leaked out a week ago that the affable Frenchman had been abruptly suspended as managing director of U.K. distrib Momentum and its Spanish sister Aurum, pending an investigation into his conduct, it sent shock waves around the world.

The reason for Marchand's ouster, and the dismissal of his right-hand man Yu-Fai Suen, still hasn't been made clear. Indeed, Motion Picture Distribution, the Toronto-based publicly-quoted parent, hasn't even announced it publicly, let alone issued any comment. And Marchand himself is forbidden to talk.

But Marchand, who worked at Polygram and Warner before joining Momentum in 2003, seems to have lost out in an internal power struggle so murky and Byzantine that it would put the Kremlin to shame.

And in true Soviet style, he may yet return from exile in a stronger position than before.

It's no coincidence that his suspension happened just hours after investment bank Goldman Sachs agreed to buy a 51% stake in MPD, which is also Canada's leading indie.

MPD chief exec John Bailey evidently was planning to move against his European topper for some time, but didn't want to jeopardize the sale by acting before the ink was dry.

Goldman Sachs reportedly had no idea what Bailey was intending. The bank has a warm relationship with Marchand, dating back to its support for a possible buyout last year, and there's speculation that the bank could reinstate him when the takeover is finalized in a few months.

In the meantime, Bailey has given former Sony exec Richard Napper the poisoned chalice of filling in as interim managing director, where he will be the target for internal and external discontent about the coup.

Suppliers of movies to Momentum and Aurum are furious at Marchand's treatment, at a time when both companies are performing well.

Momentum is getting boffo results with "Miss Potter," and has "Bobby," "Hannibal Rising" and "Arthur and the Invisibles" coming soon. Aurum has finally overcome the problems that followed its sale to Momentum in 2004, scoring an unexpected smash with "The Illusionist."

"I very rarely get worked up, but I was livid about this," comments one leading sales agent. "Xavier has run a very good ship there, and replacing him like this is catastrophic. My own view that it was pure spite and vindictiveness. They obviously didn't feel they had good enough cause to fire him, so they are just trying to humiliate him."

One interpretation is that Bailey believes Marchand is conflicted, and is simply parking him on the bench until Goldman Sachs completes its purchase.

But to besmirch Marchand with the suggestion of wrongdoing implies a darker motive, reaching back to the internecine dramas of last summer. Longtime CEO Patrice Theroux was fired in July for trying to orchestrate a management buyout, prompting chairman Victor Loewy to quit in protest. Goldman Sachs was one of their potential backers.

Marchand, a close ally of Theroux and Loewy, was left publicly unscathed by the row, which was papered over when Loewy returned in a consultancy role. But behind the scenes, Bailey tried everything to clip Marchand's wings.

The low point came when Bailey demanded at the last minute that the release of "Miss Potter" should be postponed, so the costs could be pushed out of the final quarter and into 2007. That might have made MPD's balance sheet look better to buyers, but it would have wrecked the movie's prospects. A barrage of protests from the pic's producers and financiers forced Bailey to back down bitterly, but that may have been when Marchand's fate was sealed.

This turmoil shows how unsuited the volatile film distribution business can be to the constraints of public ownership. That, of course, is exactly why the management wanted to take the company private last year. If Goldman Sachs takes over, it will free up MPD to become a much more aggressive and expansionist player.

"Goldman Sachs wants to use this as a springboard to create a big international company, not just in Europe and Canada," says a person familiar with the plans.

And don't bet against Marchand, Loewy or even Theroux playing a part in that.