Chelsea Pictures Splits with Intelefilm

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Minneapolis-based Intelefilm announced late yesterday that it has sold Chelsea Pictures back to the management team of the New York-based production company. Intelefilm acquired Chelsea in March of 1999 via a stock swap with then-owner Steve Wax. The new ownership consists of Wax, managing director Allison Amon and executive producer/head of sales Lisa Mehling. All three will now go by the title of partner.

Chelsea's roster includes directors Simon Blake, Janusz Kaminski, Nicholas Barker and features director Todd Solondz, as well as partnerships with Haxan -- the collective behind Blair Witch -- and London's Hi-Res -- designers of the award-winning website for the film Requiem for a Dream.

"The truth is that it's a very happy parting of the ways," says Wax. "It was a perfectly amicable deal." In a statement released yesterday, Intelefilm chairman and CEO Mark A. Cohn said, "We are pleased to have closed on the sale of Chelsea Pictures. This is the beginning of the unwinding of the company's strategy of being a diversified media holding company." The company aims to divest all its production assets -- which once included Chelsea, The End, animation house Curious Pictures and ad agency Dcode -- to focus on its majority ownership of WebADTV, a digital asset management company. The End closed last February, and a buyback deal similar to Chelsea's is said to be in the works at Curious, likely including Dcode. "We can't talk specifically yet," says Curious Pictures co-founder Richard Winkler when asked if his shop will follow its sibling's exit strategy. "Stay tuned."

Chelsea's buyback reverses a trend that has seen many production companies -- from Straw Dogs to Propaganda Films -- falling, and sometimes failing, in the hands of publicly-traded companies and other third-party investors. "We're really thrilled to be able to move forward when the publicly-held world is in a downturn," says Chelsea's Mehling. "It's been a tough year for everyone, but particularly for publicly-held companies."

Publicly-traded Intelefilm (symbol: FILM) peaked at just over $5/share in February 2000 before being delisted from Nasdaq in August. It currently trades on the OTC Bulletin Board at $0.48/share.

"We found it was less about the investors than the nature of the production business," Mehling says of why production and third-party ownership don’t seem to mix. "If a production company isn’t owned by the people who work there on a day to day basis, you lose some of the energy that you need to compete in this business."

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