Movie upstart is given a credit line of $1 billion

Two film veterans have become the latest Hollywood players to tap into the gusher of money Wall Street is putting into the movie business by arranging a $1-billion credit line.

Patrick Wachsberger, chief executive of foreign sales and distribution company Summit Entertainment, and Robert Friedman, former head of marketing and distribution for Paramount Pictures Motion Picture Group, aim to use the money from Merrill Lynch & Co. to make, acquire, market and distribute as many as a dozen movies a year.

The deal, announced Thursday, includes separate funds for development, acquisitions, overhead and marketing. The Santa Monica company plans to make movies with budgets of less than $60 million aimed at mainstream audiences. Summit’s staff is likely to grow from 50 employees to about 120.

Wachsberger and Friedman will serve as co-chairmen of Summit Entertainment.

“I thought it was an exciting challenge at this point in my life,” said Wachsberger, who began his career in show business as an assistant director to Jerry Lewis in France. “I am going to keep doing what I am doing in my core business. It’s on our shoulders to succeed.”

The Summit venture does not have a pay-television arrangement, an important revenue stream in a volatile industry with thin margins. Nor does it have a substantial library of films, which gives companies a financial cushion because it can generate TV and video revenue during dry spells.

“Without those elements there ain’t no cash flow,” said Harold Vogel, an independent media analyst. “So you are stuck in a box.”

But Summit does have an ongoing business. The capital adds a domestic theatrical and home video component to the firm that Wachsberger has led since 1993.

Summit cobbles together funds from abroad to cover movie production costs. It sells international rights to foreign territories for movies made by such production companies as Alcon Entertainment, Beacon Pictures and Mandalay Pictures. Summit recently launched a joint venture with Filmgate, IDC, a specialized distribution company, to serve Latin American territories. It also helped finance such movies as “Mr. and Mrs. Smith” and the award-winning “Babel.”

Summit is the latest in a spate of movie upstarts. Last fall former MGM Vice Chairman Chris McGurk launched Overture Films, with $500 million in backing from Liberty Media Corp. A key element of Overture’s deal is access to pay TV through Liberty’s Starz cable channels.

Bob and Harvey Weinstein, founders of Miramax Film Corp., said they had raised $1.2 billion for their new Weinstein Co.

Over the years, scores of independent companies have come and gone. Even DreamWorks SKG, launched with $2 billion in 1994 by Steven Spielberg, David Geffen and Jeffrey Katzenberg, had a hard time as an independent studio. DreamWorks’ live-action division was sold to Viacom Inc. nearly two years ago, and the animation division was spun off.

Weinstein Co. has also struggled, with such releases as the Quentin Tarantino/Robert Rodriguez film “Grindhouse” proving to be a disappointment.

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