A Boffo Way To Play The Box Office

It's not news that American movies are among the nation's most popular exports. U. S.-made films command 50% to 80% of the box-office gross in most foreign markets. It's probably not wise to load up on shares of U. S. moviemakers, though, particularly in a year when most new movies have bombed. But there is a smart way to get into this overseas-market game.

"The play is in distribution," says New York money manager Joe Salvani of Brookhill Equities. He has been buying shares of International Movie Group, the only publicly traded company specializing in the distribution of English-language films outside North America. So far, IMG, which trades on the American Stock Exchange at 2 3/4, has 27 films in distribution in 52 countries and owns rights to 6 that aren't in production yet.

What's IMG's strategy? The company extends "bankable" guarantees in the form of letters-of-credit to independent film producers. The guarantees are used by the producers as collateral to finance production. The guarantee is payable only upon completion of the film, so if the film isn't delivered, IMG isn't left holding the bag. And it's not liable for cost overruns, either. IMG is strictly a distributor that supplies the home-video and TV markets as well.

One big hidden asset: television rights. "The value of TV rights has soared in recent years, with one source estimating IMG's to be worth $1 million per title, or about $30 million," says Tim Bremer, an analyst at Cruttenden & Co. in Irvine, Calif. That comes out to about $7.5 million in operating profit, or $1 a share, he figures. And that dollar isn't included in his estimate for this year, which could be lower than 1990's 21~. But for 1992, some estimates go as high as 40~. Brookhill's Salvani says the stock is worth 6.

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