Universal in talks to sell Focus Features to Gores brothers

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Universal Pictures is in talks to sell its specialty film label Focus Features to investor brothers Alec and Tom Gores, according to people familiar with the matter.

The discussions, which are still in early stages, calls into question whether the film studio will hold onto its independent film division as it is swallowed by cable giant Comcast Corp. next year.

The Gores, who separately run their own private equity firms, have ambitions to build an entertainment empire by cobbling together film libraries and other media assets. Earlier this year they attempted to purchase Miramax Films and looked at Overture Films’ parent Starz Media. Three months ago, they jointly acquired DVD and video game distributor Alliance Entertainment LLC, an asset that would complement a film studio.

Alec Gores and Tom Gores are being advised by their brother Sam Gores, founder of the Beverly Hills talent agency Paradigm, who has been consulting with his siblings on their entertainment industry investments.

Talks between Universal and the Gores have been underway for weeks, but people close to the situation cautioned that there is no guarantee a deal will be reached.

Alec, Tom and Sam Gores, through their spokespeople, declined to comment.

A Universal spokesperson said, ‘We often receive interest in Focus Features, which is an attractive asset. But we are not in active negotiations to sell Focus.’

A spokeswoman for Focus declined comment.

Like Walt Disney Co., which recently sold Miramax for $663 million, and most other studios, Universal appears to have lost its interest in specialty movies, which, despite the prestige such films bring on the awards circuit, is a low-return business. Universal is focused on producing mass-appeal movies such as the ‘Fast and Furious’ and the ‘Fockers’ series and developing properties based on ‘brands’ such as Hasbro toys ‘Battleship’ and ‘Ouija.’

It is not the first time that Universal has discussed selling Focus and its 250-plus title library. Earlier this year, the studio was in negotiations with film finance and production company Media Rights Capital, but the deal fell apart over price. In late summer, Ryan Kavanaugh’s Relativity Media was in discussions to acquire Focus, but again the two sides couldn’t come to terms, people familiar with the situation said.

Last year, Relativity acquired Focus’ genre label Rogue Pictures for more than $100 million.

Focus has been under pressure from Universal to meet its financial targets, which has become increasingly difficult amid declining DVD sales and other economic challenges. People familiar with the label’s operations said the division generates at least $25 million annually in profit. However, profits are significantly below peak levels in previous years.

New York-based Focus Features was founded in 2002 when Universal acquired the pioneering independent studio Good Machine, merged it with USA Films, and renamed the combined entity. It is headed by Good Machine co-founder James Schamus. The company employs about 100 people, mostly in New York, with the remainder at Universal’s lot in Studio City.

Known for releasing acclaimed movies with unconventional stories aimed at adult audiences such as ‘The Kids Are All Right’ and ‘Lost In Translation,’ Focus has had a mixed commercial record over its eight-year history. It has released only a handful of movies that crossed over to mainstream audiences, such as director Ang Lee’s 2005 cowboy love story ‘Brokeback Mountain’ and the animated feature ‘Coraline.’

In an interview with The Times in May, Schamus acknowledged that although his studio has managed to keep its costs low, ‘the business is tougher and we face the same pressures as everyone else.’

This year, Focus has had a a couple of solid box-office performers with the George Clooney thriller ‘The American’ and the gay-family comedy ‘The Kids Are All Right,’ starring Annette Bening and Julianne Moore, but those films were offset by disappointments such as the teen comedy ‘It’s Kind of a Funny Story’ and the Ben Stiller dark comedy ‘Greenberg.’

In 2011, Universal will face scrutiny from its new owners at Comcast and pressure to recover from difficult years in 2009 and 2010, during which it released several costly flops.

-- Claudia Eller and Ben Fritz