Replication | 1:55 February 01, 2010 | Sam Andrews | Print this story

Cinram stock plunges as WHV switches to Technicolor

Shares in Cinram fell 62% after it revealed that Warner Home Video (WHV) has given notice to end its worldwide contract with the giant Canada headquartered CD and DVD replicator at the end of July. WHV announced that it will move to Technicolor for its DVD and Blu-ray Disc services.

The Technicolor pact includes what WHV described as relating to “strategic technology initiatives”.

Technicolor CEO Frederic Rose welcomed the WHV agreement and said “Combining their expertise in creating entertainment properties and key technologies related to them with Technicolor’s unrivalled track record of technological innovation is an exciting proposition filled with opportunity for both parties.”

Last year, WHV accounted for approximately 28% of Cinram International Inc.’s total consolidated revenues, the company said, adding that the move will directly hit operations — and around 17,000 workers — in North America, Mexico, UK, France, Germany and Spain.

“While we are disappointed with the decision by WHV to end our over six year relationship as their exclusive service provider of standard DVD products and distribution services, we will nevertheless be working closely with WHV to ensure an orderly transition of the services and ensuring that all affected employees and other stakeholders are given the absolute greatest consideration during this process,” said Cinram CEO Steve Brown.

In November, Cinram returned to profitability after a company-wide cost cutting plan that included restructuring its operations and selling off Ivy Hill, a division specialising in printing packages for DVDs. Third quarter profits were $9.5 million on revenue, down 15%, to $351.2 million.