Panavision Inc. History

Address:

6219 De Soto Avenue
Woodland Hills, California 91367-2602
U.S.A.

Telephone: (818) 316-1000
Toll Free: 800-FOR-PANA (367-7262)
Fax: (818) 316-1111

Public Company
Founded: 1954
Employees: 805
Sales: $124.64 million (1996)
Stock Exchanges: New York
Ticker Symbol: PVI
SICs: 3861 Photographic Equipment & Supplies; 5946 Camera Equipment & Photographic Supply Stores; 7819 Services to Motion Pictures

Company Perspectives:

Since its inception in 1954, Panavision has been building long-term relationships with cinematographers, directors, and producers who are at the forefront of the television and motion picture industries. We offer the largest inventory of cameras and lenses in the world, and we have a worldwide reach and on-site technical expertise. We are the only supplier of cinematography equipment that manufactures a complete film camera system incorporating our own range of proprietary prime and zoom lenses, the most critical components of a camera system. Located close to Hollywood, the heart of North American film production, we are in constant contact with our customers in order to develop specialized equipment to enhance the creative process that becomes the magic of filmed entertainment. Today's leading cinematographers, directors, and producers do not just ask for Panavision equipment, they insist on it.

Company History:

Panavision Inc. is the foremost designer and manufacturer of cameras and lenses for the motion picture and television industries. Its products are considered by many to be the finest in cinematography. In fact, many cinematographers, directors, and producers hold Panavision's equipment as the industry standard, particularly the company's high-precision film camera systems, comprising cameras, lenses, and other accessories. As an integral provider of equipment to the motion picture and television industries, Panavision is a well-recognized brand name among professionals and the general public.

A Prominent Place in the Industry

Most motion pictures are filmed using Panavision cameras and lenses. Approximately 90 percent of all Hollywood productions utilize the company's cameras. Each of the top ten motion pictures of 1995--including Batman Forever, Apollo 13, Die Hard with a Vengeance, and Ace Ventura: When Nature Calls--were filmed using Panavision systems. In 1996, nine of the ten leading box-office successes utilized Panavision cameras and equipment, notably Independence Day, Mission: Impossible, Twister, Ransom, The Rock, and A Time to Kill.

In addition to financial success, motion pictures filmed with Panavision systems also earn acclaim for cinematography within the industry. From 1954 through 1995, the company won 14 awards from the Academy of Motion Picture Arts and Sciences. Since 1990, the Academy recognized Panavision with two Oscars and 17 awards for scientific and technical achievement. In fact, two of every three Oscar nominees for best cinematography since 1990 filmed their works with Panavision systems. Since the decade began, five of every six Oscar-winning cinematographers filmed their productions with Panavision cameras.

Panavision has been equally successful on the small screen, providing cameras and equipment for the most watched television series of the 1990s. "Friends," "Seinfeld," "Fraser," and "ER" were all filmed with Panavision equipment. "There is no question that Panavision has a dominant place in the industry," noted Christopher Dixon, an analyst with PaineWebber, in Going Public: The IPO Reporter.

Equipment for Rent

Panavision leases its cameras and equipment to clients through owned and operated facilities throughout the world and through a network of agents. Panavision was among the first companies in Hollywood to adopt a rental-only system for its equipment. Unlike its competitors who sell their cameras to non-affiliated rental agents, Panavision maintains ten owned and operated rental facilities in the United States, Canada, and the United Kingdom. In addition, the company has established a network of agents throughout the United States, Europe, Asia, Australia, South Africa, and Mexico.

Panavision was renowned for the level of customer service it provided through its rental facilities and agent network. The company also offered its customers 140 technicians and 160,000 square feet of factory space in which to develop new equipment. For the 1997 Hollywood blockbuster Titanic, for example, Panavision designed a special camera for filming underwater. Similarly, for the movie JFK the company engineered cameras that mounted on the hoods of cars and trucks.

Two Major Subsidiaries

Lee Lighting Ltd., a Panavision subsidiary, rents lighting, lighting grips, power distribution, power generation, and transportation equipment. One of the larger lighting rental companies in the United Kingdom, Lee Lighting also maintains two owned and operated facilities in North America: one in Orlando, Florida, and the other in Toronto, Canada. Panavision also manufactures and markets lighting filters, color correction filters, and diffusion filters through Lee Filters.

Humble Beginnings in a Los Angeles Camera Store

Panavision started in Los Angeles in 1954 in a camera store owned and operated by Robert Gottschalk. Besides being a camera retailer, Gottschalk also was an inventor of photography-related innovations. His first major breakthrough was his design and perfection of a camera lens that did not distort images in wide-screen motion pictures. He officially introduced the first Panavision lens in 1957.

Ten years later Gottschalk sold Panavision to Kinney Corporation, a predecessor company of Time Warner. Despite the sale, Gottschalk remained active in Panavision. He went on to invent the Panaflex camera, a mobile unit that was lighter and more portable than earlier camera models.

Panavision After Gottschalk

After Gottschalk died in 1982, a variety of owners bought and sold Panavision--notably Ted Field, the grandson of Marshall Field, founder of the large U.S. retail chain. Field bought Panavision in 1985 from Warner Communications for $52 million. Shortly after purchasing the company, Field bought out his investment partners, giving him total control of the enterprise. Under his direction, Panavision played a role in the production of many successful motion pictures, including Outrageous Fortune, Critical Condition, and Revenge of the Nerds. Field sold the company in September 1987 to Britain's Lee International for $142 million.

In 1988, Warburg Pincus Capital Company assumed control of Panavision. The capital company invested $60 million to keep Panavision solvent. Yet the company struggled financially when camera production dropped from 25 in 1988 to a mere 15. Panavision spent the next five years securing its place in the industry, returning to profitability in 1993.

Going to New Places in the 1990s

In 1994, Panavision led the investment group that established Panavision New York, a dealership with the right to inventory and rental of the company's cameras and lenses in the northeastern United States. The new company's president, Peter Schnitzler, CFO, Ira Goodman, and general counsel, Charles Hopfl, comprised the remainder of the investment group. Goodman explained the significance of Panavision's role in the New York-based company to SHOOT: "Besides Panavision actually being a minority owner of Panavision New York, they actually enter into a franchise/leased agreement ... which gives us the right to rent Panavision cameras to production companies."

Panavision relocated its headquarters from Tarzana, California, to the Warner Center in Woodland Hills, California, in 1995. Relocation "was necessitated by our company's continued success and growth," President John S. Farrand told the Los Angeles Business Journal. "This new facility will allow us to bring our manufacturing, rental, and administrative operations under one roof."

Modern Innovations

In the spirit of Gottschalk, Panavision introduced a new camera system in 1995. The system was the company's enhanced version of an innovative lens created by Jim Frazier, an Australian camera operator. Frustrated by conventional lenses, Frazier developed a Deep Focus Lens System that had an almost infinite depth of field. The camera operator's system then kept objects in the foreground and background in focus. The Panavision/Frazier Lens System, however, augmented the original design. Panavision's system focused images in the same way as Frazier's, but also included a swivel tip to allow filming at various angles and the ability to rotate images in the lens. Observers considered the Deep Focus systems to be one of the foremost optical innovations since the zoom lens.

The next year, Panavision's small optics shop launched another innovation that greatly pleased cinematographers. In 1996 Panavision utilized the Tecnara MST modular RAA head to manufacture lens barrels to the exact specifications of professional camera operators.

Panavision As a Public Company in 1996

In total, Panavision manufactured 35 camera systems in 1996. With strong sales that year, the company initiated a recapitalization and its initial public offering of stock. In November 1996, Panavision offered 2.8 million shares of stock at $17 per share. The stock sales brought the company $47.6 million for the repayment of debt and the generation of working capital, and the company decreased its annual interest expenses to $3.9 million. Within seven days of the initial public offering, Panavision stock jumped to $22.25 per share.

Panavision manufactured no less than 80 cameras in 1997. Owing to this increase in sales and the successful initial public offering, Panavision's earnings rose from $13 million in 1996 to $18 million. This new climate prompted the company to seek out acquisitions, as well as to continue the development of new photographic innovations.

In June 1997, Panavision acquired the Film Services Group of Visual Action Holdings PLC, a London-based company, for $61 million in cash. The purchase of this enterprise solidified Panavision's foothold in camera rental operations throughout the world, including the United Kingdom, France, Australia, New Zealand, Singapore, Malaysia, and Indonesia. Panavision also expanded its U.S. camera rental operations when it assumed Visual Action operations in Atlanta, Georgia; Chicago, Illinois; and Dallas, Texas.

New Technologies in the Mid-1990s

In 1997, Panavision introduced the Panavision Take 1--Digital Video Assist, which combined digital and optical technologies for quick editing, optical effects, and bridging special effects and post-production operations. Other features of the new system included multi-camera recording, random access searching, and instant playback.

Panavision released a second innovation in 1997 as well. Its Millennium camera system launched a new generation of Panaflex camera systems. This 35 mm sync-sound film camera system used optical and electronic technologies, materials, and coatings. With optical and video view finders, the system featured custom-designed and manufactured optics with advanced coatings, in addition to a full-field view finding system. The camera's enhanced light path created brighter, clearer images, and its light weight made the system versatile. For example, the studio quiet camera operated as a Steadicam and converted quickly to a handheld camera.

Into the Future

In 1997, Panavision faced the future prepared to manufacture additional camera systems and accessories in response to the growing feature film and television commercial markets in North America, the United Kingdom, and Europe. From 1992 until 1996, feature film production in North America grew from 104 to 124 films, more than a 19 percent increase. Likewise, independent filmmaking on this continent increased from 246 in 1992 to 367 films in 1996. Europe produced 500 feature films in 1996 alone. The growth in feature film production offered many opportunities for Panavision's future prosperity, since each motion picture could require as many as ten cameras, 40 lenses, and a variety of video cameras and focusing devices&mdash much as $600,000 in equipment.

Similarly, Panavision expected television production to increase beyond 1997. The company prepared for greater opportunities in television as more cable channels, new networks, and increased video distribution took hold in North America. The privatization of network channels in Europe, as well as the growth of satellite networks there, also pointed to an increase in television production abroad. In 1997, Panavision estimated that revenues from commercial television production grew 61 percent since 1992, while episodic television production-related revenues increased 75 percent in those five years.

Panavision's plan was to capitalize on this growth-oriented environment. As Farrand and William C. Scott, chairman and chief executive officer of the company, wrote in Panavision's 1996 annual report: "In 1997 and beyond, we intend to take advantage of this growth in worldwide demand for filmed entertainment by leveraging our superior brand name, extensive distribution network, increased design and manufacturing capacity, and strategic financial position."

Principal Subsidiaries: Panavision International L.P.; Lee Lighting (United Kingdom); Lee Filters; Visual Action Holdings (United Kingdom).

Panavision Inc. History

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