paramountlogoI’m told this new deal is supposed to save Paramount “many tens of millions annually” as the studio copes with the sinking DVD market. There had been rumors that Paramount was in home entertainment merger talks with rivals like Sony Pictures and Fox Studios, signalling a new wave of consolidation over the slumping DVD market. Paramount was looking to cut costs by combining DVD production, distribution and back-office functions. One proposal reported by the Financial Times had Paramount switching to Sony’s DADC DVD production system rather than Technicolor’s system, which the studio currently uses. Judging from today’s announcement, that may have just been a negotiating ploy:

PARIS, France – October 21, 2009 – Thomson, worldwide leader in services for content creators, today announced that Technicolor has extended its existing multi-territory DVD replication and distribution services agreements with Paramount Home Entertainment.

As part of this newly extended multi-year agreement, for both SD DVD and Blu-ray, Technicolor will continue to provide core services such as mastering, replication, packaging, distribution and returns processing, as well as freight management services in North America.

Frederic Rose, Chief Executive Officer of Thomson, stated: “We are pleased to extend our existing DVD service agreements with Paramount, a long-time customer. This contract is a clear sign of Thomson’s strength and market leading position in the industry. This agreement also serves to further confirm our expanded partnership with Paramount which was strengthened earlier this year with our announcement to create a state-of-the art post-production facility on Paramount’s Hollywood lot.”

Brad Grey, Chairman and CEO of Paramount Pictures, commented: “Technicolor has been and remains a strategically important service partner to Paramount and we are happy to continue our relationship. As we navigate the changing home entertainment environment, this new deal is a forward-looking redesign of how we work together, allowing Paramount Home Entertainment and Technicolor to globally maximize efficiencies while still providing our customers with the highest quality product and service.”

Thomson, through its Technicolor brand, is the worldwide leader in physical media manufacturing, distribution and related supply chain services and a leading player in the electronic delivery of film and other media content. Technicolor replicates all DVD formats, including Blu-ray Disc, and provides complete supply chain management for film studios, game publishers, and independent rights holders.

Technicolor has been providing DVD replication and supply chain services to Paramount since 2002. Major DVD titles presently being supported by Technicolor include Transformers: Revenge of the Fallen, Monsters vs. Aliens, Star Trek, and GI Joe.