The independent filmmakingworld has been shrunk yet again as Universal Studios announced it is acquiringGood Machine with immediate plans to elevate the sassy New York production and saleshothouse into an autonomous Miramax-style specialty film unit that will absorball the existing assets of USA Films.

To be called Focus, theautonomous operation will be run in tandem by Good Machine's former principals DavidLinde and James Schamus. But there is no room in the new set-up for USA Films' chairman Scott Greenstein, who steps down to 'pursue otheropportunities.'

As the new co-presidents ofFocus, Linde and Schamus will report to Universal Pictures chairman StaceySnider. Her studio is already in business with Good Machine through AngLee's big-screen rendition of The Hulk, which Schamus both wrote and is currently producingon location in Northern California.

Good Machine's thirdprincipal Ted Hope - who founded the company with Schamus in 1991 - willnow enter into a three-year, first-look agreement to produce feature films thatwill distributed through Focus.

Linde's currentforeign sales operation, Good Machine International, will continue but underthe new moniker, Focus International. Before this latest merger, USA Films wasone of several production entities, alongside others such as Radar Pictures, ElDeseo and the Tequila Gang, that regularly funneled their films through GMI forinternational sales.

Focus International willcontinue to handle such third party producers while also representing Focus andUniversal Pictures on their international sales activity. Linde will continueto directly run the international side.

As part of there-organisation, Stephane Sperry, currently co-president, StudioCanal US, willserve as liaison between Focus and StudioCanal Europe, and will report toco-presidents Linde and Schamus. Still left unanswered, however, is what thefuture holds for StudioCanal, and its own international sales operation.

Thursday's shockannouncement, which follows several years of Good Machine being courted byseveral studios but playing hard to get, is reminiscent of Walt Disney'slock-stock-and barrel purchase of Miramax, which also occurred on the eve ofCannes a decade ago. Ironically enough, Good Machine had negotiated an exclusive first-lookoverhead arrangement with Miramax just last March - but the multi-year deal seems to have been quietly allowed to lapse just twelve months after signing.

The re-organisationclarifies months of speculation as to what would happen to Universal'svarious overlapping specialty film operations following its alignment with bothCanal Plus in France and Barry Diller's USA Entertainment Group withinthe Vivendi Universal nexus. Universal also had its own classics label,Universal Focus.

Although a level ofrationalization was expected, it had been assumed that Greenstein - whoorchestrated USA's creation through the absorption of Gramercy Pictures,October Films and certain domestic assets of PolyGram Filmed Entertainment - would continue to climb thecorporate ladder as he did under Diller. Under his tenure, USA released both Traffic and Gosford Park and made its own play for Good Machine.

In trying to make sense ofall its different film operations, Universal evidently decided to start fromscratch again and re-appraise its entire business beyond mainstream Hollywoodfare.

Explained Snider: 'Ourongoing integration process has provided an opportunity for us to thinkphilosophically about our goals in the specialty film business, and how we willmaximize the potential in those assets. All too often, specialty film units area spin-off of the primary business of a major studio. With the formation ofFocus under the leadership of David and James, we have a combustible dynamicthat combines a first-class independent marketing and distribution entity withan entrepreneurial spirit that we believe will create the global leader in specialtyfilm.'

Ron Meyer, president andchief operating officer, Universal Studios said, 'This new entity givesus the fire power we need to accelerate Universal's commitment to growingour specialty film business. The combination of strengths provided by GoodMachine and USA Films is a great strategic fit, with the potential to buildFocus into a world class, independent film operation.'

Linde and Schamus added,'We are excited about coming to Universal at a time of great opportunityfor the growth and expansion of the specialty film business. With theincredible support we're receiving from Ron and Stacey, we look forwardto making Focus the most dynamic and creative home for independent filmmakersin the business.'

Hope said, 'I'mlooking forward to being in business with Universal, and joining its creativefamily. What a great combination of opportunities - finding a new homewith a company that supports and nurtures filmmakers' visions, whilecontinuing to work with my good friends and partners at Good Machine.'

Best known for AngLee's Crouching Tiger, Hidden Dragon, Good Machine has evolved into a fixture on the independent film scene,producing and handling sales for more than 100 feature and short films, with acombined 25 Oscar nominations, 20 Golden Globe nominations, 21 Sundance FilmFestival entries (among them, four Grand Jury Prize winners), The combinedworldwide box office of this output is put in excess of $400m.

Besides Ang, the filmmakerswith whom it has developed ongoing associations - although none have everbeen locked into long-terms production contracts - include Nicole Holofcener,Todd Field, Michel Gondry and Charlie Kaufman, and Alfonso Cuaron.

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