TIME WARNER, the American theme parks to cables conglomerate, yesterday shook up the independent film —industry with the acquisition of Newmarket Films, the company that distributed Mel Gibson’s The Passion of the Christ.

Time Warner said that it would establish a new company to distribute films produced by its New Line Cinema and HBO cable television divisions, as well as handle acquisitions and fund a slate of low-budget films.

The deal underscores the increasing prominence of arthouse film-makers, whose value has soared after successes such as The Passion and Michael Moore’s Fahrenheit 9/11.

It also adds Time Warner to the list of Hollywood studios capitalising on the looming split between Walt Disney’s Miramax unit and the Weinstein brothers, Harvey and Bob, who have dominated the indie market for a decade.

Analysts said the acquisition was a blow to Viacom’s Paramount Pictures, which had been in discussions with Newmarket last year, but failed to agree on terms. Paramount has floundered at the box office in recent years, but has brought in new management, headed by Brad Grey, with a view to focusing on lower-budget films.

One industry observer said: “In the short term, while Disney tries to fill the post-Bob and Harvey gap, the other studios are trying to take the advantage. People had been trying to fill that vacuum, and Paramount was seen as the leader until today.”

News Corporation, parent company of The Times, is also increasing its investment in low-budget films through its Fox Searchlight division.

The financial success reaped by Newmarket over the past 18 months illustrates why major studios are pursuing the indie film market. The company, founded three years ago, generated more than $350 million (£186 million) at US box offices from The Passion, merely through adroit marketing aimed at religious audiences.

The Weinsteins, who scored a $120 million hit with Fahrenheit 9/11 last year, are hoping to capitalise on the market’s newfound cachet by courting Wall Street financiers with a view to raising funds for a new venture.

But there is a limit to how much the major studios will pay. Lions Gate Entertainment, the Canadian independent film company behind low-budget films such as The Blair Witch Project, has failed to find a buyer after reportedly putting itself up for sale at $1.8 billion.

Time Warner will acquire Newmarket jointly through HBO and New Line. It has also hired Newmarket’s founder, Bob Berney, to run the new venture. Chris Albrecht, HBO chief executive, said: “This is completely consistent with the goal we’ve stated for us, to evolve into a multifaceted entertainment company. It helps bring HBO Films to the next level.”

The deal is thought to have been closed for less than $100 million. It does not include Newmarket’s film finance arm and library, which will continue to be run separately.

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