2 Southland Concerns to Help Revolutionize Soviet Video Industry

Indiana Jones, Batman and R2D2 are going to Moscow.

Soviet-American International Co., a joint venture 49%-owned by Huntington Beach-based Unicorn Investments International, said Tuesday that it has signed an agreement with J2 Communications of Los Angeles to open the first video rental service for Western-produced movies in the Soviet Union.

The joint venture, also known as Sovaminco and 51%-controlled by Soviet government interests, plans to dispense movies from vending machines and rent combination television/VCRs largely to Western visitors. The service initially will be offered in hotel lobbies in Moscow and Leningrad and will eventually be expanded to other places frequented by business executives and tourists.

“There’ll be more Western businessmen going there for business deals and there’s nothing to do at night, especially in the cold winter months,” said James P. Jimirro, president and chief executive of J2.

J2 is the exclusive distributor for Los Angeles-based ITC Home Entertainment, whose movie library includes “On Golden Pond” and “Revenge of the Pink Panther.” It will provide $1.5 million in financing for the venture.

Jimirro said J2 put up about $150,000 for the venture’s initial outlet, which will have two video vending machines, each containing up to 320 video cassettes. It will supply an array of current and classic titles, including such hits as “Raiders of the Lost Ark,” “Batman” and “Star Wars.”

“We see enormous opportunities for significant profits,” he said. “The experience we’ll gain working with the hotels also positions us to participate fully as the Soviets become part of the worldwide video revolution.”

The videos are to be offered beginning in September at the Hotel Ukraine in Moscow, just months before Time Warner Inc. is scheduled to open its first American-style theaters in Moscow in 1991. English-, German- and Finnish-language movies will be available.

Sovaminco plans to expand the rental service to 12 other hotels in Moscow and Leningrad, where it already holds leases, and to other buildings, embassies and locations throughout the Soviet Union. Jimirro said the venture has agreements with hotels totaling 10,000 rooms, more than 90% of all hotel rooms in Moscow and Leningrad.

Sovaminco will operate the machines, manage the rental services and insure the business in U.S. dollars. While the initial operation will take only five major credit cards that pay vendors in hard currencies--Visa, MasterCard, American Express, Diners Club and Discover--the venture will eventually accept rubles, which currently are not convertible to dollars.

Before he started J2 in 1986, Jimirro was on the management committee of Walt Disney Co. in Burbank, where he founded and headed the Disney Cable Channel in 1983 and Walt Disney Home Video in 1980. In March, the company tentatively agreed to acquire National Lampoon magazine.

The video vending machines, which cost $25,000 each, are being supplied by Ontario-based Video View International Inc.

Martin Lopata, chairman and chief executive of Unicorn, said the venture has received Soviet government assurance that there will be no censorship of the movies it rents out. “Of course, common sense tells us (that) we not send ‘Hunt for Red October’ or any anti-Soviet films,” said Lopata, referring to the movie about a renegade Soviet submarine officer who wanted to defect to the West.

This is not the first Soviet venture for Lopata, a fourth-generation Russian-American. Last year, he opened gift shops that sell Soviet souvenirs and offered photocopying services in Soviet hotels, and he has imported Soviet gift items.

The Soviet partners in the video rental venture are: Mir Publishing, a subsidiary of Moscow’s Goscompechat, which is the state-owned printing concern; Sintez Cooperative, a Moscow cooperative controlled by the Moscow City Council, and Moskniga, another printing concern under the jurisdiction of the council and the Ministry of Printing.

The test rental service at the Ukraine will operate for two months before the service expands to other hotels, Lopata said. Jimirro added that the hotels in Moscow are: The Rossiya, National, Dom, Tourista, Mezhounarodnaya, Leningradskya, Pekin , Central Tourist House and Sovetskaya.

In Leningrad, the hotels are Hotel Leningrad, Korelia, Pulouskaya and Pribaltiskaya.