PolyGram to Buy Half-Interest in New Sundance Cable Channel

European entertainment conglomerate PolyGram said Monday that it is buying a half-interest in the Sundance Channel, a new cable channel co-founded by actor-director Robert Redford and Viacom Inc.’s Showtime Networks that features independent films.

Sources said PolyGram will probably end up investing from $30 million to $40 million in the deal, depending on such factors as how quickly the channel rolls out.

The investment comes after the channel, which formally debuted last week, scrapped plans to raise money through a private placement because of market conditions, sources said.

PolyGram will spearhead Sundance’s launch internationally and will own a 75% interest in the international part of the operation, sources said.

PolyGram, which is expanding its film business in Hollywood and currently distributes such movies as “Dead Man Walking” through Gramercy Pictures, already has a pay TV deal with Showtime to show its films. Showtime is the domestic managing partner of the Sundance channel.

The move is the first time PolyGram, which is an investor in music channels in Europe, has invested in a cable channel in the U.S. It also marks its first investment in a film channel.

“We’ll be active on the financial side here. Our real task is to develop strategies for rolling it out internationally,” said Michael Kuhn, president of PolyGram Filmed Entertainment.

The Sundance Channel is an outgrowth of Redford’s annual Sundance Film Festival, which showcases independent films. Redford will continue to oversee the creative end of the channel.

Showtime is part of Viacom’s Blockbuster Entertainment unit.