Claymont Investments, Inc., As Successor in Interest to New CCI, Inc. and Subsidiaries - Page 14

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               In the 1980s, the film processing industry became extremely            
          competitive, and studios were readily changing film processing              
          companies and negotiating lower prices, large up-front incentive            
          payments, and most-favored-nation provisions.  As a result,                 
          Technicolor was experiencing a high rate of client turnover.  In            
          fact, only 2 of Technicolor’s 12 major contractual customers in             
          1983 was a customer on the acquisition date.  Carlton’s                     
          expectation that MCEG, MGM/UA, and Paramount would remain                   
          customers in perpetuity is unreasonable and not supported by the            
               With respect to MCEG, petitioners’ expectation is                      
          unreasonable because MCEG did not, prior to the acquisition date,           
          have a contractual relationship with, or generate any income for,           
          Technicolor.  Moreover, MCEG had no track record, a dubious                 
          future, and no film processing history with Technicolor or any              
          other film processing companies.  Indeed, Technicolor had                   
          concerns about MCEG’s long-term viability (i.e., subsequently               
          validated by MCEG’s 1992 bankruptcy) and required MCEG to                   
          collateralize the 1988 loan.  Thus, petitioners failed to                   
          establish a value relating to the MCEG relationship.  See Rule              
          142(a)(1); Newark Morning Ledger Co. v. United States, 507 U.S.             
          546, 566 (1993).                                                            
               Similarly, petitioners’ expectation, that MGM/UA and                   
          Paramount would remain customers in perpetuity, was unreasonable.           

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