Gary Smith, chief executive of Winchester Entertainment, has endured a stormy couple of years and is presiding over what he hopes will be a revival in the company's fortunes via two new film releases. Robert Tyerman reports

Open Range, a £26.2 million western starring Kevin Costner, Robert Duvall and Annette Benning, is among a clutch of projects which Gary Smith believes will soon revive the fortunes of Winchester Entertainment, the film and TV production, rights and distribution specialist he has run for the past decade.

Rumour has it that the film, whose US rights are held by Disney, has already grossed more than £30 million since mid-August across the Pond and hopes are running high for this month's UK launch.

For Smith, whose experiences as Winchester's chief executive over the past 12 months have been more reminiscent of High Noon, such good tidings could not come a moment too soon. Equally welcome is news that another Winchester project, the recently released Man Who Sued God starring Billy Connolly, has already grossed £1 million in the UK.

The 46 year-old accountant from Blackburn who quit corporate finance ten years ago to take over Winchester, has had to weather two years of unremitting crisis. Mounting losses, a cash crunch in the industry and a share-dealing probe by the Financial Services Authority combined to demolish the stockmarket value of Winchester from more than £80 million to less than £9 million.

But Birmingham-based Smith, who shares his devotion to Blackburn Rovers with at least one of his three young children, says he has never flinched throughout the ordeal. 'If you have a clear vision of what you want to achieve, setbacks make you stronger.

'I have always wanted to run a company', recalls the resilient Smith, who managed investment funds in the 1980s for Gartmore and New Zealand entrepreneur Sir Ron Brierley's NZI group.

In that role, he backed the growth stars of the day, such as Nigel Rudd and emerging advertising supremo Martin Sorrell. In 1989 Smith went to run Birmingham-based corporate finance outfit Neville Industrial Securities.

That led him into merchandising children's TV and the subsequent float of the Storm company, into which Leeds United football club was later reversed.

Smith left to take the helm at Winchester in 1993, starting with the rights to the Love Is cartoon. Next came a project to produce Rainbow, a children's film directed by Bob Hoskins.

'Bob asked if we had ever produced anything', remembers Smith. 'I decided the best way to learn was to roll up my sleeves and do it'.

With Rainbow, he noticed that Hoskins and the other participants all made money, but 'we did not'.

Hence, Winchester set up a sales company and raised £3 million with Aim's first float in 1995. Thereafter, Winchester chalked up several film successes and opened a US office in Santa Monica to deal with Hollywood studios.

Winchester produced Heartbreakers with MGM in 2000 and forged links with the influential Donner film family. 'The idea was to get access to good scripts, which the studios would want.'

Then everything turned sour. German finance companies, most now bust but then flush with Neuer Markt cash, threw money at projects, upping prices.

'The bottom fell out of the TV market, which hit film making'. A cyclical advertising downturn deprived TV companies of cash needed to service costly output deals with the studios.

Winchester had to make provisions, leading to losses of £8.3 million for the year to March 2002 and £11.2 million for 2002-03. Amid this blitzkreig, Smith was cool-headed enough to spot the impending DVD trend and set up a UK distribution company, leasing films, in 2001, before a wholly different challenge threatened him and the company.

In early 2002, the Financial Services Authority launched an investigation into Smith's sale of 400,000 Winchester shares less than two weeks before the company issued a profits warning. Although the FSA eventually exonerated him, he describes this as one of his 'worst moments', but at the time, he remained characteristically unflappable.

'I knew I had done no wrong', he insists. 'So I let the finance director handle the FSA and I got on with the job'.

That involved chopping overheads and developing the UK distribution side. Winchester recently bought Cobalt Media for shares representing ten per cent of its capital.

Cobalt had Open Range and another promising film House of Sand and Fog. Smith is bullish on other current projects including a film version of TV hit Red Dwarf and a film called Harv the Barbarian.

Also director of shell company Base Group, Smith says his chief ambition is to restore Winchester's stockmarket value and grow it further. Broker Evolution Beeson Gregory foresees a reduced loss of £3 million this financial year and a pre-tax profit of £1.1 million for 2004-05, but Smith is particularly pleased that 'we are in business and those German companies are not'.