United International Pictures, the film distribution business co-owned by media conglomerates NBC Universal and Viacom, is to be broken up.

The business was co-founded by American studios Universal Pictures, Paramount - owned by Viacom - MGM and United Artists in 1981 and became a major force in film markets outside the US.

Under British chief executive Stewart Till its films earned $2bn (£1.1bn) at the international box office last year and titles due for release before Christmas include Pride & Prejudice and King Kong.

UIP's co-owners yesterday said they would divide up their main markets from January 2007 onwards, as they build up separate distribution units.

Paramount's territories will include the UK, Ireland and France while Universal will take Germany, Italy and Spain.

The studios will continue to work together until 2009 in 20 other territories, including Japan and India. Paramount and Universal will set up their own distribution units in the UIP markets that they give up.

Rob Moore, Paramount's president of marketing and distribution, said Viacom intended to produce more films through its Nickelodeon and MTV production arms, and needed in-house distribution teams to sell those titles.

"We don't have the management infrastructure in various countries who are expert in theatrical distribution but also experts in your brand," he said.

Marc Shmuger, vice chairman of Universal Pictures, declined to comment on the long-term future of UIP's boss.

Mr Till is under contract at UIP until 2007 and is expected to be head-hunted by his joint employers to head their new distribution businesses .

However, his executive experience in the music and television industries is also expected to draw competing job offers.

Mr Till said yesterday his priority was to "continue to deliver for the studios" and "after that, time will tell".