Monday, November 28, 2011
Will Summit & Lionsgate Merge?
Bloomberg is reporting that two movie studios well known to our readers – Summit Entertainment and Lionsgate – are in talks to merge. More... Though it wouldn’t cause much that typical moviegoers would notice, it’d certainly be beneficial for Lionsgate’s The Hunger Games franchise given Summit has experience from turning Twilight into a major financial success. From the report: The companies have resumed discussions that broke down in the past over price and control issues, said the people, who declined to speak publicly because talks are private and there’s no assurance a deal will be reached. Lions Gate would gain access to the cash generated by the five “Twilight” movies. The first four films have grossed more than $1 billion in worldwide ticket sales, according to Box Office Mojo. A sale would be a payday for owners of closely held Summit who formed the studio in 2007 with funding from Merrill Lynch & Co. Summit, based in Santa Monica, California, is scheduled to release the fifth “Twilight” movie in a year. Lions Gate has about $550 million in short- and long-term debt, according to Bloomberg data, and has struggled to remain profitable. Melissa Zukerman, a spokeswoman for Summit, declined to comment. Peter Wilkes, a Lions Gate spokesman, didn’t immediately respond to phone and e-mail requests for comment. Lions Gate, also run from Santa Monica, California, produces cable TV’s “Mad Men” series and in March will release “The Hunger Games,” a film based on a young-adult book trilogy that has been compared to the “Twilight” novels. “The Hunger Games” and three potential sequels may generate $220 million to $733 million in earnings before interest, taxes, depreciation and amortization over the next several years, according to James Marsh, an analyst at Piper Jaffray & Co. in New York. We’ll keep you updated on future developments. It’s completely possible that the talks could fall through if either side has any major issues with the deal. Reports have indicated in the past that the merge would be a good idea considering both studios are each considered a “mini-major”. [VIA Hypable