thedeparted
01-07-2012, 10:22 PM
Hollywood insiders have been speculating about just how the long-simmering Lionsgate/Summit merger will close. The problem? While Summit had every reason to cash out at the height of their value before the "Twilight" franchise comes to an end in November with "Breaking Dawn- Part Two," there are many high-powered alpha players on both sides to make happy. An announcement of the final deal is imminent.
As I hear it, Lionsgate chairman Jon Feltheimer and lieutenant Michael Burns will wind up at the head of the new organization, with Summit's Patrick Wachsberger--he and Rob Friedman owned some 30% of the private company-- still running the international side of the new company. While Deadline is reporting a "$700 million deal consisting of $400M in equity plus an assumption of $300 million of debt. Most of that debt will be in the form of a bank loan by JP Morgan to Lionsgate," the LAT writes: "Under terms being discussed, Lions Gate ("Saw," "Precious") would acquire its Santa Monica neighbor Summit ("Twilight," "The Hurt Locker") fo r$350 million to $400 million, consisting primarily of cash along with a small amount of stock, one of the people said. It would also assume roughly $200 million of Summit's debt. The stock payment would leave Summit's shareholders with a stake of approximately 5% in the combined company, the people said."
While Summit's Erik Feig is clearly a top production executive worth keeping, the question of how to streamline duplicative distribution and marketing teams proved problematic in negotiations. Both studio veteran Rob Friedman and Lionsgate's Joe Drake are formidable executives who know a great deal. Likely Drake, saddled with the fate of underperforming "Conan the Barbarian," "Warrior" and "Abduction," will manage a graceful exit via his former Mandate label.
It's hard to imagine hard-driving Wachsberger and Friedman--who deserve a lot of credit for succeeding with Summit-- giving up their automomy under Feltheimer. But this way they will be relatively secure--they know what their real numbers would be without the "Twilight" franchise. They know their company thrived and functioned because of those coffers. A franchise like that is lightning in a bottle.
Look at their other releases and you see why they wanted to sell: "50/50," "Astro Boy," Bandslam," "The Beaver," "A Better Life," "The Brothers Bloom," "The Darkest Hour," "Drive Angry," "Fly Me to the Moon," "Furry Vengeance," "The Ghost Writer," "The Hurt Locker," "Knowing," "Letters to Juliet," "Man on a Ledge," "Never Back Down," "Next Day Air," "Penelope," "P2," "Push," "Red," "Remember Me," "Sex Drive," "Sorority Row," "Source Code," "The Three Musketeers.'
It costs gobs of money to run a production/distribution company, even on a modest scale. That's why Graham King scuttled FilmDistrict fairly quickly; it was hemorrhaging money before there was a library to throw off cash. Remember Joe Roth's Revolution? Same problem. New start-ups need to spend $100 million before the money starts coming back in.
A merged Lionsgate/Summit --with franchise "Hunger Games" in the offing this March--will make a stronger entity. If the parties can get along.
Smart move by Summit, bad for Lionsgate. Outside of Twilight the highest films performed by Summit is Red 90.3, Knowing 79.9 and Source Code at 54.7 .
As I hear it, Lionsgate chairman Jon Feltheimer and lieutenant Michael Burns will wind up at the head of the new organization, with Summit's Patrick Wachsberger--he and Rob Friedman owned some 30% of the private company-- still running the international side of the new company. While Deadline is reporting a "$700 million deal consisting of $400M in equity plus an assumption of $300 million of debt. Most of that debt will be in the form of a bank loan by JP Morgan to Lionsgate," the LAT writes: "Under terms being discussed, Lions Gate ("Saw," "Precious") would acquire its Santa Monica neighbor Summit ("Twilight," "The Hurt Locker") fo r$350 million to $400 million, consisting primarily of cash along with a small amount of stock, one of the people said. It would also assume roughly $200 million of Summit's debt. The stock payment would leave Summit's shareholders with a stake of approximately 5% in the combined company, the people said."
While Summit's Erik Feig is clearly a top production executive worth keeping, the question of how to streamline duplicative distribution and marketing teams proved problematic in negotiations. Both studio veteran Rob Friedman and Lionsgate's Joe Drake are formidable executives who know a great deal. Likely Drake, saddled with the fate of underperforming "Conan the Barbarian," "Warrior" and "Abduction," will manage a graceful exit via his former Mandate label.
It's hard to imagine hard-driving Wachsberger and Friedman--who deserve a lot of credit for succeeding with Summit-- giving up their automomy under Feltheimer. But this way they will be relatively secure--they know what their real numbers would be without the "Twilight" franchise. They know their company thrived and functioned because of those coffers. A franchise like that is lightning in a bottle.
Look at their other releases and you see why they wanted to sell: "50/50," "Astro Boy," Bandslam," "The Beaver," "A Better Life," "The Brothers Bloom," "The Darkest Hour," "Drive Angry," "Fly Me to the Moon," "Furry Vengeance," "The Ghost Writer," "The Hurt Locker," "Knowing," "Letters to Juliet," "Man on a Ledge," "Never Back Down," "Next Day Air," "Penelope," "P2," "Push," "Red," "Remember Me," "Sex Drive," "Sorority Row," "Source Code," "The Three Musketeers.'
It costs gobs of money to run a production/distribution company, even on a modest scale. That's why Graham King scuttled FilmDistrict fairly quickly; it was hemorrhaging money before there was a library to throw off cash. Remember Joe Roth's Revolution? Same problem. New start-ups need to spend $100 million before the money starts coming back in.
A merged Lionsgate/Summit --with franchise "Hunger Games" in the offing this March--will make a stronger entity. If the parties can get along.
Smart move by Summit, bad for Lionsgate. Outside of Twilight the highest films performed by Summit is Red 90.3, Knowing 79.9 and Source Code at 54.7 .