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Lionsgate CEO: MGM Discs Would Be Distributed In-House

By : Erik Gruenwedel | Posted: 25 Oct 2010

In another pitch to MGM shareholders, Lionsgate CEO Jon Feltheimer Oct. 25 said combining the two studios would cut home entertainment distribution costs from $27 million to $32 million.

Santa Monica, Calif.-based Lionsgate is urging MGM shareholders to vote Oct. 29 against a previously announced, debt-to-equity, pre-packaged bankruptcy plan spearheaded by minority stakeholder Spyglass Entertainment.

Feltheimer, in a regulatory filing, said he would bring all domestic disc distribution in-house, relying on third parties to distribute packaged media internationally.

Combination of the two studios in 2011 would increase home entertainment staffing by 17 positions (108 total) and add $8 million in overhead costs ($12 million total), according to the pro-forma filing.

MGM discs are currently distributed by 20th Century Fox Home Entertainment. Lionsgate would also reportedly distribute MGM titles on Blu-ray Disc.

In a series of operating plan assumptions between the two companies, Feltheimer said the combined annual savings would reach $100 million.

Specifically, the overall workforce between the two studios would decline 17%, or by 176 positions.

Last week, activist investor Carl Icahn, who owns larges stakes in both studios, said he would purchase another $963 million of MGM’s $4 billion in debt to help make the merger a reality.


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