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Reports: Lionsgate Close to Acquiring Summit Entertainment

8 Jan, 2012 By: Erik Gruenwedel

The on-again, off-again merger between mini-major studios Lionsgate and Summit Entertainment apparently is nearing consummation.

Media reports say a $700 million acquisition by Santa Monica, Calif.-based Lionsgate of Summit Entertainment, which includes $400 million in cash, could close sometime next week. The proposed deal was first announced by Deadline.com.

Privately held Summit, of course, is home of the billion-dollar “Twilight” franchise, including final installment, The Twilight Saga: Breaking Dawn — Part 2, which hits theaters in November. Lionsgate, which produces the critically acclaimed “Mad Men” series and co-owns pay-TV platform Epix, has high hopes for March theatrical release The Hunger Games, starring 2010 Oscar nominee Jennifer Lawrence (Winter’s Bone). The movie is based on a popular young-adult book trilogy and is considered a possible successor to the “Twilight” franchise.

While its theatrical slate has struggled, Lionsgate continues to generate significant revenue from home entertainment, including packaged media and electronic sellthrough of catalog and new releases — the latter typically over-indexing box office returns. The acquisition could pay dividends this year with the home entertainment release of The Twilight Saga: Breaking Dawn — Part 1. Rights to the final "Twilight" film would give Lionsgate one of the top home entertainment titles of 2013 as well.

Indeed, Lionsgate, which lost $24.6 million in its most recent fiscal period, saw home entertainment revenue from both motion pictures and television programming top $175 million, a 15% increase from the prior year’s second quarter, as syndication of the first four seasons of “Mad Men” on Netflix more than offset a limited release slate in home entertainment. 

Home entertainment releases of television production reached a record $54.6 million, driven by electronic media revenue from the syndication of “Mad Men” and the distribution of “Hell’s Kitchen,” as well as revenue from the release of Weeds: Season 6 on DVD. International television revenue increased 51% from the prior year’s second quarter, led by deliveries of “Mad Men” (seasons one, two, three and four) and “Weeds” (seasons six and seven).

Revenue from Lionsgate’s digital business, which includes transactional video-on-demand, increased 123% to a record $65 million.

It’s not immediately clear how the possible merger would affect Steve Nickerson, president of Summit Home Entertainment. Representatives from Lionsgate and Summit were not immediately available for comment.

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