Modern Hollywood Mergers: The Shareholders’ Dance

Unlike the mergers that created the modern production studio model, the possible Lionsgate and Summit union brings a strong series of moneymaking franchises to the same plate. This side of Warner Brothers now concluded Harry Potter franchise (Nash, 2011) and New Line Cinema’s Lord of the Rings trilogy (Nash); modern studios have rarely seen a franchise like Summit’s Twilight Saga series (Nash). The profits produced by the latest film (the penultimate project) have been record breaking. Meanwhile, despite a lean year at the box office, Lionsgate is preparing for the release of what most Hollywood insiders believe might be the next breakout series of projects: The Hunger Games franchise. The first of these films premieres in March 2012. Then, whether this series will be on the par of the aforementioned franchises will go a long way to proving if the sustainability of such a merger is viable.

Mergers among production companies are as old as the industry itself. M-G-M (Metro-Goldwyn-Mayer) was once three separate production and distribution companies. In that light, the recent inference of a possible merger between production and distribution houses Summit Entertainment and Lionsgate Entertainment brings up a series of questions regarding the long-term financial aspects of these companies.

Still, as in all Hollywood mergers, control (financial and operational) seems to be the greatest stumbling block to the possible merger of the companies. Lionsgate is fresh off of the ejection of one of its major investors Carl Icahn from its shareholders at the cost of multi-millions of dollars. As in most deals based on leverage, there are other parties in terms of shareholders to consider in those terms. The dance between the two companies has taken place over the last three years.  In September 2008, a proposed merger between Summit and Lionsgate fell through. Since then, it has been the flavor of the day to speculate on the deal finally actually coming to fruition (Grover and White, 2011). The Summit Entertainment picture and history is clouded in large part by the Twilight Saga series. Before those films, the company was largely unsuccessful in its production record. Nevertheless, that current success is giving Summit a high level of the aforementioned leverage.

In closing, no matter if the reports are true or not, the greater question is whether this union can be successful and profitable. The modern Hollywood landscape is littered with bad marriages (Vivendi-Universal, Viacom, and AOL-Time Warner), the bottom line is not always a matter of break even analysis. It can be a matter of comparable vision and goals being attained.

Grover, R., & White, M. (2011, November 29). Lions gate said to be in merger talks with ‘twilight’ film producer summit. Bloomberg News. Retrieved from http://www.bloomberg.com/news/2011-11-28/lions-gate-said-to-be-in-merger-talks-with-twilight-film-producer-summit.html
Nash, B. (2011, November 29). Harry potter box office.The Numbers. Retrieved from http://www.the-numbers.com/movies/series/HarryPotter.php

Nash, B. (2011, November 29). Lions gate box office. The Numbers. Retrieved from http://www.the-numbers.com/movies/series/LionsGate.php

Nash, B. (2011, November 29). Summit entertainment box office. The Numbers. Retrieved from http://www.the-numbers.com/market/Distributors/SummitEntertainment.php

Turning the corner... Stu Dodge faces the future of Indy filmmaking...

Stu Dodge has spent 20 years in the motion picture industry. Starting as a production assistant at the beginning of the 1990’s. Dodge used those years to prepare himself for the big step to independent filmmaker.

Cheerleader Autopsy

Nerd of the Living Dead

‘Nerd of the Living Dead’ and ‘Cheerleader Autopsy’ are two independent gore-sexual innuendo fantasy motion pictures that came from the mind of my subject Stuart “Stu” Dodge. His approach to filmmaking has developed him an immense cult following for his movie and his company ‘Drive-in Pictures.’ Over the past decade, he has produced these two movies on a shoestring budget while maintaining relationships that have allowed him to get free services and performances from vendors and performers alike. What has been the key to his ability to accomplish these feats?

“Flexibility” is key according to Dodge. "Flexibility during the production of a motion picture is an absolute necessity, but I'm not a big fan of having to use it...." With the high level of volunteers and the commitment of time, the problems and difficulties of the leader of small independents, the two films from Dodge show the need for leadership and even more importantly for growth in how one approaches their projects.

By the time Dodge rolled out ‘Nerd of the Living Dead,’ his approach was totally different. He had adapted to the new market place and even more importantly the change in the playing field. He knew the exhibition window was now extremely short. He had a project that he needed to maximize his pay-per-view window (on Amazon and using a lock-key purchase system) that allowed him to at least get some revenue before the film could be pirated on the market.

Filmmakers like Dodge are living with the changing face of movie making in the 21^st century. Each new project leads to opportunities and challenges revolving around the management of people and situations.   


Here are Stu's direct answers to my questions:
1. Best alternative negotiating tactics (re: financing) used when making films.

"As I self financed both Cheerleader Autopsy and Nerd of the Living Dead, I didn't make use of any negotiating tactics, other than convincing my own dumb ass to self finance both pictures (see question 2 below)."


2. Financing the films; how was the first one made? What did you learn from the first, that you changed or amended for the second?

"A little back story (not that you want to hear it). I began working in the "real" film business in 1989, and for the first 10 years I worked a lot. As you know, Mr. Skinner, working in this industry can be quite lucrative for a single person with few bills. During those years I was able to put aside a pretty substantial pile of cash; cash that I planned to use to purchase either a houseboat or a pony (suffice to say I didn't have any particular plans for the cash)."

"As "film biz" years 11 and 12 came and went, I began to face the truth that "working" on other people's big budget movies was a living, but was world's away from my lifelong dream of "making" movies! So, I wrote my first script, broke it down (those Asst. Director days paying dividends here), crewed up and shot Cheerleader in 14 days."

"My desire to either "do it right" OR act like a big shot led me to involve the Screen Actor's Guild (NEVER AGAIN) and actually PAY and feed my cast and crew, and I came in about 72 bucks under budget. I won't mention what that budget was, as it was embarrassingly large for a project of this caliber...."


"The film screened theatrically Sept. 10th, 2001. Assholes attacked our country the following morning. A couple of years later, I signed the picture over to a distributor, got screwed out of my share of profits, including a Netflix deal and my little money pit has since been pirated and distributed worldwide."

"Estimates suggest Cheerleader Autopsy has been downloaded over a half a million times, and that's conservative. I've only been able to make back a few hundred dollars selling it myself on Amazon. Failure."

"When it came time to make Nerd of the Living Dead, I essentially repeated the steps above (excluding SAG and Distributor). My cast and crew made money. I've made a few hundred dollars selling it myself on Amazon. Failure (do we see a pattern here?). BTW, the definition of insanity is doing the same thing over and over, and expecting a different result."

"A very successful L.A. Producer once told me (regarding financing an independent), "1. get investors to give you X to make the movie. 2. make the picture for 1/2 of X, and pay yourself 1/4 of X. 3. Return 1/4 of X to investors as budget underage (they love that). 4. Find other investors and repeat. Whether the picture flops or not doesn't matter, and you can continue to make movies...Oh, and don't pay your cast or crew if you can get away with it." I should have listened..."

3. Separate people from problems (drama?) during prep and production?

"Again, I'll illustrate using Cheerleader (A) and Nerd (B).
Movie A: Shot in the Summer, motivated crew of 18, no cast Divas, lots of wrap beer...no drama."

"Movie B. Shot in the Winter, lackluster crew of 3, huge Diva in title role, no booze...drama and misery."

4. Since you use so many volunteers and vendors, can talk about flexibility some?

"As you know, Sir, we schedule movies out of necessity. Only a reasonable number of pages can be shot in a day; there's actor and location availability to consider, allowances have to be made for "turning" sets; the list goes on and on (and on)."


"I scheduled both films for 14 shoot days (5 on, 2 off) and for the most part kept to the schedule in both cases. I had one big "extra" day on both pictures (involving volunteers) and thankfully things work out each time, partly because I'd taken the time during prep to confirm people's availability (and partly due to accommodating weather)."

"Actually, the only issues that significantly affected either shoot were the failure of a picture car guy (and car) to show up on set on Cheerleader, which necessitated a quick (and if I do say so, shitty) rewrite...and my vegan, Diva actor's sinuses during Nerd, which...well...I don't want to even talk about that."

"Flexibility during the production of a motion picture is an absolute necessity, but I'm not a big fan of having to use it...."

That's enough from me... 

I thank my old friend Stu Dodge for being so open about his experiences. I look forward to his next film...