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
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