Tuesday, 10 February 2009

Hollywood Babble On & On #229: A Lions Share of Lionsgate?

According to the always indefatigable Nikki Finke for this report on the fortunes, or to be more exact misfortunes of Lionsgate Entertainment.

Lionsgate started out in Vancouver, Canada in the mid-90s to take advantage of a boom of film production in the region. It quickly made a name for itself
as a distributor willing to handle controversial or edgy material. One of its best money makers was a string of low budget horror films, chief among them the grotesque Saw franchise.

Now recent years saw it step away from its low budget horror roots to invest in bigger, more lavish productions.

And that's where the trouble started.

Too many expensive films sold too few tickets in too short a time. The stock is tumbling, and the investors are getting restless. Nikki reports that Carl Icahn, the superstar investor and 9% stakeholder in Lionsgate, is chief among the displeased, and has a history of shaking up companies that are under-performing.

Which leads me to the lesson of this piece.

When you do something well, like handling profitable low budget movies, you don't phase that out. You keep doing what you do right, reinvesting the profits and using the films themselves as a training ground for new talent, talent that would view Lionsgate as their home base when they move on to bigger and better things.

I'm not saying that they shouldn't have moved into making bigger movies, but they should have paced themselves better. Having one big flop is bad enough, having them come in a cluster like many recent Lionsgate releases, shows a sincere problem with management. It was all just too much too soon, the company that was like a baby that had just perfected crawling, and then tried to start running, before mastering walking.

They also made a mistake trying to copy the sort of films that the major studios make, like big budget action flicks, and comic book adaptations. What they needed to do was to look at what the major studios were not doing, that the audience was interested in, and then trying to fill that void in a way that's both cost-effective, and audience pleasing.

In other words, the management has to pass on becoming a major studio for now, and rely on just being the best Lionsgate it can be. It may not please the ego as much as being a major mogul, but who cares when you're company is making truckloads of money.

And speaking of management, in case the shareholders are thinking of making a change

You can't blame me for trying.

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