Friday, 27 March 2009

Hollywood Babble On & On #258: Lionsgate Management Fires A Volley!

Nikki Finke has the latest volley in the ongoing SIEGE OF LIONSGATE! The management faction led by Jon Feltheimer and Michael Burns has reportedly inked a "first look" co-financing deal with independent film producer Ryan Kavanaugh's Relativity Media company, but for now they're keeping it all on the down-low.


Because Lionsgate is planning on laying off 8% of their 550 person workforce.

That's something that makes you go "

I should start explaining by stating that several major studios passed on the co-financing deal with Relativity. Paramount passed, Sony/Columbia passed, and even Universal passed. Now Universal's passing is telling me something, I don't know exactly what, but it doesn't make much sense. You see Universal has a long running relationship with Relativity, and Relativity even purchased Uni's low-budget horror/suspense label Rogue Pictures. (A move some called "bold" but I thought odd considering the value of Rogue's library and it's lack of a truly independent distribution system)

This development requires the sort of insider knowledge a meager outsider like me can possibly have, so I'll go to the other big move: the layoffs.

The Lionsgate management will probably blame the weak economy for the layoffs, and while the company did lose money this year, those losses were not the fault of the secretaries, assistants, and other support staff that will be getting the pink slip. The losses fall squarely on the decisions made by the men who ran the company, one of them having signed a contract in October giving him $1.2 million in base salary, and a further $4.5 million in stock options. Plus their argument blaming the layoffs on the economy are also weakened by the simple economic fact that movie companies always do well when the rest of the economy doesn't.

I suspect that there are two other possible reasons for the lay-offs and both involve fighting off Carl Icahn's takeover bid.

1. STOCK PRICE MANIPULATION: There's nothing like layoffs to cause an up-tick in a company's stock price, no matter what the reasons behind it. They could be trying to either make the stock price too steep for Icahn to keep buying, or to somehow woo the other shareholders into leaving them in charge.

2. IMAGE MANIPULATION: After lobbing a shot at Icahn's son, they are probably now trying a new tack. This tack will probably involve Lionsgate claiming to be the victim of the big bad corporate raider whose lust for power and money are forcing them to lay innocent people off.

So the battle goes on.

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