Well, it looks like it's all done but the signing. Lionsgate Pictures is reportedly just inches away from signing a deal that will merge them with upstart indie Summit Entertainment. Some are saying that this is a good deal, especially for Lionsgate, because it will connect them with Summit's expertise in foreign distribution, but I fear the whole thing is a sort of mixed affair.
So let's look at the Pros and Cons of this deal...
1. PRICE. Reports say that the final price will be about $350 million in cash, $50 million in stock, and the assumption of Summit's debt. That's not a bad price for even a mini-movie studio with the all important library Lionsgate needs for its growing television assets. Now the debt is expected to be wiped out by...
2. TWILIGHT FRANCHISE. The epic saga of teen angst, necrophilia, that teaches girls that true love can only be found with a old predator, has sucked hundreds of millions, if not billions, from hysterical tweens and teen girls. The finale of the franchise, which has been chopped into two parts, the last part is forthcoming, is expected to pay off all the debts, and pave the way for Lionsgate's Hunger Games franchise.
3. INTERNATIONAL DISTRIBUTION. Reports say that Summit has got a lot more knowledge and experience in international sales and distribution than Lionsgate. So anything that eases the way into the increasingly important foreign markets is a plus.
1. TWILIGHT FRANCHISE. With the release of Breaking Dawn Part 2, it's over, done and dusted. While the final chapter is pretty much guaranteed to make a mint and a half, there are no guarantees that the merged company's follow ups will catch on that big. Why?....
2. THE FICKLE FINGER OF FRANTIC FEMALES. The folks at Lionsgate/Summit are counting on The Hunger Games to take up the mantle of Twilight and run with it.
Well, that's really, really risky. There is no sort of fame more dangerous than tween/teen girl fame. When you have it in your hands, it's a license to print money because it is so intense. However, it's like a very fragile bird, hold it too tight, and you can kill it, hold it too loose, and it will fly away to something else. And the problem is that this little bird has an expiration date, and no one knows exactly when that date is.
The one thing people do know is that when that date comes, everything associated with the one time source of such intense hysteria, becomes anathema. That means you can't use that franchise as a selling point beyond its camp value.
3. LIONSGATE'S OVERALL STRATEGY. Lionsgate made its bones on low budget genre movies that the major studios were mostly ignoring. Lately though its strategy seems to be to imitate the big studios, but to try to do it cheaper. Now while some may argue the merits of this strategy, I think they're missing the point. Doing what's already being done by the majors does nothing to fill the huge gaps in the marketplace between the big studio blockbuster movies and the indie-art house films.
Paramount is having success with their micro-budget Insurge division, but since it's a major studio, it's only a matter of time before they screw it up. I'm sure that right now the President of Paramount is looking at the returns from The Devil Inside and thinking: "This film would have had a way bigger weekend if it had a $100 million budget and starred Tom Cruise and Julia Roberts."
4. ONE LESS COMPANY. If you're an independent producer, this merger means one last company available to buy your movies, and it means less competition for the big boys to worry about.
Anyway, those are the facts as I see them.