EDITORIALS

Will Lionsgate Be the Next Studio to Kick the Bucket?

by
January 2, 2009
Source: Studio Briefing

Lionsgate

Although I don't usually dabble in the financial and investing side of Hollywood, I came across a very interesting story today courtesy of The Big Picture. Apparently the investing bank Caris & Co. recently downgraded the shares of Lionsgate Entertainment (stock symbol LGF) to "above average" from "buy" based on early reports of the poor performance of The Spirit. We're not going to go into the investing side of things, but the most interesting observation is that the analyst for Caris & Co. stated that "the future health of the studio might well be tied to its January 16, 2009 release of My Bloody Valentine 3-D."

Now let's get things straight -- this all pretty much pure speculation, because that statement about Lionsgate's future health is only fodder for this discussion. However, with a quick look at Lionsgate's recent releases, it's obvious they've had quite a few flops. Both The Spirit (currently at $12.5 million) and Punisher: War Zone ($8 million) did much worse than they were hoping they would. Even Oliver Stone's W. did a lot worse than expected -- it's at $25.5 million with a $25.1 million budget. And dare I mention Transporter 3 ($31.6 million), My Best Friend's Girl ($19.2 million), or Bangkok Dangerous ($15.3 million).

There once was a time when Lionsgate was on the rise as one of the best independent studios around. Their success was (and still is) fueled by the Saw franchise and other random hits (like Fahrenheit 9/11 and Crash). Then some exec decided that they didn't want to be seen as the "horror studio" anymore, so they tried to branch out and find a wider variety of films, but more often than not they come up with duds. Now it's ironic that they're striving on very demographic-specific franchises again, like Tyler Perry movies (e.g. Meet the Browns and The Family That Preys this year) and an never-ending supply of Saw movies.

I find it incredibly coincidental that when I start noticing publicity problems (e.g. they hardly give any interviews and are hard to get in touch with), it's right when a studio is on the downfall and in need of some good publicity. And now they're banking their success on a gimmicky 3-D horror remake? No wonder they're promoting My Bloody Valentine 3-D everywhere you look on the internet. It could work, because American audiences are very easily persuaded to spend (extra) money on cheap, gimmicky 3-D cinematic entertainment. The budget is only $20 million, so it shouldn't be too hard to make a profit, right?

In a previous, and more cheerful interview with the NY Times, Lionsgate's co-chief operating officer Joe Drake said of My Bloody Valentine 3-D: "We see 3-D horror as financially lucrative and creatively exciting. We want to break some new ground here in R-rated fare." Only time will tell (14 days to be exact) if it's as "financially lucrative" as they're hoping. If it isn't, we might have the next New Line Cinema -- a studio that collapsed in 2008 due to, among other things, inexplicably awful marketing. The Golden Compass was the movie that finally killed them. Is The Spirit what finally kills Lionsgate? I doubt it.

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  • darrin
    my say is 20th century fox
  • Christopher Marc
    Lionsgate made a big mistake focusing on mostly genre movies that didn't perform well at the box office....I don't think they're going under but I think they're going to stop making theater releases...mostly focusing on direct to DVD films or domestic distribution for international films...I could see their domestic studio projects limited after 2009....it makes sense since the studio makes a majority of their money from DVD sales Another studio who I believe may end up going this way is Twentieth Century Fox.. while it would take many more box office bombs the studio isn't heading in the right direction...focusing on mostly romantic comedies and poorly made children's films the studio seems to play it safe way too often...also with the studio's notorious meddling with productions that could be original or blockbusters end up watered-down/generic ....Wolverine and Avatar seem to be the best the studio will have to offer in 2009...Street Fighter and Dragonball might be the biggest gambles for the studio
  • Well face it Lion's Gate was doing rather well, but then it fell to constantly doing horror films that didn't really perform well at box office.I doubt they will go under but My Blood Valentine wasn't he best choice to produce through their company.
  • nelson
    thats a big risk to put there money in that flick even tho i have heard really good reviews of it
  • REAL6
    After what they did to Midnight Meat Train when they got the new president in, i hope they crash and burn hard.
  • andrew
    personally i want to see 20th century fox go down.
  • LeeMan
    okay i kno a lot of ppl are sayin shit about my bloody valentine, but early reviews are actually pretty good, and if you've seen atleast one commercial on tv, then you kno that the "bring your date, 3d experience" is a definite ticket-selling approach, so i doubt MBV3D will hurt Lionsgates future. as long as tyler perry has his core audience of black people to help him keep makin money off of shitty films and people still go and see saw 6, liosgate might be around longer than u expect
  • I think they need to stop gambling and just do more SAW and TYLER PERRY movies until they are financially stable enough to branch out into bigger fares.
  • It would be sad if Lionsgate collapses. I consider it amazing that Lionsgate went from a small Canadian studio that relied on opportunism (i.e. picking up films that were dropped by the major studios) for it's early success to being the studio it is now. An interesting trivia fact: Even though Lionsgate began as a Canadian studio, since 2005 all the Canadian distribution has been handled by the spin-off studio Maple Pictures.
  • Blue Silver
    Lionsgate suits with a deficiency in advertising sense are single handedly burying the studio. :(
  • I'm suprised that The Spirit isn't doing well, the problem lionsgate had is promoting the wrong movies. If they can tell me why Repo! The Genetic Opera didn't get a major worldwide release, because that would have raked it in. As a movie, it defined what lionsgate used to be about. A breakthrough film which a damn fine cast which could have been brilliantly promotoed, but no, they dropped it! Yet they push out The Punisher worldwide and everything else! Same, but not to the same "massive missed chance" level is Midnight Meat Train, underground horror with vinnie jones, sure it wouldn't have made massives but would have been enough. They aren't big enough to do a broad range of blockbuster films, they need to stick with what made them succesfull with Saw and Hard Candy by giving small films a chance.
  • They should have stuck with their roots, horror. By branching out they lost focus. At first they were releasing some really cool films, now their releaases are lackluster. Maybe its divine payback for not giving The Midnight Meat Train a strong theatrical release.
  • #12 Lionsgate's roots are NOT horror. From about 1998-2004 the studio was mostly about picking up the reigns of films that were deemed too controversial by the mainstream studios (horror films included). These films included Affliction, Gods and Monsters, Dogma, Saw and Fahrenheit 9/11. It wasn't really until after Saw came out, that the studio starting releasing a lot more horror films. However, even with the greater horror emphasis, the studio AWAYS released films in ALL genres.
  • Andyrew510
    This article is ridiculous on so many levels. For one, LGF distributes or puts out 18 wide releases a year, and typically another 3 to 4 now that are Mandate Pictures. LGF has plenty of financing to continue funding these slates for years and years to come. Over the next 5 years, LGF will likely put out over 100 movies when counting in Mandate. IS SOMEONE REALLY GOING TO LEGITMATELY SAY THAT THE SPIRIT AND THE PUNISHER IS ENOUGH TO HAVE SUCH A SERIOUS EFFECT ON THE VALUE OF A COMPANY WHEN OVER A 5 YEAR PERIOD THEY MAKE UP LESS THAN 2 PERCENT OF THE OUTPUT OF NEW MOVIES. And that doesn't even factor the amount at which new releases play into the value of Lionsgate. Trading at these levels, the true value of Lionsgate is its library. With over 8,000 movies and 4,000 television shows, including a strong direct to dvd market that it plays to, each movie makes up a really small part of lionsgates value. Now, if LGF would make bomb after bomb after bomb, then their cash pile would fall apart eventually, and the quality of their library would diminish. BUT THIS IS NOT WHAT IS HAPPENING. LGF had a record year at the box office according the boxofficemojo. $434 million at the box office with 4.6% market share. This is the highest on record for LGF (AND THOSE NUMBERS DO NOT COUNT MANDATE's JUNO, Harold and Kumar, Nick and Nora, 30 days of the night, The Strangers, etc.) LGF had a record year in video too, with year to date as of Sept. 28th, a 7.7% market share: http://a330.g.akamai.net/7/330/2540/2008... Now, I haven't even mentioned LGF's flourishing and growing television business, which did $250 million in revenue last year, and is expected to double to $500 million in just a few short years. It is laughable that any wall street analyst, or any commentator on the web would say that My Bloody Valentine holds LGF's fate in its hands. First off, with this movies budget only $20 million, once all the ancillary and foreign money comes in, it will be pretty hard for this movie to not be profitable.
  • Amen
  • Slartie Bardfarst
    With all the misspelled words and bad punctuation in all these responses, how can you expect anyone to take your opinions seriously. And Hey LeeMan, the word is spelled KNOW with a W and the word YOU is not spelled U. It's the decline of western civilization! Shit.
  • LeeMan
    @Slartie Bardfarst Your sentence should have ended in a question mark, not with a period. with bad punctuation, how am i supposed to take your comment seriously? sry i didn't know it was a spelling contest here, oh and yea i know spelled sorry "SRY"
  • with the news today (below), this article is just ridiculous. ( http://www.latimes.com/business/la-fi-tvguide6-2009jan06,1,3108918.story )
  • Slartie Bardfarst
    Well, well, well. He can read! I ended that sentence with a period to make a point. And no, it's not a spelling contest, just a comment on how lazy people have become. I rest my case.
  • AndyRews510 - You are the only one here who sounds like they know what they are talking about. All the rest of the comments are based on nothing. As the guy below your post said - "Amen"

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