Summit and Lionsgate Discussing Possible Merger

Summit and Lionsgate Merger

Summit Entertainment and Lionsgate, two of Hollywood's largest independent producers/distributors, are reportedly discussing a possible merger. The two companies have discussed a merger in the past but were unable to come to terms over an agreement.

Summit Entertainment, which is flush with cash thanks to the multibillion dollar Twilight franchise, would be a valuable partner for Lionsgate, which currently holds $550 million in short and long-term debt. For its part, Lionsgate also offers value, including a robust slate of TV shows (including Mad Men) and a large film library that accounts for "8% of the domestic home entertainment market" according to The Hollywood Reporter.

Bloomberg, who originally reported the news, writes that previous talks broke down "over price and control issues" and that "Summit has additional suitors" besides Lionsgate. Last year, Lionsgate also tried to acquire MGM during the studio's belabored bankruptcy, but was beaten out by Spyglass Entertainment.

Interestingly, an important element in these negotiations revolves around teen fantasy films. Summit has made a large portion of its revenues from the enormous success of Twilight, which has raked in over $2 billion for the company. Lionsgate, on the other hand, is looking to test the waters of the teen fantasy genre with its own high-profile film, The Hunger Games.

The Hunger Games (check out the first trailer here) could be a very lucrative film franchise. According to Bloomberg, The Hunger Games films could "generate $220 million to $733 million in earnings (before interest, taxes, depreciation and amortization) for Lionsgate over the next several years."

lionsgate's big financial gamble with the hunger games movie

With a merger, Summit and Lionsgate (which I'm calling SumminsGate for the time being) could potentially own two of the most popular and successful teen film franchises in history, which would be pretty impressive. Presumably, the profit from those films could help the companies produce even more films -- and maybe even some original movies!

What do you think of these possible merger talks? Besides freaky Internet fan fiction, this is about as close to a Twilight-Hunger Games crossover as you're going to get. Could it be a win for both companies?

Source: Bloomberg, THR

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