Possible Merger Between Lions Gate and Summit Entertainment

     November 28, 2011

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Earlier this month, we mentioned that Lions Gate Entertainment’s The Hunger Games must make at least $100 million in order to justify the sequels being made. While there’s no doubt in my mind the movie will make that at the box office, the independent film company does have another source of income: merge with Summit Entertainment. The studio that’s behind the current Twilight series (which has earned over $1 billion through 4 of its 5 planned films) is reportedly in talks with Lions Gate Entertainment Corp. about a potential merger. The benefit to Lions Gate would be a much-needed cash infusion. This, in turn, could ensure the production of The Hunger Games sequels, which could pay dividends for Summit if successful. Hit the jump for more on the possibility of a merger.

THE TWILIGHT SAGA: BREAKING DAWN-PART 1Bloomberg reports that although the two companies have had difficulties reaching common ground in the past, citing differences of opinion on price and control issues, merger talks have resumed. Summit had raised $750 million this year to finance productions, repay debts and pay dividends to investors, while Lions Gate currently has racked up around $550 million in debt. While Summit has a guaranteed money-maker in The Twilight Saga: Breaking Dawn – Part 1 and Part 2, Lions Gate’s The Hunger Games franchise is, as of yet, untested. In short, this is a small risk for Summit while being a stabilizing move for Lions Gate.

However, insiders also report that Summit has additional suitors in the mergers and acquisitions game. Spokespeople from either side declined to comment due to privacy of talks and the fact that the deal is far from assured. Perhaps a neighborly presence will go a long way as both Lions Gate and Summit are run out of Santa Monica, California. What do you think about the potential merger?  What should the new studio name be ? (I’m partial to SlumGate.) Let us know in the comments below.

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