The news – not entirely unexpected – that Lionsgate had bought Summit Entertainment comes as good news in that the two companies will together create an independent powerhouse and as depressing news in that the business loses another buyer of material and movies and a key supplier to the international market.
Summit gave it a good run as a standalone producer, domestic distributor and international sales and marketing operation. It splashily relaunched with $1bn in financing in 2006 and early on found a blockbuster franchise in the Twilight Saga films while major studios - including Paramount which had put Twilight into turnaround – looked on jealously. With one more in the five film series to come next Nov, the Twilight series has already grossed over $2.5bn at the worldwide box office.
The company had a smattering of other tasty hits – Red took $200m, Knowing grossed $183m and Letters To Juliet was a solid performer on $80m. It even won the best picture Oscar in its short run with The Hurt Locker.
But as players as diverse as PolyGram, Overture and Filmdistrict will tell you, distribution in North America is a money pit, even with a hit franchise in your pocket. In between Twilight films, Summit had a run of disappointments which hoovered up cash and put pressure on its bottom line. They included domestic pickups like The Three Musketeers, 50/50, Astro Boy and Drive Angry as well as productions like Sex Drive, Sorority Row and Remember Me. The new deal saw Lionsgate assume Summit’s not inconsiderable debt of $300m.
Lionsgate – hoping for a franchise of its own with The Hunger Games which opens on March 23 – has had similarly mixed fortunes in distribution. Its lowcost franchises like Saw and the Tyler Perry movies have been highly profitable, but it has had stumbled with bigger budget star vehicles like Abduction, The Next Three Days and Killers.
In the new Lionsgate, Summit heads Rob Friedman and Patrick Wachsberger are named co-chairs of Lionsgate Motion Pictures Group, while president Joe Drake is likely to step down after The Hunger Games opening.
And they now oversee a domestic release slate which looks powerful for 2012/13: the final Twilight, of course, The Hunger Games, Now You See Me, The Tomb, Ender’s Game, Dredd, The Expendables 2 and What To Expect When You’re Expecting are all on the lineup.
Quite how the international sales and marketing teams – Summit under David Garrett and Lionsgate under Helen Lee Kim – will shake out is as yet unclear, although both sales organizations are among the best in the business.
Independent distributors around the world will bemoan the loss of another prime sales outfit and the inevitably reduced choice in the acquisitions game. Buyers who have Summit output deals in place will no doubt continue to receive the product they committed to before the merger; after those deals expire, it’s anyone’s guess how Lionsgate will handle its in-house productions – whether it be on a film-by-film basis or in package deals.
Perhaps the market will throw up ambitious new players to step into Summit’s shoes, but in the meantime the loss of Summit with its domestic and international capabilities is a blow to the independent world that had considered it a separate source of A-list Hollywood movies to Lionsgate.
Who knows if the Summit label will even stay alive within Lionsgate? If it is abandoned, it is the end of an era in international sales. Summit, founded by Andy Vajna, Bernd Eichinger and Arnon Milchan in 1991 and subsequently run by Wachsberger, has been the pre-eminent sales house in the marketplace for over two decades, bringing smash hit films to buyers like American Pie, Mr And Mrs Smith and the Step Up films.
The Lionsgate/Summit deal makes business sense of course – and congratulations are in order for the principals of both companies – but it is another indication of how tough it is to produce and release studio-level movies in this climate. Even the studios themselves are struggling to make sense of the economics, let alone debt-backed independents.