Lions Gate Entertainment Corp. (LGF) has decided to integrate the marketing operations of its Lions Gate and Summit Entertainment LLC studios. Summit Entertainment was acquired by Lions Gate in Jan 2012.
The integration is aimed at achieving substantial operational synergy while continuing to find new movie properties and leveraging the current movie franchises into lucrative businesses.
The integrated operations will be headed by Chief Marketing Officer Tim Palen. Palen will also be responsible for merchandising and theme park business. Further, Palen will head Pantelion Films, a joint venture formed with Televisa (TV) to produce movies for the U.S. Latino market. Moreover, Codeblack Films, another subsidiary of Lions Gate, will be in his portfolio.
Lions Gate, which competes with DreamWorks Animation SKG Inc. (DWA), is fast becoming a major player in the media industry. The company boasts franchises like The Twilight Saga, The Hunger Games and the recently released Divergent. The Twilight Saga (all six films) was a monster hit, raking in roughly $3.3 billion worldwide. With The Hunger Games trilogy, Lions Gate found another successful franchise. The two installments have collected over $1.5 billion at the worldwide box office.
The third and the final installment made in two parts (The Hunger Games: Mockingjay Part 1 & Part 2) is in the production stage and will be released in Nov 2014 and Nov 2015, respectively.
However, before the release, Divergent garnered weak reviews from critics. Nevertheless, fans gave thumbs up to the movie, much to the relief of the media house.
We believe that Divergent is unlikely to reach phenomenal success at the box office. However, with a good opening, Lions Gate is now possibly looking at a profitable franchise, though not as big as Twilight or Hunger Games. Lions Gate is likely to commence the production of the second installment Insurgent in May 2014.
Lions gate has a Zacks Rank #2 (Buy). Other media stocks that are worth investment include Digital Cinema Destinations Corp. (DCIN) and The Walt Disney Co. (DIS). Both of these carry the same Zacks Rank as Lions Gate.
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