Lions Gate Entertainment Corporation, doing business as Lionsgate, is an American global mass media and entertainment company. It was originally a Canadian company, formed by Frank Giustra on July 10, 1997, domiciled in Vancouver, British Columbia, and is currently headquartered in Santa Monica, California. In addition to its flagship Lionsgate Films division, the company contains other divisions such as Lionsgate Television and Lionsgate Interactive. It owns a variety of subsidiaries such as Summit Entertainment, Debmar-Mercury, and Starz Inc.
History
Early history
Lionsgate was formed in 1997 by Frank Giustra with a $16 million investment including another $40 million from other investors which included Keyur Patel and Yorkton Securities' executives such as G. Scott Paterson. Giustra had recently retired as CEO from Yorkton, an investment bank, and Paterson was then president. Giustra then merged Lionsgate with Toronto Stock Exchange listed Beringer Gold Corp. (founded in 1986) to take the company public. Beringer's mining assets were soon sold off.
Acquisitions
Lionsgate then began a series of acquisitions to get into the film industry. The company bought a number of small production facilities and distributors, starting with Montreal-based Cinépix Film Properties (renamed as Lions Gate Films) and North Shore Studios (renamed Lions Gate Studios) in Vancouver, British Columbia. Mandalay Television was acquired by Lionsgate from Peter Guber for a 4% Lionsgate stake. In 1998, Lionsgate helped Guber form Mandalay Pictures with a 45% investment in Mandalay. Lionsgate followed that up with a June purchase of International Movie Group, Inc. (IMG), a bankrupt film distributor previously invested in by Guber and Yorktown Securities, for its film library. IMG's CEO Peter Strauss became President of Lions Gate Entertainment, Inc. (LGE), the American parent company for Lionsgate's U.S. interests. The Lions Gate Media subsidiary was also formed to produce for television.
Completing its first year of operation, Lionsgate had a revenue of $42.2 million with a loss of $397,000. The company share price dropped to a low of $1.40. This limited the corporation's ability to make acquisitions via stock swaps. Lionsgate instead made its next acquisition of Termite Art Productions, a reality-based television production company, for $2.75 million by issuing three convertible promissory notes. Giustra had the shareholders vote to move the company's public listing from the Toronto Stock Exchange to the American Stock Exchange, along with a two-for-one stock consolidation to qualify, for greater exposure that might boost share value.
In January 1999, Roman Doroniuk was named president and chief operating officers of Lionsgate, which led to the corporation's financial operations being moved in April to Doroniuk's offices in Toronto, Ontario while corporate headquarters remained in Vancouver, British Columbia. Lionsgate created US based Avalanche Films and acquired half of Sterling Home Entertainment, both in video sales. Again, Lionsgate registered losses in its second year of $9.3 million on revenues of $78.3 million with most of the losses from its stake in Mandalay Pictures. Thus in the summer, Lionsgate placed its studios up for sale with no buyers. TV operations were changed to non-network hourlong series over riskier network shows and ended its relationship with Mandalay Television. The corporation sought out more capital and cash with a filing of a preliminary prospectus for the sale of preferred stock and common stock warrants and a $13.4 million line of credit.
Lionsgate increases and new CEO
Additional acquisition funding arrived in January 2000 as a $33.1 million investment from an investor group that included Paul Allen, former Sony Pictures executive Jon Feltheimer, German broadcasting company Tele-Munchen, and SBS Broadcasting SA. This led to Feltheimer taking over as CEO from Giustra thus the passed over Doroniuk left the company. Feltheimer increased film making including several $1 million films at Avalanche. However, Federgreen still remains one of the major owners of the company and is extremely involved in the making of all their major movies. In June, Lionsgate acquired Trimark Holdings, Inc. for approximately $50 million in stock and cash including taking on $36 million in debt.
Lionsgate continued making acquisitions during the decade to boost distribution and its film library. On December 15, 2003, Lionsgate acquired Artisan Entertainment for $220 million. In 2004, Erik Nelson reacquired Termite Art and renamed it to Creative Differences.