Alibaba Seeking to Buy 37% Stake in Lionsgate

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variety.com/2014/biz/news/alibaba-seeking-to-buy-37-stake-in-lionsgate-report-1201338291/

Alibaba Seeking to Buy 37% Stake in Lionsgate: Report

China’s Alibaba Group, flush with some $25 billion in cash after its blockbuster IPO last month, is interested in acquiring Lionsgate co-chairman Mark Rachesky’s 37% stake in the studio, according to a report.

Rachesky, through his MHR Fund Management investment firm, owns 37.4% of Lionsgate’s shares. A sale of his stake to Alibaba could be announced in November or perhaps sooner, the New York Post reported Friday, citing anonymous sources.

Lionsgate and Alibaba reps declined to comment on the report. Rachesky and reps for MHR did not respond to requests for comment. New York-based MHR manages about $6 billion of capital.

Lionsgate and Alibaba this summer announced a pact for a subscription-streaming service for mainland China, called Lionsgate Entertainment World, to offer the “Twilight” series of films, “The Hunger Games: Catching Fire,” “Divergent” and “Mad Men.”

“We would expect Rachesky to command a premium for the de facto 37.4% control position (in Lionsgate),” Wunderlich Securities analyst Greg Brown wrote in a research note Friday. “The activity reinforces recognition of Lionsgate’s fairly unique position as a content engine outside the large media companies. This is apropos as Amazon, Netflix and Yahoo aim at developing distinctive in-house content, where they can realize full eventual rights values.”

In the next week, Alibaba CEO Jack Ma is reportedly leading a delegation to meet with other Hollywood studio execs, including Sony’s Michael Lynton and Paramount’s Brad Grey, as the Chinese e-commerce and media powerhouse explores potential content acquisitions and investments.

Separately, Lionsgate co-chairman and CEO Jon Feltheimer is scheduled to be in Hong Kong next week. He’s scheduled to deliver a keynote at the CASBAA Convention 2014, an engagement that was scheduled six months ago.

In announcing the deal with Alibaba in July, Feltheimer called Alibaba “a world-class brand that is well known and respected among consumers throughout China.” He added, “Alibaba is the kind of entrepreneurial company with whom we like to be in business, and the launch of our streaming service in China underscores our commitment to innovation and leadership in delivering premium content to digital platforms around the world.”

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variety.com/2014/biz/news/jon-feltheimer-sheds-little-light-on-lionsgate-alibaba-deal-1201340727/

Jon Feltheimer Sheds Little Light on Lionsgate-Alibaba Deal

HONG KONG — Jon Feltheimer, CEO of Lionsgate, offered plenty of enthusiasm for the China media scene, but offered no clue as to the possible sale of a third of his company to Alibaba.

“We’re going to be cautious, find the right partner,” he said, Tuesday morning at a speech in Hong Kong at the Cable & Satellite Broadcasting Association of Asia annual convention.

“China and the Asian territory is an incredible opportunity. We spend a lot of time looking at it, looking for the right partners,” said Feltheimer.

“There are things perhaps that speak to our strengths, not the other studios’ strengths. And we are going to think as much locally as we can.”

The name of Alibaba, the e-commerce giant that last month floated on the New York Stock Exchange, was only mentioned once.

“In the coming months we’ll launch our Lionsgate Entertainment World streaming service with Alibaba, presenting movies, premium TV series exclusive footage, behind the scenes interviews and other special content for the Chinese consumer,” Feltheimer said.

Financial market sources last suggested that Lionsgate is poised to sell upwards of 30% of the company to Alibaba. Well placed media sources have told Variety that talks are still ongoing and are currently focussed chiefly on the cost of the deal.

Feltheimer said that the company is already making progress in China. “We had a great last couple of years. 4 or 5 years ago we made no money distributing our content in China. Last year we probably made more than previous 5 years combined. We released 7 movies in China. ‘Escape Plan’ did better in China than it did in the U.S. So we see a marvellous opportunity to do business,” he said.

Feltheimer’s main message seemed to be one of embracing the changes brought on by digital technology and changing demographics.

“In the next five years, everything we do – the way we produce, package, distribute, market and monetize content — will be different,” he said.

“And to those who worry that digital innovators will compress windows, turn business models on their heads and change our ecosystem… I would say, ‘You don’t need to,’ because new, better and more profitable paradigms are waiting to take their place.

“If you’ve got the right content, a trusted brand, an efficient distribution mechanism and the means to effectively market to the consumer, new channels will be created and they will be successful.

“Our Tribeca Short List channel that we announced last week is a perfect example. Now we won’t get everyone to subscribe to the Tribeca Short List. But we don’t have to, because we want to create a core affinity group of motivated film consumers and keep them satisfied — and, if we do, the channel will be very successful.”

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deadline.com/2014/11/lionsgate-alibaba-sale-franchises-disruption-1201277060/

Lionsgate Likes Cozying Up To Alibaba, But Won’t Discuss Sale Chatter

Lionsgate execs wouldn’t bite when analysts invited them to address the most important question facing the independent studio: Whether there’s anything to the report that its largest investor, Co-Chairman Mark Rachesky, is considering selling his 37.4% stake to Alibaba. But they don’t seem to mind having a closer relationship with the Chinese e-retail colossus — its partner there in a new subscription streaming service, Lionsgate Entertainment World, which features the Lionsgate’s movies and TV shows. “We’ve shown with our relationship with Televisa, with Canal Plus and Studio Canal that having interesting partners in other territories can be a benefit,” CEO Jon Feltheimer said this morning in the company’s quarterly earnings call. “It doesn’t need to be on an equity basis. You’re going to see me spending a lot of time in China at the beginning of next year….Certainly equity always encourages people to do other strategic things with you. But at the end of the day I think it’s just a way of creating partnerships.”

He added that the studio is “in discussions with several other prospective partners for additional online branding platforms” similar to the streaming one with Alibaba, but didn’t elaborate.

Execs unveiled two initiatives: a stage show for The Hunger Games, and a parnership with free-to-play gaming company Kabam for The Hunger Games: Panem Rising, which it calls “the official mobile game” for the upcoming The Hunger Games: Mockingjay Part 1. It’s available for iPhone, iPod touch, iPad and Android devices.

On another front, Lionsgate seems to be in no hurry to unload its 50% stake in TVGN (TV Guide Network) which it shares with CBS — and is about to be rebranded as POP. “We are actually already doing some pilots for the channel,” Feltheimer says. “The ratings have gone up very consistently. We love the new brand.” And he says all’s well with the relationship with CBS. “It’s a pretty small business for them, but they have been tremendous partners and together we can keep building something really terrific.”

Feltheimer, who considers Lionsgate to be a business disruptor, danced a little when asked for his view about Netflix’s plan to simultaneously offer Crouching Tiger 2 next year to its subscribers and to theaters — which infuriated the largest chains. “We’re definitely big believers in the theatrical window which really is the driver of the food chain particularly for big movies,” the CEO says. “But we also welcome new ideas and innovation.” When changes work, then consumers “will pay a premium for it.” And he’s intrigued by a possible twist for Netflix’s movie ambitions. The streaming power could offer “a Netflix event movie that ultimately becomes ,within a short period of time, a series.” Lionsgate already produces Orange Is The New Black on Netflix.

Illustrating its interest in new things, Feltheimer noted that Lionsgate is starting to shoot some movies with 360-degree cameras to take advantage of technologies including the Oculus Rift 3-D headsets. “We think that’s one of the enhancements that will make our home entertainment product significantly more valuable” he says. “Game product as well. We think it’s pretty cool technology starting to happen out there and we’re already taking advantage of it.”