Michael Burns: Lionsgate Focused on Catalog Acquisitions as Well as Original Content Spending

In the crush of original content production across studios and streaming platforms, Lionsgate has taken a slightly different path, focusing equally on catalog library acquisitions, in addition to original TV shows and movies.

The Santa Monica, Calif.-based studio/distributor this year acquired three separate movie libraries, including a 20% stake in Spyglass Media Group, securing distribution rights to more than 200 movies and most of the The Weinstein Co. library. Lionsgate also owns stakes in Trimark Pictures, Artisan Entertainment and Summit Entertainment.

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“The ability to buy these libraries when everybody else is standing still, that’s a strategic advantage,” Michael Burns, chairman of Lionsgate, told an investor group.

Speaking Sept. 21 on the virtual Goldman Sachs Communacopia Conference, Burns said Lionsgate has spent $20 billion on content over the past 20 years — much of it on third-party libraries. The company generated in excess of $700 million in revenue on catalog content in 2020.

“The [movie] license business ages extremely well,” Burns said. “We have all the Weinstein product from 2005 to 2018. We’re the largest holder of Quentin Tarantino movies now. We have an opportunity right now to monetize library product like never before. It’s a terrific time to be in the content business.”

Burns said that in addition to SVOD, the burgeoning ad-supported VOD and FAST streaming platforms in the U.S. (i.e. Pluto TV, Tubi, The Roku Channel, etc.) and worldwide has created distribution new opportunities.

“AVOD has turned out to be a great business for us, domestically, as all these players emerge. And they just opened internationally,” he said.

On the call, Jeffrey Hirsch, CEO of Starz, said the erstwhile linear premium channel is now generating more revenue from digital distribution than pay-television. Linear and streaming now account for 30 million combined subscribers.

“The brand’s streaming platforms are now operating in 59 countries outside the U.S.,” Hirsch said. “We think we are really positioned to capture market share outside the U.S.”

Meanwhile, at a time when industrywide consolidation sees Amazon acquiring MGM and Discovery taking control of WarnerMedia, Lionsgate remains a prime target for third-party acquisition. In the last earnings call, CEO Jon Feltheimer said the company would not be distracted by industrywide “concept of scale,” while at the same time remaining open to discussions with “everyone” and listening to “everything.”

A reality not lost upon Burns.

“We expect to see more consolidation in the media sector,” he said. “That’s a given. We are one of the last big independent media companies. Our size allows us to be nimble. We are the PT boats surrounded by battleships. We are going to continue to identify ways to increase the value of our stock price.”

Lionsgate Vice Chairman: Sony Distribution Deal Increases Margins; Says Theatrical Window Forever Changed

Lionsgate vice chairman Michael Burns says he expects to see increased consolidation of marketing and distribution efforts within the home entertainment market.

Speaking March 9 on the virtual Deutsche Bank confab, Burns was asked about last month’s decision to consolidate North American DVD/Blu-ray Disc distribution with Sony Pictures Home Entertainment.

Sony will handle distribution of Lionsgate’s packaged-media releases in the U.S. and Canada beginning in July. The studio’s North American distribution has been handled by the former 20th Century Fox Home Entertainment, which was acquired in 2019 by Disney.

“It will be good for us,” Burns said. “We’re all in the same [retail] business, which is to try to make as much money as possible. So, if you can consolidate operations and squeeze a little bit of margin here and there by having significant volume, which gives you that opportunity, I think you’re going to see more of that [in the industry].”

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When asked about ongoing efforts to rejigger the traditional theatrical window, Burns said he believes the windows will continue to change and have “changed forever in many ways.”

“That’s good for us,” he said. “I like the prospects for the motion picture business right now. You have limited supply and increased demand in that business.”

Lionsgate vice chairman Michael Burns

Lionsgate movies in the pipeline include back-to-back “John Wick” releases, among other action movies; Borderlands; a Monopoly-themed movie with Hasbro; and The Hunger Games prequel Snakes and Songbirds. 

The executive said changing windows with established major theatrical franchises such as “Hunger Games,” The Twilight Saga and “John Wick” diminish the titles’ upside in future retail channels. For the movies that don’t do well at the box office, shortening windows to 17 days (or three weekends), Burns said going straight to the consumer is “a really good thing” as opposed to waiting three months or longer before electronic sellthrough, VOD or DVD.

“There are a lot of advantages to having flexibility,” he said. “We’re not going to commit to one release pattern or another. The movie business is a mixture of art and science. And so we’re going to look at each movie individually and go where we can make the most money.”

 

Vice Chairman: Lionsgate ‘Very Interested’ in Third-Party Merger

Lionsgate is shopping – itself.

With AT&T’s $85.4 billion acquisition of Time Warner in regulatory limbo, and Walt Disney’s $52.4 billion acquisition of select 21st Century Fox assets, including 20th Century Fox, pending, big media mergers are on the mind of Michael Burns, vice chairman of Lionsgate.

With a $7 billion market cap, Burns says Lionsgate is a “pint-sized bite” for potential suitors compared to “800-pound” gorillas like AT&T. Speaking on CNBC, Burns reiterated the usual “enhancing shareholder value” mantra driving publicly-traded companies like Lionsgate to acquire or be acquired.

Burns was quizzed about the likelihood of Lionsgate merging with Verizon, Comcast, Amazon or possible reunified Viacom/CBS.

He said merging with a telecom such as Verizon could be a big deal, provided the telecom decided what businesses it wants to be in. Burns was alluding to Verizon CEO Lowell McAdam, who, on the fiscal call, said the telecom wasn’t looking at any M&A activity in the short-term.

Burns said he is very interested in the outcome of the DOJ’s antitrust lawsuit against the AT&T/Time Warner merger. The executive called Comcast’s $30 billion acquisition of NBC Universal in 2011 the deal of the century.

“Again, you have to show organic growth or you have to make acquisitions, like us, which would be a bolt-on acquisition for [Comcast],” Burns said.

He said Lionsgate is talking to other media companies “all the time to see if a deal makes sense.”

Merging with Amazon would seem realistic given the ecommerce behemoth’s 70 million Prime members and ongoing content deals between the two companies, including movies The Big Sick and Oscar winner Manchester by the Sea.

“We’re a customer of Amazon and we are doing a lot of business with them,” Burns said. “We think there is more and more to do with them.”

He said media companies, particularly in the tech space, have to decide whether they want to “build it” or “buy it” when determining how far ahead the competition is in the streaming and subscription business.

“We’re very interested in the consolidation space,” Burns said. “Obviously that’s very important to us.”