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Tuesday, Jun 6, 2023

Lions Gate Cuts Jobs, Production Co. Deal

Lions Gate Entertainment Corp. laid off 26 employees last week, sparking questions about the studio’s direction in an increasingly consolidated media marketplace.

Layoffs at both the company’s Santa Monica headquarters and New York branch office come about a year after Joe Drake returned to Lions Gate as co-chair of the company’s Motion Picture Group.

Drake had been Lions Gate’s chief operating officer before leaving the company in 2012 to found production outfit Good Universe Media.

Drake said in a memo to staff Jan. 11 that Lions Gate, which has 1,600 employees, must “reassess some of the Motion Picture Group’s internal structure, processes and communication.”

The re-evaluation has the studio implementing a “data-first driven strategy,” according to the memo, and “centralizing most motion picture group business units to Santa Monica.”

Lions Gate also announced they are no longer official partners with Codeblack Films Inc., a Santa Monica production company focused on films targeted at black audiences.

Some Codeblack films distributed by Lions Gate, for example, the Tupac Shakur biopic “All Eyez On Me,” were box-office disappointments.

The layoffs and severing of a content partnership, as with seemingly any Lions Gate-related news, sparked talk about whether the studio will be sold.

But a sale doesn’t appear to be imminent.

BTIG market analyst Richard Greenfield last week penned a “19 media predictions for 2019” blog post, and while the list was rife with talk of mergers and acquisitions, not one involved Lions Gate.

Greenfield has stated that Lions Gate should have taken Hasbro Inc.’s offer to buy the company for $40 per share in late 2017 when such an offer was reportedly on the table.

Amazon.com Inc. was reported in October to be interested in buying Lions Gate. But word of any talks with Amazon have died down.

Lions Gate declined comment on any potential mergers or acquisitions.

• • •

Activision CFO’s Potential Payday

Activision Blizzard Inc. has changed chief financial officers – and the structure of its CFO compensation package.

The Santa Monica electronic games titan kicked off 2019 by parting ways with Chief Financial Officer Spencer Neumann and replacing Neumann with David Durkin.

Activision has declined to specify why Neumann, who quickly resurfaced as CFO at Netflix Inc., was dismissed.

Durkin had served as Activision’s CFO, from 2012 to 2017, before transitioning to chief corporate officer.

Activision disclosed in a Securities and Exchange Commission filing that Durkin is set to earn a minimum base salary of $900,000 in 2019, plus up to 150 percent of that sum in annual discretionary bonuses.

Durkin also gets a signing bonus of $3.75 million on Jan. 2, 2020, if he has neither quit nor been fired by that time.

Further, Durkin gets $11.2 million worth of restricted stock units that will vest in two years if he meets certain performance goals.

By comparison, Neumann earned a base salary of $503,000 as Activision chief financial officer in 2017, per an SEC filing, plus cash bonuses and equity awards that totaled about $9 million.

The filing did not say what Durkin’s performance goals were, indicating that they would be laid out in Activision’s forthcoming annual report.

Restricted stock units are increasingly seen in executive compensation packages, said Chris Krogh, an auditor at Squar Milner, because they are less risky than stock options.

Executives can obtain some of their performance bonus even if the company’s stock price declines, Krogh explained.

The practice started, Krogh said, when some technology companies saw a drop in their share price but positive numbers elsewhere, such as increased revenue and profits.

Activision has seen a recent decline in its share price. It was trading at $46.54 a share on the Nasdaq at the close of trading on Jan. 11, down from $83.39 a share three months earlier.

The latest dip came after Activision announced it severed a contract with video game developer Bungie Inc.

• • •

Universal in Asia

Universal Music Group has “significantly expanded” its “finance, marketing and public policy infrastructure in Asia,” the Santa Monica-headquartered company declared in a press release earlier this month.

The release announced six hires to Universal’s China and Southeast Asia leadership team.

They include a new chief financial officer for UMG Greater China, Aaron Wang, formerly of Yake Trade Co., and a new finance director of Universal Music China, Tracy Mu, previously at Dolby Laboratories Inc.

The hires are part of a series of personnel announcements and acquisitions Universal has made in the last few weeks.

They come as Universal’s France-headquartered corporate parent Vivendi is looking to sell off half of Universal. Buyers are not scheduled to be announced until the end of 2019.

Staff Reporter Matthew Blake can be reached at mblake@labusinessjournal.com or (323) 556-8332.

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