Television-Film Company Makes Noise With Library

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Content owners: Prepare to be courted.

That message, heard loud and clear last week after Rupert Murdoch’s 21st Century Fox made an $80 billion bid for Time Warner, sent several media stocks higher as investors expect media conglomerates to start snatching up smaller outfits that own movies and TV shows.

Among the big gainers was Santa Monica’s Lions Gate Entertainment Corp., the film production and distribution company behind “The Hunger Games” film franchise and hit television drama “Mad Men.” Shares climbed 10 percent for the week ended July 16, making it one of the biggest gainers on the LABJ Stock Index. (See page 50.)

Shares of AMC Networks Inc., Discovery Communications Inc. and Scripps Networks Interactive also jumped on the Fox-Time Warner news.

But Lions Gate was already on its way up when that news broke. Earlier in the week, the company announced it would partner with Chinese e-commerce giant Alibaba Group Holding Ltd. on a new video-streaming service. Called Lionsgate Entertainment World, the service would be Alibaba’s first foray into online video.

While financial terms have not been disclosed, the deal illustrates the value of Lions Gate’s catalog, said Eric Wold, an analyst in the San Francisco office of brokerage B. Riley & Co. who follows the company.

“Lions Gate has a healthy portfolio of content,” he said. “That’s not something Alibaba would pursue if it weren’t valuable.”

The deal with Alibaba looks especially good after the Fox-Time Warner news, Wold said. It shows Lions Gate not only has coveted content, but also has a relationship with a big player in a huge market. That’s just the kind of company that could be an attractive acquisition.

“After the Time Warner bid, the companies that are strong are the ones with strong content portfolios and the ones who have demonstrated avenues to monetize that content,” he said.

The Alibaba deal is the latest in Lions Gate’s push overseas. The company announced in November that it struck a licensing deal to make its content available on state-owned Chinese streaming site M1905.com.

Those streaming deals are big for movie studios as they offer a way around China’s strict quota on the number of imported films shown in theaters, Wold said. Just 34 foreign films can be shown each year.

“Not every Lions Gate film is going to make it,” he said. “But now you can access that market through home entertainment.”

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