Analyst: Likely FX Pick-up of More 'Anger Management' A Boon for Lionsgate

2:30 AM PST 07/30/2012 by Georg Szalai

Evercore's Alan Gould says the Charlie Sheen show's profit for producer Lionsgate could multiply to $200 million.

With FX likely to pick up an additional 90 episodes of Lionsgate-produced Anger Management with Charlie Sheen, one analyst on Monday said that the show's financial contribution to the producer could multiply. 

FX president John Landgraf told the Television Critics Association’s semi-annual press tour on Saturday that a back-90 order for Anger Management was likely. The top-rated scripted cable comedy has given Landgraf "every indication" that additional episodes will be ordered, he said.

Evercore Partners analyst Alan Gould explained in a research note Monday that "if episodes 3-10 of Anger Management's ratings surpass an undisclosed threshold, then FX will automatically purchase an additional 90 episodes of the show."

He said that would be a boon for Lionsgate, on which he has an "overweight" rating and a target price of $18. "With 100 episodes we value the show at $200 million to Lionsgate, $2 million profit per episode, as opposed to a value of $5 million if there are only 10 episodes," he said.

Gould is assuming that FX will look at C+3 ratings - commercial ratings including three days of DVR playback - for the adults 18-49 demo. "Our best assumption is that the threshold rating is an amount that equates to approximately a 2.0 rating of total viewers," he said. "We understand that Anger Management has received a nice uplift from DVR viewing."

But Gould on Monday also argued that the recent DirecTV-Viacom carriage deal is "less positive for Epix," in which Lionsgate owns a 31 percent stake. DirecTV didn't commit to carrying the premium TV venture of Lionsgate, MGM and Viacom. "DirecTV has the option to consider Epix later, but without carriage by DirecTV, in our opinion, there will be less pressure for Comcast or Time Warner Cable to pick up the channel," the analyst said.

He added that Epix's two-year exclusive run with Netflix will end in the coming weeks. "It will remain on Netflix on a non-exclusive basis for the next three years, but we imagine the fee will be less on a non-exclusive basis than exclusive," Gould said. "Perhaps the difference will be more than made up for by other online distributors."

Email: Georg.Szalai@thr.com

Twitter: @georgszalai
 

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