Lionsgate widens indie highway with Roadside

Buys minority stake in distributor

Lionsgate has acquired a minority ownership stake in fellow indie distributor Roadside Attractions.

Neither company would reveal the percentage of Roadside that was purchased, but a source familiar with the deal placed the value of the deal in the mid-seven figures. Through the partnership, Roadside keeps its autonomy and gains access to Lionsgate's home entertainment and TV distribution divisions, complementing its new 15-member theatrical distribution department. The company split from its three-year alliance with Samuel Goldwyn Films and its distribution arm IDP in May.

Lionsgate will gain a larger presence in the art house/prestige film arena. The company has released specialty films less frequently in recent years, and this purchase pushes it further into the mini-major category. Outside of the deal, the companies have tentative plans to jointly acquire one or two larger specialty films each year, likely titles with greater DVD potential. Roadside independently will release 12-14 films a year.

Representatives from both companies took pains to emphasize that Lionsgate's deal with Roadside was a passive investment. The arrangement does not give Roadside access to Lionsgate's Showtime pay TV output deal, set to expire at the end of 2008.

Since November, top company execs have discussed some form of an alliance, with initial talks centering on Lionsgate purchasing Roadside outright. Ultimately, it was decided that a minority stake was better, according to one source familiar with the deal, so that Lionsgate execs could test the partnership with a less permanent commitment and Roadside execs could maintain control of their company.

"The alliance will raise our profile," said Roadside co-president Howard Cohen, who runs the company with Eric d'Arbeloff. "There's been a plus side to the long courtship: You know who you're marrying." Cohen said he had no contractual obligation to consult with Lionsgate on marketing and distribution plans but that he would likely do so on some releases.

"With Lionsgate's investment in Roadside Attractions, we are celebrating Lionsgate's origins as a platform for distinctive and truly independent films," Lionsgate president Tom Ortenberg said.

Roadside's higher-profile films have included "Amazing Grace," "Ladies in Lavender" and "Super Size Me." The company recently acquired worldwide rights to "Starting Out in the Evening," starring Frank Langella. Cohen says he hopes the company will have more worldwide rights acquisitions and experience growth on par with distributors ThinkFilm, Magnolia Pictures and IFC Films, but he doesn't foresee creating a production division.

Wall Street appeared to approve of the transaction. Lionsgate shares rose fractionally to $11.21, making the stock one of only seven in The Hollywood Reporter Showbiz 50 stock index to have moved higher Thursday.

The deal was negotiated by Lionsgate executive vp corporate operations Wayne Levin, executive vp corporate development Marni Wieshofer, executive director of corporate development Mark Holloway, Ortenberg and the law firm O'Melveny and Myers with attorney Greg S. Bernstein and Roadside's Cohen and d'Arbeloff.
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