Lionsgate catches a big Break

Invests $21 mil for 42% stake in online video site

Canadian ministudio Lionsgate Entertainment Corp. said Wednesday that it has made a strategic investment in video-sharing site

Vancouver-based Lionsgate did not disclose financial terms of the deal, but it reportedly invested $21 million in stock for a 42% stake in the company.

Lionsgate said the deal will allow it to distribute its content and promote its upcoming movies and TV series on Break's online video entertainment channel.

Lionsgate vice chairman Michael Burns said that the firm plans to leverage its intellectual property "that we have never monetized." He cited as examples behind-the-scenes footage, deleted scenes and trailers.

Added Break CEO Keith Richman, "Lionsgate's tremendous arsenal of cutting-edge content and its commitment to innovative growth in the digital space make it the perfect partner."

Richman outlined three points of opportunity: leveraging Lionsgate's content; using the Lionsgate audience to test new concepts; and marrying Lionsgate's expertise in how to leverage content with Break's expertise in online distribution.

Break primarily targets a young male audience, and Lionsgate estimates the site receives about 17 million unique users monthly. Break was founded in 1998 and survived the bursting of the Internet bubble that sunk many of its competitors.

"Break is one of the freshest and most original platforms for content in the new-media space," Lionsgate co-chairman and CEO Jon Feltheimer said. "They immediately appealed to us as an ideal fit."

Added Burns: "We feel very comfortable with Keith and his team. This (investment) is a vote of confidence in how well we think they are doing.

"We first interacted with Break as an advertiser, and we had impressive success there," he said. "We came to recognize them as a premier platform for integrating content and advertising as well as the leading online site serving the young male demographic."

Lionsgate also has about a 20% stake in online movie-rental company CinemaNow.

"We don't expect Break to be the last digital investment," Burns said.

Shares of Lionsgate Entertainment Corp. rose 2% on Wednesday to $11.22.

Carolyn Giardina in Los Angeles contributed to this report.