Lionsgate to respond to Icahn's tender offer

Expands on interest in current MGM sales process

NEW YORK -- Lionsgate will shortly have a public response to activist investor Carl Icahn's unsolicited tender offer to boost his stake in the company, vice chairman Michael Burns said Thursday. He signaled a response would come in the next day or two.

Speaking here at the second annual Digital Cinema & Movie Conference, organized by Gabelli & Co., he also explained which parts of MGM Lionsgate is most interested in, predicted a financial boon from the Oscar wins for "Precious" and discussed the benefits of DVD rental kiosk operator Redbox.

"MGM has some great assets," but his studio wouldn't need all of them, he said of Lionsgate's interest in the current MGM sales process. For example, "The Hobbit" is "likely not" a Lionsgate movie, Burns said. And the studio couldn't self-distribute Bond movies beyond core markets, such as the U.S., Canada and the U.K., he added.

Meanwhile, the big MGM library and its brand are attractive for Lionsgate, he said.

Discussing his relationship with Icahn, Burns said he spent Valentine's Day with him. "We're trying to be as friendly as we can under the circumstances," he said. Icahn has criticized management's acquisition strategy and wants to boost his stake in Lionsgate to around 30%.

Burns also told the Gabelli conference Thursday that data from Redbox shows that the DVD rental kiosk operator isn't hurting his studio's DVD sales. Even when Redbox has a kiosk in a Wal-Mart store, "we're not seeing significant declines in our sell-through business," he said.

He argued that Redbox brings in incremental transactions as many consumers have no intention to watch a movie until they walk by a kiosk. "At that moment in time, it becomes an impulse rental," Burns explained. He added that he doesn't mind if other studios continue legal fights with Redbox as Lionsgate can in the meantime gain market share.

Burns also said the Oscar wins for his studio's "Precious" helped it ship "an awful lot of DVDs" already this week.

Lionsgate should further benefit from the Academy Awards as it handles "The Hurt Locker" in the U.K., he added.

Burns also told investors that he feels his studio has a stronger film slate this year than it has had "in quite some time." He mentioned such upcoming releases as "The Expendables."

Asked about premium TV service Epix, which is a joint venture of Viacom, Lionsgate and MGM, Burns lauded its recent momentum in signing up distribution partners. Two more deals will get it to cash flow breakeven, he predicted. Whatever happens to MGM won't stop that momentum, he added.

Will films ever come to homes via cable VOD on a day-and-date basis with their theatrical release? Burns thinks so. He predicted a "big" price tag for such offers though, mentioning $35 and $50 as possibilities.