Little firms that could need to zig and not zag

Whenever I have lunch with someone from a non-MPA company, the same comment almost inevitably gets made, unsolicited by me and often apropos of nothing in particular.

"We want to be the next Lionsgate" is how it's simply put, usually quickly amended by, "Don't write that, but that is how we see ourselves in five (or 10) years."

Now obviously such a comment is a compliment to the 8-year-old reinvented Lionsgate, which under vice chairman Michael Burns and co-chairman and CEO Jon Feltheimer has ballooned from an $80 million also-ran to a $1.2 billion mini-major in market-cap terms.

The comment also is a tacit acknowledgment that there really aren't many successful unaligned "indie" players left in the film or TV space. Not in any case of a size that allows them to play in the same big-stakes game as the big boys at the six Hollywood studios that make up the MPA.

How did Lionsgate do it?

Methodically and unsexily, starting with a steady home video biz, buyouts of key libraries, cashing in on cable (think "Weeds" for Showtime or "Mad Men" for AMC), eventually landing an Oscar ("Crash") as well as snapping up Joe Drake's Mandate, Debmar-Mercury and the HIT catalog. Not to mention those "Saw" movies and their progeny.

There were a few stumbles along the way, including hoopla about a potential "Hostel" franchise. (The first installment grossed $47 million domestic; Part 2 managed only $17 million.)

Not that being admired makes one, in whatever business, foolproof: Just think Starbucks, Southwest and Shering-Plough among recent industry darlings that have messed up.

However, that indie folks routinely cite Lionsgate as their entertainment model should give pause: Surely there should be a larger field.

But no: The entertainment landscape for the past 20 years has become littered with indie TV and film companies, not to mention the fact that the six Hollywood studio congloms have managed to bottle the indie spirit, especially on the film side, where their own specialty labels are thriving.

Still, everyone loves the idea of "the little company that could" because it smacks of youth, energy and creativity, even if in many cases the folks behind these little Lionsgate wannabes are simply ex-studio types who are hoping to reinvent themselves by hanging out a new banner.

The bad news is that there are, despite a democratized Internet, still formidable barriers to entry. As in other industries today, little guys still will probably have to get "rolled up" with other little guys before they're big enough to make a dent.

"Unfortunately, ours has become a highly capital-intensive business," Lionsgate's Burns says. "I think of it as a marathon, not a sprint. There's blocking and tackling and not doing anything stupid. It really is survival of the fittest."

Size does matter, not of offices or exhibition booths but of content: Lionsgate controls 12,000 titles that throw off $90 million in free cash flow each year — a pretty comfortable cushion for taking calculated risks.

If there's a scintilla of good news it's that the congloms have all gotten religion when it comes to the need to shake up the status quo, talk to a greater diversity of content providers and rethink how they do things. Perhaps their grip on things will loosen or at least be more inclusive. That in theory should make for openings for unaligned souls with interesting ideas to pitch.