Co. exits Canadian distribution biz

MONTREAL — Lions Gate Entertainment is handing over Canadian distribution to the newly formed Maple Pictures Corp., founded and co-owned by two former execs, Brad Pelman and Laurie May.

Lions Gate has a 10% stake in Toronto-based Maple, two unidentified private Canadian companies own 51%, Pelman and May 39%. Pelman and May are estimated to have paid $10 million-$15 million for the deal.

Lions Gate has inked a long-term library and output deal with Maple Pictures for the distribution of features, television and video product in the Great White North. Financing for the transaction was provided by RBC Royal Bank Media & Entertainment.

Move reps a significant step back from the local market for Lions Gate, a company that had its roots in Canuck distribution long before it began handling pics in the U.S.

More recently, Canadian distribution has represented less than 10% of Lions Gate’s business.

Maple Pictures will be the second largest independent film distributor in Canada behind the dominant Alliance Atlantis, even beating the Hollywood studios thanks to its deals with Miramax and New Line.

Technically headquartered in Santa Monica and Vancouver and publicly traded in both countries, Lions Gate now operates primarily in the U.S., where it has become the biggest indie studio.

Company made the move so that if it is ever taken over by non-Canadians, new owners won’t be allowed to operate as a distributor in Canada.

Canadian law prohibits non-Canadian companies from distributing films in the country.

The Hollywood studios are exempt as they were operating before the law was introduced.

Deal does not involve Lions Gate’s studio facilities in Vancouver.

May said Maple Pictures will pursue other Canuck product.

“It is our intention that the Lions Gate product will be a solid foundation of revenue,” May said. “We’re also interested in pursuing output agreements (with other U.S. distributors).”

Maple Pictures has also bought Lions Gate’s interest in Christal Distribution, a Montreal-based company mostly focused on the French Quebec marketplace.

Maple has acquired a number of production entities and other Lions Gate distribution assets in Canada.

“We have tremendous faith in Brad and Laurie’s management skills and knowledge of the Canadian marketplace,” said Lions Gate CEO Jon Feltheimer. “This is a great opportunity for them to run their own company while putting our Canadian distribution capabilities in good hands and further reducing Lions Gate’s overhead.”

Pelman has been with Lions Gate in Toronto for six years and was most recently exec VP of sales and distribution and co-manager of the Toronto office.

May has been with Lions Gate since 1997 and was senior VP of business and legal affairs and co-manager of the Toronto office.

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