Lean Lionsgate roaring louder

LGTV builds biz in low-cost world of cable network prod'n

Kevin Beggs learned everything he knows about TV from “Baywatch.”

As the assistant to the series’ exec producers, among them David Hasselhoff, Beggs was privy to the process of morphing a relatively cheap beachside sudser into a syndie juggernaut.

“There was no network, no studio, just distribution and the producers working out deals and marketing,” says Beggs, who several years later is applying the same buck-stretching principles he learned on “Baywatch” to his booming boutique operation Lionsgate Television.

In an age of vertical integration, and no guaranteed outlet for product, LGTV has built a thriving business in the low-cost world of cable network production.

Division’s shows account for 25% of Lionsgate Entertainment’s cash flow. The company will make $133 million from TV production and distribution revenues this year, (up from 63% from 2005), with a 30% profit margin.

Under the aegis of Beggs, who is president of LGTV, and his boss, Lionsgate CEO and TV veteran Jon Feltheimer, the company has, for better or worse, cornered the cable market with a cost-efficient deal-making strategy in which the profit begins at the front-end rather than the back.

In three years the company has grown its slate from a couple of shows to 11 primetime series — a tally outpacing the other main indie player Sony Pictures TV — among them returning dramas “The Dead Zone” and “Wildfire” and improv laffer “Lovespring International.”

And with cable shows like “Nip/Tuck,” “Monk” and Lionsgate’s own “Weeds,” a satirical comedy starring Mary Louise Parker as a pot-selling soccer mom, gaining traction with audiences and critics, major studios are following suit.

Warner Bros. has launched low-cost unit Warner Horizon, 20th has introduced fox 21, and CBS Paramount Network TV has installed longtime Eye exec Bela Bajaria to start up low-cost scripted programming for cable.

Feltheimer says the focus on cable sprung mostly from necessity. “We couldn’t afford to be in the deficit-backend business,” he says.

LGTV makes its coin via ancillary revenue streams — tax breaks on production, homevideo and international distribution — before any expectation of a domestic syndie run. And the plan going forward is to remain agile and lean, keeping overhead and debt low.

“I’ve always viewed our group as a start-up, and I still do,” says Beggs of his 16-person team. “We have a tight operation. Our margins might be less interesting for a big studio, but they’re crucial for us.”

In short, Lionsgate has definitely carved out a business, though it’s playing on a much smaller field than companies like Warner Bros TV and Twentieth TV.

“At worst, we break even,” says LGTV exec VP-COO Sandra Stern, who alongside Beggs, will jump through any hoop to make a deal.

When it looked like ABC Family would pass on “Wildfire,” a drama about a troubled teen adopted by a family that raises horses, Stern and Beggs trekked to New Mexico to negotiate setting up production there.

What they left with were tax benefits, guarantees for little to no location fees, free use of police and fire officials, and a news helicopter and the governor’s personal press corps to include in a scene.

“That pilot looked like it cost $10 million,” Stern says. Show is in pre-production on its third season.

Having done business as a Canadian company for so long, LGTV cut its teeth as a magnet for small-time productions that wanted to film up north. As a result, the group knows how to get a lot for a little.

“Things that aren’t worth the time for a big studio are worth it for us,” Beggs says. “We can afford to give breaks on license fees because we know how to make that money up.”

At the same time, the company’s cable partners know LGTV will go the extra mile for its productions.

Sci Fi Channel exec VP of programming Mark Stern says he goes to Beggs’ group time and time again because “you never feel like you’re one of many projects they’re working on. You feel like a priority.” LGTV is producing Sci Fi’s upcoming drama “The Dresden Files” and event series “The Lost Room.”

“We just learned there are some key visual effects in ‘Lost Room’ that we hadn’t anticipated, and they haven’t come to us asking for more money. They just share the same desire to produce the best product possible,” Stern says.

MTV Networks Entertainment group prexy Doug Herzog partnered with the company on Spike TV’s “The Kill Pit,” a heist drama toplining John Leguizamo, after his experience with LGTV on “The Dead Zone,” which he ordered while head of USA.

“They’re smart, incredibly resourceful and unencumbered by studio legacies and history.” With their track record with cablers, Stern isn’t worried about competition from the new low-cost shops at the major studios.

“They can’t compete,” she says. “Structurally, they’re different companies. We have 16 people total, and that includes our international distribution guy, our finance guy, our assistants. We can move much more quickly.”

That means executives see no logic in striking pricey overall deals with producers. Beggs says the few pacts that are in place — one with the Furst Brothers, who produced the hit indie pic “The Cooler” for Lionsgate, and one with the producers of “The Dead Zone” — have grown out of previous successful collaborations.

LGTV also signed Caryn Mandabach to the team to drum up more cable comedy.

“She needed a home with like-minded people, and that’s where we came in, so that deal made sense for us,” Stern says.

Lionsgate has also jumped into the syndication biz, spending a cool $27 million to buy distrib Debmar-Mercury, which distributes “Dead Zone,” “South Park” and the Tyler Perry sitcom “House of Payne.”

And executives are just now beginning to exploit the Lionsgate library for new series. A reality competition based on the movie “Dirty Dancing” is set to premiere on WE TV next year and FX is developing the Oscar-winning pic “Crash” into a weekly drama – a sampling of the range of genres LGTV produces. AMC has also licensed the 50’s set period drama “Mad Men”from the company.

“I’ve been in this long enough to see trendy genres go in and out,” Beggs says. “Our core business is scripted drama, but I’m way too nervous to keep all our eggs in one basket.”

With most cablers now producing their own original series, Feltheimer says the company doesn’t need to play in the Big Five network arena (although the company’s scripted hour “Hidden Palms” is awaiting launch on the CW.)

Says Feltheimer: “We’d rather be a big player in the cabler arena, than a small fish in the broadcast one.”

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