Minimajor eliminates 45 job slots
Amid a tightening economy and slowing DVD sales, Lionsgate is cutting 8% of its staff, trimming the number of job slots by 45 to about 500.
The mini-major had no comment about the cuts, which include layoffs of 27 rank-and-file staffers, 10 staffers moved into consulting slots, and eight posts remaining unfilled. The cuts come four months after Lionsgate eliminated 41 slots (Daily Variety, Nov. 10).
The two rounds of work force reductions are aimed at generating $15 million to $20 million in annual savings as part of a cost-reduction strategy initiated last summer, when it imposed a hiring freeze. The job cuts will leave annual operating costs at about $120 million.
The move comes with Lionsgate under pressure to reduce expenses from Carl Icahn, its third-largest shareholder with 14.5%. Talks between Icahn and Lionsgate about the billionaire obtaining board seats collapsed earlier this month, leading to Icahn making an offer for $350 million of Lionsgate debt.
On Thursday, Lionsgate’s board of directors decided to express no opinion and remain neutral in regard to Icahn’s tender offer. A statement said the board “strongly urged” debt holders to consider several risk factors before agreeing to sell to Icahn, whose offer expires April 20.
The risks, according to the board, include the fact that a sale could double Icahn’s current equity stake to about 29%, putting the company’s credit facility at risk of default.
Lionsgate reported a $93.4 million quarterly loss on Feb. 9 and has indicated it plans to lower costs by making fewer movies. Its “Tyler Perry’s Madea Goes to Jail” has grossed $89 million and its “The Haunting in Connecticut” opened solidly with $23 million over the weekend.
The company’s TV division produces “Mad Men” and “Weeds.” Its library contains more than 8,000 films and 4,000 TV shows.
Lionsgate also had no comment about negotiations with Relativity Media about a possible distribution pact under which Lionsgate would handle up to four films a year.