Partners huddle of cable net's ownership

One of the many questions surrounding the fate of MGM is what will become of the Lion’s stake in the fledging pay cabler Epix.

Viacom, Lionsgate and MGM joined forces two years ago to launch a feevee outlet stocked with their own movies after all three companies faced a huge cut in the fees they were receiving from their incumbent pay TV partner, Showtime.

MGM at present is contractually bound to provide new release and library titles to Epix, which bowed in late October, and absorb operating costs as an equity partner in the venture. (Viacom is believed to have a slightly larger stake in Epix than Lionsgate or the Lion.)

MGM certainly didn’t deliver much on the new-release front in 2009, but its library titles (think Bond, UA classics, etc.) are a big part of Epix’s bread and butter. With MGM on the auction block — the deadline for the first round of bids was Jan. 15 — it’s entirely unclear what will happen to the Lion’s vault of 5,000 pics. It could be carved up by several bidders, or perhaps another major will buy all the films lock, stock and celluloid.

A new owner or owners would be bound by the Lion’s preexisting multi-year commitment to deliver the titles to Epix, but the question of MGM’s equity interest is another story. Viacom and Lionsgate could wind up absorbing larger shares of company. Epix is a gamble for the partners because they opted to forgo output deals for movies with an outside outlet in favor of investing in their own service.

Epix has had a rough time getting off the ground with cable and satellite operators, who haven’t been eager to add another pay TV player to their clogged systems. But things are starting to look up. Epix inked a deal this month with Cox Communications, the nation’s third-largest cable operator, which will make the channel and its online counterpart available to more than 5 million subscribers in April. It also recently cut a deal with cabler Mediacom, which has about 1.2 million subs.

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