As the ink dries on the long-anticipated agreement to merge Trimark Holdings into Lions Gate Entertainment (Daily Variety, June 5), the Trimark majority-owned Web site CinemaNow has emerged as a potential destination for many of the employees who inevitably will be laid off because of the merger.
“It’s too early to say specifically where the redundancies are,” said Lions Gate vice chairman and CEO Jon Feltheimer, who announced the deal with Trimark chairman Mark Amin. “We are looking for savings and that’s something to do over the next few months as we try to preserve maximum revenue.”
Under the merger agreement, Lions Gate will pay at least $83 million for Trimark. That sum includes $47 million in stock and cash and the assumption of $36 million in Trimark debt.
Lions Gate has agreed to pay $4.50 in cash plus two shares of Lions Gate Entertainment stock for each share of Trimark stock. There are nearly 4.7 million Trimark shares outstanding. A stock adjustment provision assures that the minimum value of the buyout will be $10 per Trimark share when the deal closes.
The deal is subject to closing of a $200 million credit line from Chase Manhattan Bank as well as regulatory and shareholder approval by both parties.
CinemaNow is a streaming media site on which filmmakers can create, market, exhibit and distribute films. Viewers can also access exclusive, original content titles from the Trimark Pictures library, a selection of exclusively licensed titles and, soon, films from the Lions Gate library.
Trimark launched CinemaNow in August. In January, a group of investors that included Feltheimer, who was then executive VP of Sony Pictures Entertainment; Hollywood Stock Exchange co-founder Michael Burns; Harvey Entertainment exec Roger Burlage; and Blockbuster Video paid $2.3 million for a 15% stake in CinemaNow.
Amin will join the Lions Gate board of directors and will be appointed as a vice chairman of Lions Gate. Feltheimer and Burns also hold that title.
Amin acknowledged he had turned down a number of suitors in previous years.
“Being approached is not necessarily a good thing when it’s not the right player,” he said. “A couple of years ago, Trimark was not doing that well. We had lost a lot of money and it was not a good time to make a deal.”
By the time Trimark was approached by Lions Gate late last year, however, Trimark had paid down much of its debt and was beginning to show profits in its quarterly statements.
“We thought it was really good timing,” said Amin. “We could create a much more substantive company that would get more attention on Wall Street. (Lions Gate) was a great fit. Our areas of strength really complement each other.”
Primary among Trimark’s charms was its 650-title film library as well as its Trimark Home Video division, one of the industry’s largest homevideo companies. Amin also singled out Trimark’s international sales division, the broadband distribution capability of CinemaNow and Trimark’s ability to produce specialty and genre pics.
“Trimark is a nice brand in the lowbudget specialty genre arena,” said Feltheimer. “We will benefit from their production expertise.”
As for Lions Gate’s own production goals, Feltheimer said it was likely that Lions Gate Films Production president Michael Paseornek will move to Los Angeles from New York, while Lions Gate Films co-president Mark Urman will remain to oversee a smaller Lions Gate presence in Gotham that will focus on press and marketing.
Theatrical features slated for release under Trimark Pictures are the Trimark productions “Skipped Parts” starring Jennifer Jason Leigh and “Rules of Attraction” starring Gretchen Mol and Samantha Mathis, as well as the acquisition “The St. Francisville Experiment.”
The deal was announced after the close of trading Tuesday. Lions Gate stock closed at $2.69, up 31cents while Trimark closed at $8.22, up 22 cents.