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Lionsgate to Take Over Distribution of CBS Films’ Wide Releases (EXCLUSIVE)

Lionsgate has struck a deal with CBS Films to distribute the movie company’s wide release movies over the next three years, say sources with knowledge of the matter.

The first film to kick off the agreement is “The DUFF,” a high-school comedy directed by Ari Sandel and starring Mae Whitman and Bella Thorne, slated for release next year. The pact will cover four films annually. Lionsgate will handle international sales on all of the movies except for “The DUFF.”

CBS Films will retain marketing responsibilities for the wide releases and also maintain a small distribution staff to continue releasing specialty films and acquisitions. Lionsgate will collaborate on the marketing. As a result, CBS is cutting five positions among its support staff and in distribution.

Headed by Terry Press, CBS Films plans to spend the money it will save in distribution costs on stepping up production at the company.

The deal extends the business relationship that exists between CBS Films’ corporate parent CBS Corp. and Lionsgate. In March of 2003, CBS bought a 50% stake in Lionsgate’s TV Guide Network and this past September the companies announced they were rebranding the venture under the name POP in the first quarter of 2015 and will aim its programming at pop culture fans.

There is speculation in the industry that the close business ties between CBS Films and Lionsgate could well lead to an eventual merger of Lionsgate and CBS Corp. CBS has a significant amount of cash on hand — it repurchased $2.8 billion of its shares this year through Sept. 30 —  to make an acquisition of Lionsgate and fold CBS Films into the studio. It is no secret that CBS Corp. chief Leslie Moonves has always had his sights on someday owning a movie studio and Lionsgate would certainly fit that bill.

It also helps that Moonves and Lionsgate chief executive officer Jon Feltheimer have been very close friends for years and have mended their rift over Lionsgate launching premium pay cable Epix with MGM and Paramount, which competes with CBS’ Showtime.

Feltheimer has remained mum as to whether Alibaba is buying a controlling stake in the studio following a recent report that  hedge fund manager and Lionsgate co-chairman Mark Rachesky is considering selling his 37.4% stake to the Chinese e-commerce giant.

Thanks largely to Jennifer Lawrence’s “Hunger Games” franchise, Lionsgate has become a serious competitor with the six majors and finished fifth in domestic box office in 2012 and 2013. The third film, “Mockingjay: Part 1” opens Nov. 21 amid expectations that it could take in as much as $1 billion worldwide.

For its part, CBS Films has delivered less than $90 million in domestic grosses in each of the past two years. Its top performer was “Last Vegas” with $62 million last year.

CBS Films began distributing mid-budget films in 2010 under Amy Baer. Press and Wolfgang Hammer took over the top slot in 2012; Hammer departed as co-president last May.

UPDATE at 8:26 a.m. PST – Lionsgate and CBS Films have confirmed the story.

“Making movies is only half of the equation – today’s marketplace demands a strategic approach to marketing and distribution that is fluid and creative, and no company has demonstrated more vision and innovation than Lionsgate,” said CBS Films president Terry Press. “As we build our homegrown slate and expand our efforts in the acquisition space, we’re thrilled to partner with the outstanding Lionsgate team on a plan that provides the flexibility to handle these ambitions.”

“CBS Films has emerged as a creative force that will serve as a commercially exciting and reliable source of quality mainstream theatrical releases for years to come,” said Lionsgate co-chief operating officer and motion picture group president Steve Beeks.  “Our partnership unites two companies with powerful brands, complementary strengths and similar entrepreneurial cultures in a distribution agreement that extends the terrific Lionsgate/CBS relationship.”

(Pictured above: Lionsgate CEO Jon Feltheimer and president and CBS Corp. chief Leslie Moonves)

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