Lionsgate has taken a majority stake in management-production powerhouse 3 Arts Entertainment, a deal that reflects in the entertainment industry’s push to marry premium content providers with global distribution assets.
Lionsgate said 3 Arts would continue to be led by partners Erwin Stoff, Howard Klein, Michael Rotenberg, Molly Madden, Dave Becky, David Miner, and Nick Frenkel. The company was founded in 1991 by Stoff, Klein and Rotenberg. Lionsgate said it would assemble an operating board to oversee the company.
“We’re excited to be partnering with a best-in-class talent management company that shares our entrepreneurial culture and vision for the future,” said Lionsgate CEO Jon Feltheimer. “This deal checks all the boxes — a strategic and accretive transaction for our shareholders and a win/win partnership for both companies. It enables us to deepen our already successful relationship with 3 Arts and allows them to offer a richer palette of opportunities to their clients.”
Financial details of the deal were not disclosed.
The pact will give Lionsgate a pipeline to 3 Arts impressive roster of stars, writers, directors, and producers. The chase for creative talent has intensified in the past few years amid exponential growth in the demand for original content, fueled by upstart streaming platforms around the world. Lionsgate hopes the closer association with 3 Arts will give it an advantage in assembling projects and generally gaining access to talent.
Top talent agencies and management firms have been bringing in outside investors during the past decade to fuel business ambitions, notably at WME and CAA. But the Lionsgate-3 Arts union is the first such direct investment in a talent representation firm by a major studio. The deal does raise the specter of conflict of interest concerns for 3 Arts managers and their fiduciary responsibilities to clients.
“We’re thrilled to be partnering with one of the most dynamic and innovative entertainment companies in the business. Every day our clients are asking about the changing landscape, and this venture will create enormous opportunities to harness Lionsgate’s areas of expertise to give clients a competitive edge.”
The long list of TV series affiliated with 3 Arts in recent years includes “The Office,” “30 Rock,” “Silicon Valley,” “The Mindy Project,” “Parks and Recreation,” “Insecure,” “American Vandal” and “Man With a Plan.”
The deal was negotiated for Lionsgate by TV group chief operating officer Laura Kennedy, with Robert Haymer of Latham and Watkins also repping the studio. Moelis & Co., Alan Epstein at Venable and Craig Jacobson at Hansen Jacobson repped 3 Arts.