Lionsgate Cites Benefits of Proposed Merger With MGM

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Oct 13, 2010, 04:00 ET

SANTA MONICA, Calif. and VANCOUVER, British Columbia, Oct. 13 /PRNewswire-FirstCall/ -- Lionsgate (NYSE: LGF) ("the Company"), the leading next generation studio, today emphasized the value creation potential of its proposed merger combination with Metro−Goldwyn−Mayer Studios Inc. ("MGM"). The Company filed an Amendment to Schedule 14D-9 with the Securities and Exchange Commission yesterday disclosing that it sent an October 11 proposal to MGM regarding a potential business combination between the two companies. Under the terms of the proposal, the combined company would be owned by shareholders of Lionsgate and creditors of MGM.

"This is a unique, once in a lifetime opportunity to create a dynamic, forward-looking studio that unlocks tremendous potential value for Lionsgate's shareholders and MGM's various stakeholders," said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns. "A Lionsgate merger with MGM is a natural fit that would bring together two of the most powerful libraries in the world, create significant cost savings, consolidate our mutual global channel operations and generate significant incremental revenue and cash flow. It would create a combined entity with enough scale to leverage all of our distribution platforms worldwide."

Lionsgate noted that it believes that its three largest shareholders, Carl Icahn, MHR Fund Management and Capital Research Global Investors, support the merger proposal.

About Lionsgate

Lionsgate is the leading next generation studio with a strong and diversified presence in the production and distribution of motion pictures, television programming, home entertainment, family entertainment, channels, video-on-demand and digitally delivered content. The Company has built a strong television presence in production of prime time cable and broadcast network series, distribution and syndication of programming through Debmar-Mercury and an array of channel assets. Lionsgate currently has 15 shows on more than 10 networks spanning its prime time production, distribution and syndication businesses, including such critically-acclaimed hits as "Mad Men", "Weeds" and "Nurse Jackie" along with new series such as "Blue Mountain State" and "Running Wilde" and the syndication successes "Tyler Perry's House Of Payne", its spinoff "Meet The Browns", "The Wendy Williams Show" and the recently announced "Are We There Yet?".

Its feature film business has generated such recent hits as THE EXPENDABLES, which was #1 at the North American box office for two weeks this past summer, THE LAST EXORCISM, TYLER PERRY'S WHY DID I GET MARRIED TOO?, KICK ASS and the critically-acclaimed PRECIOUS, which won two Academy Awards(R). The Company's home entertainment business has grown to more than 7% market share and is an industry leader in box office-to-DVD revenue conversion rate. Lionsgate handles a prestigious and prolific library of approximately 12,000 motion picture and television titles that is an important source of recurring revenue and serves as the foundation for the growth of the Company's core businesses. The Lionsgate brand remains synonymous with original, daring, quality entertainment in markets around the world.

Forward-Looking Statements

The matters discussed in this press release include forward-looking statements, including those regarding the performance of future fiscal years. Such statements are subject to a number of risks and uncertainties. There can be no assurance that any transaction between the Company and MGM will ever be consummated or that the terms of such a transaction will be as proposed by the Company. In addition, actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including failure to realize expected incremental revenue, cash flow, synergies or other benefits from the possible combination, higher than expected integration costs and expenses of the possible combination, the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films, budget overruns, limitations imposed by our credit facilities, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on June 1, 2010, as amended in the Company's Quarterly Report on Form 10-Q filed with the SEC on August 9, 2010, which risk factors are incorporated herein by reference. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.