BUSINESS

The Hunger Games: Canada's Lions Gate Catapults To The Big Time With Record-Breaking Film

03/26/2012 12:41 EDT | Updated 03/26/2012 12:43 EDT
AP

The box office record-shattering opening of The Hunger Games this weekend is catapulting a Vancouver-born company, now headquartered in California, into the spotlight as a major player in Hollywood.

Lions Gate’s dystopian adventure film, based on the Suzanne Collins novel, raked in $155 million in North America this weekend, making it the third-largest grossing premiere of all time, and the largest for a non-sequel. (The only movies to have done better are The Dark Knight in 2008 and Harry Potter And The Deathly Hallows Part 2 in 2011.)

The company’s shares jumped 4 per cent on Monday morning, in reaction to the huge ticket sales numbers. That’s on top of a 33-per-cent increase in Lions Gate shares over the past six weeks, as buzz surrounding The Hunger Games grew.

Lions Gate Entertainment … has already emerged as the big entertainment industry winner of 2012,” writes Karl Taro at Bloomberg. “The independent, Santa Monica (Calif.) studio … has emerged as a pop-culture and financial force unrivaled in Hollywood.”

Taro argues that Lions Gate has hit a milestone by producing The Hunger Games -- a movie franchise that can produce sequels nearly guaranteed to rake in profits. And the company’s purchase this past January of Summit Entertainment, which owns the Twilight series, ensures “that Lion’s Gate will not only compete but perhaps take the lead” in move franchises, Taro adds.

That’s an unparalleled success for a film company of Canadian origin, surpassing even the success of Alliance Atlantis and its hit TV franchise CSI.

And it’s an impressively fast rise for a company that was set up in Vancouver 15 years ago, by entrepreneur Frank Giustra, to cash in on the boom in Hollywood productions filming in British Columbia.

"The panacea in the movie business is to find franchises," Lions Gate vice-chairman Michael Burns said, as quoted at the Globe and Mail. "The idea that we can create some predictability around the most unpredictable part of our business is fantastic."

Though it began in Vancouver, Lions Gate did not spend much time focused on Canadian productions. With its 2000 production of American Psycho and its 2004 distribution of Michael Moore’s documentary Fahrenheit 9/11 -- a movie the large Hollywood studios didn’t want to touch -- the company moved into a unique niche: that fo a "rebel" film studio, producing films too controversial for the big players.

On its television side it has been equally edgy, producing the hit AMC series Mad Men and the FX network’s long-running hit about the suburban marijuana business, Weeds.

The company has also been busy accumulating a large portfolio of old and new movie and TV properties. Its purchase early on of Artisan Entertainment gave it the beginning of a large catalogue that now includes TV shows Will & Grace, The Biggest Loser and Fraggle Rock.

Accumulating that prtfolio has not come without cost -- the company racked up a debt of $1.1 billion, causing it to post losses for the past four fiscal years.

But with an estimated value of $2 billion U.S., and two of the most successful film franchises of recent years, the company appears to be in good shape going forward.

“I think they will continue to make acquisitions, not be acquired themselves,” Gordon Crawford, senior VP of Capital Research Global Investors, told Bloomberg. “I think they’re going to be a major some day.”

That day may already have arrived.

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