A friend of mine once walked up to me while I was enjoying a cigar at my favorite private cigar club in Beverly Hills and said to me, “My film came out today.” I said, “Really.” He said, “Exactly.”
So therein lies the troubling problem for Producers or Production Companies when they find themselves with a complete lack of control after signing off distribution to another company and hoping for the best. It’s the moment in Hollywood when crossing your fingers comes into play more than using a calculator.
Producers and Production Companies work tirelessly to come in on budget and create something incredible. Then, once the baby is born, they hand it off to the best-dressed stranger and hope they put everything they have into raising the child into a successful box office winner.
I’m going to speculate highly on what follows, but my Spidey Sense is tingling.
Let’s look at the new movie Anna, starring Action Newcomer Sasha Luss.
EuropaCorp, who produced Anna has a film library that includes successful franchises such as “Taken,” “Taxi” and “Transporter”. The company is a public company and the stock has now fallen all the way down to 1 Euro a share.
For EuropaCorp everything hangs on Anna being a success. Lionsgate is the distributor of Anna. They are a great key to the success of the movie by way of significantly by controlling marketing and distribution.
If Anna does well EuropaCorp could have a big turn around. Investors could become
Lionsgate oddly low marketing effort on this high budget movie has for a large part resulted in
This inaction could have a significant impact on EuropaCorp, scaring investors who would, in turn, drive the share price down into the pennies by panic selling. All this is making the company ripe for a takeover at a hugely distressed stock price.
EuropaCorp has a current market cap of 40 million euros. This loss could drive it below its 52 week low of .62. This could force the stock as low as .24 a share. At that price, you could buy EuropaCorp, 100% for 10 million euros.
In May, EuropaCorp confirmed to be in discussion with its creditors and the group Pathé, as part of the restructuring of its debt and the strengthening of its financial capacity by way of capital increase.
Anna was released in France on July 10 by Pathé, as part of the French film studio’s three-year distribution pact with EuropaCorp. Under this deal, Pathé also released Guillaume Canet’s “Little White Lies 2,” which has had a strong run at the French box office.
Pathé is currently in advanced negotiations to take a majority stake in EuropaCorp, but the company is in the middle of some robust discussions on an agreement with EuropaCorp’s junior lender, Vine, over a portion of debt ($90 million) that matures next April, according to a financing source.
With the enormous multi-million loss of Anna, even as it struggles to survive the box office, EuropaCorp has become attractive as a hostile take-over
Pathé could be a player in this scenario. However, Lionsgate also could be waiting in the background ready to strike?
A company like Lionsgate with $284 million in losses this year but a share price which is oddly resilient considering its only trading at half the price it was five years ago, could go after EuropaCorp in a for stock take over. This is of course after EuropaCorp hits .25 a share.
If Lionsgate would have put an ounce of effort into marketing Anna and the movie held its own at the box office, fortunes may have changed dramatically for EuropaCorp. I would think under that scenario, the group Pathé would undoubtedly be more motivated to help the company. Investors would feel more at ease and maybe even begin buying EuropaCorp shares. This would support the share price and possibly also help it to gain some upward price movement.
So, the question that I have no clear answer to but have strong feelings towards is… Could companies like Lionsgate or Pathé gain by setting a movie like Anna out to pasture with seemingly no plans of ever seeing it again?