{"id":4773,"date":"2013-02-27T00:00:00","date_gmt":"2013-02-27T00:00:00","guid":{"rendered":"http:\/\/worldscreen.com\/tvusa\/2013\/02\/27\/exclusive-interview-lionsgates-jon-feltheimer\/"},"modified":"2013-02-27T00:00:00","modified_gmt":"2013-02-27T00:00:00","slug":"exclusive-interview-lionsgates-jon-feltheimer","status":"publish","type":"post","link":"https:\/\/worldscreen.com\/tvusa\/exclusive-interview-lionsgates-jon-feltheimer\/","title":{"rendered":"Exclusive Interview: Lionsgate&#8217;s Jon Feltheimer"},"content":{"rendered":"<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">PREMIUM: Jon Feltheimer, the co-chairman and CEO of Lionsgate, talks to World Screen about how he is always looking for ways to grow his businesses and scout for new opportunities to produce and distribute quality content. <\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Tell us about the Summit Entertainment acquisition and what it brings to Lionsgate.<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> 2012 was a transformative year for Lionsgate as we acquired Summit and launched <i>The Hunger Games<\/i> franchise within a few months of each other.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">The acquisition of Summit gave us the critical mass to negotiate higher settlement rates with our exhibition partners, structure output deals around the world for our films, negotiate a new domestic distribution agreement for our DVD releases and achieve greater efficiencies in our media buying.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">In the past six months, we&rsquo;ve created our own global distribution infrastructure by establishing output deals with blue-chip partners covering 80 percent of the world&rsquo;s movie-going population outside India and China, substantially mitigating our risk and increasing our long-term visibility in our international theatrical business.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Our integration of Lionsgate and Summit is substantially complete, and we have proven executives like Rob Friedman, Patrick Wachsberger and Erik Feig, all originally from Summit, leading our film business.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We structured the deal on financial terms that the Street found very attractive, and we paid down the $500 million Summit term loan more than two years early, underscoring our ability to rapidly deliver our balance sheet with <i>The Hunger Games<\/i> and <i>Twilight<\/i> cash flows. Overall, we&rsquo;ve generated approximately $75 million to $100 million in annual margin and cost savings from our integration synergies.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">When you greenlit <i>The Hunger Games<\/i>, did you imagine it would perform as well as it did?<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> We bought <i>The Hunger Games<\/i> when only 150,000 copies of the first book were in print. There was no way we could anticipate that there would be over 50 million copies of the books in print today or that the first <i>Hunger Games<\/i> film would gross over $400 million domestically, becoming the 13th highest-grossing film of all time.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">The film clearly struck a resonant chord in our popular culture, but much of its success was attributable to careful execution. We had a great cast, beginning with Jennifer Lawrence, and an innovative marketing campaign that included over 300 digital partners and made unprecedented use of social media.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">As you know, we&rsquo;ve been focused on building strong brands and franchises from our inception&mdash;<i>Saw<\/i>, Tyler Perry, <i>Dirty Dancing<\/i>, <i>Mad Men<\/i>&mdash;repeatable brands that can be marketed cost-effectively. If you cultivate your brands carefully, sooner or later some of them will break out on a worldwide level. I like what one of our analysts said&mdash;we&rsquo;re an overnight sensation that was 12 years in the making.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We&rsquo;re focused on maintaining our leadership in the young adult space by cultivating new brands like <i>Ender&rsquo;s Game<\/i> and <i>Divergent<\/i>, which will be opening in <i>The Hunger Games<\/i> slot in March 2014.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">What is fueling the strong performance of Lionsgate&rsquo;s feature-film business?<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We continue to take a portfolio approach to our feature-film business. Our slate is driven by a combination of tentpole franchises, strong brands with worldwide commercial potential and critically exciting, daring films.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Although <i>The Hunger Games<\/i> and <i>Twilight: Breaking Dawn&mdash;Part 2<\/i> drove our worldwide box office of more than $2.5 billion last year, a total of eight films contributed to our success with more than $40 million apiece at the domestic box office, including <i>The Expendables 2<\/i>, <i>Sinister<\/i>, <i>The Possession<\/i>, <i>Tyler Perry&rsquo;s Madea&rsquo;s Witness Protection<\/i>, <i>What to Expect When You&rsquo;re Expecting<\/i> and <i>Cabin in the Woods<\/i>.&nbsp;Another two films, <i>The Impossible<\/i> and <i>Step Up Revolution<\/i>, each grossed more than $100 million worldwide. We&rsquo;re continuing our momentum early in 2013 by achieving box-office success with <i>Warm Bodies<\/i> and <i>Texas Chainsaw 3D<\/i>, reflecting our leadership in the young adult and horror genres.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We keep costs low, but the primary financial metric we look at is &ldquo;the gap&rdquo; on each film&mdash;production capital at risk after international presales and before our marketing spend. The average &ldquo;gap&rdquo; on each of our films this year is approximately $15 million, only slightly higher than what it&rsquo;s been the past several years, even with <i>The Hunger Games<\/i> and <i>Twilight: Breaking Dawn 2<\/i> included. <\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Tell us about Pantelion and its plans for film and television product for the U.S. Hispanic market.<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We believe that there is a great opportunity for films and television shows with Hispanic elements aimed at the more than 50 million Latino consumers in the U.S.&nbsp;This is the fastest-growing segment of the U.S. movie-going population and TV audience, and we have the perfect partner in Televisa to help reach them.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We formed Pantelion two years ago to bring a full slate of English- and Spanish-language films to the marketplace on a consistent basis.&nbsp;Although it takes time to build a brand and an audience, we&rsquo;ve already released successful films like <i>From Prada to Nada,<\/i> which we&rsquo;re also developing as a TV series, and <i>Casa de Mi Padre<\/i>.&nbsp;Our efforts have been successful enough to expand our alliance with Televisa into our South Shore television partnership, where we&rsquo;re developing TV series like <i>Terminales<\/i> for ABC Family.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We believe there is a tremendous appetite for content in the Hispanic market not only in the U.S. but throughout Latin America as well.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Latin America has become a major market for us. We recently expanded our partnership with IDC, a company in which we have a 50-percent investment, to encompass both Lionsgate and Summit content in the region. IDC did a great job distributing <i>Twilight: Breaking Dawn&mdash;Part 2<\/i>, which grossed $125 million at the Latin American box office, the best performance ever outside the traditional major studios, and <i>The Impossible<\/i> has been a hit for us in Latin America as well.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We also recently signed a pay-TV agreement with Netflix for future <i>Hunger Games<\/i> installments, other upcoming Lionsgate releases and library product in Latin America. With distribution partners like IDC, Televisa and Netflix for our content, we&rsquo;re now generating revenue and profit from Latin America several orders of magnitude greater than we did just a couple years ago.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Tell us about <i>Orange is the New Black<\/i>, an upcoming original series for Netflix.<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">This is basically a traditional cable deal with a nontraditional partner. The show, about a young PR executive whose past comes back to haunt her, is being created by Jenji Kohan, with whom we&rsquo;ve had a very successful eight-year collaboration on <i>Weeds<\/i>.&nbsp;Netflix is paying us a generous license fee, and their plan is to make all 13 episodes available to their subscribers simultaneously in the spring. This is another example of new consumption patterns like &ldquo;binge viewing&rdquo; driving demand, and we&rsquo;re capitalizing on the opportunity to create and distribute programming that is custom-tailored to the way people watch television today. We&rsquo;ve been a leader in supplying programming to new and emerging cable channels and, by continuing to think outside the box, we expect to be a leader in delivering content to digital platforms as well.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">With so much time-shifted viewing, what should the television industry be doing to provide better data, for example C3 and C7 ratings, about what viewers are watching?<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">There has been a paradigm shift in the way audiences consume television content. As I&rsquo;ve said before, we&rsquo;re operating in another golden age of appointment television, but this time around consumers are making all the appointments. When <i>Anger Management<\/i> had its initial 10-episode run last summer, it was one of the most DVR&rsquo;d shows on television. <i>Nashville<\/i> is one of the most DVR&rsquo;d shows today. Nielsen is heading in the right direction in incorporating C3 and C7 ratings, an initiative that needs to extend into measuring our PC and mobile audiences as well in order to build new programming and advertising models. <\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">I wear several hats on this subject&mdash;content creator, distributor and also media buyer. We want the success of our TV shows to be measured by the entire universe of viewers watching them across multiple platforms, not just traditional overnight ratings. But as a media buyer, if I&rsquo;m buying ad time on a show that has its live airing on Wednesday night but will generate much of its viewership after one of our films has opened on Friday, this needs to be factored into the cost equation as well. <\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">How should U.S. cable operators improve their VOD services and addressable advertising capabilities?<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We&rsquo;re all adapting to shifting consumer tastes. Cable operators worked closely with us in refining a specialty theatrical\/VOD day-and-date model that created a market for films like <i>Margin Call<\/i> and <i>Arbitrage<\/i>, which we released through our Roadside Attractions platform. <i>Arbitrage<\/i> grossed nearly $8 million at the box office and generated nearly $14 million in consumer VOD spend&mdash;an unprecedented VOD-to-box office ratio&mdash;and neither window cannibalized the other.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Clearly cable operators need a better user interface. At CTAM, [Cable &amp; Telecommunications Association for Marketing] I told the story of being disappointed by the performance of our film <i>What to Expect When You&rsquo;re Expecting<\/i> on VOD. Our head of distribution pointed out to me that the title started with a &ldquo;W,&rdquo; and the film underperformed simply because online consumers don&rsquo;t bother to scroll all the way down to the W&rsquo;s.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">With 20\/20 hindsight, we should have released the film on VOD as &ldquo;A Movie About What to Expect When You&rsquo;re Expecting.&rdquo; But we certainly learned our lesson&hellip;our next VOD release was <i>Arbitrage<\/i>, and look how it did.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">The moral of the story is that we need to work together to create a better system than allowing the consumer to express his programming preferences for titles according to the alphabetical order in which they&rsquo;re presented.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We need to be more proactive about dynamic ad insertion as well. Our FEARNet channel has 30 million online subscribers but, without effective dynamic ad insertion, we can&rsquo;t monetize them. Our advertising models need to keep pace with the evolution of our content businesses in a digital environment.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">The DVD business has undergone significant challenges. How are Lionsgate&rsquo;s film and television DVD titles faring? What growth opportunities remain in the DVD market? <\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> We look at all facets of our home-entertainment business as an integrated whole&mdash;packaged media, on demand and digital. This business is growing overall, and we see increasing evidence that digital revenues will be incremental in terms of revenue and, even more importantly, margin.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Industry-wide, packaged media is stabilizing, VOD continues to grow and electronic sell-through, driven in part by Ultraviolet, is finally beginning to take off.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Our own home-entertainment business is being driven by our strong content on several fronts. We had two of the top four DVD titles in 2012 with <i>The Hunger Games<\/i> and <i>Twilight: Breaking Dawn&mdash;Part 1<\/i> and they performed well not only in packaged media but on digital and on-demand platforms as well. At the same time, our managed-brands business, led by our leadership in fitness, children&rsquo;s and direct-to-DVD titles, has quietly grown into a $250 million a year business. <\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We&rsquo;re continuing to lead the industry in DVD-to-box-office conversion rate, and we&rsquo;re focused on translating this leadership into VOD-to-box office and digital-to-box-office conversion rates as well.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Our library has achieved seven straight years of growth, and it&rsquo;s interesting to see how the composition of library sales has changed during that time. Five years ago, packaged media accounted for 70 percent of our library revenue. Today it accounts for 38 percent of our library sales. As packaged media levels off, digital, television and international are driving library growth and significantly increasing our margins in the process.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">As we look for the right balance among the packaged media, on demand and digital components of our home-entertainment business, we&rsquo;ll continue to explore innovative windowing and pricing strategies like day-and-date theatrical\/VOD releases and early EST windows to customize our content to changing consumer needs.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> Tell us about Lionsgate&rsquo;s portfolio of channels. How are they performing?<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> Our channel business is a natural outgrowth of our content leadership. Our boutique portfolio comprises branded channels targeted at demographics we know well and operated with strong partners.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Three and a half years after its launch, EPIX brings together a mix of traditional MSOs and digital players, reaches 10 million subscribers, attracts an average subscriber a decade younger than its competitors due to its technological leadership and generates approximately $75 million in annual EBITDA.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">EPIX is the only pay channel showing <i>The Hunger Games<\/i> and <i>The<\/i> <i>Avengers<\/i> this winter, and we believe the breadth and depth of our content will further enhance the value proposition we offer to the remaining MSOs who don&rsquo;t carry us, as well as additional digital partners. <\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We&rsquo;re very pleased with the performance of our Celestial Tiger Entertainment (CTE) platform in Asia, where we&rsquo;re partnered with Saban Capital and Astro&rsquo;s Celestial Pictures. We just announced the launch of three of our branded channels to 3.5 million households in Thailand, and we operate a total of six branded channels on 26 platforms in 11 Asian territories. CTE gives us valuable real estate in Asia, with proximity to the China market and the $25 billion Asian pay-TV business. <\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FEARnet is a leading VOD and Internet platform and is beginning to gain traction as a linear channel as well. TVGuide Network continues its transformation from a navigation device to an entertainment channel. It has achieved full screen penetration in 83 percent of its households and extended its distribution footprint, and we just gave it a rebranding tweak to accelerate its evolution into an entertainment destination with its own distinct identity.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Linear channels continue to be challenged by on-demand viewing. Technology continues to disrupt business models. What are the best ways to navigate today&rsquo;s evolving media landscape?<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> Viewers are offered unprecedented choice today, and they appear to be taking advantage of it. This isn&rsquo;t an either\/or scenario. Audiences are still consuming their content traditionally on the communal family TV sets as well as adopting new viewing habits tailored to PC&rsquo;s, laptops and mobile platforms.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Consumers want to take advantage of the full palette of choices available to them so, although we&rsquo;ve seen some cord shaving and new consumption patterns that could be considered cord rewiring, we haven&rsquo;t seen rampant cord cutting. The subscriber bases of most of the major pay-TV channels are increasing, and the number of viewers actually cancelling their pay-TV subscriptions remains a small minority.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">In terms of navigating a marketplace that is being reshaped by disruptive technologies, we believe this plays to our strength. Change is part of our corporate DNA. We&rsquo;ve embraced disruptive technologies from our inception and we like to think of ourselves as a disruptive company.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Here are a few specific examples:<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We&rsquo;ve embraced social media in our marketing campaigns from <i>Saw<\/i> to <i>Hunger Games<\/i>, and we tapped our base of 200 million Facebook friends in marketing our TV series <i>Nashville<\/i> last fall and opening our feature film <i>Warm Bodies<\/i>.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We have a long history of creating content for new and emerging platforms, first in the cable world and more recently in the digital marketplace. We&rsquo;re producing <i>Orange is the New Black<\/i> for Netflix, and you can expect to see more of these partnerships in the future.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We will continue to be first movers in creating new business models to capitalize on a fast-changing marketplace&mdash;launching channels like EPIX, which brings together traditional MSOs and digital partners, and our BeFit fitness channel on YouTube&hellip; developing new windowing strategies like our day-and-date theatrical\/VOD releases&hellip; and generating incremental revenue through partnerships like our multifaceted relationship with Netflix in the U.S., the U.K. and Latin America.<\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> In which areas you see potential for growth in Lionsgate&rsquo;s international businesses?<\/span><\/span><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Continued growth of the international market provides tremendous upside to our content businesses. We&rsquo;re focused on three specific growth opportunities internationally. <\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">The emergence of digital platforms like Netflix, Amazon, iTunes and Xbox is helping to drive international growth and creating competition for content in many markets where little or no competition previously existed. We&rsquo;ve structured multiplatform deals with these digital players for all types of content&mdash;films, TV programming and library product. Our recent international digital licensing deals will add tens of millions of dollars of incremental EBITDA to our bottom line.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">New territories like Russia and Latin America have been breakout markets for us, and we believe that China has the potential to follow suit. With our release of <i>The Hunger Games<\/i> and our content licensing deals, we generated several million dollars from China this year compared to pennies just a few years ago. We expect this trend to continue, and we&rsquo;re also looking at India, another vast, underserved market.<\/span><\/span><\/p>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We&rsquo;re starting to achieve significant benefits from self-distribution in the U.K. Lionsgate UK has had a record year in box office and market share and will generate nearly $150 million in revenue this year driven by a combination of Lionsgate blockbusters like <i>The Hunger Games<\/i>, homegrown Lionsgate UK hits like <i>Salmon Fishing in the Yemen<\/i> and third-party acquisitions such as <i>Magic Mike<\/i>. Lionsgate UK also has a great pay-TV deal with Netflix. <\/span><\/span><\/p>\n<p><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Looking at <i>Mad Men<\/i>, what innovative ways did you use to piece together various business partners to finance <i>Mad Men<\/i>?<\/span><\/span><span style=\"font-family: Verdana\"><br \/>\n<strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> We focused on cable programming from our inception because this was a growing market that was relatively underserved by the major studios. Cable audiences are typically smaller than broadcast audiences so, in order to build a more profitable business model, we aggregated eyeballs across multiple platforms and orchestrated windows that served the needs of all of our partners. <\/span><\/span><\/span><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> <\/span><\/span><\/p>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">As part of this process, we&rsquo;ve been aggressive about identifying windows on digital and traditional platforms alike. As I mentioned at the CTAM [Cable &amp; Telecommunications Association for Marketing] convention, our economic calculus on <i>Mad Men <\/i>includes not only a very generous license fee from AMC but revenue from international sales, DVD, on-demand platforms like iTunes and Amazon and a unique syndication deal with Netflix. Most people don&rsquo;t realize that <i>Mad Men <\/i>will generate approximately $150 million in home-entertainment revenue alone.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">The new paradigm in today&rsquo;s entertainment marketplace is being innovative in extracting maximum value from entertainment audiences that are divided into smaller and smaller market segments but generate greater revenue overall as demand for content continues to grow.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">How have you been growing and improving your television financing model?<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> We&rsquo;ve been diversifying our television financing model as we create and deliver programming to a growing spectrum of traditional and digital buyers. For example, we&rsquo;re partnered with ABC to mitigate risk in producing <i>Nashville<\/i> but, in success, the upside will include music revenue from soundtracks, concert tours and merchandising. Digital tracks from the show have already sold nearly 1.5 million downloads to date.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We&rsquo;ve pioneered a different approach for shows incorporating our 10+90 business model like <i>Anger Management<\/i> and the Tyler Perry shows, where networks pay slightly lower license fees while we achieve the benefits of unprecedented orders of 100 episodes up front and an accelerated path to syndication. A show starring George Lopez and another show with the &ldquo;Odd Couple&rdquo; pairing of Martin Lawrence and Kelsey Grammar are next up in our pipeline of programming using the 10+90 model.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">We have still another business model for <i>Orange is the New Black<\/i> that we&rsquo;re producing for Netflix, which needs to create unique windows for its domestic and international audiences and will make all 13 episodes of the first season available simultaneously in the spring.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">As I mentioned before, our approach to cable shows like <i>Mad Men<\/i>, <i>Weeds <\/i>and <i>Nurse Jackie<\/i> is to build a profitable business model by aggregating eyeballs across multiple platforms.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">The common thread is that we&rsquo;re always focused on mitigating risk while positioning ourselves to capitalize on upside in success, and we&rsquo;re always looking for ways to monetize our content on new and emerging platforms. In other words, we take the risk out of the financial side so we can be more daring on the creative side.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">WS: <\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">Tell us about Lionsgate&rsquo;s relationship with Charlie Sheen. What fueled your belief in him, even after the &ldquo;melt down&rdquo;? And how did you bring him on board for <i>Anger Management<\/i>?<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FELTHEIMER:<\/span><\/span><\/strong><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> Charlie Sheen is one of the comedy superstars of our generation and his track record over ten years of shows like <i>Two and a Half Men <\/i>and <i>Spin City<\/i> speaks for itself. <i>Anger Management<\/i> is an example of our willingness to take a little more overall risk for what we consider to be significant upside.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">In terms of finding the right vehicle for Charlie, all the pieces came together. We had longstanding relationships with Joe Roth, who produced the original movie <i>Anger Management<\/i>, and Charlie&rsquo;s manager, Mark Burg, who partnered with us on the <i>Saw<\/i> franchise. Bruce Helford is a great show runner. We loved the <i>Anger Management<\/i> concept, and it was tailor made for our 10+90 business model, which we had already used successfully. Finally, we found the ideal network partner in FX.<\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">FX has picked up an additional 90 episodes of the series, which returned to the air in January. Our Debmar-Mercury team has already sold the show into syndication in approximately 70 percent of the country, including the Fox station group, and the series has generated international sales of nearly a million dollars per episode. <\/span><\/span><\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\">&nbsp;<\/div>\n<div style=\"margin-bottom:0in;margin-bottom:.0001pt;line-height:normal\"><span style=\"font-size: small\"><span style=\"font-family: Verdana\">B<\/span><\/span>ringing Charlie on board was a collaborative effort involving Kevin Beggs and Sandra Stern, who run our TV group, Ira Bernstein and Mort Marcus at Debmar-Mercury and me. I met with Charlie and told him about the <i>Anger Management<\/i> concept and his response was, &ldquo;Dude, it&rsquo;s already been done. It was a movie.&rdquo; When I explained to him that we wanted to do a TV series, he loved the idea.<span style=\"font-size: small\"><span style=\"font-family: Verdana\">      <br \/>\n<\/span><\/span><\/div>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<div><span style=\"font-size: small\"><span style=\"font-family: Verdana\">&nbsp;<\/span><\/span><\/div>\n<div>&nbsp;<\/div>\n<p><span style=\"font-size: small\"><span style=\"font-family: Verdana\"> <\/span><\/span><\/p>\n<div>&nbsp;<\/div>\n<p><span style=\"font-family: Verdana\"><\/p>\n<div>&nbsp;<\/div>\n<p><\/span><span style=\"font-size: small\"><span style=\"font-family: Verdana\">      <br \/>\n<\/span><\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>PREMIUM: Jon Feltheimer, the co-chairman and CEO of Lionsgate, talks to World Screen about how he is always looking for ways to grow his businesses and scout for new opportunities to produce and distribute quality content. WS: Tell us about the Summit Entertainment acquisition and what it brings to Lionsgate. FELTHEIMER: 2012 was a transformative &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[69],"tags":[],"class_list":["post-4773","post","type-post","status-publish","format-standard","","category-top-stories"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Exclusive Interview: Lionsgate&#039;s Jon Feltheimer<\/title>\n<meta name=\"description\" content=\"Exclusive Interview: Lionsgate&#039;s Jon Feltheimer. PREMIUM, February 27: Jon Feltheimer, the co-chairman and CEO of Lionsgate, talks to World Screen Newsflash about how he is always looking for ways to grow his businesses and scout for new opportunities to produce and distribute quality content. . 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