More woes for the recently battered Lionsgate: Investors, including Goldman Sachs, pulled out of a deal to finance several of the independent studio’s films, forcing Lionsgate to pay for its last two movies and its upcoming Tyler Perry comedy.
LA Times: The loss of funding from the company’s Goldman Sachs-led Pride Pictures facility caused a “significant, unexpected shortfall of $65 million in free cash flow,” Lionsgate Chief Executive Jon Feltheimer said Tuesday.
Going forward, Lionsgate will be forced to rely more heavily on self-funding its movies and bringing in partners where it can on a film-by-film basis, as it had done in years past…
Pride’s pullback was largely triggered by the continued underperformance of films in the last two quarters, according to a Lionsgate spokesman.
Those include second-quarter releases “My Best Friend’s Girl,” “Bangkok Dangerous” and “Disaster Movie,” which combined grossed less than $50 million domestically.
Pride is merely the latest high-profile Wall Street film-financing deal to collapse, albeit in a less spectacular fashion than several similar arrangements. Starting in 2004, Wall Street banks and hedge funds became the go-to source for movie funding, with everyone from Merrill Lynch to Citigroup to Citadel willing to invest in Hollywood. Over the past year or so, though, these pools of money have dried up and investors disappointed with early deals have gotten litigious.
At least in Lionsgate’s case, no one’s suing anyone over this deal—yet.