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Film Studio Lionsgate Roars Into Cable

9/12/2008 8:00 PM Eastern

Next week, Mad Men could make Emmy history. If the program wins as best TV drama, it will become the first basic-cable series ever to nab an award in that category.

It would be a bona fide coup for Lionsgate, validating the movie studio’s expansion into the television business. Best known for its eclectic array of films, ranging from the bloody Saw horror franchise to artsy flicks like Monster’s Ball, Lionsgate hit TV’s Emmy Awards-nod jackpot this year, with 19 nominations.

Mad Men, which Lionsgate produces in association with AMC, received 16 nominations in total, the most for any drama series this year. And Weeds, which Lionsgate co-produces with Showtime, garnered three. The 60th Primetime Emmy Awards ceremony is Sept. 21.

But Mad Men, which AMC is expected to pick up for a third season, is one of several ambitious projects underway as Lionsgate ratchets up its TV efforts, which hinge on savvy, cost-efficient financing. Its story offers a glimpse of how one studio is making its projects pay off on several platforms.

The scripted series Crash, based on the 2006 Academy Award-winning film, debuts on Starz Oct. 17. And Nurse Jackie, a dark half-hour comedy starring Sopranos Emmy winner Edie Falco, premieres on Showtime next year. Lionsgate is co-producing those two shows with Starz and Showtime, respectively.

In addition, Lionsgate subsidiary Debmar-Mercury and partner Ish Entertainment are tackling the sitcom and reality-TV genres for the company. Debmar-Mercury distributes Tyler Perry’s House of Payne, the hit sitcom on TBS, and in January it will deliver Meet the Browns, a TV spin-off based on the hit movie, to the “Very Funny” network.

SOURCE: Lionsgate, company reports.
Films: The Saw franchise, Tyler Perry’s film franchise, Crash, Bangkok Dangerous, 3:10 to Yuma, Monster’s Ball, Away From Her, The Bank Job and Disaster Movie.
Lionsgate Television: Showtime’s Weeds, AMC’s Mad Men, NBC’s Fear Itself, with Crash coming for Starz and Nurse Jackie for Showtime.
Debmar-Mercury: First-run and off-network distributor and syndicator of Tyler Perry’s House of Payne and Meet the Browns for TBS; American Chopper, The Dead Zone, South Park and Deadliest Catch.
Ish Entertainment: Paris Hilton’s New BFF, A Year and a Day, Gone Too Far and 50 Cent Project for MTV; an untitled Antonio Sabato Jr. show for VH1.
Fearnet: Lionsgate is a partner with Comcast and Sony Pictures Television on the online and video-on-demand horror service.
New movie network: Lionsgate is part of a not-yet-named joint venture with Paramount and MGM to launch a pay TV network and on-demand service in the fall next year.

In the reality genre, Lionsgate’s partner Ish Entertainment has a half-dozen shows in the works for networks such as MTV, including Paris Hilton’s My New BFF, which debuts Sept. 30. All this from a company that didn’t have a television division 10 years ago.

A few days after the Emmy nominations were announced in July, Lionsgate celebrated with a champagne and cheese party that Jon Feltheimer, the company’s co-chairman and CEO, held in the corridor outside his office at corporate headquarters, which is nestled in a leafy neighborhood next door to MTV’s West Coast digs in Santa Monica.

On the surface Mad Men, a ratings winner for AMC, and Weeds couldn’t be more different. The former is a period piece about an ad agency in the 1960s, a look at the men in grey-flannel suits that reflects the shocking sexism and racism of the era. Weeds is a hip comedy that chronicles a widowed suburban mom who is forced to make ends meet by selling pot.

But both shows are emblematic of Lionsgate’s approach to scripted TV programming, specifically targeted to cable networks: Provocative, distinctive, well-written fare that typically wouldn’t ever be given a shot — or slot — by a Big Four broadcast network.

“A Lionsgate show is unexpected, subversive, edgy, indie-feeling,” said Kevin Beggs, Lionsgate’s president of television programming and production. “It mirrors our film brand, yet it finds a way to be commercial. And that is not an easy feat.”

Between the three TV units — Beggs’s division, Debmar-Mercury and Ish — Lionsgate has more than a dozen first-run shows already on or coming to cable and broadcast outlets. And it has gained a reputation as a fierce devotee of projects that can eventually pay for themselves by squeezing every last dollar out of ancillary and foreign deals.

Under the leadership of Feltheimer, who joined Lionsgate in 2000, and Beggs, who was recruited in 1998 to start its TV-series business, the maverick indie studio has been attracting Hollywood TV talent with its reputation for being decisive, lean and quick-moving, and with its willingness to take chances on edgier programming.

“They’re just a little bit more nimble and adept and entrepreneurial than most of the studios,” Tom Nunan, co-executive producer of the show Crash, said of Lionsgate at the Television Critics Association summer tour in July.

Lionsgate’s TV production-revenue has grown exponentially during the tenures of Beggs and Feltheimer, from just $8 million in fiscal 2000 to nearly $210 million in fiscal 2008 — compound annual growth of more than 50% — although it’s still only a small portion of the company’s $1.36 billion revenue.

Feltheimer, known by the nickname “Felt,” and vice chairman Michael Burns made diversification the mandate for Lionsgate, moving beyond just theatricals to jump-start its TV and Internet initiatives. Television is Feltheimer’s forte: Prior to joining Lionsgate, he filled various roles overseeing the medium at Sony Pictures Entertainment and its Columbia TriStar TV unit, where such hits as Mad About You and The Nanny were created on his watch.

Lionsgate’s mantra is to be a “next-generation studio” that offers movie and TV content on all platforms. In pursuit of that goal, the company has aggressively launched several cable ventures.

The studio’s biggest splash in cable so far has been in series-TV production, where it’s assembled a small but skilled team — led by Beggs — that is trying to break out with offbeat shows like Mad Men.

“Just about every show I’ve ever been involved in that has real value stands out in some way,” said Feltheimer, who is drawn to lead characters that are distinct for particular reasons. “It may have been the funny voice on The Nanny from Fran Drescher.”

Feltheimer’s fifth-floor office has glass interior walls, a design meant to encourage staffers to stop by and take him up on his “open-door” policy. It also offers perspective — a panoramic view of the mountains of Santa Monica, up the coast to the Topanga Ridge.

Production is just part of Lionsgate’s expansion into TV-related businesses, additional outlets for its TV and film content. Earlier this year, the company became part of a triumvirate of movie studios, along with Viacom’s Paramount Pictures and Metro-Goldwyn-Mayer Studios, that is launching a new premium TV network and on-demand service rather than renewing their movie-output deals with Showtime.

With the launch of that risky service, set to debut next year, Lionsgate will compete against Showtime, its TV-production partner.

Viacom CEO Philippe Dauman said Lionsgate is a good partner not only on the new pay TV joint venture, but as a program supplier for Viacom’s cable outlets.

“They do a very good job producing television and film product on budget, which is not always the case with every company out there,” Dauman said. “We have actually ordered several shows from them from some of our cable networks. They’re very reliable producers. They come up with good ideas. They understand their customers and what they’re looking for.”

Lionsgate is also part of a joint venture with Comcast and Sony Pictures Television that owns Fearnet, an online and video-on-demand horror service.

And Debmar-Mercury, which Lionsgate acquired in July 2006, is a first-run and off-network syndicator of not only House of Payne, but also such cable shows as South Park, The Dead Zone and Deadliest Catch.

But so far, Lionsgate’s sexiest TV success stories are Mad Men and Weeds, created by the TV division headed by Beggs, whose prior claim to fame was as a producer of Baywatch.

His lieutenant is Sandra Stern, executive vice president and chief operating officer of television and a lawyer who worked with Feltheimer at Sony. She spearheads TV-series negotiations and financing and came on board in 2003. The team’s other cornerstone is Barbara Wall, executive vice president of television, a 20th Century Fox Television veteran who is in charge of development.

Wall joined Lionsgate in 2005, and her job is to discover passionate writer-producers — so-called show-runners — with distinct points of view, who can create their own worlds with their shows, as Matthew Weiner did with Mad Men. One pending TV project, Tough Trade, is written by Pulitzer-nominated author Chris Offutt, who had never written for TV before.

“That’s where we live,” Wall said. “That’s what attracts me. Those are the writers that other people will go, 'How did you find him?’

“It just comes from having no life, reading massively, talking to people, and meeting with young producers who have to do the same thing we do. … We tend to shy away from the vets who’ve have done it so many times for the big networks.”

Ted Chervin, head of ICM Worldwide Television, which represents Nurse Jackie’s Falco, said Lionsgate has “a nose for some of these great voices that create these great characters and these great platforms for talent.”

Unlike the major studios, Lionsgate can’t financially weather producing a TV show at a big loss or deficit. The “mini-major” studio only proceeds with a series when it can cover production costs for a show’s first season through a combination of network license fees, international sales, state and local production subsidies or incentives and DVD revenue.

“They can’t afford to take a show and deficit-finance it to the tune of $1 million an episode and hope that it makes it into syndication,” said Natixis Bleichroeder analyst Alan Gould.

TV production is a far less volatile business than films for a company like Lionsgate. In fiscal 2008, the studio posted a $74 million loss — despite revenue growth of 39% — due to theatrical marketing expenses that soared to $326.3 million, up 118% from the prior year. The scenario is better in this year’s first quarter, with Lionsgate reporting net income of $7.1 million versus a net loss of $53.1 million in the year-ago period.

As part of its TV game plan, Lionsgate has also cautiously sought to produce shows for cable, targeting networks that have done little or no original programming, like AMC and Starz, but want to get in the game and make noise with provocative shows that will brand their channels.

“We felt that the high-end cable drama, which was our initial notion, was an area that nobody was really operating in,” Stern said. “The big studios didn’t think it was worth their while. We saw it as a great opportunity.”

Lionsgate also benefits because a network such as AMC — which is rebranding — will put a lot of marketing dollars behind a new show. Such promotional muscle really helped Mad Men, Beggs said.

Mad Men, now in its second season, had a circuitous route before landing at AMC and Lionsgate. As many in Hollywood know, the script for the pilot had been passed around the studios for more than a half-dozen years after Weiner wrote it in 1999, before he joined The Sopranos as a writer/producer.

Lionsgate executives were among those who had seen the Mad Men script, after ICM talent agent Bob Levinson sent it over. But Stern said Lionsgate didn’t want to commit to the show until it saw a pilot. Movie-based AMC stepped up to the plate when network officials read Weiner’s script in spring 2005.

“We were looking for a show that would accentuate our extensive library of movies,” said AMC Networks president Ed Carroll. “That meant it would cinematic, it would be strong storytelling, a distinct point of view.”

AMC anted up an estimated $2 million to $3 million for the Mad Men pilot, more than it typically paid. Stern watched it over a weekend. “I looked at it, and got on a plane Monday morning to meet with Matt Weiner and with AMC and with [executive producer] Scott Hornbacher and acquired it from them,” Stern said.

Mad Men debuted last year to critical acclaim, winning a Peabody Award and a Golden Globe, although it didn’t rack up huge ratings. The show’s second-season debut July 27 drew 2.1 million viewers, about double its premiere last year, and its Sept. 7 episode averaged 1.7 million viewers, a big number for AMC.

“The critical acclaim and the branding [from Mad Men] is essential,” Carroll said. “The household rating is about double the network’s average household rating.”

While Mad Men has the buzz now, it was really Weeds that was “a game changer” for Lionsgate, according to Beggs.

The series, from writer-creator Jenji Kohan, marked the first series hit for Showtime under Bob Greenblatt, who joined the service in 2003 as president of entertainment and knew Stern.

“I convinced others in the company that this show was going to be transformational for us and for Showtime,” Beggs said. “It was their first big hit after a long fallow period, and really Bob’s first big series success in his tenure there.”

Weeds, which debuted on Showtime in 2005 and is in its fourth season, has made money for Lionsgate internationally and could generate revenue in syndication.

Edgier shows such as Weeds tend to do well outside the United States, said Lionsgate executive vice president of international TV sales Craig Cegielski.

When Lionsgate took international sales of its shows in-house three and a half years ago, Weeds was one of the first shows Cegielski had to hawk right out of the gate.

“We sold it in 104 territories, territories that I didn’t think we’d be able to sell into, such as the Philippines, such as Hong Kong,” Cegielski said. “Internationally, provocative is good because violence is bad. Sexy, provocative is great.”

Showtime this summer ordered seasons five and six of Weeds, which means that Lionsgate will have enough episodes to syndicate the series to a basic-cable network or TV stations.

Lionsgate’s next series for Showtime, the 12-episode Nurse Jackie, won’t portray nurses as angels. The premium network declined to comment for this story, but in a press release Falco’s character is described as a “brilliant — but very flawed” nurse “with an occasional weakness” for Vicodin and Adderall.

Nurse Jackie is about a woman who struggles to fight a very thwarted health-care system,” Wall said. “It’s a very black comedy.”

Stern said Lionsgate had sent the Nurse Jackie script, based on a real New York City nurse’s experiences, to ICM, Falco’s talent agency.

“It was a great script and a great character, and Lionsgate had it,” Chervin said.

Falco “sparked to the script,” and gave Lionsgate some “notes,” or comments, on it, Stern said. While some studios just want an actress “to come in and read the lines,” Lionsgate welcomed Falco’s input. The actress liked that collaborative approach.

“We worked with her,” Stern said. “We introduced her to the writers before she would commit. They flew to New York and sat with her.”

Next month Lionsgate will roll the dice with Crash, a project that demonstrates how the company has encountered — and overcome — roadblocks.

Lionsgate, which turned the theatrical The Dead Zone into a successful TV show, distributed the movie Crash. But getting that particular theatrical, which examined the simmering racial, sexual, ethnic and class tensions of Los Angeles, to the small screen as a series turned out to be a tortured process.

At the TCA tour, Crash co-executive producer Nunan gave Stern a shout-out for untangling complicated rights issues, involving the film’s nine producers, so the movie could be made into a TV series in the first place.

The Crash series was first sold to FX, but the project stalled when Lionsgate “couldn’t get the creative right” and had to bring in a new writer, according to Stern.

FX then released the show, and Starz was waiting in the wings. Like AMC, Starz is a movie-based network that wanted to launch original scripted series.

The premium service had licensed some theatrical films from Lionsgate before, according to Starz Entertainment executive vice president of programming Stephan Shelanski, and had talked to the studio about original programming in early 2007.

Shelanski told Lionsgate that “if and when Crash ever comes free from FX, please let us know.’ ” Crash became available the middle of last year, and Lionsgate struck a deal with Starz to co-produce the 13-episode show, which stars Dennis Hopper.

The Crash series won’t pick up the characters and story lines from the movie, according to Beggs, but it will delve into the same issues with its own set of characters.

The movie “struck a chord for many people living in Los Angeles and any big urban center that are kind of living in the cauldron, this racial melting pot, that nobody comments on but everybody thinks about and deals with in their own ways, positive and negative ways,” Beggs said.

Even though Crash is set in Los Angeles, Lionsgate is shooting a good portion of the show in New Mexico, in order to save money through production incentives from the state.

“The majors and the networks create a show, make a show, get it out there and then try to figure out the economics later,” Beggs said. “We don’t have that luxury, and I don’t think the business affords that luxury any longer.”