Lions Gate Purchase Adds to TV Unit

Continuing its acquisition streak, Lions Gate Entertainment Corp. announced Wednesday that it had bought one of the industry’s few remaining independent television distributors.

Debmar-Mercury, which owns the distribution rights to Lions Gate’s TV series “The Dead Zone,” Comedy Central’s animated sitcom “South Park” and the Sci-Fi channel’s “Farscape,” will serve as the in-house distributor for Lions Gate’s television product. In addition, the company, which has offices in Santa Monica and New York, will sell Lions Gate’s feature film syndication packages to broadcasters around the world.

Under a preexisting deal between Revolution Studios and Debmar-Mercury, Santa Monica-based Lions Gate also will distribute two of Revolution’s feature film packages to television. Revolution is based at Sony Pictures.

The terms of the deal were not disclosed but sources familiar with it said Lions Gate spent about $20 million. Purchasing Debmar-Mercury allows Lions Gate to cut out the middleman in the television syndication business, thus potentially increasing its profit margins.

The acquisition fits into the studio’s overall strategy of increasing its television presence. Lions Gate’s revenue from television production jumped 60% in fiscal 2006 to $133 million, according to the company. Although film is still the studio’s main driver, its TV shows brought in 10% to 15% of the company’s $102-million cash flow in fiscal 2006.

The studio, whose movie “Crash” won an Academy Award this year for best film, has long been rumored to be seeking a buyer -- or to eventually become an attractive acquisition target.

Investor Carl Icahn recently accumulated a small stake in the company in part, analysts said, because of the possibility it could be sold to another studio or to an Internet, phone or cable giant looking to invest in Hollywood.

Since Chief Executive Jon Feltheimer, former president of Sony Corp.’s Columbia TriStar Television Group, took the helm at Lions Gate in 2000, the publicly traded company has brought in investors to expand its motion picture and television library.

Lions Gate acquired Trimark Holdings Inc. in 2000, and Artisan Entertainment in 2003. In October, it bought British company Redbus Film Distribution Ltd., now called Lionsgate UK, to distribute its movies abroad.

Shares of Lions Gate rose 19 cents, or 2.2%, to $8.81.