The studio, Lions Gate Entertainment Corp. (LGF) and the Mexican media conglomerate, Grupo Televisa SA (TV) formed a joint venture to produce movies for the fast-growing Hispanic population in the U.S., who account for one fourth of the country’s frequent moviegoers.
The companies also declared their plan to create Pantelion Films in the next five years, which will release eight to ten movies annually targeted to Latino audiences, starting off in January 2011 with a comedy movie “From Prada To Nada”.
The unique combination of Televisa’s brand name and Lions Gate’s theatrical exhibition support will aid Pantelion in creating an immediate impact in the marketplace. Pantelion Films is expected to harness the best qualities of both the partners and quickly adapt itself to offer commercially exciting films, entrepreneurial innovation and a consistent presence in the marketplace.
Grupo Televisa is a major player in the global entertainment business and runs four television networks in Mexico with around 260 affiliated stations. On the other hand Vancouver-based Lions Gate is in an ongoing ownership battle with activist investor Carl Icahn. Presently, it is enjoying the success of “The Expendables,” the Sylvester Stallone-led action flick that generated nearly $100 million at the domestic box office.
A considerable share of Televisa’s income comes from its U.S. operations, including the sale of content, website and cable television. However, recently it has been hit by the prevailing adverse economic conditions. Although Televisa is in a better position to face the economic crisis compared with other companies, it will be hard to completely avoid the impact of the adverse economic scenario.
We currently maintain our long-term Neutral recommendation on Televisa with a short- term Zacks Rank #3 (Hold).
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