Lions Gate Entertainment and Summit Entertainment are back in merger talks that would combine two of Hollywood’s largest independent studios, according to people with knowledge of the negotiations who are not authorized to speak publicly.

Should a deal be consummated, it would bring together one of the movie industry’s most successful young adult franchises, Summit’s “Twilight,” with one of the most highly anticipated new series, “The Hunger Games,” from Lions Gate.

The two companies, headquartered around the block from each other in Santa Monica, have held on-and-off merger talks since late 2008 but were unable to resolve key issues of price and management control. The discussions have recently become more serious, the people close to the matter said.

Publicly traded Lions Gate, which has a market value of $1.08 billion, would have a larger stake in the combined entity. However, it’s not clear exactly how privately held Summit, which raised $750 million of debt in March, would be valued and whether Lions Gate would pay cash or stock. Another question is what role Summit’s co-chairmen, Rob Friedman and Patrick Wachsberger, would play in the combined entity, which would be led by Lions Gate Chief Executive Jon Feltheimer.


One impediment in the past was the influential position held by Lions Gate’s then-largest shareholder, Carl Icahn, who attempted to seize control of the studio and oust Feltheimer and Vice Chairman Michael Burns. In September, Icahn sold most of his shares as part of a settlement with the company.

Summit’s primary value lies in the “Twilight” movie series. Three films released since 2008 have grossed $1.8 billion worldwide and the fourth successfully opened the weekend before Thanksgiving, with one more film scheduled to debut next November. Most of the studio’s other films have fared poorly, though it has a well-established division that sells international distribution rights to pictures.

Lions Gate’s primary asset is its library of about 13,000 films and television episodes, the value of which would be boosted by the addition of “Twilight” alongside “Hunger Games.”

It also has a small but growing TV production business that makes “Mad Men” and “Weeds.” A number of Lions Gate’s recent movies have flopped, including a remake of “Conan the Barbarian” and “Abduction,” starring Taylor Lautner of “Twilight.”


The talks were first reported by Bloomberg.

ben.fritz@latimes.com