Every now and then I like to give guest authors a chance to share their views either on the stocks that I already cover, or names that I don’t, but that I feel would benefit my readers.

Some of these author’s viewpoints agree with mine, and some don’t.

I feel that the more information you have about a particular company, stock or the market in general, the better decisions you can make regarding your investments and what actions you should take in regards to those investments.

Today’s guest author is Longtime Lionsgate Faithful.

No, that’s not his real name, but a pen name he uses to post articles online to protect his identity.

As you would guess, this author is an expert in all things having to do with Lions Gate Entertainment Corp. (NYSE: LGF), and today gives us some brief thoughts on the company’s just announced acquisition of TV Guide Network and TVGuide.com for $255 million from Macrovision Solutions (MVSN), as well why Lions Gate represents a bargain at today’s prices.

Please note that this is not a formal recommendation, just an information piece designed to allow you access to companies that I might never cover, but that are worth a look for your portfolio.

New To the Lions Gate Story?

Lions Gate Entertainment Corp. operates as a filmed entertainment studio.

The company offers motion pictures, television programming, home entertainment, family entertainment, multiplatform programming, online video entertainment, theatrical distribution, video-on-demand, and digitally delivered content services, as well as film, television, and home video services.

As of March 31, 2008, it distributed a library of approximately 8,000 motion picture titles and approximately 4,000 television episodes and programs directly to retailers, video rental stores, and pay and free television channels in the United States, Canada, the United Kingdom, and Ireland; and through various digital media platforms, and indirectly to other international markets, its subsidiaries, and various third parties

I have been watching Lions Gate for quite some time with interest, especially now that investor Carl Icahn has thrown his hat into the ring with a significant stake in the company, and has recently added to that stake at significantly higher prices than where the stock sits today.

You would be surprised if I listed all the properties that Lions Gate owned and sold rights to that include high quality independent films like Crash, and other fare that we’ve watched for years, such as the TV show Mad Men.

Want more?

• Read: Lionsgate Entertainment: Misunderstood, Too Cheap to Ignore
• Or: The Secret Takeover of Lionsgate Films

Lions Gate Entertainment Corp: To Cheap To Pass Up?

By Guest Columnist: Longtime Lionsgate Faithful

I feel very comfortable about the Lions Gate Films (NYSE: LGF) acquisition of TV guide and think this will be a great long-term investment for the company.

For one, the channel is carried in 82 million homes, meaning, LGF has essentially purchased a channel for $3 per consumer.

Granted, the average viewer is only on the channel for 6 minutes at a time, and only about 100,000 are on it at any given time, but with LGF’s intent and focus to turn this into a channel with original programming, and a platform to advertise their own movies and VOD programing, I think this could provide them with a great resource and a strategy way better than starting a channel from scratch with no distributional mechanisms, as they are with EPIX (a recently announced venture to begin later in 2009 similar to HBO, Cinemax, etc.).

Also, that $3 per consumer does not include TVguide.com, which is a decently successful website.

I also don’t think that the acquisition will have any affect at all on LGF’s abilities to fund their future slates and new initiatives.

If my calculations are correct, at the end of the fiscal year, March 31st, 2009, LGF should end the year without about $80 million in cash.

They will still have the $340 million JP Morgan Chase (NYSE: JPM) credit facility, and 2 film funds to help finance their movies, this all before partnering on the movies or selling any rights from the start.

In addition, I estimate that LGF should easily exceed free cash flow of $100 million next year, and EBITDA of $50 million next year, as it is my belief that TV guide most likely has about $40 million in EBITDA a year, based on what private equity was willing to pay (I would assume in this market, private firms would not pay over 6 or 7 times EBITDA).

Finally, Jon Feltheimer the CEO, has mentioned on the past few conference calls that they and their investors feel that LGF is too “underleveraged.”

I would expect LGF to continue looking for more acquisitions in the future, and I do not think this will ultimately affect their future slates at all- especially considering most of the ‘09 slate is probably close to funded or completed.

But in this market, cash is so king, that this may be viewed as a risky play.

I also think it could have an affect on their stock buyback — ie: were they more conservative over the past 2 weeks b/c they needed the cash, was this material information preventing a buyback, etc. etc.

Alot of my thoughts were relayed by an analyst at Caris and Co. which show really great projections for the next fiscal year and who confirmed my beliefs that the acquisition was accretive on all accounts, and backed up many of my numbers estimations.

By all accounts, the acquisition seems like a slam dunk, synergistic in many ways, and accretive to LGF’s bottom line.

What about LGF’s latest movie offerings at the box office?…

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