Netflix Scores a Supernatural Boost

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Some rumors do pan out. Lionsgate (NYS: LGF) has bought Twilight studio Summit Entertainment for $170 million.

You'll see a much higher figure bandied about elsewhere, but the total $412.5 million price tag gets a huge discount from Summit's cash on hand. It's like buying a $412 wallet with $242 of clean bills tucked inside.

Whatever the price, the deal combines the two of the largest independent studios. In a year like 2010, when Lionsgate produced a string of minor hits led by The Expendables and Summit boosted the usual Twilight blockbuster with smaller wins like RED and Letters to Juliet, the combined billion-dollar domestic gross would have vaulted the combined beast even past Universal Studios.

It's a deal, it's a steal, it's the sale of the [redacted] century. The Twilight saga still has another chapter left, sure to bring in about $700 million in global box office. RED shows that Summit's producers know how to get brand-name actors in the house to make a $200 million action hit. It doesn't take many of these minor successes to pay back the minuscule purchase price here. And I'd imagine Twilight spin-offs down the line: Team Jacob could use a werewolves-only flick or two, I'm sure.

And the fun doesn't stop there. There should be champagne corks popping in the headquarters of both Coinstar's (NAS: CSTR) Redbox and Netflix (NAS: NFLX) over the SummitsGate announcement.

Both movie-rental specialists have distribution deals with Lionsgate, see. The Redbox terms are unknown, but most likely include cheaper access to Lionsgate discs. For Netflix, the bubbly is even more in order: Through an indirect deal with Lionsgate via Epix, the company gets streaming access to a large portion of Lionsgate's content library.

Importantly, the streaming rights from Epix are exclusive. If I'm reading the contractual tea leaves right, the Twilight series is now available for Netflix to exploit. Having this barn-burner series on instant tap could be enough to erase much of the PR damage inflicted by Netflix management's bad moves in 2011.

If I'm right, we should see a Twilight-themed ad campaign for Netflix before too long, as Edward and Bella start showing up in our streaming queues. Netflix may have given up on the DVD game, but streaming just got a vampiric boost.

At the time this article was published Fool contributorAnders Bylundowns shares of Netflix but holds no other position in any of the companies mentioned.Motley Fool newsletter serviceshave recommended buying shares of Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. We have adisclosure policy.

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