Bid for image proves rare miscalculation for lions gate: with stock sale, film company ends its quest for CD and DVD distributor.

LIONS Gate Entertainment Corp. has been on a roll.

In 2006 its film "Crash" won the Academy Award for best picture. The "Saw" horror franchise and its strategy of producing low-cost films that target specific niches have both been major successes. The emergence of new distribution platforms--such as Apple Inc.'s iPod, with which it cut a deal in January--has goosed the value of the company's impressive library.

But an ill-fated attempt to take over Chatsworth CD and DVD distributor Image Entertainment Inc. would have to be considered a misstep. Last week, Lions Gate closed the book on its misadventure, selling off its entire stake alter Image agreed to a $4.40 per share buyout offer from an investor group led by producer David Bergstein.

Lions Gate sold what remained of its approximate 3.9 million shares of Image at a price ranging from $4.16 to $4.26 per share on March 30.

Earlier last month, the Santa Monica-based studio sold off 123,500 shares of the CD and DVD distributor stock that represented slightly more than 3 percent of Lions Gate's stake. Lions Gate once held a 19 percent stake, or about 4 million shares, making it Image's second-largest shareholder.

The sell-off comes in the wake of last fall's failed bid to elect a Lions Gate-backed slate of directors to the Image board and nearly two years of legal maneuvering. In 2005, Lions Gate launched an unsuccessful $93 million hostile bid for Image. In October, Image successfully fought off efforts by Lions Gate Entertainment Group to nominate directors to the company's board.

Despite a chronically anemic financial performance during the extended takeover bid--the stock hadn't traded above $4 a share in more than a year until the recent buyout--the apparent appeal of Image was its CD and DVD distribution deals and library, which includes feature films "Traffic." "Hoop Dreams" and the BBC's "The Chronicles of Namia."