HIT has tapped Lionsgate at its new home entertainment distributor in the US and Canada, effectively moving the business from Twentieth Century Fox Home Entertainment.

Under the terms of the agreement, Lionsgate obtains the exclusive marketing, sales and distribution rights to HIT franchises, including Thomas & Friends, Bob the Builder, Barney, Fifi & The Flowertots and Roary the Racing Car among others.

HIT first licensed-out its home video business in February 2006, cutting a large-scale deal with Twentieth Century Fox HE, which was looking to the deal to grow its 9% share of the kids non-theatrical video market at the time. Interestingly, Lionsgate now expects the HIT portfolio to boost its non-theatrical family home entertainment market share to approximately 15% from its current 9%.

Lionsgate is scheduled to begin distributing HIT’s full slate in May 2008, while Fox had new HIT releases scheduled for release until next month. Thomas and the Great Discovery, the brand’s first feature-length direct-to-DVD movie since 2005 will be one of the first titles released under the agreement in September.

The agreement encompasses electronic sell-through to the HIT owned titles as well as DVD distribution rights.