Lionsgate misses quarterly profit, TV production revenue rises


Lionsgate fell short of Wall Street expectations for the first three months of the year, but its television production division again performed exceptionally well and its Starz streaming business continued to grow.

The company previously said it would consider spinning off or selling Starz, the premium cable network and streamer it acquired in 2016, as part of the debt reduction. Among the suitors are Roku and Apollo Group, which have teamed up to acquire a minority stake in Starz.

During Thursday’s earnings call, CEO Jon Feltheimer said Lionsgate intends to announce its plan for Starz by the end of this summer and that the company expects a transaction could be concluded from the first quarter of the calendar year 2023.

“We are engaged in a solid and productive process with our bankers and a number of potential strategic and financial partners,” Feltheimer said, without identifying any potential buyers. “Even after the execution of our strategic plan for Starz, we will continue to partner with them in creating great intellectual property, building our library, and realizing significant synergies between Starz and our studio business. “

At present, Feltheimer said, Lionsgate is expected to retain some Starz ownership, although he added that “anything can happen.” Once separated from Lionsgate, “My meaning is [Starz] will also see opportunities – perhaps strategic opportunities” that would not have been possible as a 100% company-owned unit.

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Starz’s global streaming subscriber base grew by 4.8 million for the quarter to 24.5 million, a 47% increase over the prior year period. Executives reiterated that they expect Starz to reach 50-60 million global subscribers (TV and streaming) by the end of fiscal year 2025; in total, Starz had 35.8 million customers worldwide at the end of March (+21%).

Overall, the company posted revenue of $929.9 million, up 6% year-over-year, while its net loss more than doubled to $104.6 million for the quarter ended March 31. This translated to adjusted net income of $13 million, or adjusted earnings per share of 6 cents. Lionsgate’s operating loss for the period was $50.4 million, compared to operating profit of $14.3 million for the first three months of 2021.

Lionsgate did not respond to Wall Street forecasts. Analysts on average had expected revenue of $961 million and adjusted earnings per share of 10 cents for the March quarter, according to S&P Global Market Intelligence.

“Despite a very competitive and disruptive environment, I’m pleased to report a strong fourth quarter to cap off one of our best years in content creation as we continue to create significant long-term value,” Feltheimer said in announcing the results.

In fiscal 2022, Lionsgate incurred $158 million in COVID-related cash costs for its productions, according to Feltheimer. “In the future, I certainly hope to mitigate these costs. I hope these costs will come down,” he said, saying it was partly down to “trade union demands.”

Lionsgate’s Motion Picture segment revenue fell 1.5% to $288.1 million and profit fell 19.6% to $49.5 million.

In contrast, Lionsgate Television segment revenue soared 76% to $370.2 million year-over-year, and profit rose 264% to $33.1 million. The division had a record 14 new serial shows in fiscal year 2022 and grew to 15 for 15 in the current series renewed for additional seasons.

The company’s Media Networks unit, which includes Starz and Starzplay International, saw revenue fall 5.2% to $380.2 million due to reduced domestic linear television revenue, partially offset by the increase in streaming revenue. The unit’s profit fell 23.3% to $33 million.

By the end of the year, Lionsgate plans to return to its annual release rate of 45 to 55 films across its theatrical, cross-platform and direct-to-video businesses, Feltheimer said.

He noted that “John Wick: Chapter 4” starring Keanu Reeves is wrapping production for an early 2023 release. Ana de Armas will star in “Ballerina,” the John Wick action spin-off that begins production later this year. . “Expendables 4” has wrapped production for release next year. Additionally, the latest film in the Hunger Games franchise returns to “its usual place in the release calendar” with the November 17, 2023 world premiere of “The Ballad of Songbirds and Serpents,” directed by Francis Lawrence and featuring starring Tom Blyth. (“Billy The Kid”) as young Coriolanus Snow.

Meanwhile, Lionsgate recently signed Pay 2 Window movie release deals with Roku and NBCUniversal’s Peacock. Starz has the Pay 1 TV window on Lionsgate releases, which will be immediately followed by a brief Roku Channel exclusive window, a Peacock exclusive window, and then a second Roku Channel window at a later date.

Last week, Lionsgate announced a pact with Great Point Studios, a studio investment/management company, and the New Jersey Performing Arts Center (NJPAC) to build a 12-acre production facility in Newark that is slated to begin operations. operations end of 2024. The facility will be owned and operated by Great Point Studios; Lionsgate, as the long-term anchor tenant, will receive the studio’s naming rights. In January, Lionsgate and Great Point Studios opened a $500 million studio in Yonkers, NY


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