Lionsgate beats revenue expectations in earnings report thanks to its TV growth
Lionsgate earnings easily beat Wall Street expectations in its most recent quarter thanks to sales growth from its television production and film businesses, even though profit fell sharply from a year earlier.
Profit for the three-month period that ended June 30 was $1.3 million, or 1 cent a share, better than the loss of 16 cents a share Wall Street analysts had expected on average, according to FactSet.
Earnings were down 96% from a year earlier because the studio spent more on marketing and distributing major films than it did during the same period in 2015, Lionsgate said Thursday.
Total revenue for the Santa Monica-based entertainment company surged 35% to $553.6 million, topping analysts projections of $496 million.
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Lionsgate shares jumped 5% in after-hours trading on Wall Street following the earnings report, which was filed after the close of financial markets. The stock closed Thursday at $19.04, up 14 cents, or about 1%.
Led by Chief Executive Jon Feltheimer and Vice Chairman Michael Burns, Lionsgate said this summer that it would acquire premium cable network Starz for $4.4 billion, one of the biggest studio deals this decade.
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The companies hope that the long-anticipated merger will turn the combined company into a more fierce competitor among the bigger media conglomerates that dominate the entertainment industry.
“It will be the largest and most transformative transaction in our history,” Feltheimer said of the pending acquisition in a statement. “The combination will accelerate the growth and diversification of both companies.”
Lionsgate has come under pressure recently as its films struggle at the box office.
For example, “Now You See Me 2,” about a team of outlaw magicians, was a disappointment at the domestic box office compared with its 2013 original. However, it has done strong business internationally. Faced with the box-office flop of its young-adult sci-fi movie “Allegiant,” Lionsgate is looking to continue the “Divergent” series as a television property rather than doing another theatrical film.
Starz also faces significant challenges as an independent company that has operated in the shadow of popular rivals such as HBO and Showtime.
During the quarter, Lionsgate continued to see bigger sales from its television business that produces shows including Hulu’s “Casual” and Netflix’s “Orange Is the New Black.” Television production revenue increased 43% to $191 million.
Lionsgate’s film revenue grew 30% to $275.4 million because of a larger movie release slate than last year.
The company’s major upcoming releases include “Blair Witch” and “Deepwater Horizon,” about the BP oil spill disaster. Lionsgate also has high hopes for movies based on the venerable “Power Rangers” franchise, which Feltheimer has said could result in as many as seven pictures.
Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder
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