Lions Gate swings to a profit

Times Staff Writer

Sharply lower movie marketing costs and a surge in home video revenue helped swing Lions Gate Entertainment Corp. into the black, surprising analysts who expected the company behind the recent Jet Li and Jackie Chan movie “The Forbidden Kingdom” and the “Mad Men” TV series to post a loss.

The Santa Monica movie and TV producer and distributor reported net income of $7.1 million, or 6 cents a share, for the fiscal first quarter that ended June 30, contrasted with a loss of $53.1 million, or 45 cents, a year earlier. Revenue jumped 50.2% to $298.5 million from $198.7 million.

Analysts had been looking for a net loss of 3 cents to 9 cents a share.


Lions Gate, however, reported strong revenue growth across all segments of its business in addition to benefiting from lower marketing and distribution costs because it released only three movies in the quarter compared with five in the year-earlier period.

Lions Gate’s motion picture revenue rose 51.1% to $257.4 million from $170.3 million. The release of “The Forbidden Kingdom,” which featured first-time costars Li and Chan, helped to push theatrical revenue up 60.5% to $30.5 million.

The biggest contribution to motion picture revenue growth, however, came from home video, which jumped 46.6% to $152.2 million because of robust DVD sales, led by Sylvester Stallone’s “Rambo” and the horror thriller “The Eye,” among others.

Television production revenue rose 44.7%, to $41.1 million from $28.4 million, on the success of the critically acclaimed cable television series “Weeds” and “Mad Men.”

The company also earned $8.5 million from its September 2007 acquisition of Mandate Pictures, which produced last year’s sleeper teen-pregnancy hit “Juno” and, more recently, “Harold and Kumar Escape From Guantanamo Bay.”

Lions Gate recently announced a joint venture with Metro-Goldwyn-Mayer Inc. and Paramount Pictures to launch a premium movie channel and video-on-demand service, rivaling channels such as Showtime, which had wanted to cut the amount it pays in licensing fees. The channel is set to debut in fall 2009.

Lions Gate is also investing in other digital platforms. In June 2007 it purchased a 42% stake in, geared toward young men, and launched a horror video site called in conjunction with Sony Corp. and Comcast Corp. The company also owns a 18.6% interest in online movie download site CinemaNow.