Lions Gate swings to loss

Despite a strong quarter at the box office thanks to Tyler Perry’s “Madea Goes to Jail,” “My Bloody Valentine” and “The Haunting in Connecticut,” Lions Gate Entertainment Corp. recorded a loss of $28.6 million, or 25 cents a share, on revenue of $463.2 million, compared with a profit of $29.8 million in the year-earlier period.

Lions Gate stock fell 5%, to $5.96 in after-hours trading Monday after closing at $6.26, up 6 cents. The Santa Monica company was scheduled to hold a conference call with analysts this morning.

The disappointing fiscal fourth quarter caps off a rough 12 months for the independent studio, producer of the Tyler Perry movies and “Weeds” and “Mad Men” cable TV series.

For its fiscal year ended March 31, Lions Gate reported a loss of $163 million on revenue of $1.47 billion. The loss is about $25 million more than it had told analysts to expect in February and more than double last year’s loss of $74 million.

The studio said disappointing releases in the fiscal second and third quarters were to blame, as well as a $36.1-million charge it took on its deal to distribute DVDs of Hit Entertainment, which produces videos for the family and children’s market. Lions Gate also recorded higher movie marketing expenses than in previous years.

Like much of Hollywood, Lions Gate has been stung by the weakened DVD market, although its home video unit actually had a stronger-than-expected fourth quarter because of the release of titles “Bangkok Dangerous” and “Punisher 2.”

“The budgets got bigger and the risks got bigger,” analyst David Bank of RBC Capital Markets said. “They were a little heavy on expenses, particularly on distribution and marketing.” The studio, he said, needs “increased discipline.”

Lions Gate, which is facing the threat of a proxy battle from activist shareholder Carl Icahn, has already said it is going to slash the number of movies it releases in fiscal 2010 to between 10 and 12 from the 18 to 20 it has averaged over the last three years.

The company has also promised to cut its marketing and distribution expenses by more than $100 million. Chief Executive Jon Feltheimer said he expected Lions Gate to have “strong positive metrics in fiscal 2010.”

The studio is also looking to strengthen its balance sheet. Last week Lions Gate sold 49% of the TV Guide cable channel for $123 million. That’s crucial because it currently has only $138.5 million in cash and cash equivalents, compared with $371.6 million in the previous year, according the company’s financial filings. Its cash shrank when it bought the TV Guide channel for $241 million in January.

Icahn, who owns 14.5% of Lions Gate, was unsuccessful in a tender offer to acquire the studio’s convertible debt.

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joe.flint@latimes.com