Lions Gate warns of losses from poor showings by last three films
As Lions Gate Entertainment Corp. attempts to sell shares held by dissident shareholder Carl Icahn, the company told investors that it expects to lose as much as $50 million in the current quarter because of the poor performance of its last three movies.
This weekend, the Santa Monica studio’s newest release, “Abduction,” a thriller starring “Twilight” actor Taylor Lautner, opened to a soft $10.9 million. It came on the heels of the back-to-back box-office disappointments “Warrior” and “Conan the Barbarian” in the last two months.
Lions Gate’s warning to Wall Street came in a Securities and Exchange Commission filing Monday alerting potential buyers of 22 million shares it is selling on behalf of Icahn, who last month agreed to end his ownership in the Santa Monica studio as well as his long battle to seize control of the company and oust management.
The company said its loss for the quarter ending Sept. 30 — before the subtraction of certain costs including interest, taxes and depreciation of assets — would be $40 million to $50 million. Lions Gate hadn’t previously estimated results for the quarter, but decided to do so now, as Vice Chairman Michael Burns is embarking on an investor road show this week to sell the Icahn shares.
Lions Gate won’t report actual results for the quarter until November.
The company had already expected the performance of its motion picture group to be soft in the current period. But all three movies ended up doing worse than expected.
The action remake “Conan” opened in August to a weak $10 million and is finishing its box-office run at $21 million. The well-reviewed drama “Warrior” launched in September to a very poor $5.2 million and is struggling to get to $15 million.
Last weekend, “Abduction,” which the studio hoped would kick off a new franchise led by “Twilight” star Lautner, opened to $10.9 million. But because it outperformed “Warrior” and the studio had less at stake in the movie financially than it did with “Conan,” “Abduction” will probably do a bit better for Lions Gate than the other two films.
All three recent releases are expected to lose money for the studio, though. They provide a poor kickoff to a high-profile film slate for Lions Gate that is depending heavily on the blockbuster potential of next March’s adaptation of the bestselling book “Hunger Games.”
Investors seemed unsurprised by the disclosure, as Lions Gate stock closed down 1 cent at $6.99. Icahn’s shares are being offered at $7 each.
