Lionsgate narrows first-quarter loss even as film division revenue falls

Lionsgate has released its first-quarter financial results after spinning off the media giant’s film studio and turning it into a separately traded stock.

The studio, led by CEO Jon Feltheimer, reported a net loss attributable to shareholders of $59.4 million in the first quarter, down from a loss of $70.7 million a year earlier, while total revenue fell to $834.7 million, down from $908.6 million a year earlier.

“We are pleased to report a solid quarter despite unprecedented industry disruptions and the impact of strikes,” Feltheimer said in a statement accompanying his company’s latest financial results. Later, on a post-market analyst call, he cited Lionsgate’s efforts to mitigate the impact of industry-wide headwinds.

“There are things in our environment that we have little control over: the impact of disruptions on our buyers and distributors, market volatility, and the long tail of strikes and pandemics,” Feltheimer argued.

At the same time, he hinted at separating the studio business from Starz, which will allow for the creation of a theatrical release plan based on three to four big-time films per year, starting in fiscal 2026 (including an adaptation of another Suzanne Collins film). the hunger Games book, Sunrise at Harvest), building a list of television productions led by Spartacus: House of Ashur AND Hunters’ wives for Starz and Seth Rogen Studio for Apple TV+, reducing operating costs and launching new, free, ad-supported streaming channels.

Feltheimer also announced that Starz and BritBox, the BBC Studios-owned streaming service, plan to launch a new content bundle next quarter to deliver their apps directly through the Starz website.

Elsewhere, the Lionsgate chief said the studio has reduced its production deals with Lionsgate and eOne by 70 percent, with annual cost savings estimated at $30 million.

He also noted that the Motion Picture Group is wrapping up production on a Michael Jackson biopic starring Graham King and Antoine Fuqua, while also getting close to completing a John Wick spin-off. Ballerinastarting production on the next part of Ruben Fleischer’s film Now you see me franchise and adaptation of Stephen King’s novel by Francis Lawrence Long walkand preparing Chad Stahelski Mountaineer Production is scheduled to start in early 2025.

“We expect to start seeing significant revenue growth later in the year,” Feltheimer told analysts, outlining strategic moves to bolster the studio’s content and distribution businesses.

Lionsgate reported a loss per share of 25 cents in the latest quarter, compared with a loss per share of 31 cents a year earlier. The studio released its latest financial results following Lionsgate Studios’ May 2024 debut as a standalone public company, created by combining Lionsgate’s studio business with Screaming Eagle Acquisition Corp. (SEAC), a special purpose acquisition company.

The launch of Lionsgate Studios on NASDAQ was intended to provide Hollywood studios with options before the much-anticipated separation of the film and television studios and Starz is completed, including raising new capital and combining with existing companies. Lionsgate Studios consists of the Lionsgate Motion Picture Group and Television Studio, as well as a 20,000-strong film and television library.

Other recent measures aimed at increasing shareholder value include allowing investors to vote on a plan to combine two classes of shares into one class and offering a 12 percent bonus to voting Class A shareholders in Lionsgate.

In the first quarter, the company’s studio business, which combines its film and television production segments, saw revenue fall 6 percent to $588.4 million. Revenue from its media networks, which are mostly owned by Starz Networks, rose 1 percent to $345.3 million.

Starz in North America, where Lionsgate is focusing its platform development efforts, ended the first quarter with 13.2 million streaming subscribers, down from 13.38 million at the end of the fourth quarter of fiscal 2024.

The premium platform added another 8.1 million linear subscribers at the end of the latest quarter, down from 8.42 million at the end of the fourth quarter. Starz’s total global subscribers, excluding customers who will see their numbers cut in Australia, Latin America and the United Kingdom, stood at 27.17 million at the end of the first quarter, down from 27.54 million in the fourth quarter.

Motion Picture Group revenue fell 15 percent to $347.3 million due to unfavorable comparison from the same period last year John Wick: Chapter Four ticket office. In May of this year The Strangers: Chapter One grossed $43 million at the global box office. Motion Picture Group segment earnings were $86.1 million in the first quarter, up 24 percent from $69.2 million a year earlier, partly due to lower P&A spending in the final quarter.

Elsewhere, TV revenue rose 10 percent to $241.1 million in the first quarter, driven by a contribution from eOne and as the TV industry continued to recover from last year’s Hollywood actors’ and writers’ strike, which ended with an increased supply of content.

Kevin Beggs, chairman and chief creative officer of Lionsgate Television Group, told analysts that the hangover from the strike was longer than expected, but demand for TV series remains strong. “What we’re seeing on the development side is pretty strong demand for product. There’s more financial discipline in terms of budgets that are going to be commissioned,” he added.

But Beggs said “great creative” can stand out in a crowded TV market, and episodic broadcasting should pick up in the second half of the fiscal year as demand recovers.

Motion Picture Group new chief Adam Fogelson has highlighted 13 upcoming Broadway shows, including adaptations of major Lionsgate IP works and an upcoming Jan Wick AAA game that is a progression in adapting studio properties to provide additional ancillary sources of income.

“The group has done a ton of great development work over the last few years, but it’s time to step on the gas and start monetizing, and the only reason to do that is if the content deserves it,” Fogelson told analysts.

The Motion Picture Group boss also addressed the future of box office sales at movie theaters, downplaying the possibility of the industry returning to the heady days of record-breaking $11 billion in box office revenue anytime soon. But he did add that recent box office wins This Ministry about ungentlemanly war, The Unknown Hero AND The Strangers: Chapter 1 bodes well for the future.

“So we’re really bullish on the possibilities for the theater industry, especially since we have incredibly careful, precise, low overhead compared to our competitors, and we have a completely different way of managing production costs and marketing costs,” Fogelson said.