The return of John Wick, the hit man with a killer track record at the box office, helped lift quarterly earnings at Lionsgate, enabling the company to beat expectations.
For the three-month period ending on March 31, revenues at Lionsgate increased 16.7% to $1.1 billion. The company also reported an operating loss of $49.6 million, which was slightly better than the $50.4 million in losses it logged in the year-ago period. There was also a net loss attributable to Lionsgate shareholders of $96.8 million or 42 cents net loss per share, better than the loss of $104.6 million that it endured in the year-ago period. Adjusted net income attributable to Lionsgate shareholders in the quarter was $49.2 million or 21 cents in adjusted earnings per share.
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Lionsgate’s film business did much of the heavy lifting. The studio segment reported revenue of $823.6 million, an increase of 25% from the prior-year quarter, with the movie portion of that haul increasing by 85%. That was due to the success of “John Wick: Chapter 4,” a blockbuster sequel starring Keanu Reeves as the titular avenger, as well as the release of two modest hits in the faith-based drama “Jesus Revolution” and the Gerard Butler action-thriller “Plane.” It also helped off-set declines in Lionsgate’s television business, which the company said was the result of “timing” of when its shows are licensed or hit the airwaves. Profits for the segment were up 48% to $122.6 million.
Lionsgate’s film business has been quiet, but that should change. The company has several prominent movies on the horizon, including “The Hunger Games: Ballad of Songbirds & Snakes,” the raunchy comedy “Joy Ride,” and sequels to “Saw” and “The Expendables.” Lionsgate is also looking to expand the John Wick universe, releasing the Ana de Armas spinoff “Ballerina” and the launch of the prequel television series “The Continental” on Peacock and Amazon. The company told investors it will “continue our planning for multiple additional spinoffs.”
Segment revenue in Lionsgate’s media networks business, which includes Starz and its Lionsgate+ streaming service, grew more modestly at 2.3% to $389 million. However, the margins improved substantially with profits growing over 100% to $73.3 million. The company said lower marketing and distribution expenses, as well as a decrease on its content spending had helped improve profitability. Total global streaming subscribers increased by 1.3 million, with 700,000 of those signing up domestically. It now has 20.4 million subscribers worldwide.
Lionsgate’s revenue beat Wall Street’s estimates of $994 million, while adjusted earnings per share also was better than consensus estimates of a loss of 9 cents per share. The company’s stock rose more than 3% in after-hours trading on the strength of its earnings results.
The report comes as Lionsgate is looking for ways to separate its studio business from Starz, the cable and streaming company it purchased in 2016 for $4.4 billion. At the time, the company was hoping to get bigger to compete with larger media conglomerates such as Disney, which later bought much of 21st Century Fox, and Time Warner, which has been through two major mergers before re-emerging in its latest incarnation as Warner Bros. Discovery. In February, Lionsgate’s leadership said it expected to cleave Lionsgate from Starz by September. On Thursday, Lionsgate’s CEO Feltheimer said that the spinoff or separation should be achieved by that date.
“We’re working through the organizational and governance issues accompanying the separation, finalizing the intercompany agreement, and taking the appropriate steps to strengthen both companies and their respective balance sheets so they will be prepared to unlock the incremental value that the separation makes possible,” Feltheimer told investors on an earnings call.
Feltheimer also used the occasion to announce that Lionsgate has landed distribution rights to both “Kill Bill” films and “Jackie Brown.” That gives the company the largest portfolio of Quentin Tarantino movies. Lionsgate also has the rights to “Reservoir Dogs,” “Inglourious Basterds,” “Django Unchained,” “The Hateful Eight” and “Death Proof.” Most of those movies were initially released by The Weinstein Company or Miramax.
“We look forward to collaborating with the Tarantino team on a celebration of ‘Kill Bill’s’ 20thanniversary later this year with a new and remastered 4K edition,” Feltheimer teased.
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