Losses narrowed and revenues climbed as film hits such as “John Wick: Chapter 4” helped power Lionsgate’s quarterly earnings.
It’s a time of change for the company, which is separating its motion picture and television groups from its Starz streaming and pay TV business, relaunching both as publicly traded entities. That was originally supposed to take place in September, but the company said it will now occur in the first quarter of 2024, partly because the actors and writers strikes have created an atmosphere of uncertainty.
In the near term, Lionsgate reported revenues of $909 million, a 2% increase from the $893.9 million it logged in the prior-year quarter. Operating losses shrank from $68.2 million in the previous year quarter to $16.8 million in the most recent period. Adjusted net loss attributable to Lionsgate shareholders in the quarter was $9.8 million or 4 cents a share. That beat Wall Street’s expectations. Analysts were predicting revenues of $885 million and an adjusted loss per share of 23 cents.
The report comes days after news broke that Lionsgate had acquired Entertainment One’s (eOne) TV and film operations from Hasbro for approximately $500 million. The transaction is expected to close by the end of the year. The company’s library includes hits such as “The Woman King” and “Yellowjackets” as well as the “Naked & Afraid” franchise.
In a call with investors following the earnings report, Lionsgate CEO Jon Feltheimer said the pact will add 6,500 titles to the company’s library. “On closing, we expect the transaction to be immediately and highly accretive,” he said.
Lionsgate also said that Starz had made a strategic decision to exit Latin America by the end of 2023, focusing its operations on the U.S., U.K. and Canada, a sign that it is curtailing its global ambitions.
For the quarter, Lionsgate’s media networks segment, which includes Starz, saw revenue stay flat at $381.1 million, while profit grew to $31.9 million compared to losses of $37 million in the prior year. Its studio business reported revenue of $625 million, a decrease of 12% from $711.1 million it recorded in the prior year quarter. Profits for the segment increased 31% to $92.1 million. “John Wick: Chapter 4” was released at the end of March, but much of its theatrical business and its home entertainment launch took place during the three-month period ending in June. Lionsgate said its film business off-set declines in its TV operations, which saw revenue shrink because fewer shows were delivered to buyers during the period.
Feltheimer said that the separation of Starz and the motion picture and television production business is being delayed because of the purchase of eOne, along with “…uncertainties surrounding the strike and our efforts to create the most efficient capital structure within a disruptive marketplace.”
Looking ahead, Lionsgate touted its upcoming “Hunger Games” prequel, “The Ballad of Songbirds and Snakes,” as well as sequels to “Saw” and “The Expendables.” There’s also plans to expand the world of John Wick, with the streaming spinoff, “The Continental,” scheduled to debut on Peacock next month.
“We’re bullish about our slate for the rest of the year,” Feltheimer said.