Lionsgate shrinks Q3 loss, but misses revenue estimates

Despite diversifying successfully into TV production and digital platforms, the fortunes of the Canadian-based studio remain dependent on how its movies do at the local multiplex.
02-10-12 Hunger Games 2

No matter how much Lionsgate Entertainment diversifies away from high-risk movies into TV and digital content and platforms, the Canadian-based studio still gets tagged by the performance of its high-profile theatrical film slate.

That was the case Thursday with the Vancouver-based film and TV studio narrowing its third quarter loss, but missing analyst expectations on overall revenues, especially after last month acquiring Summit Entertainment and its Twilight franchise.

Lionsgate posted a loss for the three months to Dec. 31, 2011 at $1.7 million, down from a loss of $6 million for the same period of 2010.

That came in part from strong performance at EPIX, a premium TV channel Lionsgate runs as part of a joint venture with Paramount and MGM.

But overall revenue fell to $323 million during the latest frame, from $422.91 million in 2010, and missed an analyst consensus estimate of $358.7 million.

Lionsgate, which like most indie producers in challenging times is doing more lower-budget pictures, was left with no wide releases during the recent third quarter.

So the revenue line sagged sharply when compared to the third quarter of 2010 when the studio had three wide releases, Saw 3D, For Colored Girls and The Next Three Days.

Of course, that will change dramatically on March 23 when Lionsgate debuts The Hunger Games (pictured), the first film from a teen-targeted franchise it hopes will rival another, Twilight, now in its corporate fold.

Lionsgate CEO Jon Feltheimer on Friday told financial analysts during a morning call that the Summit deal brings a number of strategic benefits, including continuing “to build our leadership as a modern, diversified, pure play content company, equally well positioned to capitalize on opportunities in the tradition and digital media space.”

But just as quickly, the Lionsgate topper was back to talking about the benefits of bringing the Twilight franchise into the same studio that is now launching The Hunger Games on March 23.

“That expands our content portfolio and increases leverage with all of our buyers,” Feltheimer told analysts, underlining the value of financial and strategic muscle in distributing movies globally.

All of which underlines how, no matter how Lionsgate touts its diversification away from movie theatres, the Canadian company’s stock price remains dependent for continuing altitude on how The Hunger Games and the rest of the Lionsgate and Summit film slates do at the local multiplex.