Lionsgate released its first quarter financial results after the spinoff of the media giant’s studio business into a separately traded stock.
The studio, led by CEO Jon Feltheimer, posted a first quarter net loss attributable to shareholders at $59.4 million, compared to a year-earlier $70.7 million loss, on overall revenue falling to $834.7 million, against a year-earlier $908.6 million.
“We’re pleased to report a solid quarter despite unprecedented industry disruption and the aftereffects of the strikes,” Feltheimer said in a statement that accompanied his company’s latest financial results. Later during an after-market analyst call, he cited efforts by Lionsgate to mitigate the impact of industry-wide headwinds.
“There are things in our environment over which we have little control: the impact of disruption on our buyers & distributors, market volatility and the long tail of the strikes and the pandemic,” Feltheimer argued.
At the same time, he pointed to separating the studio business from Starz, forging a theatrical release slate driven by three to four tentpoles a year starting in fiscal 2026 (which includes adapting Suzanne Collins’s next Hunger Games book, Sunrise on the Reaping), building out a TV production slate led by Spartacus: House of Ashur and The Hunting Wives for Starz and Seth Rogen’s The Studio for Apple TV+, cutting operating costs and launching new free, ad-supported streaming channels.
Feltheimer also announced Starz and BritBox, the BBC Studios-owned streaming service, are set to launch a new content bundle next quarter to offer their respective apps directly through Starz’ website.
Elsewhere, the Lionsgate boss said on the TV front the studio had reduced the number of combined Lionsgate and eOne producer deals by 70 percent, with $30 million in projected annualized cost savings.
He also pointed to the Motion Picture group wrapping production on Graham King and Antoine Fuqua’s Michael Jackson biopic, getting near to completing the John Wick spinoff Ballerina, starting production on Ruben Fleischer’s next installment of the Now You See Me franchise and Francis Lawrence’s adaptation of Stephen King’s The Long Walk, and readying Chad Stahelski’s Highlander for a production start in early 2025.
“We expect to begin seeing a meaningful uptick in revenue later this year,” Feltheimer told analysts as he outlined strategic moves to boost the studio’s content and distribution businesses.
During the latest quarter, Lionsgate posted an earnings per-share loss of 25 cents, compared to a year-earlier per-share loss of 31 cents. The studio reported its latest financial results after in May 2024 debuting Lionsgate Studios as a standalone, publicly traded company, having been formed by combining Lionsgate’s studio business with Screaming Eagle Acquisition Corp. (SEAC), a special purpose acquisition company.
Launching Lionsgate Studios on NASDAQ has aimed to give the Hollywood studio options before completing a long-awaited separation of the film and TV studios and Starz, including raising fresh capital and merging with existing businesses. Lionsgate Studios is made up of Lionsgate’s Motion Picture Group and Television Studio business, along with a 20,000-strong film and TV library.
Other recent measures to boost shareholder value include giving investors an upcoming vote on a plan to collapse two classes of shares into one class and offer a 12 percent premium to class A voting shareholders at Lionsgate.
During the first quarter, the company’s studios business, which combines the Motion Picture and TV production segments, saw revenue fall 6 percent to $588.4 million. The media networks revenue, which is mostly Starz Networks, rose 1 percent to $345.3 million.
Starz in North America, where Lionsgate is focusing its growth efforts for the platform, ended the first quarter with 13.2 million streaming subscribers, down from 13.38 million customers at the end of the fourth quarter of fiscal 2024.
The premium platform had another 8.1 million linear subscribers at the end of the latest quarter, a fall from 8.42 million at the end of the fourth quarter. The total number of global subscribers at Starz, excluding customers to be cut in Australia, Latin America and the UK, came to 27.17 million at the end of the first quarter, against 27.54 million for the fourth quarter.
The Motion Picture group revenue fell 15 percent to$347.3 million, due to an unfavorable year-earlier comparison with John Wick: Chapter Four box office. This May, The Strangers: Chapter One grossed $43 million at the global box office. The Motion Picture group segment profit came to $86.1 million for the first quarter, up 24 percent against a year-earlier $69.2 million, due in part to a lower P&A (prints and advertising) spend during the latest quarter.
Elsewhere, television production revenue rose 10 percent to $241.1 million during the first quarter, driven by contributions from eOne and as the TV business continued to recover after the dual Hollywood actors and writers strikes last year were settled with increased content deliveries.
Kevin Beggs, chair and chief creative officer of the Lionsgate Television Group, told analysts the post-strike hangover had been longer than expected, but demand for TV series remains strong. “What we’re seeing on the development side is a pretty robust demand for product. There is more financial discipline about the budgets that are going to be commissioned,” he added.
But Beggs said “great creative” could stand out in a crowded TV market and episodic TV deliveries were expected to ramp up in the back half of the fiscal year as demand recovers.
And Adam Fogelson, the new head of the Motion Picture Group, pointed to 13 Broadway shows in the pipeline, including adaptations of major Lionsgate IP, and the upcoming launch of a John Wick AAA game, as progress towards adapting studio properties for additional ancillary revenues.
“The group’s been doing a lot of great development work in the last few years, but it’s time to put the pedal down and start monetizing, and the only reason to do that is because the content deserves it,” Fogelson told analysts.
The Motion Picture group head also addressed the future of theatrical box office, and downplayed the industry getting back the heady days of a record $11 billion in ticket receipts anytime soon. But he added recent box office wins with The Ministry of Ungentlemanly Warfare, Unsung Hero and The Strangers: Chapter 1 bode well going forward.
“So we are really bullish about what the theatrical business can do, especially because we have the benefit of an incredibly careful and precise and small overhead relative to the competition, and are managing both the production costs and the marketing costs in a very different way,” Fogelson argued.
