Lionsgate Narrows Quarterly Loss on Higher Revenues

Lionsgate, led by CEO Jon Feltheimer, released its second quarter financials amid continuing strategic talks where the media giant may sell or spinoff its premium cable and streaming platform or its studio business.

The Hollywood studio saw overall revenue hit $1.01 billion, which beat a Zacks Consensus Estimate for $990 million in revenues. Lionsgate also narrowed its net loss to $887.9 million, against a year-earlier net loss of $1.8 billion, due to the impact of non-cash goodwill and intangible asset writedowns and restructuring charges in the media networks division. That included one-time charges related to Starz leaving Latin America and the UK as the streaming platform looks to focus on Canada and India beyond the core U.S. market.

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Feltheimer on an after-market analyst call welcomed the tentative deal between SAG-AFTRA and the AMPTP. “I want to start by saying that we’re very pleased that the strikes are over, with a fair and equitable resolution for all parties, and we can all get back to work making great content for our global audiences,” he said, opening his prepared remarks.

Later, during questions from analysts, Feltheimer said he anticipated a changed financing landscape for Hollywood film and TV content coming out of the U.S. actors strike: “There’s going to be some costs attached to this. And that’s okay. Maybe we have to work a little harder to take some costs out of the business … We just have to continue to be really thoughtful about the business, be smart about how we pay for things. They’ve come up with something equitable for all the participants, so we just have to figure out how to pay for it.”

Lionsgate’s base of global streaming subscribers for Starz during the second quarter rose by 480,000 new subscribers to around 26.8 million for the three months to the end of September. That compares to 26.3 million at the end of its first quarter of fiscal 2024.

Lionsgate posted an adjusted loss per share of $3.79. The studio’s media networks business, which includes Starz, saw segment revenues rise to $416.5 million, from a year-earlier $396.1 million.

Lionsgate has been exploring its options for Starz, including a possible separation of the pay TV and streaming business and its studio operations. The goal appears to be creating two standalone companies so investors can value the Starz and studio assets separately.

“On the strategic front, we’re actively engaged in steps toward highlighting the value of our two separate businesses and expect to update you by the next call,” Feltheimer told analysts about progress on the planned Lionsgate spinout. On the programming side, Starz has green-lit Spartacus: House of Ashur, a re-imagining of the original 2010 series from Spartacus creator, writer and executive producer Stephen S. DeKnight, who will serve as showrunner and Nick Tarabay will also return to reprise his role as Ashur.

During the second quarter on the studio side, the motion picture segment revenues came to $396 million, up from a year-ago $224 million, driven in part by John Wick: Chapter Four home entertainment. Lionsgate is set to see Hunger Games: The Ballad of Songbirds and Snakes hit theaters worldwide on Nov. 17.

Lionsgate Motion Picture Group chair Joe Drake on the analyst call forecast box office success for that Hunger Games sequel after a glitzy world premiere screening in London UK. “Tracking right now looks really strong. There’s a new, younger female audience showing real enthusiasm, as are men,” he reported.

Elsewhere, TV production segment revenues fell 9 percent to $394 million, compared to $431 million in the same period last year, owing to strike impacts on episodic deliveries. Library film and TV titles generated $870 million, up 17 percent year-over-year.

Lionsgate recently acquired certain assets of Entertainment One from Hasbro for $500 million, a transaction se to close later this year. The Hollywood studio also looks set to acquire an even bigger unspecified majority stake in 3 Arts Entertainment.

“We’re in final discussions to extend our partnership with our industry-leading talent management and production company, which serves as a source of financial stability and growth for our television business segment,” Feltheimer said of 3 Arts on the analyst call.

“We had a strong financial quarter with another robust library performance and segment profit growth across our film, television and Starz businesses,” Feltheimer added in a statement on Thursday. Lionsgate reaffirmed its full year 2024 guidance, even amid the negative impact of the Hollywood actors strike now settled.

Feltheimer on the analyst call put the negative financial impact of the strike at around $30 million, “a little less than we originally forecast.”

“We are moving toward the close of an eOne acquisition that we believe will strengthen our studio business on a standalone basis. At Starz, the reorganization, restructuring and overhead reduction reflect our focus on preparing the service to thrive as a profitable and successful standalone company,” Feltheimer added.

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