Subscriber growth at Starz lifted shares of Lionsgate in after-hours trading, giving investors optimism that the media company will be able to demand top dollar when it finalizes plans to sell off its cable and streaming arm. Streaming subscribers jumped to 26.3 million worldwide, a 57% year-over-year increase.
On an earnings call, Lionsgate CEO Jon Feltheimer said that potential buyers are also interested in the company’s film studio, suggesting that Amazon’s $8.5 billion purchase of Metro-Goldwyn-Mayer had made Lionsgate a more attractive target.
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“Our library is newer, fresher than the MGM library,” Feltheimer said.
His remarks came as Lionsgate saw a dip in revenue for the most recent fiscal quarter, dropping from $901.2 million to $893.9 million. Losses also widened at the company, increasing from $45.4 million to $119 million.
Motion picture segment revenue decreased 4% to $278.8 million. However, profits increased 14% to $50.5 million because fewer wide release theatrical films in the quarter meant that Lionsgate didn’t spend as much on marketing. Television production revenue climbed 12% to $432.3 million, compared to $386.1 million in the prior year quarter, while segment profits increased five-fold to $19.6 million.
On the earnings call, Feltheimer said that the studio has started production on its Hunger Games prequel, “The Ballad of Songbirds & Snakes,” and talked up “John Wick: Chapter Four,” another installment in the revenge and retribution franchise that will hit theaters on March 24, 2023. On the television side of its business, Lionsgate has found success with “Ghosts,” “Home Economics” and “Julia,” Feltheimer said.
The Lionsgate chief did sound a note of warning even as he positioned Lionsgate as an attractive acquisition target.
“We’re cognizant of the headwinds in today’s business environment,” he said. “The economic uncertainty does make it harder to forecast our business. The pandemic has gone on longer than expected and continues to add cost. There are growing pains in the streaming world and aging pains in the linear legacy businesses. In response, we’re taking steps to conserve capital, keep our balance sheet strong, streamline operations and mitigate risk while we continue to do what we do best: create great content & franchises that build our most important long-term asset, our world-class library.”
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