On heels of 'Hostel II,' red flows

Marketing costs, slim b.o. worsen Lionsgate's Q1 loss

A steep rise in theatrical marketing costs led to a ballooning first-quarter loss for Lionsgate Entertainment, the Vancouver-based company said Thursday.

Lionsgate posted a loss of $53.1 million for the quarter ending June 30, compared with red ink of $3.6 million a year ago.

The first-quarter loss swelled as Lionsgate recorded a $47 million increase in theatrical marketing expenses compared with a year ago because of an expanded slate of films.

Revenue for the latest quarter rose 15.3% to $198.7 million as Lionsgate saw gains in motion picture and television sales.

Total motion picture revenue edged ahead 3% to $170.3 million. Theatrical revenue came to $19 million, up 2.7%, as early optimism for such titles as "Hostel: Part II," "The Condemned" and "Delta Farce" were not fully realized.

"Although we are disappointed in the weakness of the early part of our theatrical slate, this performance is offset by our diversification and the overperformance of our other businesses as well as the recognition that the strongest part of our slate is still ahead," Lionsgate co-chairman and CEO Jon Feltheimer said, adding that the first quarter reflected frontloaded costs in line with expectations.

Lionsgate executives will address financial analysts today.

The company posted home entertainment revenue of $103.8 million, down 10% from a year ago, while broadcast sales of motion pictures came to $22.4 million, up 51%.

The Canadian company also saw international revenue of $22.7 million, a jump of 47%. TV production revenue came to $28.4 million, up 289%.
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