Lionsgate Predicts Profits and Lower Debt Post-Summit Takeover

TORONTO - Lionsgate’s fourth-quarter loss Wednesday from Summit Entertainment acquisition and The Hunger Games marketing costs wasn’t a surprise.

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But there was head-scratching among financial analysts over the size of the indie studio’s Q4 write-downs, and their variety, including purchase price accounting changes.

So Lionsgate CEO Jon Feltheimer on Thursday told investors to look beyond the recent pain to the gains to come as he set the table for full-year 2013 and beyond.

With around 90% of earnings from The Hunger Games release still ahead of the indie studio, Feltheimer predicted $900 million in EBITIDA will be generated over the next three years.

“With this level of profitability, we remain confident the Summit term loan will be paid down on schedule and our corporate debt at the Lionsgate level will be significantly reduced,” he told analysts during a morning call.

Vancouver-based Lionsgate has already paid down $100 million of the $500 million Summit term loan, as part of a bid to challenge the major studios with young adult blockbuster movies like the Hunger Games and Twilight franchises.

On the TV side, Lionsgate has secured a fifth-season order from Showtime for Nurse Jackie, and Anger Management will start airing on FX on June 28.

“Charlie Sheen’s performance shows why he has been, and continues to be, one of the biggest TV stars in the world,” Feltheimer said Thursday as part of his usual pep-talk to analysts.

Anger Management has to date generated $600,000 per-episode in five territories sold.

Lionsgate expects to hear by early-September whether FX will move beyond the initial ten-episode order to take another 90 episodes.

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Back on the movie front, Lionsgate anticipates higher production costs for Hunger Games: Catching Fire, as it goes for an even bigger wow-factor.

But on the other side of the ledger, Patrick Wachsberger, Lionsgate Motion Picture Group co-chair,  reported Lionsgate did big business in Cannes licensing Hunger Games: Catching Fire to international distributors.

“We had a lot of competition form a lot of buyers that wanted to get in,” he told the analyst call.

Wachsberger also predicted Hunger Games: Catching Fire will reach the $400 million mark in international box office.