Lionsgate reports steep third-quarter loss

Overall motion picture revenue was down 2%

TORONTO -- An underperforming theatrical release slate and a DVD distribution reserve led Lionsgate on Monday to swing to a steep third-quarter loss and warn that it might miss its full-year free cash flow and EBITIDA guidance.

Vancouver-based Lionsgate recorded a loss of $93.4 million, or 81 cents per share, for the three months ending Dec. 31, against earnings of $7.3 million or 6 cents per share, in 2008.

Third-quarter revenue was up 8.4% to $324 million. But Lionsgate said that disappointing theatrical performance by "The Spirit," "Punisher: War Zone" and "Transporter 3" during the latest quarter will negatively affect EBITIDA and free cash flow for full-year 2009.

Lionsgate also took a reserve for its HIT Entertainment North American DVD distribution business because of a soft preschool nontheatrical retail market and high returns from the field.

Overall motion picture revenue was $254.9 million, down 2% from a year-earlier $261 million.

Lionsgate's home entertainment revenue was down 11% to $101.5 million, international revenue fell 8% to $41.1 million, and Mandate Pictures contributed revenue of $8.3 million, down 34% from $12.5 million in 2008.

Lionsgate offset those declines with TV production revenue rising 82% to $69.2 million, as it delivered more episodes, including "Mad Men" for AMC and "Crash" for Starz. And TV revenue that includes the motion picture segment rose 25% during the third quarter to $39 million.

Lionsgate said the TV division remains on track to deliver $250 million in revenue for full-year 2009.

But the studio will have to explain to analysts Tuesday during a morning conference call how it will reach earlier forecasts for fiscal 2009 of between $1.5 billion and $1.6 billion in revenue, free cash flow of $100 million, and EBITIDA at break even in a year increasingly dependent on backend performance to meet targets.

Lionsgate CEO Jon Feltheimer said his company was affected during the third quarter by "the same broad economic factors reported by other companies in the media and entertainment sector."
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