Lionsgate takes Q1 hit from film marketing

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

Lionsgate posted a loss of $53.1 million for the three months ending June 30, compared with a loss of $3.6 million in 2006.

The first-quarter loss swelled as Lionsgate recorded a $47 million increase in theatrical marketing expenses compared with 2006 due to an expanded slate of films.

Revenue for the latest quarter rose to $198.7 million, against $172.4 million in 2006, as Lionsgate saw gains in motion picture and television sales.

Total motion picture revenue was $170.3 million, up 3% from a year-earlier $165.2 million. But theatrical revenue came to $19 million, compared with $18.5 million in 2006, as early optimism for titles including "Hostel 2," "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 in a statement, added that the first quarter reflected frontloaded costs in line with expectations.

Lionsgate executives will address financial analysts Friday morning.

Lionsgate posted home entertainment revenue of $103.8 million, down 10% from $114.8 million in 2006, while broadcast sales of motion pictures came to $22.4 million, up 51% from a year-earlier $14.8 million.

The Canadian company also saw international revenue of $22.7 million, a jump of 47% from $15.5 million in 2006. TV production revenue came to $28.4 million, up 289% from $7.3 million in 2006.
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