Less roar in store at Lionsgate

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Look for a leaner 2010 theatrical slate at Lionsgate accompanied by a smaller boxoffice take and, judging from Tuesday's action, a lower stock price.

After Lionsgate told analysts Tuesday that it expects only $400 million in U.S. boxoffice sales this year, down from previous estimates of up to $550 million, its shares sank 27% to $3.90, about a three-year low.

Separately on Tuesday, entities controlled by Carl Icahn disclosed the purchase of more than 1 million Lionsgate shares for about $4.53 each, raising the financier's stake to nearly 10.6%.

Executives also said to expect fiscal 2009 revenue of about $1.4 billion, against an earlier target of as much as $1.6 billion, and that 2010 home entertainment revenue will decline by 12%.

Grappling with a recession and shrinking profit margins, the mini-major also said it will release about a dozen movies in 2010, down from the 15-16 it expects to release this year. It will spend about $200 million less on production and marketing costs for its film slate next year while greenlighting safer movies.

Lionsgate has suffered lately with such titles as "The Spirit," "Punisher: War Zone" and "Transporter 3."

"Breaking even or taking losses, even small ones, on so many films this year is totally unacceptable," Lionsgate CEO Jon Feltheimer said. "We must do better, and we will."

On Monday, Lionsgate posted a third-quarter loss of $93.4 million, against net income of $7.3 million in 2008, but executives waited until Tuesday to host a conference call. Revenue was up 8.4% to $324 million, but operating expenses rose 45% to $417.9 million.

The leap in film distribution and marketing expenses was caused in part by partner Pride Pictures not sharing theatrical P&A costs on the last three pictures of fiscal 2009.

The studio also indicated that it will record $47 million in reserves and charges in the fourth quarter, including a $20 million write-down on a DVD deal with HIT Entertainment.

Nevertheless, Feltheimer told analysts that Lionsgate remains on the hunt for acquisitions. It recently picked up the TV Guide Network for $255 million. (partialdiff)
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