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Lionsgate on Thursday posted a smaller fourth quarter loss on lower overall revenue as the Hollywood studio continues to drive into the streaming space with Starz.
The studio saw its global streaming subscriber base for Starz grow year-over-year to 16.7 million, with the domestic streaming subscriber base hitting 10 million. With Starz global subscribers standing at 29.5 million at the end of the fourth quarter, Lionsgate now has more over-the-top digital Starz subscribers than the 12.8 million traditional linear TV subscribers it had at the end of the fourth quarter.
Shares in Lionsgate popped in after hours trading to $19.70, up $1.02 or 5.5 percent, topping a previous 52-week high of $19.68 reached on May 25. That comes as market speculation after Amazon picked up MGM grows that the Hollywood studio could get snapped up by other Big Tech players looking for franchise content like The Hunger Games, Twilight, Saw and John Wick series, or add to their streaming offerings for consumers via Starz.
“Operationally, it was a year of strong subscriber growth, great new television series, record library sales and a successful pivot to alternative release strategies for many of our films,” Lionsgate CEO Jon Feltheimer told analysts during a conference call as he recalled the last pandemic-impacted fiscal year.
And as industry consolidation gathers pace, including a recent $43 billion deal for AT&T to merge WarnerMedia with Discovery to create a global streaming giant, Feltheimer wouldn’t be drawn when asked how Lionsgate might be eyeing possible mergers and acqusitions on the horizon that included Starz. “We’re going to keep our head down and just keep executing on our plan. We don’t want to get distracted frankly by this concept of scale,” he told analysts.
At the same time, Feltheimer argued the Discovery/WarnerMedia and Amazon/MGM deals represented “a resounding affirmation about the value of content, the value of IP and the value of brands.”
On the analyst call, Lionsgate execs pitched Starz as a premium pay TV service with grown-up content that can sit on top of other platforms, not a broad general entertainment platform like Netflix or Amazon Prime. They projected Starz was likely to get close to 60 million subscribers by 2025, with around 80 percent of that customer base expected to be streaming subscribers.
During the latest quarter, Lionsgate reported adjusted earnings of 17 cents per share, which beat a Wall Street estimate for a 33 cents per-share loss during the latest quarter. The studio posted a quarterly net loss attributable to shareholders at $37.7 million, which compared to a year-earlier $44.9 million loss.
Fourth-quarter revenues came to $876.4 million, down from a year-earlier $944.3 million. That beat analysts having projected quarterly revenues of $815 million for the latest financial quarter.
The studio’s media networks revenue, which accounts mostly for Starz, rose 12 percent to $401 million on the strength of strong streaming revenue growth. “We’ve… been busy aligning our content businesses behind the growth of Starz, and in fiscal 2021 we hit our full stride with 15 Lionsgate Television series launched, preparing to launch or in production for Starz,” Feltheimer told analysts.
And motion picture revenues fell to $292.4 million, down from $393.3 million a year ago as the studio felt the impact of fewer theatrical releases in the quarter amid movie theater closings during the COVID-19 pandemic. Lionsgate also pivoted to an online release strategy for titles like Run, Antebellum and Fatale.
Television production fell to $210.7 million, from $258.1 million last year. Feltheimer pointed to a “substantial ramp” in original content spend expected for fiscal 2022, much of it to land on Starz.
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