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TORONTO — Despite a steep first-quarter loss and a disappointing early film slate, Lionsgate Entertainment argues that the best is yet to come in the second half.
Vancouver-based Lionsgate also reiterated fiscal 2008 revenue of $1.1 billion and free cash flow of $100 million.
Lionsgate CEO Jon Feltheimer told analysts during a Friday conference call that poor boxoffice for such releases as “Hostel 2,” “The Condemned,” “Delta Farce” and “Bug” had left the studio $22 million “off-plan.”
Lionsgate predicted the first six releases of fiscal 2008 will produce an eventual $15 million loss.
Higher marketing expenses led Lionsgate on Thursday to post a first-quarter loss of $53.1 million, against a loss of $3.6 million in 2006. Virtually all the loss was attributed to $47 million in higher theatrical marketing costs stemming from an expanded release slate.
But Friday morning, Feltheimer said the strongest part of Lionsgate’s slate lay ahead, particularly with its next five releases: “War,” “3:10 To Yuma,” “Good Luck Chuck,” “Saw 4” and Tyler Perry’s “Why Did I Get Married?”
He told analysts that Lionsgate has “much higher return expectations for our next five releases, which represent the core of this year’s theatrical slate.”
Feltheimer added that the studio, which has diversified its revenue base away from theatrical boxoffice, offset the underperformance of its film slate with an “overperformance” from its home entertainment, TV and international divisions during the latest quarter.
For full-year 2008, Feltheimer predicted the studio’s P&A spending will continue to be front-loaded into the second quarter, producing a likely loss for the financial period, before Lionsgate rebounds with positive third and fourth quarters.
Feltheimer insisted that the studio’s P&A expenses are in line with that forecast. He added that Lionsgate only expanded its film slate after offsetting risk by taking on new financing partners, including Goldman Sachs and Montreal-based Societe generale de financement du Quebec, which invests in Quebec films on behalf of the provincial government.
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