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Lionsgate, continuing to rack up box-office gains with its Oscar-nominated La La Land release, on Wednesday reported a third-quarter loss, despite overall revenue rising 12 percent, as it recorded one-time transaction costs associated with its merger with Starz.
The studio, led by CEO Jon Feltheimer, posted a loss of $31 million, a swing from a year-earlier profit of $33 million. Lionsgate, having just completed its $4.4 billion acquisition of premium cable network Starz, posted $80 million in one-time restructuring and other costs related to the merger.
Stripping out the unusual items stemming from the Starz merger, the studio reported increased earnings across its film, TV and media network segments. Overall revenues rose to $752 million, compared to a year-earlier $670.5 million, largely due to gains in TV production and the acquisition of Starz.
The studio reported an adjusted earnings per share at 21 cents in the third quarter. Lionsgate was expected to report per-share earnings of 17 cents for the fiscal third quarter, according to analysts surveyed by FactSet.
The motion picture segment at Lionsgate saw revenues drop 13 percent to $440 million, with releases like Tyler Perry’s Boo! A Madea Halloween and Hacksaw Ridge, even as segment profit jumped 55 percent on lower direct operating expenses and distribution and marketing expenses.
On the movie side, the studio is poised for a big showing at the upcoming Academy Awards after collecting 26 nominations spread across four films, including a record-tying 14 noms for Damien Chazelle’s musical La La Land, which stars Emma Stone and Ryan Gosling.
La la Land, which played mostly in limited release in December, during the last part of Lionsgate’s fourth quarter, will be a windfall for the studio into the new fiscal year. Motion picture group head Eric Feig told analysts during an afternoon call that the awards-season contender continues to overperform at the box office, domestically and internationally.
“It has worked basically in every single territory it has opened in, and we’re really optimistic about its launch [next Tuesday] in China,” he said. La la Land is set to cross the $300 million worldwide box-office mark this week, the studio forecast.
TV production segment revenues rose 39 percent to $229 million, driven by deliveries of Orange Is the New Black, Dear White People and the three-hour musical event Dirty Dancing. The segment profit rose 117 percent to $26 million.
Lionsgate during an afternoon analyst call announced the studio had inked a new, multiyear home entertainment deal with EuropaCorp. to include the sci-fi action film Valerian and the City of a Thousand Planets from writer, director and producer Luc Besson. Senior execs at the studio argued they were limiting any downside from the theatrical movie business by diversifying into Starz and expanding TV production.
“These initiatives all reflect the continued scaling of our global content platform, growth we’re achieving through the development of major new film and TV properties, as well as by forming partnerships with other leading content companies around the world,” Feltheimer told analysts.
Elsewhere, the new Media Networks division reported revenues of $85 million and a segment profit of $33 million.
After the merger with Starz, Lionsgate’s combined company away from the multiplex now has a 16,000-title film and TV library, making it the largest independent TV business in the world, with 87 original series on 42 U.S. networks. The TV output includes franchises like Orange Is the New Black, Greenleaf, The Royals and Nashville.
The new entity also includes the operation of or investment in 30 channel platforms around the world, namely the flagship Starz platform that reaches 24 million U.S. subscribers, the Starz Encore network with over 32 million subscribers and five OTT services.
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