Lionsgate Posts First-Quarter Loss as Starz Grows Again

John Wick Chapter 3 - Parabellum - Still 7 - Publicity-H 2019
Niko Tavernise

John Wick Chapter 3 — Parabellum.

The studio, led by CEO Jon Feltheimer, unveiled its latest financial results on Thursday as Starz's global subscriber base jumped to 26.5 million.

Lionsgate on Thursday unveiled first-quarter financial results that posted a loss on higher overall revenues and Starz continuing to grow with 400,000 new domestic streaming subscribers to get to 4.4 million in all.

The studio, led by CEO Jon Feltheimer, reported a widened net loss of $54 million, compared to a year-earlier loss of $7.9 million.

The diluted loss per share was 25 cents, against a 4 cents a share loss for the three months before June 30 last year. The adjusted diluted earnings per-share loss of 2 cents beat a consensus loss of 4 cents.

Overall revenue was $963.3 million, compared to a year-earlier $932.7 million. That beat an analyst forecast for $962.6 million in total revenues.

“We’re pleased to report strong financial results in the quarter and a great start to the fiscal year,” Lionsgate CEO Jon Feltheimer said in a statement ahead of an analyst call. “All of our businesses are performing well. Our Television Group had its best development season ever, John Wick: Chapter 3 reaffirmed our thesis that mid-priced action films have a valuable place in the market, and Starz achieved strong growth in its domestic OTT business while continuing to expand its premium SVOD platform around the world."

The Hollywood studio unveiled its latest financial results after speculation that CBS is eyeing Starz as a takeover target. Lionsgate has recently increased investment in the global rollout of Starz. During its latest quarter, Starz's overall global subscriber base came to 26.5 million, up 2.6 million new customers year-over-year.

Feltheimer on an analyst call touted the studio's Starz growth strategy. "On the domestic front, as consumer viewing continues to move to a subscription video-on-demand world, Starz is continuing to capture over-the-top market share, outpacing its peer group. With the debut of the expanded two-part sixth season of Power less than 3 weeks away, we expect this momentum to continue."

Starz COO Jeffrey Hirsch forecast the premium cable channel would have 6 million domestic streaming subscribers by the end of 2019, and Superna Kalle, executive vp of of International digital networks at Starz, commented on the global rollout.

"International... is growing week-on-week. We see a very, very strong cadence. And as everyone else has mentioned, we're ahead of schedule. So by year-end, I expect that the growth rate will be pretty terrific," Kalle said.

Lionsgate in 2016 acquired Starz for $4.4 billion in cash and stock to create what the studio has called a global content powerhouse. The deal aimed to allow Lionsgate to focus on growing Starz as a pay TV network, including online and internationally, and to diversify the studio and its motion picture group, led by Joe Drake, from the ups and downs of theatrical box office.

Lionsgate during the latest quarter saw media network revenue, which mostly consists of Starz, rise 5 percent to $372.4 million, compared to a a year-earlier $355 million.

The studio's Motion Picture Group posted segment revenue up 8.9 percent to $397.8 million, compared to $365.3 million a year ago, as Lionsgate saw strong box office from John Wick: Chapter 3 — Parabellum. Television production revenue was $279.8 million, virtually unchanged from a year-earlier $279.4 million.

Shares in Lionsgate rose by 35 cents, or nearly 3 percent, to $13.01 in after-market trading following the release of the studio's latest financial results.