Lionsgate Second-Quarter Financial Results Beat Analyst Expectations

Jon Feltheimer - Getty - H 2018
Mike Pont/FilmMagic

The studio, led by CEO Jon Feltheimer, saw continued traction from Starz, which added 1.3 million more customers to reach 25.1 million in all.

Lionsgate on Thursday swung to a second-quarter loss on lower overall revenues, while still beating analyst expectations.

The company, led by CEO Jon Feltheimer, posted a net loss of $144.1 million, which compares to a year-earlier profit of $15.5 million for the three months ending Sept. 30, as the latest quarter included a $114.1 million charge for litigation settlements.

The studio in August unveiled a tentative $92.5 million settlement deal to end a class-action suit brought by former Starz shareholders over its $4.4 billion merger with the premium cable channel in 2016.

Lionsgate posted a loss of 67 cents per share, against a year-earlier 7 cents a share profit, while the adjusted earnings per share was 22 cents, when stripping out the shareholder litigation fees, against an analyst estimate of 11 cents.

Overall revenues came to $901.1 million, compared to $941 million in fiscal 2018, as media networks posted revenues up 5 percent to $377.3 million. Analysts had forecast overall revenue of $891.8 million at Lionsgate.

At the same time, motion picture segment revenues were $379 million, down 2 percent from a year-earlier $385.7 million, and TV production revenue fell to $152 million, against a year-earlier $211.2 million.

Starz added 1.3 million overall subscribers during the latest quarter, reaching 25.1 million customers in all.

"During the quarter, Starz continued to build on its strengths as a modern, data driven premium streaming platform, well differentiated from our competitors and positioned to become an integral part of the bundles and packages emerging throughout our ecosystem," Feltheimer told analysts Thursday during a conference call.

The studio also reported gains in over-the-top and traditional multichannel video programming distributor subscribers, including on Hulu, as it looks to diversify its movie and TV business in the streaming arena.

The studio said the StarzPlay premium streaming service will launch on Virgin Media and to its approximately 4 million video subscribers in the U.K. on Nov. 29.

Buoyed by its partnerships with Amazon and Hulu, Starz boss Chris Albrecht told analysts that his premium service had potential in both U.S. and global markets to reach additional traditional, over-the-top and international subscribers for years to come.

"We're well positioned between what Starz does, and between the Lionsgate library, which gives us the opportunity to go to market very quickly," he argued. The exec also insisted the Hulu and Amazon partnerships in the U.S. were "complementary" to one another.

"The economics are very good for Starz in these over-the-top, wholesale relationships and we're hopeful that there will even more partnerships announced domestically, and globally," Albrecht added.

Nov. 8, 3:15 p.m. Updated with comments by senior Lionsgate executives made during an analyst call.