Lionsgate Touts Benefits of Digital Diversification

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Jon Feltheimer

The mini-studio told shareholders it's exploiting new media platforms to expand away from the volatile theatrical movie business

Lionsgate on Monday told shareholders nervous about the entertainment business climate it was exploiting a rapidly expanding array of digital platforms to take the Hunger Games studio well beyond the confines of the volatile exhibition business.

"There's no question that the summer box office has been soft. We think it's due mostly to product that is not as good as a year ago," Lionsgate CEO Jon Feltheimer told a concerned investor questioning falling attendance and sales at the local multiplex. He added that Lionsgate is creating content for the next wave of premiere content distributors in an expanding streaming and subscription pay universe.

"I know it's making a lot of people in our industry nervous," Feltheimer said of the increasing pace of disruption and disintermediation in the global entertainment space. "But at Lionsgate we see these changes as an opportunity to reap the benefits of being a disruptive company in a disruptive industry."

In his traditional pep talk to shareholders, Feltheimer said Lionsgate was paying down debt to strengthen its balance sheet and seize market opportunities. "Our strong cash flow allowed us to repurchase our stock, increase our dividend and re-invest in our content," he said.

The shareholders meeting at Toronto's Shangri La Hotel took place as the Toronto Film Festival was in full swing in the surrounding downtown hotels and cinemas. Feltheimer in his big-picture strategy discussion pointed to a successful diversification into TV, content licensing deals like Lionsgate's pact with the Alibaba streaming service in China, video gaming, ancillary deals for film projects such as the upcoming Hunger Games traveling museum and new movie properties including Power Rangers and Gods of Egypt.

He noted that Lionsgate content was viewed digitally last year by more than 50 percent of the people watching it worldwide. "That says to all of us at Lionsgate that the future looks pretty bright," Feltheimer said.