In what the company described as a “disrupted and difficult year for our industry,” Lionsgate has reported “disappointing” second quarter financial results, with an operating loss of $88.6m on revenue of $948.6m.
The company’s studio business had an operating loss of $34.8m, compared to an operating income of $76m for the second quarter of the previous year. The motion picture segment of Lionsgate’s studio business produced a profit of $2.6m, compared to $67.5m the previous year. The television production segment showed a profit of $24.4m, compared to $63.2m.
In his comments on the results, Lionsgate CEO Jon Feltheimer conceded that on the August release of Borderlands, the company’s video game-based action comedy that grossed only $33m worldwide on a $100m-plus budget, “nearly everything that could go wrong did go wrong.”
Feltheimer said the film “sat on the shelf for too long during the pandemic, and re-shoots and rising interest rates took it outside the safety zone of our usual strict financial models.”
“Several of our other releases in the quarter, though cushioned by financial models that worked as intended, didn’t live up to either our standards or our projections,” he added.
Feltheimer insisted, though, that “our business model still works: risk-mitigated film and television slates, efficient production and marketing spends, a diversified portfolio of assets and a strong library that serves as the ballast of our business.”
During a conference call with analysts, Adam Fogelson, chairman of Lionsgate’s motion picture group, said that going forward the company will be “leaning into” franchises such as John Wick, The Hunger Games, Saw and Highlander.
Said Fogelson: “We’re going to continue to be super financially disciplined but there will be an extra emphasis, not only in what we make but in what we develop, to make sure that we are aligned with creative production, with physical production, with marketing, with distribution and with our filmmakers to bring the right kind of films to the market.”
Asked about what some are predicting will be an increase in merger and acquisition activity under the upcoming Trump administration, Feltheimer acknowledged that “there’s going to be a lot of movement of pieces.”
“Will both of the sides of our business be involved in those conversations?,” he added. “I think that’s extremely likely.”
Lionsgate is set to complete the separation of its studio business from its Starz premium cable and streaming business by the end of 2024.
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