Lionsgate reported mixed results for its fiscal third quarter, with revenue of $998.5 million comfortably exceeding Wall Street estimates but adjusted earnings of 14 cents per share undershooting forecasts for 18 cents.
Like other traditional media peers, Lionsgate had sought to manage the message of taking a hit to the balance sheet in order to invest in streaming. It has said it plans to put about $150 million into Starz International in fiscal 2020. The outlay has been generating results for Starz, with 2.1 million OTT subscribers being added in the period, for a total of 8.6 million. Overall global subscribers reached 28.5 million.
The film operation, which has been making strides after stumbling in the latter part of 2018, saw revenue rise 30% in the quarter, to $473.9 million. Segment profit was $49 million thanks to Knives Out, which is on track for $300 million in global box office, as well as strong ancillary results for John Wick: Chapter 3 – Parabellum.
Improvements in film and strategy at Starz — whose programming chief, Carmi Zlotnik, exited last month — will likely be front and center as Lionsgate executives take questions from Wall Streeters on the quarterly numbers.
There’s also been on-and-off takeover speculation about Lionsgate itself as the media industry consolidates. Rumors have linked it with giants Netflix and Apple as content becomes increasingly attractive in the age of streaming battles. Lionsgate owns The Hunger Games, Twilight and John Wick franchises, among others. CBS offered Lionsgate about $5 billion to buy Starz last year, but the talks broke off when Lionsgate determined the offer was insufficient.
The long-term deal with Comcast calls for Starz to continue carriage on Xfinity TV with a transition to an à la carte model — similar to deals it has signed with other major MVPDs. It will let Starz license content to NBCU’s upcoming Peacock streaming service and visas versa, giving Starz some additional content.
The motion picture group’s high-profile projects include the ninth installment of the Saw franchise. The star-studded Spiral: From the Book of Saw comes out in May. The studio recently greenlighted a film about NFL legend Kurt Warner from Kingdom Story Company, the third in a faith-based film slate.
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