Lionsgate Thursday reported $50 million in costs last quater due to COVID-19, said it anticipates more are coming and that it’s seeking insurance to cover what it can.
The last media and entertainment company to report its March quarter as earnings season ends, Lionsgate posted revenue for the three months of $944 million, an operating loss of $12 million and net loss attributable to Lionsgate shareholders of $45 million, or a $0.20 diluted net loss per share.
The shares closed up 1.41% at $8.61 for the session but were losing ground in after-market trade, down nearly 5%.
Hitting the main points ahead of a conference call scheduled for 5 pm ET, the mini-major said over-the-top paid subscribers increased to 10.6 million, driven by strong sequential gains at Starz, which ended the three month with 6.8 million domestic OTT paid subs.
“We reported a strong quarter to end a solid fiscal year despite the disruption posed by the COVID-19 global pandemic,” said Lionsgate CEO Jon Feltheimer. “Our Lionsgate family has risen to the challenge of these unprecedented times with resilience, dedication and collaboration. Thanks to their efforts, Starz is continuing to deliver great entertainment to our audiences in the current at home environment, and we’re working closely with all of our content partners to ensure that when production resumes and theatres re-open, we will be ready.”
Media Networks revenue of $358 million was essentially unchanged from the prior year quarter while segment profit of $26 million was impacted by the continued investment in STARZPLAY’s international expansion. STARZPLAY has launched in 50 countries and exceeded subscriber targets for the fiscal year.
Motion Picture sales increased by 10% to $393 million compared to the prior year quarter due to the strong home entertainment performance of Knives Out and other titles. The only new theatrical release in the quarter, I Still Believe, was in theatres for only four days before they closed, but the studio pivoted quickly to launch the title in an exclusive premium video-on-demand window to mitigate lost theatrical revenue. Segment profit was $101 million.
Television Production revenue was $258 million and profit was $22 million driven in part by strong library sales.
Lionsgate said that as a direct result of the COVID-19 global pandemic and the related economic disruption, including the worldwide closure of most theatres, international travel restrictions and the pausing of motion picture and television productions, during the fourth quarter of fiscal 2020, the company said it incurred $50.5 million in incremental costs which were expensed in the period.
These costs include $46 million reflected in direct operating expense, which include certain motion picture and television impairments and development charges associated with changes in performance expectations or the feasibility of completing the project, costs associated with the pausing of productions, including certain cast and crew costs and incremental costs associated with bad debt reserves. There were $4.2 million in distribution and marketing expense, which primarily consists of early marketing spends for film releases and events that have been canceled or delayed, other costs to transition the company to a remote-work environment.
“We expect to incur additional incremental costs in future periods. We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in our consolidated financial statements,” Lionsgate said.