UPDATED with conference call: Lionsgate revenue dipped to $745 million last quarter, down 20% from $938 million the year earlier, as OTT subscribers jumped and the shares headed higher in late trading.
The stock was up nearly 4% after rising 2% for the session. Vice chairman Michael Burns insisted on a conference call post-earnings that the company’s growth and positioning is not reflected in its stock price.
The motion picture producer and distributor, which just announced it’s laying off 15% of its global motion pictures group, said it swung to a net loss of $18.4 million from a $1.8 million profit the year before.
OTT subscribers — a major focus — rose by 2.3 million to end the quarter at 13.7 million. That includes Starz domestic streaming subs, which increased from 7.4 to 9.2 million, Starz International, and the Pantaya Spanish-language platform (800,000). The company expects to end the year at the high end of its projected 13-15 million sub range. Global over-the-top subscribers passed MVPD subs for the first time in the quarter.
Burns anticipates the company will have 40 to 50 million total global subscribers, the vast majority of them OTT, by 2025.
Motion picture revenues fell to $257 million from $405 million due to theatre closings associated with the global pandemic, partially offset by the performance of titles in the premium video-on-demand market and digital home entertainment. Segment profit, however, surged 63% to $83 million on strong demand for library content and lower distribution and marketing costs.
The layoffs were a nod in part to the economics of the pandemic and to an industry-wide streamlining at entertainment companies across the grid to optimize production and distribution in a digital age.
Lionsgate CEO Jon Feltheimer in comments on the call, said the feature film business “saw a massive imbalance between content supply and demand” and the studio responded by green-lighting eight films in the past six months — one has wrapped, four more are currently shooting and three others start production early next year.
As the theatrical business continues to pivot to new paradigms of distribution and monetization, we’re prepared. Our slate has all the ingredients to resonate at the theatrical box office while our organization has the agility to successfully embrace alternative release strategies when needed, as we did with Antebellum, Run and The Secret.
film business that is already in the process of rethinking the financial & strategic priorities for its output deals coming up for renewal
Television production sales fell to $197.2 million from $274 million in the prior year quarter, and segment profit of $9.9 million was down from $12.6 million on the timing of production schedules and episodic deliveries. Lionsgate has over a dozen scripted series and more than 20 unscripted shows back up and running.
Media networks segment revenue of $388 million firmed 3.8% from the prior year on profit of $93 million, down from $104 million. Revenues were driven by strong growth in domestic OTT subscribers and increased revenue from STARZPLAY International.
On its last earnings call in August, management described progress on transitioning the business for a greater focus on streaming. At a media conference in September, Starz CEO Jeffrey Hirsch discussed the rapid growth of the app even as cord-cutting accelerates the erosion of linear pay TV profits across the board.
Lionsgate, which is operating in a landscape of media giants and carries a hefty debt load. At the same time, execs pointed out, unlike a significant portion the industry, Lionsgate has not been impacted by skyrocketing costs for sports rights, closed theme parks and exposure to a bearish ad market
The company had seen its stock sink this year, with a dip in October as COVID cases spiked. It perked up so far this month and closed up more than 2% today, then popped in late trading.
Execs pointed out that unlike a significant portion the industry, Lionsgate has not been impacted by skyrocketing costs for sports rights, closed theme parks and exposure to a bearish ad market.
The company has a library of some 17,000 film and titles and television programs. The library brought in $166.7 million in revenue in the quarter, the company said.