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Lions Gate profits fall 96% on marketing costs

Subsidiary posts first-time profits

Higher marketing costs forced Canadian film and TV group Lions Gate Entertainment to post a 96% drop in fiscal second-quarter profit to $125,500, despite the first quarterly profit from subsidiary Mandalay Pictures.

Lions Gate enjoyed a 38% jump in revenue to $57.9 million over the three months ended Sept. 30.

The Vancouver-based company said revenue rose 22% in its motion picture operations and 30% in television. Animation revenue surged 223% and studio facilities 14%.

Lions Gate has a 45% controlling stake in Mandalay. The unit — whose theatrical titles in the period included “Enemy at the Gates” and “The Score” — repped a $125,500 profit for Lions Gate in the latest quarter, compared with a $1.3 million loss in the same period of the previous fiscal year.

“We continue to achieve strong revenue growth in a difficult operating environment, and we enter the second half of the year well-positioned for further growth,” Lions Gate CEO Jon Feltheimer said. “We are committed to disciplined and profitable expansion and exploring innovative, efficient and cost-effective ways of doing business.”

The company said its recent commitment to funding more ambitious film releases led to declines in net income and cash flow in the latest quarter. Distribution and marketing costs soared 192% to $15.9 million in the period.

Lions Gate reported its financial results after the close of market trading. The stock gained 1¢ to $2.28 on the day.

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