First-quarter revenues drop by 14%
Poor financials reported Monday by Lionsgate Entertainment for its fiscal first quarter will almost certainly embolden activist shareholder Carl Icahn, who is looking to take over the studio that he says is mismanaged.
Revenues for the quarter ending June 30 dropped 14% to $327 million, and Lionsgate reported a net loss of $64 million vs. profits of $36 million in the year-ago period. Report was issued after the close of trading.
“Our first quarter was affected by marketing costs for our three wide releases, timing of television deliveries and the underperformance of our theatrical release ‘Killers,’ ?” Lionsgate CEO Jon Feltheimer said in a statement.
Lionsgate execs are expected to address analysts on a conference call today before the market opens.
The three wide releases Feltheimer was referring to were Tyler Perry’s “Why Did I Get Married Too?,” “Kick-Ass” and “Killers.” “Killers” took in $78.4 million worldwide, while “Kick-Ass” has cumed $94.7 million thus far.
The latest Perry pic, which has not been distributed overseas, earned $60.1 million domestically. Lionsgate said its marketing costs rose by $71 million in the quarter, mostly to promote these three pics.
Lionsgate’s revenue decline also can be attributed to its deconsolidation of TV Guide Network revenue. It sold a 49% stake in the network in 2009 to an investment unit of JPMorgan Chase.
Revenues were hurt by tepid DVD sales, which the company attributed to having a smaller release slate in the quarter.
Home entertainment revenues fell by 22%. Revenues at Lionsgate’s Mandate Pictures unit plummeted by 75% in the quarter to $13 million, largely because its slate couldn’t come close to the strength of the year-ago period with box office and ancillary revenues from releases like “Drag Me to Hell,” “Juno” and “Passengers.”
Such weak results likely will be used as fodder by Icahn, who is looking to wage a proxy fight and replace Lionsgate’s board with his own team.
On Aug. 2, Lionsgate’s board rejected the latest hostile takeover bid from Icahn, who offered $6.50 a share. Lionsgate said Icahn’s offer “is not in the best interest of Lionsgate and its shareholders and other stakeholders.”