Lionsgate CEO sez pic's profits will boost subsequent quarters

Lionsgate sees income rising each quarter this fiscal year as more coin from “The Hunger Games” flows in and marketing expenditures ease up.

Two-thirds of profits from the blockbuster pic are still to come, with a home entertainment launch next week that will be the biggest in the studio’s history plus a major licensing and merchandising push for what CEO Jon Feltheimer called a “transformative franchise.”

“We anticipate significant and growing profitability beginning with the second quarter, although, as usual, the year will be backloaded,” Feltheimer said Friday on a conference call to discuss the mini-major’s fiscal first quarter earnings, which were released Thursday.

Revenue surged in its fiscal first quarter ended in June, but the company reported a loss of $44 million on $98 million in marketing costs for five releases vs. only one the year earlier.

Despite the boffo B.O. for “Hunger Games,” which raked in more than $684 million worldwide since its March release, Lionsgate took a modest loss for the quarter because of marketing bills as well as unspecified costs associated with its acquisition of Summit Entertainment and early retirement of some of Summit’s term loan debt.

“This quarter was a atypical relative to what you can expect for the rest of the year due to marketing costs,” Feltheimer said. He reassured Wall Street that Lionsgate hasn’t raised the spending bar. “If you do five releases and average $100 million, that’s about $20 million minus that $18 million pre-expense. So I think that on a per-picture basis, we are definitely keeping our foot on the brakes in terms of costs.”

“The Hunger Games: Catching Fire” starts shooting next month for a Nov. 22, 2013, release, followed by “Mockingjay” sequels in 2014 and 2015. “Twilight: Breaking Dawn 2″ also hits this November, “giving us significant forward visibility for our film business,” Feltheimer said.

He predicted a strong opening next Friday for “The Expendables 2″ and touted “Ender’s Game” and “Red 2,” both Summit franchises. “Ender’s” is based on a series of 11 books. “There’s a lot of books. We’re excited about the franchise. It’s a very different kind of a franchise than ‘Hunger Games’ and, obviously, we just have to wait and see where we stand with the first movie,” he said.

Lionsgate just completed new output deals with Nordisk in Scandinavia, Village Roadshow in Australia and IDC in Latin America and will announce additional pacts in Germany, Spain, Russia, Korea and Poland in the “very near future. When we finish executing our plan, we’ll be covering, on average, more than 50% of our film budgets even before receiving the benefits of our tax credits,” Feltheimer said.

On the TV side, FX has expressed confidence in Charlie Sheen comedy “Anger Management,” which should lead a 90-episode pickup, per the terms of its innovative deal with Lionsgate’s Debmar-Mercury syndie unit. That would “Anger Management” another signature Lionsgate brand, execs said.

Kevin Beggs, Lionsgate’s prexy of television programming and production, said the plan is to furnish FX with “somewhere in the neighborhood of 40 episodes a year. How they then program them out will be completely up to them. But our writers are working in anticipation that it goes forward and we start shooting in September to be able to furnish new episodes in a large, large block for them as early as January.”

In other series activity at Lionsgate, music-themed drama “Nashville” debuts in October on ABC and has so far been warmly received by critics. Dramedy “Orange Is the New Black” begins production next month to premiere on Netflix next spring. The next wave of TV projects includes a musical drama from “American Idol” creator Simon Fuller, an adaptation based on Dennis Lehane’s “Gone Baby Gone” and a Debmar-Mercury sitcom deal with George Lopez.

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