Lionsgate CEO Jon Feltheimer: We Need to Be Disruptors

Jon Feltheimer

Lionsgate CEO Jon Feltheimer reassured shareholders on Tuesday that the studio behind “Twilight” and “Orange is the New Black” will be able to take advantage of the technological changes upending the media business. His remarks come as the summer box office has hit its lowest levels in nearly two decades, and as streaming services such as Netflix continue to build their audiences, providing compelling alternatives to tradition cable services. Lionsgate has weathered the headwinds better than some, it scored with the late summer release “The Hitman’s Bodyguard” and its stock is up 50% from the last time the stockholders gathered in Toronto.

“We spend a lot of our time thinking about the challenges created by a fragmented box office and a television business in which cord cutters and cord nevers are rewriting all of the rules,” Feltheimer said at the company’s annual meeting held at Toronto’s Shangri-La Hotel. “But we’re also confident that we can continue to capitalize on change, as we’ve done for 17 years.”

Central to that strategy will be exploiting the movies and television series that Lionsgate makes in new ways, he argues. The company has been building its suite of over-the-top streaming channels, allowing it to interact more directly with customers. It launched a new comedy channel with Kevin Hart and new digital programming focused at African-American and Hispanic audiences.

Lionsgate has also announced its partnership in a South Korean theme park, the third such licensing deal. Fetheimer cited a shift into gaming, one that has include a “John Wick” virtual reality experience and Power Rangers games, as further evidence of Lionsgate’s emphasis on thinking beyond theatrical exhibition and broadcasting.

“We will continue to turn industry challenges into Lionsgate opportunities by punching above our weight,” he said. “Finding ways to be disruptors rather than disrupted, and keeping the needs of our consumers and the expectations of our shareholders foremost in our minds.”

But there is one part of Lionsgate’s strategy that hovers above all the rest — making its $4.4 billion acquisition of Starz pay off. The company relied on debt financing to complete the purchase. It has used its sale of a stake in the cable channel Epix to deleverage, but still must find efficiencies in order to justify the move. Feltheimer hailed Starz’s programming slate and said the company has increased its subscriber base by 5% last year even as other cable networks lost customers.

“But our biggest opportunities lie in what Lionsgate and Starz can do together,” said Feltheimer. “The first phase of the Starz integration into our operations is complete, and this consolidation is already achieving even greater than anticipated cost synergies.”

Feltheimer said the companies are reining in costs by bringing employees together in a single New York office and relocating Starz’s West Coast employees to new offices next door to Lionsgate’s headquarters.

He said the second phase of the process will involve migrating a line-up of premium Lionsgate series to the Starz platform. The first of these shows, “The Rook,” a paranormal adventure that’s executive produced by Twilight creator Stephenie Meyer, has been greenlit.

“We continue building our company piece by piece,”said Feltheimer. “Monetizing our content across multiple platforms that we either control or to which we’re a critical supplier and building our brand around the world.”

“As we compete with companies many times our size, we recognize the importance of being great at what we do best without trying to be great at everything,” he added.

The gathering wasn’t all about corporate speak and visions of synergies to come. Feltheimer also injected some levity into the proceedings. He noted that the studio had earned eight Oscars for “La La Land” and “Hacksaw Ridge.”

“It was almost nine,” he cracked, a reference to “La La Land” briefly being crowned best picture before “Moonlight,” the true winner, took the stage.

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  1. Angeleno says:

    “But there is one part of Lionsgate’s strategy that hovers above all the rest — making its $4.4 billion acquisition of Starz pay off.”

    What a joke. I loved Starz before Lionsgate took it over; it was my favorite of all the premium channels. However, the quality of the service overall has slipped so far that I am currently waiting for this season of Outlander to finish, and then I’m going to cancel my subscription. Yes, I like some of their series (Outlander, American Gods, etc., but those were put into place before Lionsgate took over). The quality of their movie programming has gone from the best of all the premium channels straight into the trash heap. I’ve got nothing against a good solid B picture, but we’re talking C and D level stuff from 10 or 20 years ago that was terrible then and that makes up at least 2/3 of Starz programming. It’s appalling. And I don’t even want to talk about what they’ve done to the Encore channels. It’s pretty apparent just where they’ve been cost-cutting — the quality of their movie programming.

    All these media companies keep talking about how they’re trying to keep people from cord-cutting, but they don’t do even the simplest things to encourage us not to do it. Like not destrooying a once great premium channel.

  2. nik says:

    Its not cheap to do that

  3. MikeS says:

    And yet Lionsgate refuses to release TERMINATOR 2 3D on home video. The company can’t even recognize a gift horse.

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