Lionsgate expects to see big business from its new private equity partnership, even though it will push the indie studio into the red.
CEO Jon Feltheimer told Wall Streeters in a conference call Thursday that the company expects to swing from a $27.5 million profit in the fiscal year that ended March 31 to a $50 million loss in the current fiscal year as it significantly ups marketing for new features. That’s because while half the cost will be borne by its new $400 million co-financing fund, Lionsgate has to report all the spending.
Studio plans to nearly double its theatrical marketing this year from $150 million to $290 million, along with an added $60 million for homevideo. However, with more, bigger budgeted pics such as “War,” “Good Luck Chuck,” and “3:10 to Yuma,” vice chairman Michael Burns predicted the studio could see domestic box office grow from approximately $250 million to more than $400 million.
In the past fiscal year, revenue grew 3% to $976 million. Feltheimer said the current fiscal year should see growth of 10% to 15%, bringing the company to well over $1 billion in revenues. While net loss will grow due to the accounting rules, free cash flow is expected to be more than $100 million. It was $114.2 million in the past fiscal year.
Home entertainment revenue was flat in fiscal 2007 at $528 million, though the indie studio’s library saw growth of more than 20% to $256 million, making up for declines in new releases.
Theatrical revenue fell 26% to $107.9 million on disappointing results for a number of pics, including “Pride,” on which the studio lost $6 million. “Tyler Perry’s Daddy Little Girls” also grossed significantly less than the helmer’s previous two pics.
TV revenue was down 11% to $132.9 million as it delivered fewer episodes.
For the quarter ending March 31, revenue was up 6% to $331.6 million and net income fell 36% to $25 million.
Lionsgate stock closed up 1% Thursday at $11.85.