In revising its estimates for its fiscal year ending March 31, Lionsgate Entertainment said Monday part of the net losses it will report this month are due to $23 million it spent in the prevous year to defend itself against a takeover attempt from Carl Icahn.
Lionsgate also had losses of $43 million on its investment in pay cabler channel Epix, which eventually became profitable in Lionsgate’s fiscal year after a lucrative streaming distribution deal with Netflix. Executive stock compensation was $32 million for the year, higher because of change-of-control provisions that were triggered when Icahn’s equity stake in Lionsgate exceeded 33%. Those, too, contributed to net losses.
In a regulatory filing, Lionsgate said it expects revenues for the fiscal year to be between $1.5 billion and $1.6 billion and the net losses to between $66 million and $78 million. Revenues would have been higher by $125 million but Lionsgate has deconsolidated the TV Guide Network numbers. Its estimates are consistent with earlier guidance the mini-major gave the Street. In fiscal year 2010, revenues were $1.6 billion and the net loss was $19.5 million. Lionsgate will report its earnings on May 31.
In Monday’s filing, it did revise upward its guidance for earnings before interest, taxes, depreciation and amortization — commonly referred to as EBITDA — from $75 million to between $80 million and $100 million. Estimated free cash flow is expected to be between $1 million and $10 million, the company said, a turnaround from negative free cash flow last year of between $75 million and $85 million.
Icahn abandoned a proxy fight at Lionsgate in December in which he was attempting to put his own slate of directors on the board. He remains Lionsgate’s largest shareholder with a 33% stake but has not been agitating management in months.
Lionsgate also said Monday it is issuing $150 million in high-yield notes as part of a debt refinancing.