Lionsgate has reported a charge of $50.5 million in the fourth fiscal quarter that ended on March 31 due to the COVID-19 pandemic and related economic disruption — with $46 million reflected in direct operating expense.
This charge included motion picture and television impairments and development charges associated with changes in performance expectations, and the feasibility of project completions, along with costs associated with pausing film and television production.
“We expect to incur additional incremental costs in future periods. We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in our consolidated financial statements,” the company added.
Lionsgate posted revenues and operating income above Wall Street projections. Revenues were $944.3 million, 1% above the analyst consensus. Adjusted operating income was $125.8 million, 9% above Wall Street forecasts.
“We reported a strong quarter to end a solid fiscal year despite the disruption posed by the COVID-19 global pandemic,” said CEO Jon Feltheimer on Thursday. “Our Lionsgate family has risen to the challenge of these unprecedented times with resilience, dedication and collaboration. Thanks to their efforts, Starz is continuing to deliver great entertainment to our audiences in the current at-home environment, and we’re working closely with all of our content partners to ensure that when production resumes and theatres re-open, we will be ready.”
Lionsgate said media networks segment revenue of $358 million was essentially unchanged from the prior-year quarter, while segment profit of $26 million was impacted by the continued investment in Starzplay’s international expansion to 50 countries and exceeded subscriber targets. Domestically, Starz OTT subscribers totaled 6.8 million in the quarter.
Motion picture segment revenue increased by 10% to $393 million due to the strong home entertainment performance of “Knives Out” and other titles. The only new theatrical release in the quarter, “I Still Believe,” played for only four days before theaters shuttered. The studio quickly launched the faith-based title in an exclusive premium video-on-demand window to mitigate lost theatrical revenue. Segment profit was $101 million.
“Our slate is stocked with big brands and properties like ‘Spiral,’ the ‘Saw’-reimagining; ‘The Hitman’s Bodyguard 2,’ starring Ryan Reynolds, Samuel L. Jackson and Salma Hayek; and ‘John Wick 4,'” Feltheimer said. “It is deep in comedies like ‘The Unbearable Weight of Massive Talent,’ starring Nicolas Cage, and ‘Barb and Star Go to Vista del Mar,’ starring Kristen Wiig. It includes the horror thriller ‘Antebellum,’ starring Janelle Monae, the Dean Taylor-directed Hilary Swank thriller ‘Fatale’ and the Neil Burger-directed sci-fi feature ‘Voyagers.'”
The company said television production segment revenue was $258 million and segment profit was $22 million, driven in part by strong library sales.