Lionsgate Records Quarterly Loss of $45.4 Million, Starz Global Streaming Subscriptions Hit 16.7 Million

Chris Rock Spiral
Courtesy of Lionsgate/Everett Collection

Lionsgate’s investment in streaming paid off during its most recent financial quarter, as its Starz platform topped 16.7 million global subscribers.

But it wasn’t all good news at the media company, which reported a net loss of $45.4 million and a loss of 20 cents per share. That compared unfavorably to a profit of $51.1 million or 23 cents per share in the year-ago period. Lionsgate’s revenues rose more than 10% to $901.2 million. The revenue numbers were in line with Wall Street’s expectations, but the earnings per share were 9 cents better than analysts’ consensus estimates.

“I’m pleased to report that we were able to lean into our resilient business model to drive strong financial results in the quarter,” said Lionsgate CEO Jon Feltheimer. “We filled our content pipelines with exciting new properties and added valuable new titles to our library. Like the rest of the industry, Starz subscriber growth was impacted by the decline in home viewership and, importantly, a light content quarter due to COVID-driven production delays.”

The recent earnings report comes as media companies are in an acquisitions and mergers binge in an effort to bolster their streaming offerings. Amazon recently agreed to buy MGM for $8.5 billion, while WarnerMedia and Discovery announced plans to merge. Smaller players have benefitted from the froth of change, with Reese Witherspoon’s Hello Sunshine recently announcing that it will be purchased by an affiliate of the Blackstone Group for $900 million. Lionsgate, relatively bite-sized in today’s conglomerated landscape, could find itself to be an acquisitions target.

Feltheimer seemed to savor that position in his remarks to analysts shortly after Lionsgate reported its earnings.

“If the media consolidation of the past year has taught us anything, it’s that the global appetite for content is greater than ever,” Feltheimer said. “And to paraphrase Keanu Reeves in ‘John Wick 3,’ we have that content, lots of content — in our world-class library, our deep film and television pipelines, and throughout our global streaming platform at Starz. We live right in the sweet spot of global consumer demand — bold, original, high-end premium scripted television and film. And with our talented and entrepreneurial employees working across every part of our company every single day to identify ways to create, own and monetize this content, we’re well positioned to create outsized value for our partners, consumers and shareholders.”

Lionsgate used the most recent quarter to grow its library. In July, it acquired a 20% stake in Spyglass Media Group and most of its film library, which includes “The King’s Speech,” “Paddington” and “Silver Linings Playbook.”

The company’s media networks segment, which includes Starz, saw revenue increase 4% to $382.3 million, while segment profit increased 23% to $88.2 million, which the company attributed to lower programming spending. The total number of Starz global subscribers increased to 28.9 million, while its streaming subscriber count was up 58% year-over-year.

Lionsgate’s motion picture segment released the “Saw” spinoff “Spiral” and “The Hitman’s Wife’s Bodyguard” during the quarter. Revenues for the division increased 4% to $291.2 million and segment profit declined to $44.3 million compared to $101.1 million in the prior-year quarter. The decline in segment profit compared to the prior-year quarter was attributable to higher promotional and advertising spending. In 2020, Lionsgate released no movies theatrically during the period due to COVID-19 theater closures, which led to lower distribution-related costs.

Television production segment revenue increased 97% to $386.1 million, while segment profit of $3 million was down sharply from the $34.9 million in profit that Lionsgate recorded in the prior-year period.

Looking ahead, Lionsgate noted that it was about to begin shooting “John Wick 4” and was wrapping production on “Borderlands,” its adaptation of a popular video game franchise. On the television front, Lionsgate is producing “Ghosts” for CBS in the fall and “Welcome to Flatch,” which will premiere on Fox midseason.