Returning to Panem with “The Hunger Games: The Ballad of Songbirds and Snakes” proved to be very profitable for Lionsgate, but the writers and actors strikes that upended Hollywood imperiled the company’s ability to produce new television episodes, putting a strain on its third quarter earnings.
The company, which is in the midst of spinning off its film and television business from its Starz streaming platform, reported a net loss at $107.4 million, compared to the $15.2 million in profits that Lionsgate logged in the same quarter in 2022. Revenue topped out at $975.1 million, a drop from the $1 billion that the company reported in the prior-year quarter. The company’s adjusted earnings per-share of 27 cents was down from the 21 cents per-share it reported in the same period in 2022.
It was a mixed report, one that showed the lingering financial impact of strikes that ground the entertainment industry to a standstill as the creative community hit the picket lines. The company’s adjusted earnings beat Wall Street’s forecasts, even as revenues fell short of projections.
“We’re pleased to report another strong financial quarter in which the performance of our diversified businesses gives us confidence that we can continue to deliver the growth our investors expect,” said Lionsgate CEO Jon Feltheimer.
Lionsgate’s motion picture business was a source of strength with “The Hunger Games” prequel and “Saw X” scoring at the box office. Segment revenue increased by 53% to $443.2 million compared to the prior year quarter, and segment profit increased by 31% to $100.4 million.
At the same time, Lionsgate’s television business struggled to keep up, weighed down by the impact of the Hollywood labor disputes, as well as declines in television licensing fees. Segment revenue dropped to $248.4 million, a steep fall from the $605.4 million in revenue that the company reported in the prior year quarter. At the same time, the segment saw a drop in profits from $71.5 million to $8.1 million.
The deal to spinoff Starz is expected to close in the spring. Lionsgate’s media networks operations, which includes the streaming service, saw revenue increase 10% to $417.2 million, while profit grew 73% to $85.5 million. The number of global subscriber stayed essentially unchanged at 27.9 million.
In December, Lionsgate said its TV and film production and distribution segments and library with 18,000-plus titles, will spin off in a merger with Screaming Eagle Acquisition Corp., a special-purpose acquisition company (SPAC). The new publicly traded company will be known as Lionsgate Studios Corp. and will have an enterprise value of $4.6 billion.
More to come…