Bloomberg News

Lions Gate Posts Loss on Costs From Summit, ‘Hunger Games’

May 31, 2012

Lions Gate Entertainment Corp. (LGF:US) posted a loss on costs to market the film hit “The Hunger Games” and the purchase of Summit Entertainment. The company also predicted $900 million in profit over the next three years.

The fiscal fourth-quarter net loss of $22.7 million, or 17 cents a share, compared with profit of $48.7 million, or 34 cents, a year ago, Vancouver-based Lions Gate said yesterday in a statement (LGF:US). Analysts predicted profit of 22 cents excluding items, the average of eight estimates (LGF:US) compiled by Bloomberg.

“The Hunger Games,” the independent film studio’s biggest hit ever, opened eight days before the quarter ended, on March 31. About 90 percent of the profit from the film will come ahead, Lions Gate said today on a conference call. The studio plans as many as four movies based on the Suzanne Collins book trilogy.

“We’ve have established ourselves as the No. 1 studio in young adult franchises,” Chief Executive Officer Jon Feltheimer said on the conference call.

Lions Gate rose 3.7 percent to $13.32 at the close in New York trading. The shares have added 60 percent this year.

The company expects about $900 million in earnings before interest, taxes, depreciation and amortization, over the next three years, Feltheimer said.

Summit Acquisition

Profit during the March quarter was reduced by about $36 million in costs related to the Summit acquisition, the company said yesterday. The studio also spent about $55 million promoting “The Hunger Games” in the quarter, Ben Mogil, an analyst with Stifel Nicolaus & Co. in St. Louis, said in a May 24 note to investors.

Of 11 analysts who follow the company, eight have buy recommendations, two say hold and one says sell.

Revenue rose 71 percent to $645.2 million in the quarter, missing the average forecast of $670.2 million. Lions Gate, run from Santa Monica, California, is also producer of the Emmy- award winning TV series “Mad Men.”

“The Hunger Games” generated $233 million in domestic ticket sales during the fourth quarter, Mogil, who recommends (LGF:US) the stock, wrote in a May 24 note. This quarter, Lions Gate will benefit from $180 million in ticket sales without offsetting marketing costs, he wrote.

International Rights

Since its release, “The Hunger Games” has collected $396 million in domestic ticket revenue, a sum Lions Gate splits with theater operators. It has also generated $247 million outside the U.S. and Canada, according to film researcher Box Office Mojo.

Lions Gate sold some of its international rights to “The Hunger Games” to help defray the $80 million production cost, a decision that limited its overseas income from the picture.

Revenue got a boost from the February home entertainment release of “The Twilight Saga: Breaking Dawn - Part 1,” according to Alan Gould, an analyst with Evercore Partners LLC in New York, who has an overweight or buy recommendation on the stock. The final movie in the series is scheduled to be released in theaters on Nov. 16.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • LGF
    (Lions Gate Entertainment Corp)
    • $33.0 USD
    • 1.65
    • 5.0%
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