Lionsgate Tops First Quarter Forecasts, Thanks to Starz, ‘John Wick 3’

Dave McNary

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Lionsgate has posted revenues and operating income above Wall Street projections for its first fiscal quarter of 2019, amid growth from premium cabler Starz and a strong performance from “John Wick: Chapter 3.”

Lionsgate reported revenue of $963.6 million — $1 million above consensus estimates — and operating income before depreciation and amortization of $67.3 million, topping estimates by $3.7 million, for the quarter that ended June 30. Net loss per share was 2 cents, half of what had been forecast.

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Starz ended the quarter with 26.5 million total global subscribers, up 2.6 million from the prior year quarter, and 24.4 million total domestic subscribers. Starz domestic over-the-top subscribers grew 400,000 sequentially to 4.4 million, its third best subscriber growth quarter ever.

“We’re pleased to report strong financial results in the quarter and a great start to the fiscal year,” said Lionsgate chief executive officer Jon Feltheimer. “All of our businesses are performing well. Our Television Group had its best development season ever, ‘John Wick: Chapter 3’ reaffirmed our thesis that mid-priced action films have a valuable place in the market, and Starz achieved strong growth in its domestic OTT business while continuing to expand its premium SVOD platform around the world.”

Starz was the subject of buyout speculation this spring with CBS rumored to have made a $5 billion offer that was spurned. Starz was acquired by Lionsgate in 2016 for $4.4 billion.

“John Wick: Chapter 3 — Parabellum” opened on May 17 and represents the studio’s first hit since 2017’s “Wonder” with $170 million in box office in North America and another $150 million internationally. Lionsgate has already green-lit “John Wick 4” for release in 2021.

Media networks segment revenues increased by 4.9% to $372.4 million driven by strong over-the-top subscriber growth. Segment profits for domestic Starz Networks business increased by 3.4% to $103.7 million.

Motion picture segment revenues increased by 8.9% to $397.8 million in the quarter due to the strong theatrical performance of “John Wick: Chapter 3.” Segment profits declined from the prior year quarter to $7.6 million due an increase in P&A spending associated with a greater number of theatrical releases during the quarter.

Television production segment revenues of $279.8 million were largely in line with the prior year quarter while segment profits increased 60.3% to $25 million driven by the timing of episodic deliveries.

Feltheimer said during the conference call with analysts that the John Wick franchise underlines Lionsgate ability to make mid-budget action movies that are profitable. Motion Picture Chairman Joe Drake said Lionsgate is able to operate effectively amid consolidation among major studios.

“We’ve become an ever more important supplier for exhibition as the ecosystem of theatrical distribution among the majors narrows,” Drake said. “We’ve begun to differentiate ourselves as more of a middle-market player.

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