Lionsgate Swings to First Quarter Loss Despite 'Hunger Games' Box Office

Lionsgate Credit Rating Upgraded on Reduced Debt

TORONTO - Lionsgate on Thursday swung to a first quarter loss as one-time items and spiking marketing costs for a slate of five movie releases hurt its bottom line.

The mini studio exceeded analyst estimates as its revenue jumped 81% to $471.8 million - due mostly to the North American box office of The Hunger Games - against a year-earlier $261.2 million.

Lionsgate also clocked in the box office from Cabin in the Woods and What to Expect When You’re Expecting, as well as sharp gains in its home entertainment business.

But the mini-studio posted a loss of $44.2 million for the three months to June 30, against a year-earlier profit of $10.3 million.  

That came as Lionsgate racked up an increase of $90 million in theatrical marketing costs to launch five movies theatrically during the latest quarter, four of them as wide releases, against only one release in the first quarter of fiscal 2012.

Lionsgate also faced higher G&A costs from increased stock-based compensation after its shares rocketed in the wake of the Summit Entertainment acquisition and The Hunger Games release.

Higher interest charges and a non-cash charge for early retirement of Summit term loan debt also hurt the bottom line during the latest frame.

Despite the steep first quarter loss, Lionsgate remained bullish on its prospects ahead of an analyst call to discuss its latest results on Friday morning.

“We completed our first quarter on target for our fiscal year and our three-year plan," Lionsgate CEO Jon Feltheimer said in a statement.

“However, with two-thirds of the profitability of the first Hunger Games film still ahead, we anticipate that the combined benefits of our Summit acquisition, the strength of our young adult franchises and the continued evolution of our television business will translate into significant and growing contributions for the balance of our three-year plan,” he added.     

Total motion picture revenue during the first quarter came to $406.5 million, up 111% from the same period of fiscal 2012.    

Within the motion picture segment, theatrical revenue was $137.6 million, due mainly to the box office performance of The Hunger Games.

Lionsgate's home entertainment revenue from both motion pictures and television was $145.5 million, against a year-earlier $92.9 million.

And TV revenue included in motion picture revenue was $37.1 million in the first quarter, down 14% from a year-earlier.