Lionsgate’s quarterly report: Navigating through turbulent times

A challenging quarter for Lionsgate

Lionsgate, still grappling with the aftermath of last year’s Hollywood strikes, has reported a mixed bag of financial results for the June quarter. The company’s revenue dipped to $834.7 million, marking an 8% decline. However, there was a silver lining as the net loss narrowed to $59.4 million, translating to a loss of 25 cents per share. This is an improvement from the previous year’s net loss of $70.7 million. Wall Street had anticipated slightly better results, predicting revenue of $857.5 million and a loss of 18 cents per share.

Operating income sees a positive shift

Despite the challenges, Lionsgate’s operating income showed a positive shift, reaching $18.8 million compared to an operating loss of $16.8 million a year ago. CEO Jon Feltheimer expressed optimism, stating, “We’re pleased to report a solid quarter despite unprecedented industry disruption and the after-effects of the strikes.”

Motion Picture segment: A mixed performance

Lionsgate’s Motion Picture segment experienced a 15% drop in revenue, settling at $347.3 million. However, the segment’s profit surged by 24% to $86.1 million. The company attributed this to strong box office performances from films like The Strangers: Chapter 1 and robust home entertainment results from several theatrical titles. The year-over-year revenue decline was primarily due to the high benchmark set by the previous year’s quarter, which included carryover theatrical revenue from John Wick: Chapter Four.

Studio business: A closer look

The studio business, encompassing both film and TV production segments, reported a revenue of $588.4 million, a 5.9% decrease from the prior-year quarter. Adjusted operating income also saw a decline, dropping by 5.5% to $58.3 million. Interestingly, television production revenue increased by 10% to $241.1 million, although segment profit decreased by 53% to $10.7 million. This growth in revenue was driven by contributions from eOne, while the profit decline was attributed to the lingering impacts of the strike on the timing of deliveries.

Starz business: A mixed bag

The Starz business posted a revenue of $345.3 million, up by 1%, and segment profit grew by 54% to $58.5 million. The revenue growth was driven by a price increase in June 2023 and year-over-year OTT subscriber growth, partially offset by declines in linear subscribers. However, North American streaming subscribers decreased by 180,000 in the quarter, and Starz’s overall subscribers dropped by 500,000 sequentially. Earlier this week, Starz notified U.S. customers of a $1 increase in the service’s monthly cost.

Future projects and strategic moves

Lionsgate Television is developing a TV series follow-up to the successful John Wick movie franchise. Additionally, the company announced the release of the film adaptation of Suzanne Collins’ next book, “Sunrise on the Reaping,” slated for November 2026. Other major franchises under Lionsgate’s belt include the Saw and Twilight films.

The road to separation

Lionsgate comprises two entities: Lionsgate and Lionsgate Studios. Lionsgate Studios debuted as a standalone public entity on May 14 under the Nasdaq ticker symbol LION. This move is a step toward the full separation of its studio business and the Starz TV network and streaming business. Through a merger with special-purpose acquisition company Screaming Eagle Acquisition Corp., Lionsgate Studios raised $350 million from a group of investors. The company expects the full separation of Lionsgate Studios and Lionsgate (i.e., Starz) to occur by the end of calendar year 2024.

Personal reflections for enthusiasts

For cinema and TV series enthusiasts, the financial health of a studio like Lionsgate is more than just numbers. It directly impacts the kind of content we can expect in the future. The development of a TV series follow-up to John Wick and the upcoming Hunger Games adaptation are exciting prospects. These projects promise to bring more of the high-octane action and intricate storytelling that fans love.

For music lovers, the financial stability of a studio can also influence the soundtracks and scores that accompany our favorite films and series. A well-funded studio can afford to hire top-notch composers and musicians, enriching the overall viewing experience.

In these turbulent times, it’s heartening to see that despite the challenges, Lionsgate is still pushing forward with exciting new projects and strategic moves. The future looks promising, and as fans, we can look forward to more captivating content from this resilient studio.