Starz subscriber growth has lifted Lionsgate shares in after-hours trading, giving investors optimism that the media company will be able to order top dollar when its cable and streaming arm plans are finalized. The number of live broadcast subscribers jumped to 26.3 million worldwide, an increase of 57% year-over-year.
In an earnings call, Lionsgate CEO John Feltheimer said potential buyers are also interested in the company’s movie studio, suggesting that Amazon’s $8.5 billion purchase of Metro-Goldwyn-Mayer made Lionsgate a more attractive target.
“Our library is newer and more modern than the MGM library,” Feltheimer said.
His comments came as Lionsgate saw revenue decline for the last fiscal quarter, dropping from $901.2 million to $893.9 million. The company’s losses also widened, increasing from $45.4 million to $119 million.
Motion picture segment revenue decreased 4% to $278.8 million. However, earnings rose 14% to $50.5 million because the few wide-release theatrical films this quarter meant Lionsgate didn’t spend much on marketing. Television production revenue increased 12% to $432.3 million, compared to $386.1 million in the previous quarter, while segment profits increased fivefold to $19.6 million.
On the earnings call, Feltheimer said the studio had begun production on the Hunger Games show, “The Ballad of Songbirds & Snakes,” and talked about “John Wick: Chapter Four,” another installment of the revenge and revenge franchise that will hit cinemas March 24, 2023. On the TV side of her business, Lionsgate has had success with “Ghosts,” “Home Economics,” and “Julia,” Feltheimer said.
The Lionsgate chief has sounded a warning even as he positioned Lionsgate as an attractive acquisition target.
“We are aware of the headwinds in today’s business environment,” he said. “Economic uncertainty makes our business more unpredictable. The pandemic has lasted longer than expected and is still adding cost. There are growing pains in the world of streaming and aging pains in linear old businesses. In response, we are taking steps to conserve capital, preserve Our balance sheet is robust, streamlining operations and mitigating risk as we continue to do what we do best: create great content and franchises that build our most important long-term asset, our world-class library.”
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