Lionsgate earnings and operating income have topped Wall Street projections, thanks to growth from its premium cable channel, Starz.
The studio reported earnings of $22.9 million, or 10 cents a share, and adjusted operating income before depreciation and amortization of $171.4 million for its third fiscal quarter that ended on Dec. 31. Analysts had been forecasting earnings of 9 cents a share and OIBDA of $162 million.
Revenues were down 18% to $933.2 million, which fell short of Wall Street’s estimate of $1 billion. Starz ended the quarter with 25.1 million overall domestic subscribers, up 1.1 million subscribers from the prior-year quarter, and achieved strong over-the-top subscriber growth.
“We’re pleased to report a strong quarter with significant free cash flow, and continued revenue and subscriber growth at Starz,” said Lionsgate CEO Jon Feltheimer. “As we refill our feature film and television pipelines at a robust pace and take our integration of Lionsgate and Starz to the next level, all signs are pointing to strong growth in the year ahead.”
Lionsgate made the earnings announcement on Thursday at the close of trading on the New York Stock Exchange. Shares of Lionsgate declined slightly in after-hours trading by 4 cents to $16.36. The stock has declined by 50% in the last 13 months.
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Media networks segment revenues, which includes Starz, increased to $366.8 million due to strong OTT subscriber growth. Segment profits increased 9.6% to $134.1 million. Lionsgate bought Starz, which includes “Power” and “Outlander” series, for $4.4 billion in late 2016. Starz chief Chris Albrecht said on Feb. 1 that he’s exiting in March.
Motion picture segment revenues slid 33% to $362.6 million and segment profits decreased by 19.9% to $43.5 million, reflecting underperformance of titles such as “Robin Hood,” which was not named in the report., compared with the year-ago period with the hit “Wonder.” “Robin Hood,” which opened Nov. 21 with Taron Egerton starring, grossed only $30.8 million in North America and $54 million internationally on a $100 million production budget. Lionsgate’s top domestic grosser in 2018 was “A Simple Favor” with $53 million.
TV production segment revenues were off 19% to $216.5 million and segment profits slid to $21.2 million, compared to $27.8 million in the prior-year quarter, partly due to the timing of deliveries.
Lionsgate also announced Thursday it is developing “I Still Believe” as a biopic about Christian music star Jeremy Camp and set a March 20, 2020, release date.
Jon Erwin, Andrew Erwin and producing partner Kevin Downes, who collaborated on the 2018 faith-based hit “I Can Only Believe,” are reteaming with Lionsgate. The film marks the Erwin Brothers’ first project coming out of their film and TV first-look deal with Lionsgate.
“I Still Believe” starts shooting this spring. The Erwin Brothers will direct from a script by Jon Erwin and Jon Gunn. Downes and The Erwin Brothers will produce the film under their Kingdom banner.
Lionsgate said the project underscores its commitment to the faith-based movie-going community, which has included “Hacksaw Ridge,” “The Shack,” and “I Can Only Imagine,” which was the top indie film of 2018 grossing over $80 million in the box office through Lionsgate’s Roadside Attractions.