Lionsgate revenue earnings topped projections, thanks to growth from its premium cable channel, Starz.
The company reported strong gains at Starz of 1.3 million subscribers for a total of 25.1 million domestic subscribers during its second quarter ending Sept. 30. The studio also topped Wall Street estimates by reporting revenue of $901 million and a net loss $144.1 million, stemming from settling shareholder litigation. Lionsgate generated earnings of 22 cents after the settlement, $99.5 million in free cash flow during the quarter and operating income before depreciation and amortization of $128.8 million.
Projections had been anticipating $892.3 million in revenues, 13 cents in earnings per share and operating income of $97.4 million.
“We’re pleased to report a strong quarter with robust free cash flow and outstanding growth at Starz,” said Lionsgate CEO Jon Feltheimer. “Our great results at Starz reflect our slate of hit premium programming, strong over the top subscriber growth and retention, and healthy gains in our MVPD business. Coupled with the global expansion strategy we have begun to execute, we see a very clear path to outsized value creation for our platform.”
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Lionsgate made the earnings announcement Thursday at the close of trading on the New York Stock Exchange. Shares of Lionsgate surged in after-hours trading by 4.5% to $20 share.
Two years ago, Lionsgate paid $4.1 billion to buy the premium cable service with the goal of competing effectively with the top-tier conglomerates. It bought management-production powerhouse 3 Arts Entertainment in May for a price estimated at $170 million.
Media networks segment revenues increased by 5% to $377.3 million due to strong OTT subscriber revenue. Segment profits increased 19% to $122.7 million from the prior year quarter.
Motion picture segment revenues decreased by 2% to $379 million while segment profits increased by 45% to $12.9 million due to strong ancillary performance of previously released theatrical titles.
Television production segment revenues were $152.1 million in the quarter. Segment profits came in at $9.4 million compared to the prior year quarter that included licensing of several major Starz original series.