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Lionsgate Misses Q3 Earnings Projections

Company reported earnings per share of $0.27, lower than projections of $0.47

Lionsgate posted lower than expected Q3 earnings on Thursday, reporting earnings of $0.27 per share, compared to analyst projections of $0.47.

The company posted earnings of $0.66 during the same quarter last year. It also reported revenue of $670.5 million, compared to revenue of $751.3 million in the prior year quarter. Lionsgate shares dropped six percent after the results were reported.

Although “The Hunger Games: Mockingjay 2” grossed over $650 million at the global box office, ranking it among the highest-grossing films of the year, its box office performance declined from “Mockingjay 1” with higher “Mockingjay 2” production costs also impacting its profitability.

“While the performance of our theatrical film slate resulted in softer than anticipated results, our other businesses performed strongly in the quarter,” Lionsgate CEO Jon Feltheimer said. “With our television business continuing its robust topline and margin growth, a deeper and more diversified film slate with lower costs and contributions anticipated from recently launched businesses, we have a clear path to resume our strong and sustainable financial trajectory in fiscal 2017.”

Lionsgate’s television production segment reported revenue of $164.7 million, up from $161.2 million in the prior year quarter. Overall motion picture segment revenue for the quarter was $505.8 million compared to $590.1 million in the prior year quarter.

The international motion picture segment posted revenue of $140.1 million for the quarter compared to $142.1 million in the prior year quarter.

Although theatrical revenue of $183.1 million was comparable to $186.4 million in the prior year quarter, margins were lower due in part to theatrical P&A expenses associated with four wide film releases in the quarter compared to two wide film releases in the prior year quarter.

Lionsgate’s home entertainment revenue from motion picture and television production for the quarter was $142.0 compared to $183.1 million in the prior year quarter.

The news comes as Lionsgate is looking into a potential acquisition of Starz — again — per a Thursday filing with the Securities and Exchange Commission.

“Lionsgate has informed the Issuer that it intends to explore whether there is a potential mutually beneficial combination of the two companies,” Starz shared in its Schedule 13D. Starz is set to unveil its fourth-quarter and full-year 2015 financials on Feb. 25.