Lions Gate Stock Slides After Q1 Revenue, Earnings Dip on Lean Film Line-up

With “Age of Adaline” the studio’s only wide movie release in the quarter, television provides the bright spot with strong international numbers

Lions Gate Entertainment Corp. stock dropped almost six percent in after-hours trading Thursday, after the studio reported revenues fell to $408.9 million in the first quarter of its fiscal 2016, a nine percent drop from last year.

Adjusted earnings of 26 cents a share and profits of $40.7 million were also down from the year-ago numbers of 30 cents and $43.3 million in the period that ended on June 30, and a weak film slate in the period was the primary culprit. Earnings were bolstered by a 73 percent surge in returns from licensing of international programming, continued momentum at its EPIX pay television partnership and lower theatrical marketing expenses.

Lions Gate’s movie revenue was $275.4 million, compared to $331.9 million in the prior year quarter. “Age of Adaline,” which has grossed just over $42 million, was its only wide release, and the Tom Hardy thriller “Child 44” bombed in a limited release.

With fewer films hitting the shelves and pay-per-view TV, home entertainment revenue fell to $129.5 million from $140.9 million in the corresponding fiscal 2015 quarter.

The company’s free cash flow was $94.7 million for the quarter.

Television revenue increased to $133.6 million, a jump of 14 percent from the $117.5 million in the quarter last year.  A licensing deal for Netflix’s “Orange is the New Black” provided a lift, as did growth in the international market, especially digital platforms.

Lions Gate CEO Jon Feltheimer saw reason for optimism going forward, based on the TV gains overseas.

“We believe that we’re exceptionally well positioned to use the depth of our film and television pipelines, our natural advantages as a global content company with few legacy constraints and the strength of our capital structure to continue moving quickly and opportunistically in a dynamic and disruptive industry environment,” Feltheimer said.

He probably hadn’t forgotten that the finale of the “Hunger Games” franchise, “Mockingjay – Part 2,” opens on November 20. The first three films in the series have grossed more than $2.3 billion at the worldwide box office.