The box office success of “The Hunger Games: The Ballad of Songbirds and Snakes” was not enough for Lionsgate Entertainment to offset the shutdown of TV production by the Hollywood strikes, causing the Hollywood studio’s revenue to drop 2.5% year-over-year.
Here are the top-line results from Lionsgate’s quarterly report released Thursday:
Revenue: Overall revenue fell from $1 billion the prior quarter to $975 million. The biggest drop came in Lionsgate’s TV division, which suffered a 59% year-over-year drop to $248.4 million as the strikes shut down production for 191 days.
Net loss: Income fell to a loss of $107 million, compared to net income of $15 million in the prior year quarter. Earnings per share came in at 27 cents per share, beating projections of 24 cents from Zacks Investment Research.
Starz: North American subscribers grew by 300,000, with a 700,000 subscriber boost for over-the-top. Global subscriber counts, excluding territories like the United Kingdom that Starz is exiting, fell by 120,000.
While the strikes took a blow to Lionsgate’s TV division, the motion picture group was a bright spot for the studio as revenue increased 53% year-over-year to $443.2 million. This was fueled by the success of the “Hunger Games” prequel, which grossed $338 million at the global box office against a reported $100 million production budget.
Lionsgate saw its domestic box office total for 2023 increase to $584 million. That’s below the $797 million the company earned in 2019, but still a profitable year given Lionsgate’s strategy of generating profit through overseas distribution deals and home platforms on its lower budget and non-IP films, while keeping production costs low on franchise films like “Hunger Games,” “John Wick: Chapter 4” and “Saw X.”
Lionsgate is hoping to give its TV division a post-strike rebound with the recent purchase of eOne from Hasbro and the coming start of production on shows like Starz’s “Spartacus” and ongoing series previously produced by eOne like “Yellowjackets” and “The Recruit.” Combined, Lionsgate plans to launch 10 film and TV productions in the coming quarter.
“Ten years ago, nearly all of our television profits came from our core premium scripted business,” CEO Jon Feltheimer said in an earnings call statement. “Today, our contributions are spread across scripted, unscripted, talent management, syndication and international productions, enabling us to navigate downturns in any one part of the business and one of the reasons we’re continuing to track toward record Television Group segment profit this year despite the strike and several series cancellations.”
Last month, the company pitched its plans to split Starz into a separate company via a SPAC deal that will see Lionsgate’s TV and motion picture groups, along with a 20,000-title library expanded by the eOne purchase, combine with SPAC company Screaming Eagle Acquisition Corp. to form a new publicly traded entity called Lionsgate Studios Corporation. That new company is set to go public on NASDAQ this spring under the ticker symbol LION.
“The transaction will not limit the studio’s ongoing working relationship with Starz, which remains a wholly owned subsidiary of parent company Lionsgate,” Feltheimer told investors in January. “Starz will have the ability to continue strengthening its position as a profitable, premium SVOD platform with a domestic content strategy focused on valuable core demos, a largely digital subscriber base and a continued reliable supply of content from the Lionsgate Television and Motion Picture Groups.”
Along with the spin-off plan, Lionsgate has executed significant restructuring of its overseas Lionsgate+ streaming service, which included ending the service in multiple countries in order to increase Starz’s profitability. The company cited impairment charges of $77.8 million in the quarter related to the restructuring.
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