Lionsgate Q2 DVD revenue jumps 32%
UPDATE: Company loss wider than expected on theatrical slate
By Danny King -- Video Business, 11/10/2008
NOV. 11 | UPDATE: Lionsgate’s fiscal second-quarter home entertainment revenue jumped 32% on titles such as The Bank Job and The Forbidden Kingdom, but failed to prevent the company from reporting a wider loss than analysts expected. Lionsgate also cut 17 jobs last week and decided not to fill another 24 positions of people who had recently left the company.
The independent studio’s home entertainment revenue for the quarter ended Sept. 30 rose to $178.3 million from $135.2 million a year earlier, Lionsgate said in a statement today. DVD sales were a record for fiscal second-quarter results.
Lionsgate has boosted DVD sales as overall year-to-date DVD spending through September fell 2.4% to $14.25 billion, according to data compiled by Video Business and Rentrak.
This year’s titles for the company, the seventh-largest in home entertainment sales, outpaced year-earlier DVD releases such as The Condemned and Delta Farce, Lionsgate said.
Additionally, DVD sales and digital downloads of Lionsgate-produced TV series Mad Men and Weeds and this year’s distribution agreements with children’s content companies Marvel Entertainment and Hit Entertainment also helped Lionsgate boost DVD revenue, company executives said on a conference call with analysts today.
"Lionsgate continues to grow and take share," Lionsgate president Steve Beeks said, adding that the tripling of Blu-ray-capable devices in the U.S. this year will feed sales of high-definition discs. "We remain excited about the potential for Blu-ray to inject growth into packaged media."
Still, Lionsgate’s DVD sales couldn’t offset lower theatrical-release revenue, which helped the company post a wider loss than analysts forecasted. This year’s titles, such as Bangkok Dangerous, Disaster Movie and My Best Friend’s Girl, fell short of revenue generated by such year-earlier films as 3:10 to Yuma and Good Luck Chuck. Theatrical revenue dropped 25% to $34 million from $45.3 million a year earlier.
"To put it plainly, I’m disappointed in this performance," Lionsgate co-chief operating officer Joseph Drake said on the conference call.
Between the 17 job cuts and the hiring freeze causing the other 24 positions to not be filled, Lionsgate is reducing its workforce by about 8% as part of an effort to keep overhead costs at less than 9% of revenue.
The cuts are "part of our commitment to grow our company with the leanest infrastructure in the business," Lionsgate CEO Jon Feltheimer said on today’s call.
Overall, Lionsgate’s fiscal third-quarter loss narrowed to $48.1 million, or 41¢ a share, from $58 million, or 49¢, a year earlier, as revenue increased 8.2% to $380.7 million. The company, which will host an earnings call tomorrow morning, was expected to lose 16¢ a share on $383.5 million in revenue, the average analyst estimate in a Thomson Financial survey.
