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Lionsgate Issues First Dividend

20 Dec, 2013 By: Erik Gruenwedel

Lionsgate is issuing its first-ever quarterly cash dividend to investors.

The Santa Monica, Calif.-based mini-major said it would pay 5 cents per share on Feb. 7 to common shareholders of record on Dec. 31.

Lionsgate ended its most recent fiscal period with more than 137.9 million shares outstanding, making the payout worth almost $6.9 million.

"Our outstanding film and TV performance continues to translate into strong financial results," Lionsgate CEO Jon Feltheimer and vice chairman Michael Burns said in a joint statement. "We're pleased that our financial strength and excellent visibility enable us to offer our first quarterly dividend, returning value to our shareholders as we continue to grow the company."

The studio is basking in the financial windfall of The Hunger Games: Catching Fire, the sequel to The Hunger Games starring Oscar winner Jennifer Lawrence.

Catching Fire has topped $730 million at the global box office since its Nov. 22 launch, which is $40 million more than the original’s total ticket sales.

The strong box office results portend robust home entertainment sales as Lionsgate continues to over-index industry averages distributing titles at retail via both packaged-media and digital channels.

B. Riley & Co. analyst David Miller attributes much of the success to foreign pre-selling of Catching Fire, which he said was much more aggressive than for Hunger Games. Whereas Games saw a negative cost of $80 million that was defrayed down to $30 million through pre-selling foreign distribution rights, Fire has a negative cost more akin to $95 million (more expensive because there are a number of scenes filmed on water), but defrayed down to near-zero as LGF/Summit got much more aggressive this time around with foreign distributors, which is Summit’s forte.

Negative cost is the expense to produce and shoot a film, excluding distribution and promotion. The bottom line, according to Miller, is that Lionsgate is eyeing a major box office title for retail with minimal overhead.

“That will have the effect within the cash flow statement of decreasing film investment,” Miller wrote in a note last month. “That is why we continue to model a fairly dramatic [free cash flow] swing to the positive in the current quarter, as well as fourth quarter [which ends March 31, 2014].”


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