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Lionsgate Explodes Third-Quarter Profit

11 Feb, 2013 By: Erik Gruenwedel

Minimajor posts impressive turnaround due in large part to a 43% rise in home entertainment revenue

Lionsgate Feb. 11 reported third-quarter (ended Dec. 31) net income of $37.8 million, up exponentially from a loss of $1.4 million during the previous-year period.

The quarterly profit would have been higher without a $14.7 million noncash debt payment related to the early retirement of the Summit Entertainment acquisition term loan.

The Santa Monica, Calif.-based minimajor said revenue increased 130% to $743 million from $323 million last year. Notable drivers included the domestic box office performance of The Twilight Saga: Breaking Dawn — Part 2, among other films, and continued strong home entertainment, international revenue and increased pay television revenue.

Indeed, Lionsgate’s home entertainment revenue from both motion pictures and TV shows was $233 million, a 43% increase from the prior-year quarter. Principal drivers included The Expendables 2, Step Up Revolution, Madea’s Witness Protection, The Cabin in the Woods, What to Expect When You’re Expecting, Arbitrage and continued revenue from The Hunger Games, released on DVD and digital last August. 

The Twilight Saga: Breaking Dawn — Part 2 releases at retail March 2.

Overall motion picture revenue topped $673 million, an increase of 189% from the prior-year quarter reflecting strong gains in most categories. Within the motion picture segment, theatrical revenue in the quarter was nearly $193 million compared with $8.4 million in the prior-year quarter, an increase attributable to the box office performance of The Twilight Saga: Breaking Dawn — Part 2, Sinister and The Impossible, among others.

International motion picture revenue topped $89 million (excluding Lionsgate U.K.) for the third quarter, and increased six times over from the prior-year quarter, driven by the strong international theatrical performances of Step Up Revolution and The Twilight Saga: Breaking Dawn — Part 2.

Lionsgate U.K. revenue surpassed $36 million, an increase of 120% from the prior-year quarter, on the strength of a diversified theatrical slate driven by The Expendables 2 and What to Expect When You’re Expecting, Lionsgate U.K. and third-party titles Magic Mike and Keith Lemon: The Film, and the continued strong performance of The Hunger Games.

Television production revenue topped $70 million, a decline of 22% compared to last year, as strong international sales of “Anger Management,” “Mad Men” seasons three, four and five, and “Weeds” season eight were offset by revenue declines in domestic series licensing due to timing.

“The quarter reflected not only the impact of our young adult franchises but strong contributions from the rest of our theatrical releases and our home entertainment and international operations,” CEO Jon Feltheimer said in a statement. “Our revenue growth compared to the prior year quarter was matched by continued strong pre-tax earnings and free cash flow that will enable us to continue our focus on optimizing our capital structure and deleveraging our balance sheet.”   

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