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Theatrical Marketing Costs, Success Sink Lionsgate

9 Aug, 2012 By: Erik Gruenwedel

Home entertainment revenue surged 57% driven by five major releases

Sometimes success has its price. Lionsgate Aug. 9 reported a first-quarter (ended June 30) loss of $44.2 million compared to net income of $10.3 million during the previous-year period.

The Santa Monica, Calif.-based minimajor attributed the loss in part to a $90 million year-over-year increase in theatrical marketing costs related to five releases in the quarter, including The Cabin in the Woods, Safe, Girl in Progress, What to Expect When You’re Expecting and Tyler Perry’s Madea’s Witness Protection.

Lionsgate had just one theatrical release — Tyler Perry’s Madea’s Big Happy Family — in the same period last year. It expects the five releases to be profitable.

The loss was also affected by increased general and administrative costs due to increased stock-based compensation associated with the increase in Lionsgate’s stock price as well as increased costs associated with the integration of Summit Entertainment.

Indeed, Lionsgate's stock price has doubled in the past year to $13.25 per share on Aug. 9, compared with $6.62 per share on the same date in 2011.

Revenue for the quarter increased 81% to $472 million compared with $261 million in the prior year, driven by the theatrical revenue of The Hunger Games, The Cabin in the Woods and What to Expect When You’re Expecting.

Hunger Games ranks the 12th highest-grossing movie of all time in North America.

Home entertainment revenue from both motion pictures and television was $145.5 million compared with $92.9 million in the prior year quarter, driven by five major DVD and digital releases in the quarter.

Television production revenue declined 5% to $65.3 million due primarily to fewer deliveries from Lionsgate’s syndication arm, offset in part by increased digital revenue from “Weeds” seasons six and seven and “Mad Men” season five in their home entertainment windows.

“With two-thirds of the profitability of The Hunger Games still ahead, we anticipate that the combined benefits of our Summit acquisition, the strength of our young adult franchises and the continued evolution of our television business will translate into significant and growing contributions for the balance of our three-year plan,” CEO Jon Feltheimer said in a statement.  

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