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Lions Gate Posts Loss on Box Office Shortfall

10 Nov, 2005 By: Erik Gruenwedel

Lions Gate Entertainment posted a second-quarter (ended Sept. 30) loss of $14.1 million, compared to a profit of $8.3 million in the comparable 2004 quarter. Second-quarter revenue was $212 million, down 8 percent from $231 million last year.

Noting strong DVD sales of Crash, Barbie and the Magic of Pegasus, State Property 2 and Diary of a Mad Black Woman, the studio attributed much of the loss to the theatrical releases Lord of War and The Devil's Rejects. Lions Gate spent $35 million marketing and distributing the titles in the quarter. The studio expects to turn a profit in the titles' DVD and pay-per-view cycles. Theatrical should also get a boost soon, as Saw II recently posted record-breaking opening box office for the studio. The studio has slated Saw III and eight theatrical Spanish-language titles for 2006.

President Steven Beeks said the studio continues to believe it will generate 10 percent revenue growth in DVD regardless of the sluggish state of the industry. He said lower-margin title offerings and downward pricing pressure from Wal-Mart and Target pushed down margins 4 percent, to 21 percent.

“We were caught a little by surprise in our [product] mix,” Beeks said.

Barbie and the Magic of Pegasus shipped 1.5 million units, and a new animated “Barbie Diaries” line debuts Jan. 31. It casts the celebrated doll as a real girl living a typical high-school life. Lions Gate also will release a second title in the “Barbie Fairytopia” line in March, Barbie Fairytopia Mermaidia. The first Barbie stage show also debuts in March.

Lions Gate remains interested in buying Image, executives said.

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