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Strong DVD Biz Slashes Lionsgate Q1 Loss

9 Aug, 2006 By: Erik Gruenwedel

Strong DVD sales of Tyler Perry's “Madea Family” franchise and Academy Award-winning Crash, plus “I>Barbie Diaries, Lord of War, Waiting… and Saw II were not enough to keep Lionsgate from halting a year-over-year first-quarter (ended June 30) loss.

The Santa Monica, Calif.-based minimajor reported a net loss of $3.6 million, compared to a loss of $21.8 million during the same period last year. Revenue for the quarter topped $172.4 million, down almost 12% from $194.2 million last year.

Home entertainment revenue soared 18% to $114.8 million, from $97.4 million last year. Theatrical revenue fell 17% to $18.5 million, compared to $22.3 million last year. Lionsgate released two movies in quarter, including Akeelah and the Bee and See No Evil.

The studio, which claimed a backlog of $240.5 million in filmed entertainment — the most of any quarter — said it would release the “heart” of its film slate, including 11 prime-time television series, in upcoming quarters.

Upcoming feature films include Crank (Labor Day), documentary The U.S. vs. John Lennon (Sept. 15), Employee of the Month (Oct. 6) and Saw III at Halloween.

CEO Jon Feltheimer said recent theatrical release The Descent, which generated about $9 million at the box office, cost the studio $1 million to acquire and $18 million to distribute and market.

“We expect to generate about $50 million in North American revenue,” said Feltheimer. “This will be a very profitable movie for us.”

Earlier this week, Lionsgate entered into deal with TVN Entertainment to distribute Lionsgate's catalog of more than 7,500 movies on video-on-demand.

The studio has VOD deals with EchoStar, In-Demand and Cablevision with access to more than 20 million broadband-enabled households. Lionsgate also has digital distribution deals with CinemaNow (in which it has a 21% stake), Movielink and later this year, iTunes Music Store.

Lionsgate president Steve Beeks said he expects the studio to generate between 10% and 20% of revenue from digital distribution within the next five years.

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