Lionsgate Sales Drop 8% in June Quarter, Starz Loses 500K Subscribers

Lionsgate, still feeling ripple effects from last year’s twin Hollywood strikes, reported a decline in sales and while narrowing its net loss for the June quarter, as its Starz unit shed 500,000 subscribers.

Revenue for the quarter was $834.7 million, down 8%. The company reported a net loss of $59.4 million, translating into a loss of 25 cents per share, an improvement over a net loss of $70.7 million in the year-earlier period. Wall Street analysts on average predicted revenue of $857.5 million and a loss of 18 cents per share.

Lionsgate’s operating income was $18.8 million, compared with an operating loss of $16.8 million a year ago.

“We’re pleased to report a solid quarter despite unprecedented industry disruption and the after-effects of the strikes,” Jon Feltheimer, CEO of Lionsgate and Lionsgate Studios, said in announcing the results. “Our Motion Picture Group, Starz and our library performed well, though financial results in our television segment reflected a heavily backloaded year. Importantly, we generated great momentum during and after the quarter by taking a number of steps toward full separation by calendar year-end, subject to the timing of normal regulatory approvals.”

Lionsgate’s Motion Picture segment revenue decreased by 15% to $347.3 million and segment profit increased by 24% to $86.1 million. The company touted strong box office from horror film “The Strangers: Chapter 1” (pictured above) along with “robust” home entertainment results from several theatrical titles, and lower P&A spend and content amortization. The year-over-year revenue decline was due to the “difficult comparison” with the prior year’s quarter, which included carryover theatrical revenue from “John Wick: Chapter Four,” the company said.

The company’s studio business, comprising of the film and TV production segments, reported revenue of $588.4 million, a decrease of 5.9% from the prior-year quarter. Adjusted operating income of $58.3 million decreased by 5.5% from the prior year quarter. Television production revenue increased 10% to $241.1 million while segment profit decreased 53% to $10.7 million. Revenue growth was driven by contributions from eOne, while segment profit growth was impacted by lingering impacts of the strike on the timing of deliveries in a heavily backloaded year, according to Lionsgate.

The company’s Starz business posted revenue of $345.3 million, up 1%, and segment profit grew 54% to $58.5 million. Revenue growth was driven by a June 2023 price increase and year-over-year OTT subscriber growth, partially offset by linear declines. North American streaming subscribers decreased by 180,000 in the quarter, while Starz’s overall subscribers decreased by 500,000 sequentially. Earlier this week, Starz notified U.S. customers of a $1 increase to the service’s monthly cost.

Earlier this week came word that Lionsgate Television is developing a TV series follow-up to the successful “John Wick” movie franchise. In June, Lionsgate said it would release the film adaptation of the next book from “Hunger Games” scribe Suzanne Collins, “Sunrise on the Reaping,” in November 2026. The studio’s other big franchises are the Saw and Twilight films.

The company comprises two entities: Lionsgate and Lionsgate Studios. Lionsgate Studios debuted as a standalone public entity on May 14 under the Nasdaq ticker symbol LION, which was a step toward the full separation of its studio business and the Starz TV network and streaming business. Through the merger with special-purpose acquisition company Screaming Eagle Acquisition Corp., Lionsgate Studios raised $350 million from a group of investors. The company expects the full separation of Lionsgate Studios and Lionsgate (i.e. Starz) to occur by the end of calendar year 2024.