Shares of Lionsgate Entertainment tumbled 4 percent in after-hours trading Thursday afternoon after the independent TV and movie studio reported disappointing quarterly results.
The Santa Monica, Calif.-based company reported a net loss of $155 million, or 72 cents per share, compared with net income of $91.3 million, or 43 cents, a year earlier. Revenue slumped 12 percent to $913 million as the company released fewer films in the quarter than it did during the same period in 2018. Adjusted profit was 11 cents per share. On that basis, Wall Street analysts had expected Lionsgate to report a 6-cent loss on revenue of $949.4 million.
Earlier this year, Lionsgate announced that it would release fewer films and increase spending on original programming on its Starz cable channel as it tried to expand its viewership overseas. The company has long been considered a potential acquisition target of larger companies eager to expand in Hollywood including Amazon.
"We've completed a very active and productive fiscal 2019 in which we set in place all the elements for strong growth and continued value creation in the year ahead," said Lionsgate CEO Jon Feltheimer in a press release. "We've refilled our film and television content pipelines, refocused on extracting maximum value from our franchise properties and are capitalizing on an extraordinary opportunity to continue Starz's global expansion and cement its stature as one of the leading international pure play subscription video-on-demand services."
Profits in Lionsgate’s Motion Picture division plunged by 28 percent to $129 million as revenue plummeted 20 percent to $1.46 billion. The company’s Television Production unit reported revenue of $921 million, a decrease of 11 percent. Profit at the business plunged 41 percent to $66 million.
The only bright spot in Lionsgate’s quarter was in the company’s Media Networks business which includes the Starz premium cable channel which ended the quarter with 24.7 million domestic subscribers, an increase of 1.2 million from the year-ago period. Revenue in the division surged 4 percent to $1.46 billion while segment profits rose 2 percent to $436 million.
According to media reports, Lionsgate recently turned down an “informal offer” of $5 billion for Starz from CBS, claiming that it undervalued the network which it acquired in 2016 for $4 billion from its ownership group lead by Liberty Media Corp. New York-based CBS is also reportedly in talks about joining forces with its former corporate sibling Viacom.