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TV series help propel Lions Gate to profit

Although film box-office receipts fell 11%, TV revenue soared 30% as the studio produced more episodes of 'Weeds,' 'Mad Men' and 'Crash.'

November 10, 2009|Claudia Eller

Solid gains in its television production business, new revenue from its recently acquired TV Guide Network and lower movie marketing costs helped swing Lions Gate Entertainment to a profit in the company's fiscal second quarter.

The Santa Monica film and TV studio, producer of the Tyler Perry movies and "Mad Men" TV series, reported net income of $31.7 million for the quarter ended Sept. 30, compared with a net loss of $51.8 million for the same period last year.

Revenue increased 3% to $393.7 million.

It was the second consecutive quarter of financial recovery for Lions Gate, after a net loss last year because of the poor performance of the studio's movies and a charge taken for distribution of certain DVD titles.

In the most recent quarter, Lions Gate said motion picture revenue fell 11% to $277.1 million because it released only two films -- "I Can Do Bad All by Myself" and "Gamer" -- compared with the four it released in the year-ago period. Having fewer releases, however, led to a 66% reduction in marketing costs.

Television production revenue jumped 30% to $88.9 million, thanks to new episodes from TV series "Weeds," "Mad Men" and "Crash," along with much higher contributions from international TV sales and its Debmar-Mercury syndication unit.

Home entertainment revenue was a drag on the company, plunging 25%. Lions Gate blamed the decline on the weak box-office performances behind its new DVD releases, including "Crank 2: High Voltage" and "The Haunting in Connecticut." The weak results in movies and home entertainment, however, were offset by strong contributions from television and investments in TV Guide Network and

Lions Gate Chief Executive Jon Feltheimer said the company was on track to "meet our financial targets for the year."

Although the studio's sixth installment of its long-running "Saw" movie series was not released in the quarter, it was a box-office miss and is sure to ding Lions Gate's next quarterly results. However, the company's latest big-screen release, "Precious," a drama about the brutal home life of a teenage girl from Harlem, could be a positive contributor. The film grossed an impressive $1.87 million in its debut last weekend in 18 theaters and is being positioned as a strong contender in the coming awards season.

Wanting to capitalize on the film's strong word-of-mouth, Lions Gate plans to expand it into more theaters beginning Friday and throughout the month. If the movie, based on the novel "Push" by Sapphire, continues to draw audiences, Lions Gate could make a nice profit given that it paid a relatively modest $5.5 million for worldwide rights to the picture.

In after-hours trading following the release of its earnings, Lions Gate stock rose nearly 6% to $5.71.


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