More popular movies helped boost Lions Gate Entertainment Corp.'s revenue in the fiscal year that ended March 31, but higher costs caused its net loss to more than double.
The Santa Monica film and television studio reported revenue of $1.8 billion, up 6% from the previous fiscal year, and a net loss of $53.6 million. The revenue was in line with an estimate the company issued this month, while the net loss came in lower than expected.
The studio's motion picture group had the biggest boost, with revenue up 10% to $1.23 billion thanks to a slate with more big-budgeted releases, including the action hit "The Expendables" and the low-budget horror success "The Last Exorcism" as well as flops such as the romantic comedy "Killers" and the Russell Crowe drama "The Next Three Days."
Box-office revenue surged 48% to $205.9 million, while home entertainment revenue was up 5% to $690 million. The latter figure is more remarkable in that the overall home entertainment market is shrinking and other studios are seeing significant drops. Lions Gate said its small increase was driven by a 69% jump in digital and cable on-demand revenue to $140 million, which more than made up for declining DVD sales.
Lions Gate didn't report income or losses for its motion picture group but had a mixed performance at the box office in the last year. Signaling that he recognized a need for more consistency, Chief Executive Jon Feltheimer said in a statement: "Our numbers going forward should reflect growing momentum in our film business."
He cited as examples a sequel to "The Expendables" scheduled for 2012, as well as next year's adaptations of the popular books "The Hunger Games" and "What to Expect When You're Expecting."
In television, production revenue increased just 1% in the fiscal year to $353.2 million as the studio delivered 75 episodes of shows such as "Mad Men" and "Running Wilde." But TV syndication and distribution revenue jumped 48% to $136.5 million on the back of such popular shows as Tyler Perry's "Meet the Browns" and the Ice Cube-produced comedy "Are We There Yet?"
The company attributed its higher net loss to interest expenses, a loss on its controversial debt-for-equity transaction last summer that helped fend off a takeover attempt by dissident shareholder Carl Icahn, and losses from its stake in pay-cable channel Epix.
Epix, however, moved into profitability by the winter after the company struck a five-year deal with Netflix valued at nearly $1 billion. That transaction played a role in the company's profitable fourth quarter that ended in March, for which it reported net income of $46.1 million on revenue of $376.9 million. That compared with a net loss of $22.3 million on $401 million in revenue a year earlier.
Since Icahn ended his takeover attempt in December, Lions Gate's stock price has been down from its highs of last year. Since building up to $6.51 a share in December, it has fallen. The shares slipped 1 cent Tuesday to $5.93 before the company reported its financial results.
That wasn't helped by a new report from Caris & Co. analyst David Miller, who downgraded the stock on concern that Lions Gate is having trouble finding buyers willing to pay a high-enough price for the "noncore assets" it previously said it would seek to sell.
Miller said those assets would probably include the company's minority stakes in cable network FearNet, website Break.com and independent film distributor Roadside Attractions.