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Lions Gate forecasts increase in losses and slight uptick in revenue for recently ended fiscal year [Updated]

May 9, 2011 | 10:18 am

Lions Gate Entertainment told investors Monday that its net loss grew in the fiscal year ended March 31 despite an increase in revenues, according to preliminary figures. The losses were attributed in part to its ongoing investments in premium cable channel Epix and its legal fight with dissident shareholder Carl Icahn.

The early figures were reported in connection with the Santa Monica-based film and television studio's announcement that it will offer up to $150 million in new debt. Lions Gate is expected to report its official financial results at the end of May.

[Update, May 10, 10:30 a.m.: Lions Gate said Tuesday that the amount of debt it is selling has increased to $200 million.]

According to the preliminary figures, Lions Gate's revenue was between $1.5 billion and $1.6 billion for the fiscal year. The previous year, the company had revenue of $1.49 billion. Its net loss increased substantially to between $66 million and $78 million, from $19.5 million. The company's EBITDA (earnings before interest, taxes, depreciation and amortization), a figure it prefers to highlight for investors, fell to between $80 million and $100 million, from $128.4 million.

The latter figure was in line with previous expectations set by Lions Gate. The company had said EBITDA would be greater than $75 million.

Also, as the company had previously told investors to expect, it generated slightly positive free cash flow of between $1 million and $10 million. That was up from negative cash flow of $102.4 million in the previous fiscal year.

Though the preliminary financial results did not break down performance by business units such as film and television, they did reflect an increase in the company's losses on its equity interests to between $43 million and $45 million, from $28 million. Much of that came from Epix, which Lions Gate co-owns with Viacom's Paramount Pictures and Metro-Goldwyn-Mayer. Epix turned to profitability in the fall following a new online distribution deal with Netflix, but was losing money prior to that time.

Lions Gate also had higher legal expenses last year from its fight with Icahn, who became embroiled in three lawsuits with the studio as part of his failed attempt to take it over and elect a dissident slate of directors to its board. Interest costs also rose substantially -- to between $39 million and $40 million, from $27.5 million.

The company plans to use its new debt offering to pay off existing credit facilities and other debt. It said it may use any remaining proceeds for acquisitions.

Lions Gate stock was up 1% at $6.32 in midday trading in New York.

-- Ben Fritz

[For the record, 11 A.M.: An earlier version of this report incorrectly said that Lions Gate warned investors that net losses in the previous fiscal year were higher than expected and that revenue was between $1.4 billion and $1.5 billion.]

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