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Lions Gate reports increased revenue and net loss for fiscal year

May 31, 2011 |  2:52 pm

More popular movies helped to boost Lions Gate Entertainment's revenue in the fiscal year 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 saw the biggest boost, as revenue jumped 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 a more modest 5% to $690 million. The latter figure is more remarkable in a market in which 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 very 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." However, 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 increased 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.

However, Epix 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, from January through March of this year, during 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 during the same period in 2010.

Since Icahn ended his takeover attempt in December, Lions Gate stock has been down from its highs of last year. After building up to $6.51 a share in December, it has since fallen again and closed at $5.93 on Tuesday 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 concerns that Lions Gate is having trouble finding buyers willing to pay a high-enough price for the "non-core 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.

-- Ben Fritz

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