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'Killers,' costs of fighting Icahn drag down Lions Gate earnings

August 9, 2010 |  4:35 pm

Killers2 More than $29 million in costs related to its battle with its largest shareholder, Carl Icahn, and higher expenses from its movie slate, including the box-office disappointment "Killers," led Lions Gate Entertainment to nearly double its net loss in the quarter ended June 30.

Total revenue declined 14% to $326.6 million, while Lions Gate's net loss grew 77% to $64.1 million.

The Santa Monica film and television studio said it spent $7.3 million in legal fees fighting off Icahn's ongoing takeover attempt and another $21.9 million on stock-based compensation due to accelerated vesting of shares for top executives prompted by Icahn's escalating stake, which now stands at 33.5%.

The company also reported high marketing costs for its three latest movie releases -- "Why Did I Get Married Too?," "Kick-Ass" and "Killers" -- compared with the same period a year ago. "Killers" was a money loser for the company, but "Married" was another profitable release from Tyler Perry and "Kick-Ass" made some money despite not selling as many tickets as the studio had hoped.

Because Lions Gate released only one movie in the same quarter last year, theatrical revenue shot up 214% to $71.3 million. However, Lions Gate's home entertainment revenue slumped 22% to $117.1 million as fewer new films hit DVD. As a result, total motion picture revenue was flat at $272.7 million.

Though television production has been a growth driver for Lions Gate in recent quarters, that segment's revenue fell 38% to $53.9 million, primarily because the studio delivered fewer episodes of its shows "Mad Men" and "Scream Queens."

Lions Gate stock was flat in after-hours trading after closing up 2% at $6.58 before financial results were released.

--Ben Fritz

Photo: Katherine Heigl and Ashton Kutcher in "Killers." Credit: Melissa Mosely / Lionsgate.