Lionsgate Revenue Falls As CEO Concedes “Disappointing” Quarter

Lionsgate released its second quarter financial results that follow the spinoff of the media giant’s studio business into a separately traded stock earlier this year.

The studio, led by CEO Jon Feltheimer, shrunk its first quarter net loss to $177.8 million, compared to a year-earlier $887.9 million loss then due to the impact of non-cash goodwill and intangible asset write downs and restructuring charges in the media networks division.

Lionsgate is the studio behind John Wick, The Hunger Games and other movie franchises and Feltheimer during prepared remarks made to Wall Street analysts on an after-market conference call said the latest financials come amid “continued industry disruption, the lingering effects of last year’s strikes and a disappointing theatrical box office performance.”

During the latest financial quarter, Lionsgate saw overall revenue falling to $948.6 million, which compares to a year-earlier $1.01 billion. The latest financial frame beat an analyst consensus of $921 million for second quarter revenues. The adjusted per-share loss was 43 cents, which beat an analyst consensus by 5 cents.

During the first quarter, the company’s studios business, which combines the Motion Picture and TV production segments, saw Motion Picture revenue rise to $407.1 million, compared to $396 million in the same period of 2023, while the TV production revenue reached $416.6 million, against a year-earlier $394 million.

The media networks revenue, which is mostly Starz Networks, fell to $347 million, against a year-earlier $416.5 million.

Facing industry-wide disruption, Lionsgate CEO Jon Feltheimer didn’t sugarcoat his company’s latest financial results. “In a transitional, disrupted and difficult year for our industry, we reported disappointing financial results in the quarter. Our performance underscores the need to adhere even more rigorously to the risk mitigated business models, slate diversification and strict financial discipline that have always served us well.  The combination of a return to strong content slates, the continued stellar performance of our film and television library and sure-handed execution will put us back on the path to solid growth and shareholder value creation,” he said in a statement.

Feltheimer expanded on those comments to analyst by adding: “Within our television Group, our unscripted business is feeling the effects of a continuing market correction.  In our film group, the poor box office performance of Borderlands, coupled with softer-than-anticipated results for other releases in the quarter, reflected an environment with less margin for error than ever before.”

On Eli Roth’s Borderlands, the live-action adaptation of the popular video game, the Lionsgate boss revealed “nearly everything that could go wrong did go wrong: it sat on the shelf for too long during the pandemic, and reshoots and rising interest rates took it outside the safety zone of our usual strict financial models. Several of our other releases in the quarter, though cushioned by financial models that worked as intended, didn’t live up to either our standards or our projections.”

Lionsgate CFO Jimmy Barge added losses from Borderlands after it disappointed at the box office “was outside the range of outcomes we would expect, given the underlying IP cast and size of the film’s budget.” The film’s A-list cast included Cate Blanchett, Kevin Hart, Jack Black, Edgar Ramirez, Ariana Greenblatt, Gina Gershon and Jamie Lee Curtis, which stretched Lionsgate’s business model that aims where possible to keep budgets under control and sells foreign rights to its theatrical titles to offset risk.

“As always, we learned valuable lessons from every release, and Borderlands is no exception. We are confident that our go-forward processes will help reduce the likelihood of a similar outcome in the future,” Barge added.  

To mitigate the impact of industry disruption, Lionsgate completed the separation of its studio business from Starz, bolstered its theatrical release slate to an expected three to four tentpoles a year starting in fiscal 2026 and is building out its TV production slate and launching new free, ad-supported streaming channels.

But Feltheimer added his studio’s business model, which sets Lionsgate up as even more of a cost-conscious studio than its bigger Hollywood rivals, still has value for investors.

“In spite of the above, our business model still works: risk-mitigated film & television slates, efficient production & marketing spends, a diversified portfolio of assets, and a strong library that serves as the ballast of our business, generating nearly $900 million in trailing 12-month revenue in the quarter.  But emphasizing the success of our financial models doesn’t take the place of also getting the creative right,” Feltheimer argued.

Here Lionsgate and its Motion Picture Group are “making good progress in preparing our return to a much stronger and more diversified film slate in fiscal 2026 driven by the tentpoles Michael, Ballerina and Now You See Me 3,” Feltheimer told analysts. “Beyond that, Francis Lawrence will be directing our sixth Hunger Games movie after he finishes The Long Walk, the film adaptation of Stephen King’s classic novel, as we focus on and take full advantage of one of the most valuable portfolios of brands and franchises in the business,” he added.

More recently Lionsgate announced Paul Feig will direct Sydney Sweeney and Amanda Seyfried in the thriller Housemaid, Challengers director Luca Guadagnino will get behind the studio’s re-imagining of the Lionsgate classic American Psycho, and Amazing Spiderman filmmaker Marc Webb will direct Johnny Depp and Penelope Cruz in Day Drinker.  

Adam Fogelson, chair of the Motion Picture Group, said the studio would continue to be financially disciplined, but would also take bigger swings to bring commercial hits to the marketplace. “We do have an extraordinary number of franchises that we are going to be leaning into, because the audience is asking us for it,” he said as he pointed to the John Wick franchise expanding into TV and the gaming space as examples.

On the TV front, Feltheimer said a continuing “market correction” after Hollywood’s Peak TV era went bust had impacted the studio’s scripted and unscripted TV business as buyers order fewer shows and disrupt longstanding business models.

Until what Lionsgate expects as a “new normal” is reached as streaming platforms change their content strategies for sustained profitability, Feltheimer told analysts his TV business “is doing everything you would expect us to do: reducing costs; consolidating smaller labels to create greater efficiencies in our unscripted business, and continuing to evaluate the mix of business models on our scripted slate to mitigate risk and maximize our upside.”

Kevin Beggs, chair of the Lionsgate Television Group, at the same time argued his division was taking its own big swings to keep pace with industry rivals and shifting TV viewership trends. “We’re certainly seeing lots of green shoots on the development side,” he added as Lionsgate searches for and finds new network buyers as major studios like Warner Bros. Discovery and Paramount Global moving to the Skydance Media fold work out their own changing business models amid industry disruption.

Beggs added is tempering its own TV series budgets to allow network and streaming partners cost savings. “To the extent that we can make as many originals as possible to drive revenues and earnings and build our library is our first choice, but we have to be flexible and go with the markets,” he added.

Launching Lionsgate Studios on NASDAQ aimed to give the Hollywood studio options before completing a long-awaited separation of the film and TV studios and Starz, including raising fresh capital and merging with existing businesses.

Feltheimer was asked int the wake of Comcast possibly separating out its cable networks whether more Hollywood players will pursue deal-making of their own to undo earlier media asset consolidations. “I think it’s obvious there’s huge dislocation about to happen in the business. I think certainly some people are going to start questioning whether this idea of vertical integration really works, whether taking away the natural tension between buyer and seller is really the best way to allocate resources. But for sure there’s going to be a lot of movement of pieces, I believe, out of these conglomerates. And I think after the dislocation there’s going to be a lot of relocation.”

Lionsgate Studios is made up of Lionsgate’s Motion Picture Group and Television Studio business, along with a 20,000-strong film and TV library.