Lions Gate Entertainment Corp., maker of “The Hunger Games,” posted a surprise fourth-quarter loss on costs for its purchase of Summit Entertainment and the marketing of its biggest film hit ever. The shares fell.
The net loss of $22.7 million, or 17 cents a share, compared with a profit of $48.7 million, or 34 cents, a year earlier, Vancouver-based Lions Gate said Wednesday in a statement. Analysts predicted profit of 22 cents excluding items, the average of eight estimates compiled by Bloomberg.
None of the analysts predicted a loss, signaling the company failed to profit as expected from “The Hunger Games” release in theaters on March 23, eight days before the quarter ended. Lions Gate also incurred $26 million in costs related to the home video release of “The Twilight Saga: Breaking Dawn Part 1,” part of the film series acquired with the January purchase of Summit Entertainment.
“I’m surprised there wasn’t more impact from the ‘Breaking Dawn’ video release,” said Matt Harrigan, an analyst with Wunderlich Securities in Denver who recommends the stock. “They sold five million copies in the first 11 days.”
The company may not have recorded much of its international advance sales for “The Hunger Games,” he said.
Lions Gate fell as much as 7.9 percent to $11.84 in extended trading. It lost 0.5 percent to $12.85 at the close of regulator trading in New York. It has added 54 percent in 2012.
Severance and other expenses brought total one-time costs related to the acquisition of Summit to $38 million, the company said.
Lions Gate spent about $55 million promoting “The Hunger Games” in the quarter ended March 31, said Ben Mogil, an analyst with Stifel Nicolaus & Co. in St. Louis.
Of 11 analysts who follow the company, eight have buy recommendations, two say hold and one says sell.
“With substantially all of the profitability of the first ‘Hunger Games’ film and this November’s release of ‘The Twilight Saga: Breaking Dawn - Part 2’ still ahead of us, we have great visibility and have set the stage for anticipated strong Ebitda, free cash flow and earnings in the years ahead,” Chief Executive Officer Jon Feltheimer said in the statement.
Revenue rose 71 percent to $645.2 million in the quarter, missing the average forecast of $670.2 million. Lions Gate, run from Santa Monica, California, is also producer of the Emmy-award winning TV series “Mad Men.”
‘Hunger Games’ Series
“The Hunger Games,” the first of as many as four movies based on the young-adult novels by Suzanne Collins, generated $233 million in domestic ticket sales during the fourth quarter, Mogil, who recommends the stock, wrote in a May 24 note. This quarter, Lions Gate will benefit from $180 million in ticket sales without offsetting marketing costs, he wrote.
Since its release, “The Hunger Games” has collected $396 million in domestic ticket revenue, a sum Lions Gate splits with theater operators. It has also generated $247 million outside the U.S. and Canada, according to film researcher Box Office Mojo.
Lions Gate sold some of its international rights to “The Hunger Games” to help defray the $80 million production cost, a decision that limited its overseas income from the picture.
Revenue got a boost from the February home entertainment release of “The Twilight Saga: Breaking Dawn - Part 1,” according to Alan Gould, an analyst with Evercore Partners LLC in New York, who has an overweight or buy recommendation on the stock. The final movie in the series is scheduled to be released in theaters on Nov. 16.
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