Investors dropped the curtain on Lions Gate Entertainment (LGF: 5.42, -0.02, -0.36%) after the film and video production company reported a widening quarterly loss, as well as higher expenses. CEO Jon Feltheimer said in a Monday evening conference call that the fiscal fourth quarter was its best box office period, with $190 million in ticket sales. But rising costs and sinking home entertainment revenue caused the producer of films and television shows as wide-ranging as the "Saw" franchise, "Madea Goes to Jail," "Juno" and "Mad Men" to lose $1.40 a share, compared with a year-earlier loss of 62 cents a share. Wall Street analysts expected a loss of $1.24 a share. The company also gave a disappointing forecast for the rest of the year. Benjamin Mogil, an analyst at Thomas Weisel Partners, said Lions Gate would be paring back its film offerings and expected the company to clear inventory issues for its DVD business in the fourth quarter. "Fewer films, less expenses and capital to produce and market them, and a return to presales would neutralize many of the negatives experienced in fiscal 2009," BMO Capital Markets analyst Jeffrey Logsdon said Tuesday. Brian Shipman, a Jefferies & Co. analyst, wrote Tuesday that Lions Gate drew down its revolving credit facility by $255 million to buy its share of the TV Guide Network. Then last week it sold 49% of that position to a group of private equity firms. That paid back some of its acquisition debt, and helps defend the studio from a possible takeover from Carl Ichan, who currently owns 15% of its stock. The revolving credit facility contains covenants keeping individuals from purchasing up to 20% of the outstanding shares, and revenues from TV Guide Network operations should keep the credit line paid up, Shipman wrote.
$5.42 (06/03/09)
