MUMBAI: Global content leader Lionsgate has reported fourth quarter (ending 31 March, 2020) revenue of $944 million, operating loss of $12 million and net loss attributable to Lionsgate shareholders of $45 million or $0.20 diluted net loss per share on 219.9 million diluted weighted average common shares outstanding.
Adjusted net income attributable to Lionsgate shareholders in the quarter was $47 million or adjusted diluted EPS of $0.21, with adjusted OIBDA of $126 million. Fourth quarter cash flow provided by operating activities was $180 million and adjusted free cash flow was $175 million.
"We reported a strong quarter to end a solid fiscal year despite the disruption posed by the Covid2019 global pandemic," said Lionsgate CEO Jon Feltheimer. "Our Lionsgate family has risen to the challenge of these unprecedented times with resilience, dedication and collaboration. Thanks to their efforts, Starz is continuing to deliver great entertainment to our audiences in the current at-home environment; and we're working closely with all of our content partners to ensure that when production resumes and theatres re-open, we will be ready."
Full year fiscal 2020 (fiscal year ended March 31, 2020) revenue was $3.89 billion, operating income was $2.8 million, and net loss attributable to Lionsgate shareholders was $188 million, or $0.86 diluted net loss per share on 217.9 million diluted weighted average common shares outstanding. Adjusted net income attributable to Lionsgate shareholders was $124.3 million or adjusted diluted EPS of $0.56 and adjusted OIBDA was $462 million for fiscal 2020. Full year adjusted free cash flow was $349 million.
Driven by robust sales at home environment in the quarter, library revenues for the fiscal year reached a record $600 million.
The company reported a charge of $50.5 million in the quarter due to the Covid2019 global pandemic and related economic disruption. This charge included, among other things, certain motion picture and television impairments and development charges associated with changes in performance expectations and the feasibility of project completions, along with costs associated with pausing film and television production.
Fourth quarter results
Media networks segment revenue of $358 million was essentially unchanged from the prior year quarter while segment profit of $26 million was impacted by the continued investment in STARZPLAY's international expansion. STARZPLAY has launched in 50 countries and exceeded subscriber targets for the fiscal year. Domestically, STARZ grew its OTT subscribers to 6.8 million in the quarter.
Motion picture segment revenue increased by 10 per cent to $393 million compared to the prior year quarter due to the strong home entertainment performance of Knives Out and other titles. The only new theatrical release in the quarter, I Still Believe, was in theatres for only four days before they closed, but the studio pivoted quickly to launch the title in an exclusive premium video-on-demand window to mitigate lost theatrical revenue. Segment profit was $101 million.
Television production segment revenue was $258 million and segment profit was $22 million driven in part by strong library sales.
Covid2019 Impact
The impact of the ongoing Covid2019 global pandemic and measures to prevent its spread, and the resulting unprecedented economic uncertainty, are affecting the company’s business in a number of ways. To date, it has experienced early termination of the theatrical run of one of its films domestically and one of its films in the UK, delayed theatrical distribution of several films domestically and internationally, and delayed production of film and television content resulting in changes in future release dates for some titles and series. Its partners have also closed several location-based entertainment attractions based on its film and television properties. It won’t be possible to accurately predict when theatres re-open, production resumes or if and when certain of our content will be released. The full extent of the impact of the Covid2019 global pandemic on its business, operations and financial results will depend on numerous evolving factors.
Increase in TV consumption
Conversely, television and streaming consumption around the globe has increased as well as home entertainment demand. STARZ has experienced an increase in viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally. This increase, however, may not be indicative of future results and growth may slow as governmental and other restrictions are relaxed, and as a result of the current and possible longer term negative economic impact of the pandemic.
“In a number of instances, we have also been able to adapt to these new circumstances by releasing one of our theatrical films earlier on streaming platforms, completing post-production of one of our television series remotely and continuing the development of a number of our television series utilizing virtual writers' rooms. These changes in the way we operate may be helpful to partially offset some of the negative impacts from the pandemic. However, the impact of these changes and the Covid2019 global pandemic are uncertain and cannot be predicted,” said the company release.
As a direct result of the Covid2019 global pandemic and the related economic disruption, including the worldwide closure of most theatres, international travel restrictions and the pausing of motion picture and television productions, during the fourth quarter of fiscal 2020 the company incurred $50.5 million in incremental costs which were expensed in the period. These costs include $46.0 million reflected in direct operating expense, which include certain motion picture and television impairments and development charges associated with changes in performance expectations or the feasibility of completing the project, costs associated with the pausing of productions, including certain cast and crew costs and incremental costs associated with bad debt reserves. In addition, these costs include $4.2 million reflected in distribution and marketing expense, which primarily consists of early marketing spends for film releases and events that have been cancelled or delayed and will provide no economic benefit, and $0.3 million in restructuring and other costs primarily due to transitioning the company to a remote-work environment and other incremental costs associated with the Covid2019 global pandemic during this period.
