Lions Gate Records Surprise Loss on Summit, ‘Hunger Games’ Costs

Lions Gate Reports Loss on 'Hunger Games' Expenses

Lions Gate Entertainment Corp. (LGF), maker of “The Hunger Games,” posted a surprise fourth-quarter loss on costs to market its biggest film hit ever and the purchase of Summit Entertainment. 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 late yesterday in a statement. Analysts predicted profit of 22 cents excluding items, the average of eight estimates compiled by Bloomberg.
None of the analysts had projected 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,” the fourth film in the series acquired with the January purchase of Summit.
“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 also 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 yesterday in extended trading. It lost 0.5 percent to $12.85 at the close of regular 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. Of that, $36 million occurred in the fourth quarter.
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.