Lionsgate sees streaming boost ahead of UK pullout

US studio Lionsgate was boosted by streaming growth in its fiscal second quarter. The studio’s Lionsgate+ streamer returned to growth in the US market by adding 200,000 subscribers, while total global OTT subs increased by 480,000 on a proforma basis.

The results come as Lionsgate prepares to split off its Starz businesses, comprising its pay TV and streaming services. Lionsgate acquired Starz in 2016 for US$4.4 billion.

The growth in streaming in Q2 helped take Lionsgate’s media networks revenue into positive territory, with media networks revenues up 5% to US$416.5 million, despite lower domestic linear channels revenue.

Media networks profit grew to US$66.6 million compared to US$21 million in the prior year quarter, driven by a significant improvement in Lionsgate+ segment profit due to accelerated revenue recognition associated with minimum guarantees from Lionsgate+’s bundling partner in Latin America.

Lionsgate had previously signaled that it intends to withdraw Lionsgate+ from the UK and Latin American markets, with a plan to exit the UK by March next year to focus on growing its domestic streaming business.

The company took US$876 million in charges in its second quarter related to Media Networks, including a US$212 million restructuring charge from its exit of the UK and Latin American markets and the write-off of non-core series domestically as well as a US$664 million non-cash goodwill and trade name impairment charge.

Lionsgate posted revenue increases across its studios and motion picture businesses, with a revenue dip in TV production related to the Hollywood strikes.

The company posted revenues of US$1 billion for the quarter and an operating loss of US$817.5 million.

“”We had a strong financial quarter with another robust library performance and segment profit growth across our film, television and Starz businesses,” said Lionsgate CEO Jon Feltheimer.

“We are reaffirming our guidance for the full year, even with the negative impact of the strike.  We are moving toward the close of an eOne acquisition that we believe will strengthen our studio business on a standalone basis.  At Starz, the reorganization, restructuring and overhead reduction reflect our focus on preparing the service to thrive as a profitable and successful standalone company.”