Lions Gate to cut film staff as virus slows production

Revenue falls 24 per cent in lockdown

Lions Gate Entertainment Corp. plans to cut about 15 per cent of the staff in its motion-picture group as the COVID-19 pandemic continues to weigh on Hollywood.

The virus, which closed movie sets across the world in March and ravaged the theatre business, spurred the independent studio to “accelerate changes to our own operations and strategic plan,” according to an internal memo from division chairman Joe Drake that was obtained by Bloomberg News. Those changes include a reorganization that consolidates jobs.

“This means that individuals across the motion-picture group will be impacted as groups are being combined, and new roles have been defined or eliminated as part of this process,” Drake wrote. The layoffs were reported earlier in trade publications.

Lions Gate said Thursday that second-quarter revenue fell 24 per cent to US$745 million, missing analysts' estimates of US$760 million, largely as a result of the pandemic. Earnings excluding some items rose to 33 cents, beating analysts' projections of 16 cents.

Struggles in the motion-picture group were offset by the pay-TV service Starz. Domestic online subscriptions jumped during the pandemic, rising to 9.2 million from 7.4 million in the previous quarter. The company expects its customer count to climb until at least early 2021. Media networks are the company's largest business, followed by films and TV production.

Shares of Lions Gate rose as much as 10 per cent to US$7.77 in late trading. They were down 36 per cent through Wednesday's close.

The Santa Monica, California-based studio, which has scored hits such as The Hunger Games and John Wick, normally relies on a big box-office showing to generate cash. However, theatres across the U.S. closed in March, and remain shut in the major movie-going markets of New York City and Los Angeles.

The company has experimented with new models to ease some of the COVID-related pain. It released the horror film Antebellum for US$20 online in September, scrapping a plan to debut it in cinemas. The studio said

INDIVIDUALS ACROSS THE (FILM) GROUP

WILL BE IMPACTED.

it attracted enough of an online audience for the movie to offset a steep sales decline in its motion-picture segment during the quarter.

The company had 1,443 full-time employees at the end of 2019, according to filings. The motion-picture group employs about 450.

PATRICK T. FALLON / BLOOMBERG FILES Lions Gate Entertainment plans to lay off up to 15 per cent of its film-production staff amid the pandemic.