Vancouver film distributor trims its full- year forecast
VANCOUVER— Independent film distributor Lions Gate Entertainment Corp. has cut its fullyear profit forecast to $ 15 million ( U. S.), down from an earlier estimate of $35 million. The company yesterday cited the poor box- office performance of In the Mix, a movie starring pop star Usher; a downturn in the home-entertainment sector; and a drop in filmlibrary margins.
“ In the Mix was probably a swing of $15 million alone,” Lions Gate chief executive Jon Feltheimer said during a conference call with analysts.
Lions Gate’s fiscal year ends March 31. The company said its outlook for free cash flow remains unchanged at more than $100 million for 2006, as well as guidance of more than $850 million in revenue.
Feltheimer said the company is expecting its next two big movie releases, Hostel and Medea Family Reunion, to do about $60 million in business at the box office combined.
“ We think that’s pretty conservative,” Feltheimer said.
Lions Gate president Steve Beeks said the disappointing performance of the library business was due to a focus on recent acquisitions that have lower margins rather than some of the marquee titles that have traditionally formed the backbone of the library’s business and where the focus will return in the coming year. “We have some special editions next year coming out of the library, including Basic Instinct, which is timed for the release of Basic Instinct 2,” Beeks told the analysts.
“There’s nothing that indicates that the titles on which we keep most of the margin have gotten tired. Those products are still working.”
Earlier this month, Lions Gate reported swinging to a secondquarter loss as the company ramped up spending to promote two big theatrical releases this summer, Lord of War and The Devil’s Rejects.
Lions Gate posted a loss of $14.1 million in the quarter, compared with a profit of $ 8.3 million in the quarter last year. The company attributed the loss in part to $35 million spent to market and distribute the two films to theatres, but expects both will be profitable after release on DVD and pay television.