Lionsgate reports US$1.75bn loss, scales back Lionsgate+ internationally

US media company Lionsgate has reported second quarter (quarter ended September 30, 2022) revenues of $875.2 million and an operating loss of US$1.75 billion. In response to the challenging economic and competitive environment it faces, the company said it has decided to pull streamer Lionsgate+ (formerly Starzplay International) from seven territories: France, Germany, Italy, Spain, Benelux, the Nordics and Japan.

Jon Feltheimer

“We reported another strong library performance and continued growth in Lionsgate Television series deliveries as our studio businesses continued to perform in line with expectations,” said Lionsgate CEO Jon Feltheimer. “Economic and industry headwinds are having the greatest impact at Starz, where we are exiting seven territories. This will allow us to streamline Starz’s international business and return it to profitability more quickly while continuing to build on the opportunities created by a strong Starz original series slate and focused content strategy domestically.”

The decision to exit from the above markets contributed to a US$218.9 million restructuring charge in the quarter, primarily driven by content impairment write-downs in the affected territories. At this early stage, there is no indication of how the decision will affect the company’s recent investments in local scripted content. The company may still see a viable business in creating local content for other platforms, but the loss of its streaming capability could mean there is less incentive to create local market originals in territories such as France and Spain. The main international focus going forward will be on the UK, Latin America and Canada (as well as the US).

In terms of current subscriber numbers, Lionsgate cited a global figure of 37.8 million including Starzplay Arabia. Global streaming subscribers increased 52% year-over-year to 27.3 million. Lionsgate+ subscribers grew 97% year-over-year to 14.8 million (including Lionsgate Play in India & South Asia). By streamlining the business, the company says its Starz division should reach breakeven y end of 2024.

Lionsgate is still keen to spin off its Starz division into a separate stock – a move that he believes will help the market valuations of both. Lionsgate is a very successful film and TV studio while Starz houses the company’s PayTV and streaming activities.