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Lionsgate records $1.8 billion operating loss on Starz restructuring costs

Lionsgate swung to a loss of $1.8 billion in its most recent fiscal quarter, which it attributed to restructuring charges around Starz and its international operations. The movie and television studio initially planned to sell a stake in Starz, but has signaled that it may spin off other parts of the company instead. At the same time it has rebranded Starzplay, its international streaming service, as Lionsgate+. In an effort to streamline its business, it announced it will leave such foreign markets as France, Germany, Italy, Spain, Benelux, the Nordic regions and Japan, moves which came with write downs.

“These charges are an acknowledgement of current market conditions and the challenges in our environment,” Lionsgate CEO Jon Feltheimer said in his remarks to analysts after earnings were unveiled. “But they also represent an opportunity to stabilize our STARZ business [and] reset expectations.”

Lionsgate recorded revenue of $875.2 million, a drop of more than 1.4% from the $887.8 million that the company logged in the year-ago period. There was also a loss of 15 cents per-share. Both of those results were better than expected. Wall Street projected a loss of 18 cents per-share on revenue of $851 million for the film and television company. The company’s operating loss was $53.7 Million without the Starz write down.

Lionsgate has found itself in a difficult position in recent years — out-armed by the tech titans and conglomerates dominating the entertainment industry, but not bite-sized enough to sell itself to one of these players. It has made moves to alter that complicated calculus. Lionsgate bought Starz in 2016 in a deal that was valued at $4.4 billion. The hope was that would give the company the scale it needed to compete. In 2021, the company announced that it was considering a sale or spinoff of Starz, the media network behind “Outlander” and “Power.” Along those lines, it has held talks with several companies, including Canal+, about selling a stake.

However, that strategy has shifted. In September, Lionsgate announced in regulatory filings that it planned to hold onto Starz and spin off its film and television studio.

On the TV side of its business, Lionsgate has fielded a hit, producing the CBS sitcom “Ghosts,” and also is behind “Welcome to Flatch” and “Home Economics.” It has been quieter on the film front, releasing “Clerks 3” and “The Good House” with Sigourney Weaver and Kevin Kline.

Lionsgate shares fell more than 2% in after-hours trading. Variety

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