Lionsgate Entertainment Corp (NYSE:LGF.A) CEO Jon Feltheimer abided with the policy of the company by refusing to discuss the M&A rumors during the conference call discussing the Q4 financial results.
Lionsgate’s lackluster Q4 financial results
However, the CEO and CFO Jimmy Barge have emphasized on the company’s long term plan to go on with their investment in Starz although there are reports that there are discussions with CBS over the possible sale of the network.
The company reported not so convincing Q4 results which were largely due to the huge investment in the building of Starz Play as well as the slowing of the film industry. The CFO indicated that the company expects to get good returns from its investment in Starz in a bid to take it internationally. He added that the continued spending will result in annual losses ranging from $125 million to around $150 million in FY2020 while profitability expected in FY2023.
Lionsgate looks to increase its global subscribers on Starz network
It is estimated that services will have between 15 million to 25 million users by 2024. Currently, the platform has 3 million international users largely from Amazon Prime Partnership in Europe, StarzPlay Arabia as well as a Bell venture in Canada. Starz has seen domestic streaming users increase to 4 million.
Lionsgate has plans of raising equity against StarzPlay’s value that is currently in close to 51 global regions. Citing considerable valuation disparities between the company’s hopes about their global business and investor perception, the CFO estimated negative baggage to be around $500 million of the current market value.
Currently, the company is focused on integrating the Starz and Lionsgate teams that were initially separate entities as well as adjusting its programming to enhance its international appeal. Starz was acquired by Lionsgate in 2016 for an estimated cost of $4.4 billion. The CEO noted that the titles with the Epix whose deal will expire soon will be redirected to Starz.
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