Lions Gate has been successful in differentiating itself by focusing on young adult movies, such as The Hunger Games and Twilight. It will be expanding its young adult franchise with the release of movies this year based on the Divergent and Ender's Game books. Ender's Game will be released in November 2013 and Divergent will be released in March 2014.
Lions Gate will also be expanding on other movies outside of the young adult arena by working on RED 3, the Expendables 3 and Sinister 2.
Since acquiring Summit, Lions Gate has seen a 12 percent market share of the domestic box office.
Lions Gate is also diversifying its television programming and seeking areas with higher margins. It recently sold the Saint George program, starring George Lopez, to FX. Anger Management will be aired on FX in the same block and four episodes of Anger Management will be shown on Fox in June. Nashville has been renewed for a second season. In total, Lions Gate has 28 shows on 20 networks, and five are in national syndication. It expects $500 million in television revenue in 2014.
Lions Gate is seeing benefits from partnering with Amazon, Netflix and Hulu. One of its shows, Orange is the New Black, will premiere on Netflix in July. Lions Gate is also developing a comedy for Hulu and an animated comedy for Amazon. It expects that more of its business in the future will be creating content for these providers.
Internationally, Lions Gate has seen growth in Latin America, Russia, China and India.
The best method of evaluating Lions Gate is EBITDA adjusted by unusual nonrecurring charges. EBITDA should be increasing for the next two years, but the biggest jump will be in fiscal year 2015, where it will see the benefits of Divergent. Lions Gate will likely refinance the high-interest rate loan due this year with a lower interest bond.
The full transcript of the earnings conference call can be found on Seeking Alpha at the following link: http://seekingalpha.com/article/1474201-lions-gate-entertainment-management-discusses-q4-2013-results-earnings-call-transcript?part=single
Copyright 2013 Jaygo's Earnings Conference Call Summaries
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