Amazon (AMZN) and Lionsgate (LGF/A) have struck a deal that will put Lionsgate’s newest releases on Amazon’s streaming platform. The multiyear deal that begins on January 1, 2020, will give Amazon subscribers access to current box-office star Knives Out and forthcoming releases such as Bombshell. I added Lionsgate to my Jubak Picks Portfolio back on June 14, 2018 on the premise that the streaming wars among Amazon, Apple, Disney, and Netflix would lead someone to buy Lionsgate for its library of films. That premise is still likely to come true, in my opinion, but it certainly has tried my patience. The shares are up 3.85% today on the news but still down 60.94% since I added them to this portfolio.
Back on November 8 Lionsgate reported second-quarter fiscal 2020 adjusted earnings of 22 cents per share. That was even with the second quarter of fiscal 2019 but 10% ahead of analyst projections. Revenues increased 9.2% year over year to $983.5 million, beating the consensus by 13.5%. Motion pictures revenue (41.3% of total revenue) climbed 7.1% year over year to $406 million. Revenue from television production (27.9% of total revenue) surged 80.1% year over year. Revenue from the new Media Networks segment, formed after the acquisition of Starz, saw revenue fall 0.8% year over year. Profit from the segment fell 14.8% due to investments in STARZPLAY. At the end of the quarter Starz had 27 million total global subscribers.
As of September 30, 2019, Lionsgate had cash and cash equivalents of $232.6 million compared with $196 million as of June 30, 2019.