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Can 'Magic Tree House' acquisition save Lionsgate?

The Magic Tree House books
Source: Amazon.com
The Magic Tree House books

Fans of Mary Pope Osborne's award-winning young-adult book series "The Magic Tree House" will soon see tales from the 54-volume series on the big screen.

Lionsgate revealed on Thursday that it had acquired the collection of books for an undisclosed sum and will be developing multiple live-action films based on the material.

More than 130 million books from the franchise have been sold since the series was first published in 1992. A script has already been penned for the first film based primarily on the novel "Christmas in Camelot."

"Lionsgate has an impressive reputation for working closely with content creators, respecting and protecting their vision, and making them part of the creative process," Will Osborne, husband and writing partner of Mary Pope Osborne, said in a statement. "I'm thrilled to have partnered with them on bringing the Magic Tree House books to life in a series of films that kids, parents and grandparents will all get to enjoy together."

This acquisition could be a boon for Lionsgate, which posted earnings that missed estimates on Thursday, sending the stock plummeting more than 33 percent during on Friday.

The company posted fourth-quarter earnings per share of 45 cents on revenue of $671 million. Analysts had expected Lionsgate to report earnings of about 49 cents per share on $767 million in revenue, according to a consensus estimate from Thomson Reuters.

The production company made more than $652 million globally from the fourth installment of the "Hunger Games" franchise, netting nearly $500 million on a $160 million production budget.

The film was the softest open of the franchise, garnering $280 million domestically. The first two films earned more than $400 million each at the box office and the third installment garnered upwards of $337 domestically, according to Box Office Mojo.

However, Lionsgate box office success was limited in 2015, with several big budget products yielding less-than-spectacular ticket sales.

"Mortdecai," which had a production budget of $60 million, only garnered $7.7 million domestically. While the film did earn $39.5 million internationally, it was unable to earn back what was spent on production.

Similarly, "Freeheld" garnered around $573,000 at the U.S. box offices on an estimated $7 million budget, according to Filmmaker Magazine, an independent film publication.

The company's remake of the '90s classic "Point Break" barely broke even for the company, earning $116 million globally — $88 million of which was garnered from international box offices — on a $105 million production budget.

"While the performance of our theatrical film slate resulted in softer than anticipated results, our other businesses performed strongly in the quarter," Jon Feltheimer, CEO of Lionsgate, said in a statement. "With our television business continuing its robust topline and margin growth, a deeper and more diversified film slate with lower costs and contributions anticipated from recently launched businesses, we have a clear path to resume our strong and sustainable financial trajectory in fiscal 2017."