Lionsgate Posts Earnings; Icahn's Battle Goes On

Tuesday afternoon, Lionsgate issued its fiscal fourth quarter and full-year earnings results, following on the higher EBITDA earnings it pre-released five weeks early in the heat of the battle with corporate raider Carl Icahn.


The company's adjusted EBITDA for the fiscal year came in at a record $128.5 million, compared to negative $122.9 million in the prior year.

This is more than the $115 million in EBITDA the company said it expected back in April 29, which was in turn more than 50 percent higher than the guidance of $75 million the company projected back in February.

The company reported revenue of $1.584 billion up 8 percent from the prior year, driven by a 58 percent increase in revenue from Lionsgate's television business. The company's net loss of $19.5 million for the fiscal year compares to a net loss of $178.5 million in the prior fiscal year.

That's certainly progress, particularly in the studio's television division. But Lionsgate is suffering from the industry-wide decline in DVD sales: home entertainment revenue for the year dropped 10 percent.

It was a busy day for Lionsgate: for the fourth time, Carl Icahn extended his $7 per share tender offer for Lionsgate stock from June 1 to June 16. Unlike the past three times Icahn extended his offer, this time he's changing the terms of his offer. Now he's offering to buy "any and all" Lionsgate shares — eliminating the minimum of 36.9 million shares he had previously imposed. (Icahn currently owns some 19 percent of the company, and disclosed that 4.7 million shares have been tendered.)

In a statement, Icahn said: "We continue to be concerned that the Board may engage in an inappropriate dilutive defensive acquisition or other transaction ion an attempt to thwart our offer."

In response to the extension, Lionsgate released a statement declaring that its shareholders have "again rejected the offer by Carl Icahn."

Noting that less than four percent of shareholders tendered, the company states: "Lionsgate appreciates the continued support of its shareholders and notes that, while there is no need for shareholders to take action at this time, those shareholders who have tendered into the offer can still withdraw their shares.”

What's next for Lionsgate? Investors are of course watching whether investors will tender shares as the June 16 deadline nears. But they're also watching the performance of "Killers," an action comedy starring Ashton Kutcher and Katherine Heigl, which opens on Friday.

The studio didn't do the usual barrage of advance screenings for critics, raising concerns that it's trying to hide a bomb. And now Ashton Kutcher is tweeting that he's "pirating the 1st ten min of Killers from the premiere." It's more marketing stunt than it is pirating, but it's certainly raised some eyebrows.

The big question is whether Kutcher will be able to draw even a percentage of his 5 million Twitter followers to theaters. If it works, investors focus may shift towards the power of social media marketing and less on Icahn's ongoing push for tendered shares.

Questions? Comments?