Addressing shareholders at Lionsgate’s annual general meeting in Vancouver, CEO Jon Feltheimer said explaining the company’s value to Wall Street is now the company’s top priority.
The transformation of the company over the years from scrappy indie to mature owner of assets like Starz and formidable film and TV studios requires a more clear message, Feltheimer said.
“All of these changes bring with them the need to better communicate to the Street the value creation I've just outlined as well as how we intend to better unlock that value,” the CEO said. “That will be our highest priority in the coming months.”
In addition to Starz, acquired for $4.4 billion in late-2016, the company of late has taken a majority stake in 3 Arts Entertainment, initiated plans for entertainment centers and theme parks, including a recently opened site in China. And just last week, Lionsgate announced a partnership with Great Point Capital on a $100 million production facility in Yonkers, NY.
Shares in Lionsgate have declined 34% in 2019 to date they finished Tuesday’s session down a fraction, at $11.01 and are the lowest they have been since 2012 amid questions about strategic direction. The company has made significant investments in the global streaming capabilities of Starz, boosting it to 27 million total subscribers. And yet, the ownership fate of the premium network has been shrouded in some uncertainty. Lionsgate held talks with CBS last spring about a possible deal for Starz but ultimately the companies could not settle on a price.
As recently as early 2018, the company was sending signals about its appeal as an acquisition target, and the decline in its share price has potential suitors taking a fresh look. One scenario often speculated about by investors and company observers would see ViacomCBS swooping in after its own $30 billion, all-stock recombination closes by the end of the year.
Feltheimer, not surprisingly, didn’t address any of the larger M&A picture. Instead, he stressed the reversal of fortunes at the once-lagging film unit, noting that three of its last four theatrical titles have outperformed pre-release tracking. “Buzz is building” for upcoming entries Knives Out, which drew accolades after its world premiere at Toronto last weekend, and Jay Roach's Bombshell, he said.
The television unit, meanwhile, had its “best development year ever,” according to Feltheimer, setting up 66 projects at networks, along with series in the works for emerging platforms like Apple, HBO Max and Charter Spectrum.
Sizing up the fiscal year, the top executive concluded, “It was a year in which we achieved success by creating business models for every kind of platform, found our own places to compete and win, and continued to occupy a unique and special place as a supplier of premium content to women, African-American, Latinx and LGBTQ audiences who have been historically under-served and underappreciated.”