The PR folk at Lionsgate must be having a tough week. First AICN makes it big that director Lexi Alexander has been booted off of PUNISHER: WAR ZONE, buried in an NDA and that the changes set in motion are less than ideal. Then Scott Weinberg at Cinematical writes a plea to Lionsgate’s adressing their (mis)handling of DANCE OF THE DEAD. And now Bloody-Disgusting has a war waged in its comments section regarding the news that MIDNIGHT MEAT TRAIN has not only been dumped in limited release, but is only being released in dollar theaters scattered with unicorn logic around the nation.
Now why are they doing all of this? Lionsgate used to be the go to outfit for genre championship. Now they’re dumping well received films with unprecedented disrespect. What gives? Shareholders give.
Lionsgate are, despite a few huge theatrical hits from time to time, apparently, not very good at business. In 2007 LGF was like a drunk at a race track that picked all the winning horses (most of the time), but then blew all its earnings at the bar.
It doesn’t take a genius to figure out that Lionsgate’s accountants are behind the eight ball with these recent decisions. Their stock is up slightly for the year, but is still down nearly 13% from its high a year ago. In FY08, LGF’s net income was -$70 million. Not because their movies didn’t do well, but because the company made shitty investements along the way, operating at a -33% return on its equity. Even I’m not that bad at the stock market.
Considering no one has much hope for THE SPIRIT being a box office smash, Lionsgate’s hand is forced to stop losing money on the pictures they’ve been backing. Such is the reversal seen in the last quarter of 2008 and the first of ’09, when flicks like 3:10 TO YUMA, RAMBO and THE EYE were padding their earnings. LGF finally started to get better at not losing as much money and they would like to keep it that way. They announced today that their FY09 Q1 earnings will be released next Friday and their stock jumped nearly 3%. Why?
Because in Q1(March to June for them) LGF did right (maybe by chance). They didn’t have any bombs at the box office, but their DVD and Blu-Ray sales were kicking ass at retail. Now that quarter is over and the second is beginning and they can’t afford to have loses from the hard to market, hard to sell MIDNIGHT MEAT TRAIN and DANCE OF THE DEAD mar their Q2 sequel to the expectedly strong Q1 showing. Simple numbers. Plus these flicks came along in the wrong quadrant.
That said, I do have a problem with the MIDNIGHT MEAT TRAIN handling, which doesn’t make a whole lot of sense to me. They’re dumping it in dollar theaters for Christ sake. If they’re going to release it at all, why not just go big or go home? My guess is purely hypothetical: The contract for MIDNIGHT MEAT TRAIN had a guaranteed theatrical exhibition clause. It is cheaper to satisfy that clause and not get sued than it is to pay the associated presence costs of opening in crowded top markets. Purely a guess, but that must be closer to the truth. That or there is a tax hole for losing money at theaters I don’t know about and they are intentionally setting it up for failure. Or maybe they are just better at losing money than I am.
So aside from the Clive Barker anamoly, I understand why Lionsgate is taking a breather in the market place. They’re resting during this Q2, waiting for their big Halloween DVD sales and SAW cash cowing that’ll trump Q3 and then they’re back in the game. Lionsgate is finally getting better at losing less. I don’t blame ’em. Sucks for the movies. Sucks for us.
Well, not me. I’m going to go buy more shares of LGF.