Lionsgate CEO Jon Feltheimer says avoiding “crazy risks” will help movie studios grow at the box office after splitting from Starz

Lionsgate CEO Jon Feltheimer offered an optimistic view of the movie business — at least the way his cost-conscious management team approaches it.

During a conference call with Wall Street analysts to discuss the company’s upcoming film and television business spinoff from Starz, Feltheimer said the key is to avoid “crazy risks” that could cause financial problems in a volatile market . One analyst wondered how Lionsgate would survive a period of sustained decline in box office revenue, with ticket sales well below pre-COVID levels.

“You can’t call the movie industry a box office business, okay?” Feltheimer said, adding that the analyst’s take on movie attendance was “off a bit” as it is expected to decline in 2024 due to several factors. “I’m not really worried about it. I am optimistic,” said the CEO.

“The box office is the engine of the business,” the executive admitted, “but while I can’t speak for all studios, I think if you asked people in general what they think about the business right now, I would really listen. “When I start adding all the revenue streams together, I think it’s a pretty positive business.”

Lionsgate’s broad release slate includes John Wick, Hunger games, Saw and other franchises are treated “a little differently” than major studios, Feltheimer noted. “I like our profile. We probably reduce the super advantage a bit, but the way we pre-license our films to a much larger group of international buyers means that our domestic release has a much smaller gap or shortfall to recover from. “In the world we live in now, it’s a great model.”

At the level among wide releases, a category that includes everything from direct to streaming offerings, daily and date titles or low-budget titles, Lionsgate had a 94% financial success rate, according to Feltheimer. He estimates that the individual return on investment from these films is 30 to 40 percent.

“It’s a business that’s going from strength to strength with 30 to 40 films a year,” he said, calling it a “huge foundation” and “foundation” for the studio.

Feltehimer said Lionsgate could generate additional revenue with an expanded library of films, including recent releases, which it could sell to outside streamers, which are increasingly looking for royalties and are not as dependent on hits. In his ideal world, he conceded, the library would be responsible for the bulk of the film’s revenue (without the volatility of production spending or release timing affecting the bottom line as much). By parting ways with Starz, the studio will continue to avoid the mega-budgets of major studios that are used to spending $250 million to $300 million on their biggest tentpoles.

Feltheimer’s comments came during a phone call to discuss Lionsgate Studios’ announcement a few days before Christmas. The plans call for the creation of a new publicly traded studio company through a SPAC deal with Screaming Eagle, as well as investments from private sources. The company’s management team provided written comments for about 25 minutes and then answered questions from a handful of analysts. They also offered a 30-page “roadshow” deck with financials and fine print.

After the deal, which is expected to close in the spring, parent company Lionsgate will own 87% of Lionsgate Studios and 100% of Starz. The full separation of the units is expected to be completed during the 2024 calendar year.