Everyone was flipping out last Fall when major stocks were tumbling uncontrollably on Wall Street, and there is now cause for more commotion as the film industry falls deeper into the distressful milieu.
Lions Gate Entertainment reported a third-quarter loss of $93.4 million on Monday, compared with a $7.3 million profit in the same quarter last year. To make matters worse, film-financing investors Pride Pictures observed those results, and pulled out of a multi-film funding agreement Tuesday [Los Angeles Times], which will mean a $65 million drop in Lionsgate’s cash flow.
This action caused shares to drop a whopping 27%, or $1.43 to $3.90 per share, their lowest level since 2003. Lionsgate execs blamed the losses on “underperforming” releases, including The Spirit, Punisher: War Zone and Transporter 3 [Variety].
There could be some truth to this claim (I know I didn’t cough up the cash for these flicks), but there are so many other factors here. People seem to keep forgetting it’s not just a few movies that aren’t being frequented, it’s the majority. Theater screenings, rentals, and DVD/Blu-ray purchases aren’t even necessary with websites like Hulu and YouTube streaming full films. And I’m willing to bet that even The Dark Knight was available as a torrent download within the first week of its release.
It seems like a smart move for Lionsgate and other film companies to invest in more crowd-drawing technology, such as 3-D films, but even then there’s something unappealing about having to sit through a movie wearing spectacles. Other film fans must be having similar thoughts, because now Lionsgate is being forced to self-finance its last three films on its fiscal 2009 lineup [Los Angeles Times].
I may sound skeptical, but I really hope that Lionsgate can pull itself out if this vicious cycle where funding/profits keep plunging, resulting in reduced quality of and available marketing for films, resulting in further profit loss. When I can again hit the theaters for less than $8 and walk out with a smile on my face, I’ll know we’re making some headway…
What do you think about Lionsgate’s film-financing woes? Have we reached the Apocalypse of quality filmmaking?