Tuesday, 2 June 2009

Hollywood Babble On & On #296: Lionsgate Losses

Lionsgate's management may have been able to fight off Carl Icahn & Co.'s takeover bid for a while, but I think their side has been dealt a pretty harsh blow by cold unfeeling numbers.

The mini-major's losses for the last fiscal year topped $163 million ($1.40 a share) which is more than double the $74 million (62 cents a share) which they lost last fiscal year.

This development maybe just what Icahn needs to resuscitate his siege of the company, by bringing up these losses to the very shareholders that gave management a second chance via their sale of a share of their TV Guide Channel and other deals. He can say: "Look what that second chance got you, more losses!" and go on from there.

Lionsgate management is trying to spin this story by tooting how much their revenue went up, beyond even the predictions of so-called Wall Street experts.

And while upward revenue is a wonderful thing, it's not going to do you much good when you have more money going out.

The biggest problem with Lionsgate is that the folks running it don't appear happy running a successful independent film company. They appear to want to be like Universal, Warner Bros. or Paramount and become a massive media conglomerate, humming with buzzwords like "synergy" and "multi-platform."

They appear to have forgotten that when you have a company with a successful business model, you don't fix what ain't broken. Sure growth is nice, but it has to be natural growth, born from success, not from having the corporate ego write checks the corporate body can't cash.

I'm rooting for whoever can take Lionsgate and return it to its roots, as a company that made money by filling in the gaps left by those big conglomerates.

Because if making money can't make a businessman happy, then they're in the wrong business.

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