Lions Gate to Cut Film Division Staff 15% as Moviegoing Sags
(Bloomberg) -- Lions Gate Entertainment Corp. plans to cut about 15% of the staff in its motion-picture group as the Covid-19 pandemic continues to weigh on Hollywood.
The virus, which closed movie sets across the world in March and ravaged the theater business, spurred the independent studio to “accelerate changes to our own operations and strategic plan,” according to an internal memo from division chairman Joe Drake that was obtained by Bloomberg News. Those changes include a reorganization that consolidates jobs.
“This means that individuals across the motion-picture group will be impacted as groups are being combined, and new roles have been defined or eliminated as part of this process,” Drake wrote. The layoffs were reported earlier in trade publications.
Lions Gate said Thursday that second-quarter revenue fell 24% to $745 million, missing analysts’ estimates of $760 million, largely as a result of the pandemic. Earnings excluding some items rose to 33 cents, beating analysts’ projections of 16 cents.
Struggles in the motion-picture group were offset by the pay-TV service Starz. Domestic online subscriptions jumped during the pandemic, rising to 9.2 million from 7.4 million in the previous quarter. The company expects its customer count to climb until at least early 2021. Media networks are the company’s largest business, followed by films and TV production.
Shares of Lions Gate rose as much as 10% to $7.77 in in late trading. They were down 36% through Wednesday’s close.
The Santa Monica, California-based studio, which has scored hits such as “The Hunger Games” and “John Wick,” normally relies on a big box-office showing to generate cash. However, theaters across the U.S. closed in March, and remain shut in the major moviegoing markets of New York City and Los Angeles.
The company has experimented with new models to ease some of the Covid-related pain. It released the horror film “Antebellum” for $20 online in September, scrapping a plan to debut it in cinemas. The studio said it attracted enough of an online audience for the movie to offset a steep sales decline in its motion-picture segment during the quarter, without providing specific figures.
The company had 1,443 full-time employees at the end of 2019, according to filings. The motion-picture group employs about 450.
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