Spotlight Update
Lions Gate Entertainment (LGF)
from BI Research, recommended at $27 in Investment Digest issue 743, dated May 22, 2013.
Lionsgate (LGF) made a bit of a splash at the box office this weekend with yet another under-the-radar film that it is distributing in the U.S. with Televisa (i.e., it doesn’t own it). This time it was a subtitled Spanish-language movie called Instructions Not Included, about a one-night stand who drops the resulting baby off at a playboy’s house and promptly exits (that’s the set-up), leaving him to raise the child. Audiences gave the film a 98% positive rating, though critics were mixed. The film came in number five for the weekend on just 347 screens and did a mind-boggling $10 million for the four-day holiday weekend—with minimal advertising. Mind boggling? Do the math. That works out to $28,800 per screen for Friday through Monday. For just the three-day weekend (excluding Monday), it did $22,000 per screen. Now for scale, The Butler did $4,469 per screen on those same three days, and One Direction did $5,777—albeit both on a lot more screens. But you see what I’m saying.
The well-reviewed You’re Next, by the way, averaged just $1,668 per screen for the three days, but is up to about $14 million at the domestic box office, and Lions Gate acquired (owns) it for $2 million. So Lions Gate has a couple moneymakers here, with all the ancillary revenue streams to follow.
Of course, it is the big guns that will have the biggest impact, but those singles and doubles can help run up the score too. Meanwhile the anticipation of the “big guns,” like The Hunger Games: Catching Fire, along with these smaller successes, are causing the share price to creep up there. So, as noted earlier, if the shares touch $39 I’d take 25% off the table, because there are no guarantees in this business.
Tom Bishop, BI Research, www.biresearch.com, September 3, 2013