Lionsgate CFO Jimmy Barge said the company will see little to no financial impact from a three-month WGA strike – about how long the guild’s last work stoppage lasted — and that it hasn’t factored prolonged labor action into its guidance. A strong content pipeline and large library makes the business pretty resilient, he told analysts Thursday.
Asked if Lionsgate was changing financial projections based on the labor action that started May 2, he said no. “In terms of the motion picture group, I don’t think you are going to see a significant impact. Looking at the 2008 precedent of three months, up to that point, I think the financial impact for us, if any, would be modest. We’ve of course been preparing for a strike for several months and we have a significant content pipeline, completed projects, and, with our film and television library, our businesses are very resilient. So, we’re nicely poised for growth as we go into ‘24 managing the challenges,” he said during a Q&A after quarterly earnings.
The 2007-2008 WGA strike lasted 100 days.
Executives also noted Starz’ upcoming price raise of $1 on June 26, taking it to $9.99 a month, a move that reflects increased original programming. Jeff Hirsch, president and CEO of Starz, said on the call that Starz hasn’t ever raised prices before in seven years of direct-to-consumer streaming.
“In that time, some of our peers have done one and sometimes two rate increases,” he said. “So, we feel pretty good that by increasing our slate from six to 11 originals, plus all the great movies from Lionsgate and Universal, and still at $10, it’s still a great value for the consumer.”
In the near term, the hike could put “some pressure” on subscriber numbers, but ultimately “it’s a positive,” he said.
That comes as the company said it’s on track with plans to split Lionsgate and Starz by the end of the September quarter. This has been a prolonged process, designed to unlock value for the studio and the streamer. It would give both the studio and Starz separate public market valuations and stock to use as currency — and make both easier acquisition targets.
Lionsate filed plans for the split with the SEC in March. “We’re working through the organizational and governance issues accompanying the separation, finalizing the intercompany agreement, and taking the appropriate steps to strengthen both companies and their respective balance sheets so they will be prepared to unlock the incremental value that the separation makes possible,” said CEO Jon Feltheimer.