Regardless, both companies have plenty in the pipeline. Disney's ability to go out and spend billions of dollars to buy another studio highlights the relative strength of Disney compared to Lionsgate.
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Disney could also make additional acquisitions in the future to expand its content library, similar to its recent deal to acquire Twenty-First Century Fox's entertainment properties. The Star Wars universe has a library of 17,000 characters, and then there's the steady flow of story ideas coming from the talented filmmakers at Pixar. The company has a 16,000-title library to fuel its future film releases and television production. Disney's Marvel studios has a library of 7,000 comic book characters to drive future releases in the Marvel Cinematic Universe.īut Disney has even more in the vault. To be fair, Lionsgate isn't going anywhere. The problem for Lionsgate is that it can be very difficult for midbudget movies to stand out, particularly in light of the lower budget these films have for important things like marketing, which Disney is very good at. Since Disney acquired Marvel in 2010 and Lucasfilm in 2012, the studios segment operating margin has improved from 10% in fiscal 2010 to 30% in fiscal 2018. There's no question Disney has what moviegoers want to see: sequels of popular franchises, especially comic book characters, that feature special effects and action sequences on an epic scale. What immediately jumps out is not only the consistency in generating a profit, but also the consistently high operating margin. Here is a look at the operating performance for Disney's studios segment over the last five years:ĭata source: Walt Disney. Its acquisitions of Pixar, Lucasfilm, and Marvel Entertainment were game-changers for Disney in bolstering its studios segment with a deep library of content that should keep the studios segment well-stocked for decades. On the other side, Disney typically releases no more than 10 movies every year, but that small slate packs its share of billion-dollar blockbusters. Revenue from the studios segment increased 36% between fiscal 2008 and fiscal 2018. It's no secret that Disney has an enormous advantage with its well-known brands and marketing muscle. However, Lionsgate's recent performance reveals a weakness in the company's strategy of spreading a wide net across midtier movies hoping that enough will turn a profit to keep the company growing.Ĭheck out the latest earnings call transcript for Lionsgate.ĭata source: Lionsgate. Meanwhile, Walt Disney ( NYSE:DIS) is coming off a record year, in which its studios segment (17% of total revenue) posted a record $10 billion in revenue. Of course, Disney is not a better entertainment stock merely due to one year's performance relative to Lionsgate. The stock tumbled 45% over the past year after the company reported disappointing operating results. Investors had high hopes for Lionsgate after the acquisition of Starz in fiscal 2017. The stock was sitting at a forward P/E of 28 in early 2018, reflecting high growth expectations, but the motion pictures segment (44% of fiscal 2018 revenue) had some misses at the box office last year that weighed on the company's profitability. Through the first three quarters of fiscal 2019, revenue was down 11%, which translated to a decrease in operating income of 26%. However, 2018 was not one of Lionsgate's best years.
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Lionsgate Entertainment ( NYSE:LGF-A) ( NYSE:LGF-B) has made a name for itself over the years by turning out midbudget movies that management calculates will likely turn a profit. The company is on a mission to grow into one of the largest movie studios in the world. Over the last decade, Lionsgate increased revenue by 160% to $3.8 billion. John covers consumer goods and technology companies for.