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Lions Gate Entertainment Corp. Message Board

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  • lagunadan92677 lagunadan92677 Oct 1, 2012 9:41 PM Flag

    Michael Burns is on CNBC Fast Money at 5pm today

    I just watched the CNBC segment. Michael Burns specified that the majority of HG DVD revenue will be included in the 3rd quarter. "The majority of our money for Hunger Games DVD, which is obviously a blockbuster, ..., I will tell you that most of our money comes in October, which is in our 3rd quarter...

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    • Laguna,
      A part of me is holding out.......I understand the physical money will come in Quarter 3 after the distributors settle their Accounts Receivable.....but the revenue should be recorded when sold, which is in September. The stores would record their sales for HG and should appropriately reflect the receivable due to LGF if they did not pay upfront. Perhaps this is the accounting area we need more clarification on......Do stores pay LGF upfront (about $10 per DVD) for DVDs or do they sell the DVDs first and remit a portion of revenues to LGF on a one month lag? Then, if they do remit LGF revenues on a lag, when does LGF recoginize the point of sale or at point of receipt from the vendor? Does anyone know for sure? I will check the 10-K to see if I can get any guidance.

      I am 50/50 on this issue, as it seemed by the tone of Michael's voice he meant "money" to mean profits. But then again, his whole conversation revolved around EBITDA (eps focused) and deleveraging (cash focused) which is why I am on the fence...

    • If that's the case, earnings won't be pretty. Guidance will be great, the larger story is intact, but I think everybody is sick of LGF always being that company that is going to kill next quarter.

      Positive spin: If HG money is really in October, they''ll combine that with Breaking Dawn box office and Q3 will absolutely destroy. Still not good, though BD mania might crush disappointment.

      • 2 Replies to billyshelby666
      • Billy, my understanding is that from an accounting perspective, Twilight will certainly rake in the cash and this will be very positive in terms of Cash Flow and deleveraging, but it will do very little to the bottom line as Twilight was capitalized on the balance sheet as part of the Summit Acquisition. As you may recall, we discussed on the thread that the future revenues for the Twilight franchise was part of the acquisition it will only flow to the bottom line if their revenue estimates were too low......and I don't see a true-up calculation happening until 2 years out minimum after the movies have run its course in syndication. If they have firm contracts in place right now for this 2 year time period, then they would need to adjust the purchase cost of the franchise for any changes in revenue/profit projections. IMO

      • You're spot on with the larger story is intact. The problem with most equity analysts is they deal in the short term and if the company doesn't put up a positive EPS this quarter the stock will pull back. The larger story is that management has strategically built the company either to become a major or to be acquired by a major. This is a growth story and their acquisitions over the last several years have elevated them to the big leagues. The Summit acquisition is paying big dividends already with increased foreign distribution - look at EX2's international results. The company is now a global franchise. The new credit facility provides them additional flexibility to continue to grow while positioning the company favorably with international bankers. The long term story may prove to be quite lucrative for patient investors.

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