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Long term value investor, prefer dividends at my age. Best investments MVL Entertainment, HSY , SMBL and SBUX. Worst calls Ames Department stores and Bravo milk.
  • Lions Gate Entertainment Corporation: Not Just A Movie Business 16 comments
    Oct 21, 2011 2:12 PM | about stocks: LGF
    'Cyberspace', finance articles and blogs seem to have a lot of misleading information or they focus solely on one aspect of Lions Gate Entertainment (LGF). Sometimes LGF is identified solely as 'the movie studio that brought us the SAW franchise' or articles intimate 'the movie studio that Carl Ichan wants to take control of or buy due to mismanagement'. Or articles provide 'doom and gloom' for LGF due to insinuating that LGF makes an essential portion of its money from it's DVD market and then state the respective decrease in DVD sales. Even the stock ticker LGF is misleading as it appears to be an abbreviation for Lions Gate 'Films'.   

    Lions Gate is a TV producer, TV distributor, TV Channel, a movie distributor and producer, an international movie and TV distributor,  a holder of a huge  library (12,000 titles) of movie and television content, a partial owner/partner of Epix, etc. Don't take my word for it see for yourself: 

    I can understand corporate raider Carl Ichan putting down the company when he was trying to take control of the LGF board and buy the company as a hugely undervalued asset and merge it with MGM, but the general misinformation from almost every article, blog and  financial site is a mystery to me. 

    Some 'positive' articles are in regards to everyone talking about the Hunger Games being the 'game changer' for LGF due to the potential this movie has to be a huge hit. But whether Hunger Games emulates the 'Twilight' series and makes over 180 Million domestic or not, the company is still more than a movie studio. There is  Epix ,Mad Men, Weeds, Nurse Jackie, Boss, Latin TV, Asian and Indian TV, in short, LGF is an effectively tiered and well diversified entertainment company.

    Then there is the DVD market breakdown talk as a possible demise for LGF. The direct  or 'on demand' streaming of LGF content and Netflix deals and Epix are more than enough to make up for people stopping their DVD collections. Personally, I prefer to watch a movie without having to return it.

    LGF has had some misadventures of late at the box office with "Conan the Barbarian" remake, "Abduction" and the less than remarkable box office reception to an excellent movie "Warrior", which resulted in a negative adjustment to their 2Q earnings. But my contrarian view on these 'misadventures' is watch what happens to these properties beyond their 'opening' box office reception. These properties losses or failure to meet expectations will most likely shrink over time due to; DVD and direct streaming of the content, Netflix and their competitors contracts, content used for Epix and TV rights.

    Another misconception is that LGF pays the full production cost for all of the films they release. Lions Gate Entertainment does produce some 10 lower budget films (2 million range) and some mid-range budget movies (3 to 30 million)  and higher end movies like 'Hunger Games' (75 million). But a large portion of LGF released films are purchased from LGF for their distribution rights (usually at a discount) and these movies production costs are already paid for by the studio or company that they are purchased from.       
    I imagine that sooner or latter the value of LGF will be realized after they more than survive a few flops like 'Conan' at the box office. Until the potential catalyst from Hunger Games, let's try to remember LGF is not 'just' a movie company. Lions Gate Entertainment is a shrewd and efficient growing 'Entertainment' company.   

    Disclosure: I am long LGF.
    Themes: movies, TV, television, hollywood Stocks: LGF
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Comments (16)
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  • Author’s reply » Add Summit (Twilight Franchise), a Globe for Kelsey Grammar in Boss, and another Asian TV project to the list of LGF accomplishments. I just don't get the simple articles that still stereotype LGF, but I will not name publishers or articles- it's obvious that most writers do not know companies and spew a few technical terms to form an opinion. Suppose I won't be able to publish articles until I become adversarial or a technical indicator / analysis fan. What a game. Really understand the Crammer followers now- short and sweet or not so sweet.
    16 Jan 2012, 01:16 AM Reply Like
  • Author’s reply » The folks at seeking alpha seemed to think my theory flawed and unsupportable regarding the 'negative' and limited view articles and soon after they published a very short sighted article regarding LGF. Now we have Forbes saying it's shares are falling off a cliff, twice. Guess my ideas are not meant to be shared in articles.
    9 Feb 2012, 06:42 PM Reply Like
  • that was a good prediction. nice run up in the stock and now every one seems to love this...
    29 Feb 2012, 11:02 PM Reply Like
  • Nice run up, time to take some profits and hedge bets...whats say Brian. The marketing machinery for LGF and Hunger Games was phenomenal. I am impressed by their use of various media like Facebook, Twitter, Mall Visits, Radio, and others. All you hear is Hunger Games. The Buzz is deafening. I am sure they will execute well but it is still an entertainment business....a big gamble.
    21 Mar 2012, 10:54 PM Reply Like
  • Author’s reply » I haven't been on here for a while- what was your decision- short or long? I'm expecting the naysayer's to be out soon with the 'no more Twilight films'.
    11 Feb 2013, 04:48 PM Reply Like
  • Author’s reply » I understand the 'strategy' of taking profits on the run up, but I'm in this for the long haul. At least until the 'streaming' content wars are over and my thinking is they have just begun. Netflix has barely met it's adversaries yet. Hulu, Amazon, Intel TV, Apple TV, Google- it's anyone's guess who will win the 'war' or at least be in the game, but one thing is for sure, they all need content. The stock may go down after the movie or before, but will it be $2, $3 or less, but it will most likely go back up- I can't do the timing 'thing' especially when the negativity is rampant before the numbers are released. Good luck.
    22 Mar 2012, 11:15 AM Reply Like
  • Author’s reply » The question now is will LGF start receiving buyout offers before they become a studio Goliath, or should I say 'more' of a Goliath. Viacom would not like it if Disney beat them to it, since Disney has already got the 'boy demographic' covered with their prior Marvel acquisition. Sure this stock will go up and down with wild swings in the near future and the next 'upset' at the box office will really bring the naysayer's out. But I will be focusing on the 'bigger picture', no,not the 2nd Hunger Games franchise movie, the rising values of content and content libraries with the 'streaming' revolution.
    25 Mar 2012, 01:11 PM Reply Like
  • Author’s reply » Wonder how fast the TV right will sell for Hunger Games? Or will they keep them for exclusive Epix marketing. Either way, expect a new, higher number.
    25 Mar 2012, 01:19 PM Reply Like
  • Author’s reply » Exciting times- Earning Monday!! No buyout offers until the next huge win with a franchise or proof of the continued success of the existing ones. Glad the price will SOAR before that day, could be right around the corner or not for a few more years- OK, I'll wait and watch the show.
    8 Feb 2013, 04:12 PM Reply Like
  • Author’s reply » Very quiet for a great call, if I say so myself.
    4 Mar 2013, 01:40 PM Reply Like
  • Author’s reply » Good news-

    7 Mar 2013, 08:38 AM Reply Like
  • Author’s reply » I'm actually out today- 30% position of an account and a 230% gain was too much like gambling with the market at high's. I'll be watching to get back in half of my sold position with a 'hopeful' pullback. May use the other half on your Imax. Got out of my GE and LOW also today. Look forward to your articles- one of the best choices in writers available.


    Do I have to change my "Disclosure"- still want to have a 15% stake with a market pullback- if this happens.
    8 Mar 2013, 05:21 PM Reply Like
  • Author’s reply » Oh well sold at 22.15 and bought-back smaller position at 22.55 after watching price action. Decided my theory of less than stellar box office receipts for movies before Catching Fire bringing the price down, was erroneous. The competitive placement of similar themed movies by competing studio's appears to be getting fiercer, signaling that large studios are not happy that LGF has joined the top 5 studios. LGF can play some hard ball right back at them and move toward the top 3 studios/ media companies. With Disney almost ruling a large portion of content, some big boy's are going to need LGF to compete. Or LGF will just keep cross pollinating it's properties until more than 2 movie franchises/ series and content delivery regimes (Epix / TV guide) are raking in the cash.
    19 Apr 2013, 12:44 PM Reply Like
  • Author’s reply » Now the Google , Intel and Apple TV are in the news and the 'content is king' talk being thrown around. The LGF TV business is improving. Just more unpublishable jargon-


    Suppose I'm talking to myself- least it's a good conversation.
    17 Jul 2013, 05:42 PM Reply Like
  • I just bought a small, entry position in LGF. I actually bought before reading SA articles. Must say, now that I've read three, yours and two naysayers, it does appear those who think LGF's days are over don't really understand the multiple channels this company has into the media/entertainment sector. Frankly, I found the Wiki article quite helpful.


    The Wiki piece made it clear there was a lot of purchasing, shifting of assets, selling, etc. for the first decade or so of LGF's existence. After all of the sorting and horse trading, it appears the company has come up with good channels for making money.


    Looking for another drop in the price to take a full position. Here's to hoping that pullback continues!


    20 Sep 2013, 11:55 PM Reply Like
  • Author’s reply » I'll be adding to my position despite some fear that a few movies planned for franchise successes may work out. The Enders and Divergent movies could in fact not be the replacements for the Twilight franchise currently being ended. But this company has a track record that shows they will eventually come up with a 'win'. When MVL Entertainment was growing, many 'experts' wrote that consumers would tire of hero movies and they only had Spiderman. They are writing and will write articles claiming that Hunger Games is a one trick pony, it's just predictable.
    22 Sep 2013, 12:17 AM Reply Like
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