Lionsgate (LGF) may be the only shop in Hollywood looking forward to a lazy, relaxing summer.
While its competitors work themselves into a marketing frenzy over massively expensive movies, Lionsgate is rolling out a third Expendables movie with a cast of has-been action stars and a fifth iteration of its Step Up dance franchise. Expectations are restrained, at least among those who don’t keep up with Dolph Lungren. But so too are the costs and risks involved.
The summer strategy is counter-intuitive and savvy. Blockbuster movies can be a marketing arms race, and Lionsgate doesn’t have nearly the advertising arsenal of big rivals like Warner Bros. and 20th Century Fox. That’s one of the reasons why it slated Divergent, its next multi-installment franchise, for the less-crowded calendar of late March.
And the films Lionsgate is screening this summer won’t even need to perform like blockbusters to make some money at the box office. Expendables 3 cost an estimated $90 million—no doubt because the crew, including Wesley Snipes, Antonio Banderas and Kelsey Grammer, don’t hold as much power at the negotiating table as they did 20 years ago. Bruce Willis won’t be in the picture because he was asking for too much money, according to the Guardian.
Step Up All In is likely to be even cheaper. The original—starring a younger, more affordable Channing Tatum—cost just $12 million. Tatum, of course, won’t be in the newest iteration; this summer he’s busy anchoring 22 Jump Street for Sony.
It’s all gravy for Lionsgate with its forthcoming Hunger Games movies on the calendar for the next two Novembers. That franchise is sure to carry the company financially for the near future. The only way to screw it up would be to squander the spoils on unproven projects and bloated August ad campaigns.
Not surprisingly, Lionsgate is being more conservative about what films it bankrolls, not just when it opens them. Last year the company only had 13 widely released films, down from 19 in 2012. Instead of buying more movies, the studio is investing in a Hunger Games video game and considering a theme-park attraction. The company has given a green-light to a fourth Divergent film and a Power Rangers project.
“We don’t model that everything is going to work, but obviously we’ve got a very robust business right now,” Lionsgate CEO Jon Feltheimer said Friday on a conference call. “Most of the things that we have do not require a large deficit going in.”
Meanwhile, Lionsgate is making a pile by cranking out hit TV shows like Orange is the New Black, Nashville, and Mad Men. Its television revenue surged 18 percent last year to $447 million. The company sells the premiere of those shows to outlets like AMC, but it owns the ongoing rights and can convert those into quick cash through deals with streaming services. “That didn’t even exist five years ago,” Feltheimer said.
So step up and buy some movie tickets this summer—or don’t. Lionsgate doesn’t necessarily need you this season, as long as you still turn on your TV and turn out for movies again in the fall.
