Life, as the saying goes, is not always fair.
Three months ago, independent filmmaker Lions Gate
No respect
There's no two ways about it: Lions Gate's performance in fiscal Q1 2009 was a blockbuster. Revenue came in at $298 million, 50% better than last year, and the company earned $7 million instead of losing $53 million.
The company's products keep popping up on screens both large (Saw IV,Rambo, and the superb 3:10 to Yuma) and small (Weeds on CBS's
But does it deserve respect?
While I spoke highly of the company last quarter, I'm not so sure anymore. For one thing, I fear its collaboration with Viacom
Turning to matters more numerical, for all its good GAAP news, Lions Gate didn't do so hot on the cash flow statement this time around. Free cash flow for the quarter ran negative to the tune of $152.1 million, a cash loss nearly three times as large as last year's. (In related news, the company secured a $340 million revolving credit facility from JPMorgan Chase
Respect demands disclosure
What I find more disturbing than the actual number, however, is Lions Gate's attempt to bury it. In past earnings reports, free cash flow gets pride of place in the headlines for Q4 and Q2 earnings -- when the news was good. Likewise in Q3. But Lions Gate prefers to downplay negative cash flow. You won't see it mentioned in the prose portion of last year's Q1 report; nor in this year's.
So why are investors disrespecting Lions Gate? Simply put, respect is a two-way street. If Lions Gate wants to earn our respect, it needs to respect our intelligence, and quit moving the goalposts.
What did we expect out of Lions Gate last quarter, and what did we get? Find out in: