One Guy's Investments: Annual Checkup -- LGF

It wrote a bit about Lionsgate (LGF -- free portfolio tools and RT quote) a few weeks ago when the CEO said some things that weren't so entertaining. Not a lot has changed since then -- LGF still has a bright long term future, I believe, and they seem to be committed to refocusing on their strengths after making some mistakes with overspending on promotion for disappointing star vehicles this past year (thanks for nothing, Nicholas Cage and Usher). The big news since they downgraded their guidance is twofold: Hostel and Starbucks. Hostel took the concept of "American backpackers in European trouble" that so entertained back in the American Werewolf in London days and added about a thousand gallons of blood and gore, to great success. Hostel won the weekend box office for LGF last week, just as Saw II did a few months ago. And Starbucks and Lionsgate have agreed to comarket and codistribute Akeelah and the Bee, which could dramatically increase the audience for that film. While Akeelah is likely to get a lot of attention with this deal, its "inner city spelling bee" subject is a little cleaner than LGF's recent hits like Hostel -- these horror (analysts call them "genre") movies, cheap to make and popular as all get out, are clearly the way to go for almost-guaranteed profitability at the box office. Sprinkle in a few critical low budget darlings every year, and some cheap TV shows that get a lot of press, add a dash of children's programming that advertisers crave, and top it all off with a library of thousands of films and TV shows that are prime content for the VOD and next-generation DVD arena, and I think LGF looks great for the next few years (for dessert, you might look at the ongoing rumors about consolidation and see a nice buyout offer for this tantalizing studio and library). I bought my shares at an average price of about $10.50, so I'm still significantly under water, but I'm holding and I continue to think we'll see some great performance from Lionsgate over the long haul ... even if we have another tough few quarters.

Labels: LGF