Additionally, the current year is well packed with several other releases. There will be seven motion picture film releases in 2013, with six more to follow in 2014 as per the current schedule.
Competition
The release of Hunger Games: Catching Fire will face competition from Paramount Picture’s Thor: The Dark World. Paramount is controlled by Viacom, Inc. (NASDAQ:VIAB), an entertainment content company based in New York. The company connects with audiences through compelling content on television, motion picture, online, and mobile platforms, and just like Lions Gate, it operates in two segments, Media Networks and Filmed Entertainment.
Viacom’s most recent quarter earnings fell 18.3% as one of its business units, Nickelodeon, continued to struggle. However, the company’s margins are far superior to those of Lions Gate Entertainment Corp. (USA) (NYSE:LGF). Viacom’s operating margin in the most recent quarter stood at 27.56% compared to Lions Gate’s 7.43%; profit margins stood at 16.33% and 1.81%, respectively. However, Lions Gate’s revenue grew an overwhelming 130.2% compared to Viacom’s decline of 5.9%.
Meanwhile Rupert Murdoch’s News Corp (NASDAQ:NWSA) through its distribution channel 20th Century Fox, will also be releasing numerous films through the year. Notably, the company is slated to release the film, The Counselor, in wide screen on November 15, just a week ahead of Lions Gate’s Hunger Games 2. Similar in genre, this is likely to compete directly with Hunger Games, but the one-week delay might play a critical part in eliminating that threat.
News Corp. is a big company with investments in several media networks, which gives it a market cap of more than $70 billion compared to Lions Gate’s $3.8 billion. Murdoch’s company has an operating margin of 16.15% and a profit margin of 16.68%, thereby trumping Lions Gate.
The bottom line
Lions Gate Entertainment Corp. (USA) (NYSE:LGF) finds itself in a field which has attracted media tycoons like Rupert Murdoch and John Malone, who have put in a lot of money in acquiring motion picture film companies. Viacom and News Corp. are not essentially Lions Gate’s direct competitors, but rather, their subsidiaries and franchises. This means that while Lions Gate’s share performance could be determined by the impact caused by a film release, this might not be the same case for News Corp and Viacom, which have a diversified business.
That said, Lions Gate Entertainment Corp. (USA) (NYSE:LGF)’s release of Hunger Games: Catching Fire should result in a major upside. The potential revenue expected from the release is enormous, and coupled with other scheduled releases, fiscal year 2014 is set to be yet another rally for the stock. The releases of Hunger Games 1 and Twilight Saga, among others, have contributed to the stock’s current rise of more than 225% since Jan. 9, 2012. Therefore, there is every reason that the coming releases should provide the stock with further momentum.
Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article This Stock’s Rally Could Stretch Beyond 2014 originally appeared on Fool.com.
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