Nov. 1 (Bloomberg) -- Lions Gate Entertainment Corp. brought in investors and sold foreign rights to “Ender’s Game,” buffering the independent film studio against potential losses from the science-fiction film opening in theaters today.
It’s a good thing, considering the movie is unlikely to match “The Hunger Games” or “Twilight” films, past hits from the Santa Monica, California-based studio. Muted social-media chatter, looming competition and anti-gay marriage remarks by the author that alienated some fans have led to forecasts suggesting the picture won’t measure up to those predecessors.
“Ender’s Game” will be a minor financial setback for Lions Gate, not the $200 million loss Walt Disney Co. recorded with “John Carter” in 2012. The sale of foreign rights and use of outside capital in “Ender’s Game” limit the risk for Lions Gate, according to James Marsh, a Piper Jaffray Cos. analyst who lowered his fiscal 2014 profit forecast by 2 cents $1.25 a share because of diminished prospects for the film.
“It probably won’t lose money,” said Matthew Harrigan, an analyst at Wunderlich Securities Inc. who recommends buying the stock. “It’s not the start of great new franchise either.”
“Ender’s Game,” based on the novel by Orson Scott Card, will gross $28.5 million over the weekend and $67 million during its full run in domestic theaters, according to researcher BoxOffice.com. The film stars Asa Butterfield as child-warrior Ender Wiggin, a war-games whiz who’s trained to battle aliens attacking Earth. Harrison Ford co-stars as his commander.
“The movie is enthralling and the effects are totally great, though not great enough to keep your mind from wandering toward dark thoughts about what kind of society could produce this demented, militaristic poison,” wrote Craig Seligman, a critic for Bloomberg News.
Early receipts in the U.K., Germany, Austria and Switzerland, where the film opened last week, were $2.8 million, according to Rentrak Corp. That’s a “surprisingly weak number,” Harrigan said.
Lions Gate has carved out a lead role in making dark movies for young adults. The shares have more than quadrupled over the past two years on profit from the “Twilight” vampire films and “The Hunger Games,” a post-apocalyptic teen combat movie. The studio has three “Hunger Games” sequels lined up, including the second installment this month.
The shares rose 0.8 percent to $34.86 at the close in New York and have more than doubled this year. The company declined to make a studio executive available for an interview.
Social-media chatter about “Ender’s Game” has been muted, according to BoxOffice.com. The film’s 1,477 tweets three days before its U.S. release were half those of “John Carter,” and the 133,830 Facebook “likes” also trail that picture.
“It’s not catching on the way a true event film would,” said Phil Contrino, an analyst with BoxOffice.com.
“Ender’s Game” faces competition for young audiences in coming weeks. Walt Disney Co.’s “Thor: The Dark World” is set for wide release on Nov. 8, and “The Hunger Games: Catching Fire” opens Nov. 22. Reviews for “Ender’s Game” are running about 63 percent positive, according to Rottentomatoes.com, which compiles critics remarks. That compares with 84 percent for “The Hunger Games” last year.
Meanwhile, the author Card has stirred controversy with his opposition to gay marriage, sparking calls for a boycott from the website Geeksout.org.
On his website, the author said some of his remarks have been taken out of context, and cites a 2008 Mormon Times article he wrote titled “Disagree but don’t be unkind.” He didn’t respond to an e-mail request for comment.
Lions Gate responded to calls for a boycott by citing a longtime policy of offering benefits to employees’ same-sex partners and the distribution of critically praised, gay-themed films including the Oscar-winning “Gods and Monsters.”
The studio spent about $110 million making “Ender’s Game,” according to a person with knowledge of the matter. Marketing costs total about $40 million, said the person, who asked not to be named because he wasn’t authorized to speak publicly.
OddLot Entertainment, a film company founded by Hyatt Hotels Corp. heiress Gigi Pritzker, and Digital Domain, a special effects firm, have invested in the production, according to Lions Gate. The studio’s equity stake in the film is 25 percent, officials said on an Aug. 9 conference call.
A bigger worry for investors is where Lions Gate goes after its current slate runs out.
The “Twilight” films, now in home video, and the “Hunger Games” releases will contribute 62 percent of earnings before interest, taxes, depreciation and amortization over the next three years, Doug Creutz, an analyst with Cowen & Co. in New York, said in a report last month.
The studio faces a potential “earnings cliff” in fiscal 2017, after the last “Hunger Games” film completes its theatrical run, according to Creutz. He downgraded the stock to “market perform” from “outperform,” citing the appreciation over the past two years.
“While it is certainly possible that the company could come up with more mega-hit franchises, such success is difficult to predict,” he said.
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