SEC filing summary
Filing identity: The supplied filing is for Lions Gate Entertainment Corp., not Starz Entertainment Corp. It covers the quarter ended December 31, 2023—Lionsgate’s fiscal third quarter of 2024, not calendar 2024 Q3. Figures are in U.S. dollars; amounts are in millions unless noted.
Business context and reporting period
Lionsgate operates Motion Picture, Television Production and Media Networks businesses, including the STARZ subscription platforms. Its studio operations and STARZ business are referred to as the Studio Business and Media Networks, respectively. The filing reports unaudited results for the three and nine months ended December 31, 2023, compared with the same periods in 2022.
Financial performance and liquidity
| Metric | Three months ended Dec. 31, 2023 | Nine months ended Dec. 31, 2023 |
|---|---|---|
| Revenue | $975.1 | $2,899.1 |
| Operating income (loss) | $(43.5) | $(877.9) |
| Net income (loss) attributable to Lionsgate shareholders | $(106.6) | $(1,063.5) |
| Diluted loss per share | $(0.45) | $(4.56) |
| Operating cash flow | Not provided for quarter alone | $401.4 |
For the nine months, cash provided by operating activities was $401.4, compared with cash used of $128.0 in the prior-year period. Investing activities used $365.5, including $331.1 net cash paid for eOne; financing activities used $17.4. Cash, cash equivalents and restricted cash ended at $333.2, including $283.0 of unrestricted cash and cash equivalents.
At December 31, 2023, corporate debt, net of issuance costs, was $2,288.5, including $375.0 drawn on the revolving facility; $875.0 remained available under the $1.25 billion facility, subject to covenants. Film-related obligations, net, were $1,873.0. Shareholders’ equity was negative $325.5 and total equity was negative $323.7. Current assets were $1,525.6 and current liabilities $3,171.8.
For the quarter, Motion Picture revenue rose 53.5% to $443.2 and segment profit increased to $100.4; Television Production revenue fell 59.0% to $248.4 and segment profit declined to $8.1; Media Networks revenue rose 9.7% to $417.2 and segment profit increased to $85.5. Total segment profit, a non-GAAP measure outside the segment disclosures, was $182.0 versus $189.1.
Material changes versus comparable periods
- Quarterly revenue declined 2.5% year over year, as stronger Motion Picture and Media Networks results were outweighed by weaker Television Production revenue. The prior-year quarter included more Starz-series licensing and other television deliveries.
- Quarterly results shifted from $16.6 net income attributable to shareholders to a $106.6 loss. Higher restructuring costs, distribution and marketing spending, interest expense, and the absence of prior-year gains on debt extinguishment and the STARZPLAY Arabia investment sale contributed.
- Nine-month revenue rose 4.7%, while the attributable net loss narrowed to $1,063.5 from $1,913.5. The comparison includes goodwill and intangible impairment charges of $663.9 in 2023 versus $1,475.0 in 2022; the 2023 charge included $493.9 of Media Networks goodwill and $170.0 for the STARZ trade name.
- Corporate debt, net, increased from $2,019.6 at March 31, 2023, principally reflecting $375.0 drawn on the revolver to fund eOne, partly offset by debt repayments and note repurchases.
Outlook, commentary and notable items
- eOne acquisition: Completed December 27, 2023, for an aggregate preliminary purchase consideration of $385.1, subject to final purchase-price adjustments. Lionsgate paid $331.0 net of $54.1 cash acquired. eOne contributed no material revenue or net income before year-end; purchase accounting remains preliminary.
- Proposed Studio Business combination: Lionsgate entered an agreement with Screaming Eagle Acquisition Corp. to establish the Studio Business as a separately traded company. The transaction was expected to close in spring 2024, subject to approvals and other conditions, including at least $350 of gross proceeds. Lionsgate expected to retain approximately 87.3% and receive approximately $350 of gross proceeds, including $175 of PIPE financing. Completion was not assured.
- Media Networks restructuring: LIONSGATE+ exits include multiple international markets, including Latin America and the U.K. Restructuring content impairments totaled $317.4 for the nine months and $696.7 since plan inception through December 31, 2023. Management estimated another $30–$55 of charges and $145–$170 of net future cash outlays; additional exits or charges remained possible.
- Management outlook: The company expected lower production cash requirements and higher marketing spend in fiscal 2024 versus fiscal 2023. Management stated that operating cash flow, cash, revolving availability and financing sources should meet known operating and debt-service needs for the next 12 months and beyond. This is a company assessment, not a guarantee.
- Debt and rate exposure: Term Loan B of $822.3 was due March 2025. If more than $250 remained outstanding without refinancing, repayment or extension to the specified date, the revolver and Term Loan A could become due December 23, 2024; management expected to refinance or extend Term Loan B before then. The company reported covenant compliance at quarter-end. Variable-rate debt exposes it to higher interest costs.
- Other risks and items: WGA and SAG-AFTRA strikes paused some productions, delaying content and payments and potentially increasing costs. The filing identifies risks to eOne integration and Canadian status, the proposed business combination and separation, content performance, financing, and impairment estimates. No material pending legal proceeding was reported. Disclosure controls were concluded effective; eOne control integration was underway.
Most important facts for investors to verify
- Confirm the filing entity and fiscal period: Lions Gate Entertainment Corp., quarter ended December 31, 2023.
- Track completion conditions, minimum proceeds and final terms of the proposed Studio Business transaction, and any subsequent separation from STARZ.
- Monitor refinancing or extension of the March 2025 Term Loan B before the December 2024 acceleration trigger, alongside covenant headroom and revolver availability.
- Assess cash generation and the cash costs of the Media Networks restructuring, including whether the estimated $145–$170 outlay or $30–$55 additional charges change.
- Review eOne’s finalized purchase-price allocation, integration costs and realized operating contribution, as well as the January 2, 2024 purchase of an additional 25% of 3 Arts Entertainment for approximately $194.
- Evaluate underlying segment performance separately from impairment, restructuring, acquisition and other unusual charges; confirm STARZ subscriber trends and revenue after international exits.