Core Insights - Starz Entertainment Corp. reported modest results for 2Q25, missing revenue and adjusted EPS estimates, with revenue of $319.7 million, down 8.0% YoY from $347.6 million in 2Q24 [2][14] - The company experienced an operating loss of $26.9 million in 2Q25, compared to an operating income of $10.1 million in the prior-year period [2][14] - Starz ended the quarter with 12.2 million U.S. OTT subscribers, a sequential decline of 120,000, and total U.S. subscribers reached 17.6 million, down 410,000 from the previous quarter [2][15] Financial Performance - Adjusted OIBDA for 2Q25 was $33.4 million, down from $56.3 million in 2Q24, leading to a decrease in adjusted OIBDA margin to 10.4% from 16.2% [2][14] - The net loss for the quarter was $42.5 million, compared to a net income of $4.2 million in 2Q24, with diluted loss per share at $2.54 versus diluted earnings per share of $0.26 in 2Q24 [2][14] Subscriber Trends - The decline in subscribers was attributed to lower OTT additions and ongoing pressure on linear subscribers, particularly due to the underperformance of BMF Season 4 [2][15] - Despite the overall decline, the Outlander prequel, Blood of My Blood, achieved strong performance, becoming the third-highest series premiere in Starz history for subscriber additions [2][10] Strategic Outlook - Starz is focusing on a digital-first growth strategy and expects sequential revenue and OTT subscriber growth in upcoming quarters, supported by a strong content lineup [2][8] - The company aims to reach $200 million in adjusted OIBDA by year-end and convert 70% of that into free cash flow by 2026 [2][8] Valuation - The intrinsic value of Starz Entertainment Corp. is estimated at $18.00 per share, based on a 2026e EV/EBITDA multiple of 4.4x, maintaining a 'Buy' rating with an implied upside of 33.3% from the current market price of $13.50 [6][16] - The valuation is sensitive to fluctuations in adjusted EBITDA and EV/EBITDA multiples, with potential changes impacting the target prices significantly [18] Company Strategy - Starz is strategically exiting seven international territories to streamline its business and is prioritizing lower-cost original content production [21] - The company is targeting key demographics and aims to achieve a 20% margin run rate by FY28 to boost profitability [11][12]

Financial Data and Key Metrics Changes - Total revenue for the quarter was $319.7 million, down 2% sequentially and 7.4% year over year [12] - Adjusted OIBDA was $33.4 million, down from $92 million in the previous quarter, primarily due to higher content amortization [13] - The company ended the quarter with $573.5 million in total net debt, down $42.1 million sequentially, with a leverage ratio of 3.2 times [14] Business Line Data and Key Metrics Changes - The company had 12.18 million U.S. OTT subscribers, a sequential decline of 120,000, and a total of 19.08 million North American subscribers, down 520,000 sequentially [12] - OTT revenue was $221.1 million, while linear and other revenue was $98.6 million, reflecting declines due to lower OTT subscriber additions [13] Market Data and Key Metrics Changes - The linear subscriber base declined to 6.22 million, reflecting continued declines in Pay TV households [12] - The company expects sequential revenue and OTT subscriber growth in the next two quarters due to the successful premiere of "Blood of My Blood" [13] Company Strategy and Development Direction - The company aims for higher adjusted OIBDA margins, higher free cash flow, and lower leverage, with a target of reaching a 20% margin by the end of calendar 2028 [6][10] - The content slate includes high-performing returning series and new premieres, which are expected to drive subscriber growth and revenue [9][10] Management's Comments on Operating Environment and Future Outlook - Management views 2025 as a transition year for cash flow management, with a focus on deleveraging in 2026 and 2027 [14] - The company believes it is undervalued compared to peers and expects valuation disconnect to become more apparent as large media companies spin off their linear networks [6] Other Important Information - The company is excited about its content slate, including the return of "Spartacus" and the launch of "Fightland," which is expected to have a lower cost structure compared to previous productions [10][46] - The passage of the One Big Beautiful Bill Act allows the company to reduce federal tax liabilities, leading to no significant cash tax payments anticipated for the foreseeable future [14] Q&A Session Summary Question: What defines scale in this business and prerequisites for M&A? - Management has a clear plan for deleveraging and achieving a 20% margin, focusing on delivering that plan regardless of M&A participation [18] Question: What caused the underperformance of BMF and adjustments going forward? - BMF was still a large show but did not meet growth expectations due to gross adds issues; management is analyzing the situation and has new content in development [28] Question: Insights on ARPU and distribution relationships? - ARPU was slightly down due to more customers on multi-month offers, which helps reduce churn; no rate increases are planned for the next year [30][32] Question: Audience transition for "Blood of My Blood"? - The company has a strong track record of franchising, with spin-offs typically retaining over 85% of the original audience [38] Question: Confidence in the return of "Spartacus"? - There is significant demand for "Spartacus" to return, and the company has incorporated diverse characters to appeal to a broader audience [46]

Core Insights - Starz reported total revenue of $319.7 million in Q2, slightly below Wall Street expectations due to declines in subscriber levels on linear TV and streaming [1] - The company, which became independent from Lionsgate earlier this year, is projecting growth in both subscribers and revenue over the next two quarters [2] - Adjusted operating income before depreciation and amortization (OIBDA) reached $33.4 million, meeting Street forecasts [2] Subscriber Metrics - Starz has over two-thirds of its subscriber base in streaming, ending Q2 with 12.2 million streaming customers in the U.S., a decline of 120,000 from the prior quarter [3] - Total U.S. subscribers (linear and streaming combined) reached 17.6 million, down 410,000 [3] - North American subscriber count was 19.1 million, reflecting a quarter-to-quarter decline of 520,000 [3] Financial Performance - The company reported net losses of $42.5 million, equating to a loss of $2.54 per share [4] - Starz had total net debt of $573.5 million at the end of the quarter, with a leverage ratio of 3.2 times trailing 12-month adjusted OIBDA [6] Content and Future Outlook - The main new series released in Q2 was "Power Book III: Raising Kanaan," with the current quarter seeing strong performance from the "Outlander" spinoff "Blood of My Blood" [5] - Executives expect growth in both subscribers and revenue in Q3 and Q4, although no specific projections were provided [5] - CEO Jeffrey Hirsch highlighted significant progress towards financial and operational objectives since becoming a standalone public company [6] Stock Performance - Starz shares have nearly doubled since the company's May IPO, reaching a high of $21 before drifting down closer to $15 in recent trading sessions [7]

Part I. Financial Information [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements for Q2 2025 reflect the company's post-separation financial position, showing a net loss of $42.5 million and increased cash [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $51.6 | $17.8 | | Programming content, net | $1,092.7 | $1,096.3 | | Total assets | $2,091.6 | $2,173.2 | | **Liabilities & Equity** | | | | Programming related payables | $378.1 | $101.8 | | Debt | $611.7 | $699.9 | | Total liabilities | $1,379.3 | $1,406.8 | | Total equity | $712.3 | $766.4 | | Total liabilities and equity | $2,091.6 | $2,173.2 | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $319.7 | $347.6 | | Operating (loss) income | $(26.9) | $10.1 | | Net (loss) income from continuing operations | $(42.5) | $1.1 | | Basic and diluted net (loss) income per common share - continuing operations | $(2.54) | $0.07 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statement of Cash Flows Highlights (in millions) | Cash Flow Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $65.4 | $(33.5) | | Net cash provided by (used in) investing activities | $75.2 | $(71.6) | | Net cash (used in) provided by financing activities | $(106.8) | $93.3 | | **Net change in cash and cash equivalents** | **$33.8** | **$(11.8)** | | Cash and cash equivalents – end of period | $51.6 | $25.2 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - On May 6, 2025, Old Lionsgate completed the separation of its LG Studios Business from the Starz Business, resulting in two separate public companies: Starz Entertainment Corp. and Lionsgate Studios Corp. (New Lionsgate)[34](index=34&type=chunk) - For accounting purposes, New Lionsgate is considered the divesting entity, and Starz is the divested entity; Starz's pre-separation financial information is prepared on a carve-out basis from Old Lionsgate's records[36](index=36&type=chunk) - The company's Board of Directors approved a change in the fiscal year end from March 31 to December 31, effective starting with the year ending December 31, 2025[59](index=59&type=chunk) - In connection with the separation, Starz entered into a new credit agreement for a **$300.0 million** term loan and a **$150.0 million** revolving credit facility[53](index=53&type=chunk)[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 8.0% revenue decline and $26.9 million operating loss, attributing it to lower subscribers and higher costs, partially offset by reduced marketing, with liquidity supported by new credit facilities [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $319.7 | $347.6 | (8.0)% | | Operating (Loss) Income | $(26.9) | $10.1 | (366.3)% | | Net (Loss) Income from Continuing Operations | $(42.5) | $1.1 | (3,963.6)% | - Consolidated revenue decreased by **$27.9 million (8.0%) YoY**, driven by declines in both linear revenue (**$14.6 million**) and OTT revenue (**$13.3 million**) due to lower subscriber numbers[215](index=215&type=chunk)[218](index=218&type=chunk) Subscriber Data (in millions) | Subscriber Type | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Domestic Subscribers | 17.59 | 18.93 | | Total Canada Subscribers | 1.49 | 2.37 | | **Total Starz Networks Subscribers** | **19.08** | **21.30** | | International OTT Subscribers | — | 2.60 | | **Total Starz Subscribers** | **19.08** | **23.90** | - Advertising and marketing expenses decreased by **$19.3 million (23.3%) YoY**, primarily due to increased efficiency in marketing operations and lower overall spend[215](index=215&type=chunk)[225](index=225&type=chunk) - Programming amortization increased by **$14.6 million (9.9%) YoY**, attributed to the premieres of new original series like *Black Mafia Family Season 4*[215](index=215&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk) - General and administrative expenses rose by **$2.5 million (9.4%) YoY**, reflecting additional costs incurred as a standalone public company post-separation[215](index=215&type=chunk)[229](index=229&type=chunk) [Non-GAAP Measures](index=40&type=section&id=Non-GAAP%20Measures) Reconciliation of Operating (Loss) Income to Adjusted OIBDA (in millions) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Operating (loss) income | $(26.9) | $10.1 | | Depreciation and amortization | $48.7 | $41.6 | | Restructuring and other | $6.4 | $(0.6) | | Share-based compensation expense | $5.2 | $5.2 | | **Adjusted OIBDA** | **$33.4** | **$56.3** | - Starz Networks Adjusted OIBDA decreased by **$23.9 million** to **$33.4 million** in Q2 2025, down from **$57.3 million** in Q2 2024, primarily due to lower revenue and higher programming costs, partially offset by reduced marketing spend[243](index=243&type=chunk)[245](index=245&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) - Post-separation, the company's primary liquidity sources are cash from operations, a new **$300 million** Term Loan A, and a new **$150 million** senior secured revolving credit facility[248](index=248&type=chunk) - As of June 30, 2025, the company had cash and cash equivalents of **$51.6 million**, compared to **$17.8 million** at the beginning of the period[246](index=246&type=chunk) Material Cash Requirements from Known Contractual Obligations (as of June 30, 2025, in millions) | Obligation | Total | Next 12 Months | Beyond 12 Months | | :--- | :--- | :--- | :--- | | **On-Balance Sheet** | | | | | Term Loan A | $300.0 | $— | $300.0 | | 5.5% Senior Notes | $325.1 | $— | $325.1 | | Programming related obligations | $88.2 | $88.2 | $— | | **Off-Balance Sheet** | | | | | Programming related obligations commitments | $419.2 | $260.1 | $159.1 | | Interest payments | $181.5 | $42.1 | $139.4 | | **Total** | **$1,820.7** | **$814.5** | **$1,006.2** | [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks from interest rate and foreign currency fluctuations using derivative instruments like forward foreign exchange contracts and interest rate swaps - The company's main market risks are from interest rate changes on its variable-rate debt and foreign currency fluctuations[283](index=283&type=chunk) - Starz uses forward foreign exchange contracts to hedge production costs denominated in British Pounds[284](index=284&type=chunk) - The company has entered into **$150.0 million** worth of pay-fixed interest rate swaps to convert its floating-rate borrowings to fixed-rate borrowings, managing interest rate risk[285](index=285&type=chunk)[286](index=286&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, despite material changes from a new ERP system and post-separation control implementation - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[291](index=291&type=chunk) - A new enterprise resource planning (ERP) system was implemented during the quarter, which changed the company's internal control over financial reporting[292](index=292&type=chunk) - New controls were implemented for processes that were previously performed by the former parent company, Old Lionsgate[292](index=292&type=chunk) Part II. Other Information [Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in normal course legal proceedings, not expected to materially impact financial position, with details in Note 16 - Starz is involved in legal proceedings arising from the normal course of business but does not expect them to have a material adverse effect[294](index=294&type=chunk) - Further details on legal matters, including a lawsuit filed by former noteholders, are provided in Note 16, Contingencies[156](index=156&type=chunk)[294](index=294&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported to the risk factors previously disclosed in the Annual Report on Form 10-K for FY2025 - No material changes were reported to the risk factors from the Annual Report on Form 10-K for the fiscal year ended March 31, 2025[295](index=295&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not purchase any of its common shares during the three months ended June 30, 2025 - No common shares were purchased by the company during the three months ended June 30, 2025[296](index=296&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including separation agreements, credit agreements, and CEO/CFO certifications

[Q2 2025 Earnings Release](index=1&type=section&id=Q2%202025%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) For the quarter ended June 30, 2025, Starz Entertainment Corp. reported a net loss of $42.5 million on revenues of $319.7 million, generating an Adjusted OIBDA of $33.4 million despite an operating loss of $26.9 million, with management reiterating its outlook for sequential revenue and OTT subscriber growth for the remainder of 2025 | Metric | Value | | :--- | :--- | | Revenue | $319.7 Million | | Operating Loss | $(26.9) Million | | Net Loss | $(42.5) Million | | Net Loss Per Share | $(2.54) | | Adjusted OIBDA | $33.4 Million | - Management reaffirms its forecast for sequential growth in both revenue and OTT subscribers in the third and fourth quarters of 2025[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Jeffrey Hirsch highlighted significant progress since becoming a standalone company, citing strong audience resonance with its content strategy, evidenced by the successful premiere of 'Outlander: Blood of my Blood', with the company focused on returning to revenue growth, improving margins, and increasing free cash flow conversion, supported by a compelling content slate and an improved cost structure - The premiere of 'Outlander: Blood of my Blood' achieved the **third-highest subscriber additions** for a series premiere in the company's history, indicating a successful content strategy[3](index=3&type=chunk) - Key strategic objectives include returning to revenue growth, improving margins, and increasing the conversion of Adjusted OIBDA to free cash flow[3](index=3&type=chunk) [Operational and Financial Position](index=1&type=section&id=Operational%20and%20Financial%20Position) As of June 30, 2025, STARZ had total net debt of $573.5 million and a Total Adjusted OIBDA Leverage Ratio of 3.2x, experiencing a sequential decline in subscribers, with total U.S. subscribers decreasing by 410,000 to 17.6 million, primarily due to pressures on linear subscribers and lower OTT additions | Metric | Value | | :--- | :--- | | Term Loan A Outstanding | $300.0 Million | | Senior Unsecured Notes | $325.1 Million | | Cash | $51.6 Million | | Total Net Debt | $573.5 Million | | Total Adjusted OIBDA Leverage Ratio (TTM) | 3.2x | | Subscriber Category | Q2 2025 Count | Sequential Decline | | :--- | :--- | :--- | | U.S. OTT Subscribers | 12.2 Million | 120,000 | | Total U.S. Subscribers | 17.6 Million | 410,000 | | Total North American Subscribers | 19.1 Million | 520,000 | [Financial Statements](index=3&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Starz reported total assets of $2.09 billion, a decrease from $2.17 billion at the end of the prior quarter, with total liabilities also decreasing slightly to $1.38 billion from $1.41 billion, reflecting shifts in accounts like 'Due from/to LG Studios Business' following the company's separation | Balance Sheet Item | June 30, 2025 (in millions) | March 31, 2025 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $51.6 | $17.8 | | Total current assets | $123.2 | $170.5 | | Total assets | $2,091.6 | $2,173.2 | | Total current liabilities | $677.1 | $622.5 | | Debt | $611.7 | $699.9 | | Total liabilities | $1,379.3 | $1,406.8 | | Total equity | $712.3 | $766.4 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, Starz reported a total revenue of $319.7 million, down from $347.6 million in the same period last year, posting an operating loss of $26.9 million, a significant shift from an operating income of $10.1 million year-over-year, consequently resulting in a net loss of $42.5 million, compared to a net income of $4.2 million in Q2 2024 | Income Statement Item | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | OTT revenue | $221.1 | $234.4 | | Linear and other revenue | $98.6 | $113.2 | | **Total revenue** | **$319.7** | **$347.6** | | Total expenses | $346.6 | $337.5 | | **Operating (loss) income** | **$(26.9)** | **$10.1** | | **Net (loss) income** | **$(42.5)** | **$4.2** | | **Basic and diluted net (loss) income per share** | **$(2.54)** | **$0.26** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q2 2025, Starz generated $65.4 million in cash from operating activities, a significant improvement from a $33.5 million use of cash in the prior-year quarter, with net cash used in financing activities totaling $106.8 million, primarily due to a distribution to New Lionsgate upon separation, ending the quarter with $51.6 million in cash and cash equivalents, an increase of $33.8 million during the period | Cash Flow Activity | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $65.4 | $(33.5) | | Net cash provided by (used in) investing activities | $75.2 | $(71.6) | | Net cash (used in) provided by financing activities | $(106.8) | $93.3 | | **Net change in cash and cash equivalents** | **$33.8** | **$(11.8)** | | **Cash and cash equivalents – end of period** | **$51.6** | **$25.2** | [Supplemental Information](index=6&type=section&id=Supplemental%20Information) [Reconciliation of Operating Income (Loss) to Adjusted OIBDA](index=6&type=section&id=Reconciliation%20of%20Operating%20Income%20(Loss)%20to%20Adjusted%20OIBDA) The company provides a reconciliation from the GAAP measure of Operating Income (Loss) to the non-GAAP measure of Adjusted OIBDA, where for Q2 2025, an operating loss of $26.9 million was adjusted for items like depreciation, amortization, and restructuring costs to arrive at an Adjusted OIBDA of $33.4 million, with the trailing twelve months ended June 30, 2025, showing an Adjusted OIBDA of $178.6 million | Reconciliation Item (in millions) | Q2 2025 | Trailing Twelve Months | | :--- | :--- | :--- | | Operating income (loss) | $(26.9) | $(207.3) | | Depreciation and amortization | $48.7 | $177.4 | | Restructuring and other | $6.4 | $191.1 | | Adjusted share-based compensation expense | $5.2 | $17.5 | | **Adjusted OIBDA** | **$33.4** | **$178.6** | - Restructuring and other costs for Q2 2025 totaled **$6.4 million**, which included **$4.5 million** in transaction costs related to strategic activities and **$2.2 million** for a one-time modification of equity awards connected to the Separation[16](index=16&type=chunk)[17](index=17&type=chunk) [Subscriber Data](index=8&type=section&id=Subscriber%20Data) Starz experienced a decline in its total subscriber base over the past year, with total Starz Networks subscribers standing at 19.08 million as of June 30, 2025, down from 21.30 million a year prior, a decline observed in both OTT and linear segments across the U.S. and Canada, with linear subscribers showing a more pronounced downward trend | Subscriber Category (in millions) | 6/30/2025 | 3/31/2025 | 6/30/2024 | | :--- | :--- | :--- | :--- | | **Total Domestic Subscribers** | **17.59** | **18.00** | **18.93** | | - Domestic OTT Subscribers | 12.18 | 12.30 | 12.44 | | - Domestic Linear Subscribers | 5.41 | 5.70 | 6.49 | | **Total Starz Networks Subscribers** | **19.08** | **19.60** | **21.30** | [Use of Non-GAAP Financial Measures](index=9&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) Starz utilizes non-GAAP financial measures, such as Adjusted OIBDA and Adjusted OIBDA Leverage Ratio, to evaluate its operating performance, defining Adjusted OIBDA as operating income adjusted for depreciation, amortization, adjusted share-based compensation, and restructuring costs, as management believes these metrics provide useful information to investors by eliminating items that may not reflect the fundamental performance of the business - Adjusted OIBDA is defined as operating income (loss) adjusted for depreciation, amortization, adjusted share-based compensation, restructuring costs, and other unusual items[25](index=25&type=chunk) - Adjusted OIBDA Leverage Ratio is defined as Net Corporate Debt divided by Adjusted OIBDA for the trailing twelve-month period[26](index=26&type=chunk) - The company uses these non-GAAP measures to assess performance, believing they eliminate non-fundamental, infrequent, or non-cash expenses, which is a common practice in the entertainment industry[27](index=27&type=chunk)[28](index=28&type=chunk)

Group 1 - STARZ will report its second quarter financial results for calendar 2025 on August 14, 2025 [1] - Senior management will hold an analyst and investor call at 2:00 PM PT/5:00 PM ET on the same day to discuss the results [1] - A live audio webcast will be available, with a full replay accessible later that evening [1] Group 2 - STARZ is a leading premium entertainment destination targeting women and underrepresented audiences [2] - The company offers a diverse programming mix, including original series and blockbuster movies, under the brand positioning "We're All Adults Here" [2] - STARZ is available across various digital OTT platforms and multichannel video distributors, and is recognized for its advanced technology and data analytics capabilities [2]

Cash Flow and Debt Obligations - Starz's cash flow from operations is expected to be significantly dedicated to principal and interest payments, impacting its ability to meet debt obligations [147]. - Starz may face substantial liquidity problems if cash flows and capital resources are insufficient to fund debt service obligations [148]. - Starz's subsidiaries may not be able to make distributions to enable the company to meet its debt obligations [149]. Interest Rate Exposure - A 1% increase in interest rates would decrease the fair value of the 5.5% Senior Notes by approximately $21.2 million [347]. - A quarter point increase in interest rates on the outstanding principal amount of programming notes would result in a $0.2 million increase in annual net interest expense [346]. - Starz's variable interest rate programming notes incur SOFR-based interest at a weighted average rate of approximately 6.51% [346]. - Starz's exposure to interest rate risk is primarily from borrowings under credit facilities, which are expected to be at variable rates [345]. Corporate Indebtedness and Covenants - The agreements governing Starz's corporate indebtedness impose restrictive covenants that limit its operational flexibility [151]. Financial Condition Risks - Changes in tax laws could adversely affect Starz's financial condition and results of operations [155]. - As of March 31, 2025, Starz's 5.5% Senior Notes had an outstanding carrying value of $699.9 million and an estimated fair value of $623.7 million [347].

[PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the nine months ended December 31, 2024, report a net loss of $259.5 million and total assets of $7.17 billion, reflecting key strategic transactions Condensed Consolidated Statements of Operations Highlights (Nine Months Ended Dec 31) | Metric | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | **Revenues** | $2,753.8 | $2,899.1 | | **Operating Loss** | $(34.1) | $(877.9) | | **Net Loss** | $(259.5) | $(1,066.8) | | **Net Loss Attributable to Shareholders** | $(244.7) | $(1,063.5) | | **Diluted Net Loss Per Share** | $(1.03) | $(4.56) | Condensed Consolidated Balance Sheets Highlights | Metric | Dec 31, 2024 (in millions) | Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | $1,070.9 | $1,463.5 | | **Total Assets** | $7,167.3 | $7,092.7 | | **Total Current Liabilities** | $3,399.6 | $3,992.1 | | **Total Liabilities** | $7,323.7 | $7,279.9 | | **Total Equity (Deficit)** | $(256.1) | $(310.5) | Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended Dec 31) | Metric | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | **Net Cash Used In Operating Activities** | $(359.7) | $401.4 (Provided) | | **Net Cash Used In Investing Activities** | $(46.3) | $(365.5) | | **Net Cash Provided By (Used In) Financing Activities** | $292.4 | $(17.4) | [Note 2. Acquisitions](index=12&type=section&id=Note%202.%20Acquisitions) The company completed a business combination with SEAC on May 13, 2024, establishing Lionsgate Studios and generating $330.0 million, in addition to other film library and eOne acquisitions - On May 13, 2024, the Studio Business combined with SEAC, creating the publicly traded 'Lionsgate Studios Corp.' (Nasdaq: LION), with Lionsgate retaining an **87.8% ownership stake**[45](index=45&type=chunk) - The business combination generated gross proceeds of approximately **$330.0 million**, with net proceeds of **$278.2 million** used to partially pay down Term Loan A and Term Loan B[47](index=47&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - On December 27, 2023, the company acquired the Entertainment One (eOne) television and film business from Hasbro for approximately **$373.1 million** in cash[55](index=55&type=chunk) - On June 5, 2024, the company invested **$35.0 million** for a **51% interest** in CP LG Library Holdings, LLC, which acquired a library of 46 films, and will consolidate this entity[41](index=41&type=chunk) [Note 6. Debt](index=19&type=section&id=Note%206.%20Debt) Total corporate debt increased to $2.60 billion as of December 31, 2024, reflecting the payoff of Term Loan B and the establishment of new IP-backed credit facilities Corporate Debt Summary (in millions) | Debt Instrument | Dec 31, 2024 (in millions) | Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | Revolving Credit Facility | $390.0 | $575.0 | | Term Loan A | $314.4 | $399.3 | | Term Loan B | $— | $819.2 | | 5.5% Senior Notes | $715.0 | $715.0 | | eOne IP Credit Facility | $331.5 | $— | | LG IP Credit Facility | $850.0 | $— | | **Total Corporate Debt** | **$2,600.9** | **$2,508.5** | - In November 2024, the company fully paid off the Term Loan B facility, due in March 2025[90](index=90&type=chunk)[107](index=107&type=chunk) - The company entered into two new IP-backed credit facilities: the eOne IP Credit Facility (max **$340.0 million**) maturing in July 2029, and the LG IP Credit Facility (max **$850.0 million**) maturing in September 2029[103](index=103&type=chunk)[104](index=104&type=chunk) [Note 10. Revenue](index=27&type=section&id=Note%2010.%20Revenue) Total revenues for the nine months ended December 31, 2024, decreased to $2.75 billion, primarily due to a decline in Media Networks revenue, with remaining performance obligations at $1.76 billion Revenue by Segment (Nine Months Ended Dec 31, in millions) | Segment | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | Motion Picture | $1,063.3 | $1,245.6 | | Television Production | $1,062.5 | $860.7 | | Media Networks | $1,041.5 | $1,214.9 | | Intersegment eliminations | $(413.5) | $(422.1) | | **Total Revenues** | **$2,753.8** | **$2,899.1** | - Remaining performance obligations, including deferred revenue and backlog, totaled **$1.76 billion** as of December 31, 2024[147](index=147&type=chunk) [Note 14. Restructuring and Other](index=33&type=section&id=Note%2014.%20Restructuring%20and%20Other) Restructuring and other costs significantly decreased to $71.9 million for the nine months ended December 31, 2024, primarily due to lower content impairment charges from Media Networks restructuring Restructuring and Other Costs (Nine Months Ended Dec 31, in millions) | Category | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | Content and other impairments | $17.1 | $317.4 | | Severance | $26.2 | $41.3 | | Transaction and other costs | $28.6 | $12.3 | | **Total** | **$71.9** | **$371.0** | - The Media Networks restructuring plan, involving exiting most international territories, has resulted in cumulative impairment charges of **$735.1 million** through December 31, 2024[176](index=176&type=chunk) - Subsequent to quarter-end, the company removed additional programming from its domestic Starz platform with a carrying value of approximately **$77.4 million**, expected to result in a charge in Q4 fiscal 2025[178](index=178&type=chunk) [Note 15. Segment Information](index=34&type=section&id=Note%2015.%20Segment%20Information) Total segment profit for the nine months ended December 31, 2024, decreased to $335.5 million, primarily driven by lower profitability in the Media Networks segment Segment Profit (Nine Months Ended Dec 31, in millions) | Segment | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | Motion Picture | $172.5 | $237.1 | | Television Production | $96.0 | $94.1 | | **Total Studio Business** | **$268.5** | **$331.2** | | Media Networks | $109.5 | $184.1 | | Intersegment eliminations | $(42.5) | $(43.8) | | **Total Segment Profit** | **$335.5** | **$471.5** | - Total segment profit of **$335.5 million** is reconciled to a loss before income taxes of **$243.5 million**, after deducting items including corporate G&A (**$89.9 million**), restructuring (**$71.9 million**), and adjusted share-based compensation (**$54.1 million**)[198](index=198&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the ongoing separation of Studio and STARZ businesses, the Lionsgate Studios business combination, and Media Networks restructuring, noting a 5.0% consolidated revenue decrease for the nine-month period [Overview](index=47&type=section&id=Overview) The company is advancing its plan to separate the Studio Business from STARZ, following the May 2024 Lionsgate Studios business combination, while Media Networks undergoes significant international restructuring - The company is proceeding with a plan to fully separate its Studio Business (Lionsgate Studios Corp.) from its STARZ business, subject to board approval and other conditions[253](index=253&type=chunk) - The Media Networks restructuring plan, involving exiting all international territories except Canada and India, has resulted in cumulative impairment charges of **$735.1 million** through December 31, 2024[259](index=259&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Q3 consolidated revenues were flat at $970.5 million, with Television Production growth offsetting declines in Motion Picture and Media Networks, leading to a 5.0% nine-month revenue decrease Q3 FY25 vs Q3 FY24 Revenue by Segment (in millions) | Segment | Q3 FY25 (in millions) | Q3 FY24 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Motion Picture | $309.2 | $443.2 | (30.2)% | | Television Production | $404.6 | $248.4 | 62.9% | | Media Networks | $344.5 | $417.2 | (17.4)% | | **Total Revenues** | **$970.5** | **$975.1** | **(0.5)%** | Q3 FY25 vs Q3 FY24 Segment Profit (in millions) | Segment | Q3 FY25 (in millions) | Q3 FY24 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Motion Picture | $83.6 | $100.4 | (16.7)% | | Television Production | $60.9 | $8.1 | 651.9% | | Media Networks | $24.9 | $85.5 | (70.9)% | | **Total Segment Profit** | **$176.7** | **$182.0** | **(2.9)%** | - Motion Picture revenue declined due to a difficult comparison with the prior year's quarter, which included the successful theatrical release of *The Hunger Games: The Ballad of Songbirds & Snakes*[319](index=319&type=chunk)[355](index=355&type=chunk) - Television Production revenue surged primarily due to the inclusion of approximately **$114.3 million** in revenue from the recently acquired eOne business[320](index=320&type=chunk) - Media Networks revenue and profit fell sharply due to the exit from most international territories and a decline in domestic linear subscribers, partially offset by OTT price increases[321](index=321&type=chunk)[380](index=380&type=chunk)[384](index=384&type=chunk) [Liquidity and Capital Resources](index=86&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by operations, debt, and business combination proceeds, with $200.5 million in cash and sufficient resources to meet obligations for the next 12 months - Primary sources of cash include operations, corporate debt, film obligations, and the recent business combination which provided gross proceeds of approximately **$330.0 million**[455](index=455&type=chunk)[456](index=456&type=chunk) - The company had **$200.5 million** in cash and cash equivalents and **$860.0 million** available under its **$1.25 billion** Revolving Credit Facility as of December 31, 2024[455](index=455&type=chunk)[88](index=88&type=chunk) - For the nine months ended December 31, 2024, cash used in operating activities was **$359.7 million**, a significant shift from **$401.4 million** provided by operations in the prior year, driven by higher investment in film and television programs[484](index=484&type=chunk) - Total material cash requirements from contractual obligations are estimated at **$6.68 billion**, with **$2.44 billion** due in the next 12 months[475](index=475&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=92&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency fluctuations, with a 0.25% interest rate change impacting annual net interest expense by $6.0 million on corporate debt - The company is exposed to interest rate risk through its variable-rate debt, including the Senior Credit Facilities and new IP Credit Facilities[490](index=490&type=chunk) - A **0.25%** change in interest rates would result in a **$6.0 million** change in annual net interest expense on corporate debt and a **$1.6 million** change on film-related obligations[490](index=490&type=chunk)[491](index=491&type=chunk) [Controls and Procedures](index=94&type=section&id=Item%204.%20Controls%20and%20Procedures) As of December 31, 2024, management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[499](index=499&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the quarter ended December 31, 2024[500](index=500&type=chunk) [PART II — OTHER INFORMATION](index=95&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=95&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, none of which are expected to have a material adverse effect on its financial condition or results - The company is not a party to any material pending legal proceedings expected to have a material adverse effect on its financial condition[208](index=208&type=chunk)[503](index=503&type=chunk) [Risk Factors](index=95&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[505](index=505&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=95&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common shares were repurchased during the three months ended December 31, 2024, with $179.9 million remaining authorized for future repurchases - No common shares were repurchased during the three months ended December 31, 2024[507](index=507&type=chunk) - Approximately **$179.9 million** remains available for future repurchases under the company's authorized share repurchase plan[506](index=506&type=chunk) [Exhibits](index=96&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including supplemental indentures, credit agreements, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits filed include supplemental indentures for debt, various credit agreements, and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[512](index=512&type=chunk)

[Lionsgate and Lionsgate Studios Report Results for Third Quarter Fiscal 2025](index=1&type=section&id=Lionsgate%20and%20Lionsgate%20Studios%20Report%20Results%20for%20Third%20Quarter%20Fiscal%202025) This report details the financial and operational performance of Lionsgate and Lionsgate Studios for the third quarter of fiscal year 2025 [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Lionsgate's Q3 FY2025 highlights include **$970.5 million** revenue, **$21.9 million** net loss, and **$144.2 million** Adjusted OIBDA Lionsgate Q3 FY2025 Key Financial Metrics | Metric | Value (in millions USD) | | :--- | :--- | | Revenue | $970.5 | | Operating Income | $35.8 | | Net Loss Attributable to Shareholders | $(21.9) | | Diluted Net Loss Per Share | $(0.09) | | Adjusted Net Income Attributable to Shareholders | $68.4 | | Adjusted Diluted Net Income Per Share | $0.28 | | Adjusted OIBDA | $144.2 | - Trailing 12-month library revenue reached a record **$954 million**, marking a **22% increase** from the prior year quarter[2](index=2&type=chunk)[4](index=4&type=chunk) - CEO Jon Feltheimer highlighted the strong quarterly performance amidst a challenging environment, noting record library performance, profitability in mid-budget films, a strong television portfolio, and a return to domestic OTT subscriber growth for STARZ on a sequential basis[4](index=4&type=chunk) [Segment Performance Overview](index=1&type=section&id=Segment%20Performance%20Overview) Studio Business revenue grew **3%** to **$713.8 million**, Adjusted OIBDA surged **45%** to **$112.0 million** Studio Business Performance (Q3 FY2025 vs Q3 FY2024) | Metric | Q3 FY2025 (in millions USD) | Q3 FY2024 (in millions USD) | Change | | :--- | :--- | :--- | :--- | | Revenue | $713.8 | ~$693.0 (implied) | +3% | | Adjusted OIBDA | $112.0 | $77.4 | +45% | - The Motion Picture segment's revenue and profit decreased due to a difficult comparison with the prior year's quarter, which included major theatrical releases like *The Hunger Games: The Ballad of Songbirds and Snakes* and *Saw X*[6](index=6&type=chunk) - The Television Production segment experienced significant growth, with revenue up **63% to $404.6 million** and a substantial increase in segment profit to **$60.9 million**. This was attributed to more episodic deliveries, library content licensing, and recovery from last year's industry strikes[7](index=7&type=chunk) - Media Networks' North American revenue slightly decreased to **$341.9 million**, and segment profit fell to **$25.7 million** due to higher content amortization. However, North American OTT subscribers grew by **170,000** sequentially[8](index=8&type=chunk) [Lions Gate Entertainment Corp. Financials](index=4&type=section&id=Lions%20Gate%20Entertainment%20Corp.%20Financials) This section presents the consolidated financial statements and segment performance for Lions Gate Entertainment Corp [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Lionsgate's consolidated financials show **$7.17 billion** total assets, a **$21.9 million** net loss, and **$118.9 million** operating cash outflow [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This chapter presents the consolidated balance sheet data for the specified periods Consolidated Balance Sheet Highlights (in millions USD) | Account | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $200.5 | $314.0 | | Total current assets | $1,070.9 | $1,463.5 | | Total assets | $7,167.3 | $7,092.7 | | Debt - short term portion | $119.0 | $860.3 | | Debt (long-term) | $2,441.8 | $1,619.7 | | Total liabilities | $7,323.7 | $7,279.9 | | Total equity (deficit) | $(256.1) | $(310.5) | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This chapter outlines the consolidated statements of operations for the specified periods Consolidated Statement of Operations (Three Months Ended Dec 31, in millions USD) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $970.5 | $975.1 | | Operating income (loss) | $35.8 | $(43.5) | | Net loss attributable to shareholders | $(21.9) | $(106.6) | | Diluted net loss per common share | $(0.09) | $(0.45) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This chapter details the consolidated statements of cash flows for the specified periods Consolidated Statement of Cash Flows (Three Months Ended Dec 31, in millions USD) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $(118.9) | $71.1 | | Net Cash Used In Investing Activities | $(3.1) | $(334.0) | | Net Cash Provided By Financing Activities | $92.8 | $324.4 | [Segment Information](index=7&type=section&id=Segment%20Information) Lionsgate's segments show Studio Business revenue of **$713.8 million** and profit of **$144.5 million** [Segment Revenue and Profit](index=7&type=section&id=Segment%20Revenue%20and%20Profit) This chapter provides a breakdown of segment revenue and profit for the specified periods Segment Performance (Three Months Ended Dec 31, in millions USD) | Segment | Revenue 2024 | Revenue 2023 | Profit 2024 | Profit 2023 | | :--- | :--- | :--- | :--- | :--- | | Motion Picture | $309.2 | $443.2 | $83.6 | $100.4 | | Television Production | $404.6 | $248.4 | $60.9 | $8.1 | | **Total Studio Business** | **$713.8** | **$691.6** | **$144.5** | **$108.5** | | Media Networks | $344.5 | $417.2 | $24.9 | $85.5 | [Media Networks Subscriber Data](index=10&type=section&id=Media%20Networks%20Subscriber%20Data) This chapter presents subscriber data for the Media Networks segment Starz North America Subscribers (in millions) | Date | OTT Subscribers | Linear Subscribers | Total | | :--- | :--- | :--- | :--- | | 9/30/24 | 12.40 | 7.75 | 20.15 | | 12/31/24 | 12.57 | 7.36 | 19.93 | - Total global subscribers, including STARZPLAY Arabia and excluding territories being exited, decreased to **24.57 million** as of December 31, 2024, down from **25.66 million** in the previous quarter and **27.92 million** in the prior year[40](index=40&type=chunk)[43](index=43&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) GAAP operating income of **$35.8 million** adjusted to **$144.2 million** Adjusted OIBDA, net loss to **$68.4 million** Adjusted Net Income [Reconciliation of Operating Income to Adjusted OIBDA](index=11&type=section&id=Reconciliation%20of%20Operating%20Income%20to%20Adjusted%20OIBDA) This chapter reconciles GAAP operating income to Adjusted OIBDA Reconciliation to Adjusted OIBDA (Q3 FY2025, in millions USD) | Line Item | Amount | | :--- | :--- | | **Operating income** | **$35.8** | | Restructuring and other | $43.3 | | Purchase accounting and related adjustments | $38.3 | | Adjusted share-based compensation expense | $18.4 | | Other adjustments | $8.4 | | **Adjusted OIBDA** | **$144.2** | [Reconciliation of Net Loss to Adjusted Net Income](index=14&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20Net%20Income) This chapter reconciles GAAP net loss to Adjusted Net Income Reconciliation to Adjusted Net Income (Q3 FY2025, in millions USD) | Line Item | Amount | | :--- | :--- | | **Reported Net Loss Attributable to Shareholders** | **$(21.9)** | | Restructuring and other | $43.3 | | Purchase accounting and related adjustments | $38.3 | | Adjusted share-based compensation expense | $18.4 | | Other adjustments (net) | $(9.7) | | **Adjusted Net Income Attributable to Shareholders** | **$68.4** | [Reconciliation of Operating Cash Flow to Adjusted Free Cash Flow](index=15&type=section&id=Reconciliation%20of%20Operating%20Cash%20Flow%20to%20Adjusted%20Free%20Cash%20Flow) This chapter reconciles operating cash flow to Adjusted Free Cash Flow Reconciliation to Adjusted Free Cash Flow (Q3 FY2025, in millions USD) | Line Item | Amount | | :--- | :--- | | **Net Cash Flows Used In Operating Activities** | **$(118.9)** | | Capital expenditures | $(5.4) | | Net borrowings of production and related loans | $124.3 | | Other adjustments | $12.8 | | **Adjusted Free Cash Flow** | **$12.8** | - The company defines and uses non-GAAP measures such as **Adjusted OIBDA**, **Adjusted Free Cash Flow**, and **Adjusted Net Income** to evaluate operating performance by excluding items like restructuring costs, share-based compensation, and purchase accounting adjustments[66](index=66&type=chunk)[67](index=67&type=chunk)[73](index=73&type=chunk) [Lionsgate Studios Corp. Financial Information](index=21&type=section&id=Lionsgate%20Studios%20Corp.%20Financial%20Information) This section provides the standalone financial statements and segment performance for Lionsgate Studios Corp [Consolidated Financial Statements (Lionsgate Studios)](index=23&type=section&id=Consolidated%20Financial%20Statements%20(Lionsgate%20Studios)) Lionsgate Studios reported **$5.37 billion** total assets, **$713.8 million** revenue, and **$49.6 million** operating income [Consolidated Balance Sheets (Lionsgate Studios)](index=23&type=section&id=Consolidated%20Balance%20Sheets%20(Lionsgate%20Studios)) This chapter presents the consolidated balance sheet data for Lionsgate Studios for the specified periods Lionsgate Studios Balance Sheet Highlights (in millions USD) | Account | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $186.2 | $277.0 | | Total assets | $5,374.5 | $5,103.0 | | Total liabilities | $6,324.6 | $6,129.9 | | Total equity (deficit) | $(1,049.8) | $(1,150.2) | [Consolidated Statements of Operations (Lionsgate Studios)](index=24&type=section&id=Consolidated%20Statements%20of%20Operations%20(Lionsgate%20Studios)) This chapter outlines the consolidated statements of operations for Lionsgate Studios for the specified periods Lionsgate Studios Statement of Operations (Three Months Ended Dec 31, in millions USD) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total revenues | $713.8 | $691.6 | | Operating income | $49.6 | $7.3 | | Net income attributable to shareholders | $6.4 | $(41.1) | | Diluted net income per common share | $0.02 | $(0.16) | [Consolidated Statements of Cash Flows (Lionsgate Studios)](index=25&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Lionsgate%20Studios)) This chapter details the consolidated statements of cash flows for Lionsgate Studios for the specified periods Lionsgate Studios Statement of Cash Flows (Three Months Ended Dec 31, in millions USD) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $(163.0) | $128.2 | | Net Cash Provided By (Used In) Investing Activities | $1.0 | $(317.8) | | Net Cash Provided By Financing Activities | $137.4 | $267.8 | [Segment Information (Lionsgate Studios)](index=27&type=section&id=Segment%20Information%20(Lionsgate%20Studios)) Lionsgate Studios' Q3 FY25 saw Television Production revenue of **$404.6 million** (**63%** increase), with total segment profit of **$144.5 million** Lionsgate Studios Segment Performance (Three Months Ended Dec 31, in millions USD) | Segment | Revenue 2024 | Revenue 2023 | Profit 2024 | Profit 2023 | | :--- | :--- | :--- | :--- | :--- | | Motion Picture | $309.2 | $443.2 | $83.6 | $100.4 | | Television Production | $404.6 | $248.4 | $60.9 | $8.1 | | **Total Segment Profit** | | | **$144.5** | **$108.5** | [Non-GAAP Financial Measures and Reconciliations (Lionsgate Studios)](index=29&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations%20(Lionsgate%20Studios)) Lionsgate Studios' GAAP operating income of **$49.6 million** adjusted to **$112.0 million** Adjusted OIBDA, net income to **$62.8 million** [Reconciliation of Operating Income to Adjusted OIBDA (Lionsgate Studios)](index=29&type=section&id=Reconciliation%20of%20Operating%20Income%20to%20Adjusted%20OIBDA%20(Lionsgate%20Studios)) This chapter reconciles Lionsgate Studios' GAAP operating income to Adjusted OIBDA Lionsgate Studios Reconciliation to Adjusted OIBDA (Q3 FY2025, in millions USD) | Line Item | Amount | | :--- | :--- | | **Operating income** | **$49.6** | | Restructuring and other | $40.9 | | Adjusted share-based compensation expense | $14.3 | | Corporate general and administrative expenses | $28.4 | | Other adjustments | $11.6 | | **Total Segment Profit** | **$144.5** | | Less: Corporate G&A and Unallocated Rent | $(32.5) | | **Adjusted OIBDA** | **$112.0** | [Reconciliation of Net Income to Adjusted Net Income (Lionsgate Studios)](index=32&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20(Lionsgate%20Studios)) This chapter reconciles Lionsgate Studios' GAAP net income to Adjusted Net Income Lionsgate Studios Reconciliation to Adjusted Net Income (Q3 FY2025, in millions USD) | Line Item | Amount | | :--- | :--- | | **Reported Net Income Attributable to Shareholders** | **$6.4** | | Restructuring and other | $40.9 | | Adjusted share-based compensation expense | $14.3 | | Other adjustments (net) | $1.2 | | **Adjusted Net Income Attributable to Shareholders** | **$62.8** | [Reconciliation of Operating Cash Flow to Adjusted Free Cash Flow (Lionsgate Studios)](index=33&type=section&id=Reconciliation%20of%20Operating%20Cash%20Flow%20to%20Adjusted%20Free%20Cash%20Flow%20(Lionsgate%20Studios)) This chapter reconciles Lionsgate Studios' operating cash flow to Adjusted Free Cash Flow Lionsgate Studios Reconciliation to Adjusted Free Cash Flow (Q3 FY2025, in millions USD) | Line Item | Amount | | :--- | :--- | | **Net Cash Flows Used In Operating Activities** | **$(163.0)** | | Capital expenditures | $(1.3) | | Net borrowings of production and related loans | $116.4 | | Payments on transaction costs | $1.9 | | **Adjusted Free Cash Flow** | **$(46.0)** | - Lionsgate Studios uses non-GAAP measures like **Adjusted OIBDA** and **Adjusted Free Cash Flow** to evaluate performance, excluding items such as restructuring costs, purchase accounting, and share-based compensation to provide a view consistent with management's perspective[126](index=126&type=chunk)[127](index=127&type=chunk)[133](index=133&type=chunk)

```markdown [PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, for the period ended September 30, 2024 [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position with total assets of **$7.15 billion** and an improved equity deficit as of September 30, 2024 Condensed Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | Sep 30, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $229.6 | $314.0 | | Investment in films and television programs, net | $3,284.8 | $2,762.2 | | Total Assets | **$7,146.8** | **$7,092.7** | | **Liabilities & Equity** | | | | Total Debt (Short & Long Term) | $2,460.3 | $2,480.0 | | Total Liabilities | $7,271.7 | $7,279.9 | | Total Equity (Deficit) | **$(224.6)** | **$(310.5)** | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Presents revenues and a significantly reduced net loss for the three months ended September 30, 2024, driven by the absence of prior-year impairment charges Consolidated Statement of Operations Summary (in millions, except per share data) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $948.6 | $1,015.5 | $1,783.3 | $1,924.1 | | Operating Loss | $(88.6) | $(817.5) | $(69.8) | $(834.3) | | Net Loss | $(177.8) | $(887.9) | $(240.9) | $(959.4) | | Net Loss Attributable to Shareholders | $(163.3) | $(886.2) | $(222.7) | $(956.9) | | Basic & Diluted EPS | $(0.68) | $(3.79) | $(0.94) | $(4.12) | - The significant reduction in operating and net loss year-over-year is primarily attributable to a **$663.9 million** goodwill and intangible asset impairment charge and a **$222.1 million** restructuring charge recorded in the three months ended September 30, 2023, which were not repeated in the current period[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Details cash flows for the six months ended September 30, 2024, showing net cash used in operations and cash provided by financing activities Consolidated Cash Flow Summary (Six Months Ended, in millions) | Cash Flow Activity | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $(240.9) | $330.3 | | Net Cash Flows Used In Investing Activities | $(43.2) | $(31.5) | | Net Cash Flows Provided By (Used In) Financing Activities | $199.7 | $(341.9) | | **Net Change In Cash, Cash Equivalents and Restricted Cash** | **$(84.4)** | **$(43.1)** | - A key financing event was the sale of a noncontrolling interest in Lionsgate Studios Corp., which generated **$283.1 million** in cash proceeds[29](index=29&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Details significant accounting policies, key business events, debt composition, and segment performance for the reporting period [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, key business developments, and liquidity, focusing on the proposed Studio and STARZ business separation [Overview](index=45&type=section&id=Overview) Outlines core operations and strategic initiatives, including the proposed separation of Lionsgate Studios and STARZ, and Media Networks restructuring - The company is pursuing a separation of its Studio Business (Lionsgate Studios) from its STARZ business to create two distinct publicly traded companies[242](index=242&type=chunk) - On May 13, 2024, the Studio Business combined with Screaming Eagle Acquisition Corp. (SEAC), resulting in Lionsgate Studios Corp. becoming a separate publicly traded company (NASDAQ: LION) This transaction generated approximately **$330.0 million** in gross proceeds for Lionsgate[243](index=243&type=chunk)[245](index=245&type=chunk) - The Media Networks restructuring plan continued, involving the exit from all international territories except Canada and India This resulted in net recoveries of content impairment charges of **$4.3 million** in Q2 2024, compared to charges of **$211.6 million** in Q2 2023[248](index=248&type=chunk)[249](index=249&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Compares financial results for the three and six-month periods, highlighting decreased consolidated revenue, mixed Studio Business performance, and a narrowed net loss Consolidated Revenue and Operating Loss (Three Months Ended) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $948.6 | $1,015.5 | (6.6)% | | Operating Loss | $(88.6) | $(817.5) | 89.2% improvement | Segment Profit (Three Months Ended) | Segment | Q2 2024 (in millions) | Q2 2023 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Studio Business | $27.0 | $130.7 | (79.3)% | | Media Networks | $27.2 | $66.6 | (59.2)% | | **Total Segment Profit** | **$15.6** | **$173.5** | **(91.0)%** | - Motion Picture segment profit fell **96.1%** to **$2.6 million**, driven by the negative contribution from the theatrical slate, including *Borderlands*, which had higher relative costs[344](index=344&type=chunk)[354](index=354&type=chunk) - Television Production revenue grew **5.8%**, boosted by **$111.1 million** from the eOne acquisition, but segment profit declined **61.4%** due to a less favorable content mix compared to the prior year[309](index=309&type=chunk)[357](index=357&type=chunk) - Media Networks revenue decreased **16.7%**, primarily due to exiting international territories Total Starz subscribers were **23.20 million**, down from **26.58 million** in the prior year[311](index=311&type=chunk)[371](index=371&type=chunk) [Liquidity and Capital Resources](index=83&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses liquidity sources, cash position, and capital resources, including proceeds from the Business Combination and total contractual obligations - Primary sources of cash include operations, corporate debt, film financing, and accounts receivable monetization Cash and cash equivalents stood at **$229.6 million** as of September 30, 2024[449](index=449&type=chunk) - The Business Combination that formed Lionsgate Studios provided gross proceeds of approximately **$330.0 million**, which were used to partially repay Term Loan A and Term Loan B[450](index=450&type=chunk) Cash Flow Summary (Six Months Ended, in millions) | Cash Flow Activity | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Net Cash From Operating Activities | $(240.9) | $330.3 | | Net Cash From Investing Activities | $(43.2) | $(31.5) | | Net Cash From Financing Activities | $199.7 | $(341.9) | Material Cash Requirements from Contractual Obligations (as of Sep 30, 2024, in millions) | Obligation Category | Total | Next 12 Months | Beyond 12 Months | | :--- | :--- | :--- | :--- | | On-Balance Sheet Arrangements | $5,034.4 | $2,276.4 | $2,758.0 | | Off-Balance Sheet Arrangements | $1,532.2 | $645.3 | $886.9 | | **Total** | **$6,566.6** | **$2,921.7** | **$3,644.9** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=89&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details market risks from interest rate and foreign currency fluctuations, and the use of derivative instruments to manage these exposures - The company is exposed to interest rate risk through its variable-rate debt, including Senior Credit Facilities and film-related obligations[484](index=484&type=chunk) - A **0.25%** change in interest rates would impact annual net interest expense on corporate debt by **$1.7 million** and costs related to film obligations by **$4.9 million**[484](index=484&type=chunk)[485](index=485&type=chunk) - The company utilizes interest rate swaps to convert a portion of its variable-rate debt to fixed-rate, with a total notional amount of **$1.92 billion** in swaps outstanding as of September 30, 2024[487](index=487&type=chunk)[489](index=489&type=chunk) [Item 4. Controls and Procedures](index=91&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with ongoing integration of the eOne business's internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[492](index=492&type=chunk) - The company is integrating the internal controls of the acquired eOne business, which began on December 27, 2023 No other material changes to internal control over financial reporting occurred during the quarter[493](index=493&type=chunk) [PART II — OTHER INFORMATION](index=92&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=92&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, none of which are expected to have a material adverse effect on its financial position or results - The company states it is not a party to any material pending legal proceedings that would have a material adverse effect on its financial condition[203](index=203&type=chunk)[496](index=496&type=chunk) [Item 1A. Risk Factors](index=92&type=section&id=Item%201A.%20Risk%20Factors) Highlights new material risks, primarily related to the proposed separation of Studio and STARZ businesses and a noteholder lawsuit challenging a prior transaction - A new risk factor concerns the proposed separation of the Studio and STARZ businesses, which is complex and may be delayed, not completed, or occur on less favorable terms than expected[499](index=499&type=chunk) - The company faces a lawsuit from holders of its 5.500% Senior Notes who allege a breach of the indenture following a note exchange The plaintiffs are seeking to nullify the transaction and obtain an injunction against the proposed separation[501](index=501&type=chunk)[502](index=502&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=93&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no common share repurchases during the quarter, with a remaining authorized amount under the share repurchase program - No common shares were repurchased by the company during the third quarter of 2024[505](index=505&type=chunk) - There is approximately **$179.9 million** remaining under the authorized share repurchase plan[504](index=504&type=chunk) ```