Restructuring and Impairment - Starz Entertainment Corp. incurred impairment charges totaling $456.7 million from the inception of its restructuring plan through June 30, 2025[171]. - The company executed a restructuring plan to shut down its international LIONSGATE+ business, exiting all international territories except Canada, India, and Southeast Asia, completed in May 2024[172]. - The restructuring initiatives included the removal of certain programming from the Starz Platform, with further evaluations planned for future content[169]. - The company anticipates a net future cash outlay of approximately $45.0 million for impairment charges related to content commitments in exited territories[263]. Financial Performance - Total revenue for the quarter ended June 30, 2025, was $319.7 million, a decrease of $27.9 million or 8.0% compared to $347.6 million in the same quarter of 2024[214]. - OTT revenue decreased by $13.3 million (5.7%) to $221.1 million, while linear and other revenue declined by $14.6 million (12.9%) to $98.6 million[214]. - The total number of domestic subscribers decreased to 17.59 million from 18.93 million, with OTT subscribers at 12.18 million and linear subscribers at 5.41 million[217]. - Operating loss for the quarter was $26.9 million, a decline of $37.0 million compared to an operating income of $10.1 million in the prior year[214]. - Net loss from continuing operations was $42.5 million, a significant increase from a net income of $1.1 million in the same quarter of 2024[214]. - Starz Networks reported an Adjusted OIBDA of $33.4 million for the quarter ended June 30, 2025, down $23.9 million from $57.3 million in the same quarter of 2024[245]. Expenses and Costs - The Starz Business incurred a $10.0 million annual charge for corporate general and administrative expenses from Old Lionsgate under the Shared Services Agreement[189]. - General and administrative expenses increased by $2.5 million (9.4%) to $29.1 million, reflecting the costs associated with operating as an independent public company[214]. - Advertising and marketing expenses decreased by $19.3 million (23.3%) to $63.4 million, influenced by fewer new series launches during the period[214]. - Depreciation and amortization expense increased by $7.1 million to $48.7 million for the quarter ended June 30, 2025, up from $41.6 million in the same quarter of 2024[230]. - Interest expense rose by $2.4 million (22.2%) to $13.2 million, contributing to the overall financial challenges faced during the quarter[214]. Debt and Financing - Following the Separation, Starz Entertainment Corp. issued $389.9 million aggregate principal amount of new 5.5% exchange notes due 2029, reducing the outstanding principal amount of the 5.5% Senior Notes to $325.1 million[184]. - The company’s total aggregate debt outstanding, including $300.0 million outstanding per Term Loan A, was $625.1 million post-Separation[184]. - The company had $300.0 million of 5.5% senior notes outstanding as of June 30, 2025, down from $325.1 million in the same period of 2024[249]. - Total future repayment of debt and other commitments under contractual obligations is estimated at $1,820.7 million, with $814.5 million due in the next 12 months[270]. - The company’s programming related obligations commitments total $419.2 million, with $260.1 million expected to be repaid in the next 12 months[270]. Cash Flow and Liquidity - Cash and cash equivalents increased to $51.6 million as of June 30, 2025, compared to $17.8 million as of June 30, 2024[246]. - The company reported a net cash flow from operating activities of $65.4 million for the quarter ended June 30, 2025, compared to a cash outflow of $26.8 million for the same quarter in 2024, resulting in a net change of $92.2 million[274]. - The company had a significant increase in cash provided by investing activities, totaling $75.2 million for the quarter ended June 30, 2025, compared to a cash outflow of $71.6 million for the same quarter in 2024[275]. - Cash flow from operations, cash on hand, and borrowings under a $150 million senior secured revolving credit facility are expected to meet operational cash and debt service requirements for the next twelve months[264]. Interest Rate and Currency Management - The Company entered into $150.0 million worth of pay-fixed interest rate swaps to manage interest rate risk[286]. - The variable interest rate programming notes incur SOFR-based interest at a weighted average rate of approximately 8.8%[287]. - The average interest rate for Term Loan A is 7.3%[288]. - The average interest rate for programming notes is 8.8%[288]. - The Company has entered into forward foreign exchange contracts to hedge foreign currency exposures on future programming production costs[284]. - Interest rate swap contracts were entered into to mitigate the impact of interest rate changes on earnings and cash flows[285]. - Certain borrowings are at variable rates, exposing the Company to interest rate risk, which could decrease net income if rates increase[286]. Corporate Changes - Starz Entertainment Corp. will change its fiscal year end from March 31 to December 31, with the next fiscal year end on December 31, 2025[191]. - The company’s financial statements prior to the Separation were prepared on a carve-out basis, reflecting the combined historical financial position of the Starz Business[174]. - Starz Entertainment Corp. is considered the accounting spinnee or divested entity following the Separation from Old Lionsgate[168].
Lions Gate Entertainment(LGF_A) - 2026 Q1 - Quarterly Report