Restructuring and Impairment Charges - 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 company may incur additional content impairment charges in the future as it continues to evaluate its restructuring plan[171]. - The restructuring initiatives included the cancellation of certain ordered programming and the removal of programming with limited strategic purpose[169]. - The company expects to incur additional content impairment charges as part of ongoing business activities, with an estimated future cash outlay of approximately $45.0 million for impairment charges recorded through June 30, 2025[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 fell by $14.6 million (12.9%) to $98.6 million[214]. - The total number of domestic subscribers decreased from 18.93 million in June 2024 to 17.59 million in June 2025, reflecting a decline in both OTT and linear subscribers[217]. - Operating loss for the quarter was $26.9 million, a decrease 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 for the quarter, a significant decline from a net income of $1.1 million in the same quarter of 2024[214]. - The number of total Starz subscribers decreased from 23.90 million in June 2024 to 19.08 million in June 2025, with OTT subscribers dropping from 15.80 million to 12.86 million[217]. - Adjusted OIBDA for Starz Networks decreased by $23.9 million to $33.4 million for the quarter ended June 30, 2025, down from $57.3 million in the same quarter of 2024[245]. Expenses and Cash Flow - Advertising and marketing expenses decreased by $19.3 million (23.3%) to $63.4 million, reflecting a reduction in promotional activities[214]. - Starz Networks' general and administrative expenses increased by $2.5 million to $29.1 million for the quarter ended June 30, 2025, compared to $26.6 million in the same quarter of 2024, representing a 9.4% increase[226][229]. - Interest expense increased by $2.4 million (22.2%) to $13.2 million compared to the previous year[214]. - 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, an increase of $92.2 million compared to a net cash flow of $(26.8) million for the same quarter in 2024[274]. - Cash provided by investing activities for the quarter ended June 30, 2025, was $75.2 million, primarily due to cash provided from the LG Studios Business through the New Lionsgate revolving credit facility[275]. Debt and Financial Obligations - Starz Entertainment Corp. has a $300.0 million senior secured term loan credit facility and a $150.0 million senior secured revolving credit facility under the new Starz Credit Agreement[185]. - Total future repayment of debt and other commitments under contractual obligations is estimated at $1.82 billion, with $814.5 million due in the next 12 months[270]. - The company anticipates cash flow from operations, cash on hand, and borrowings under its $150 million revolving credit facility will be sufficient to meet operational cash and debt service requirements for the next twelve months[264]. - The company has significant cash requirements related to corporate debt and programming obligations, with programming related obligations commitments totaling $419.2 million[268]. - The company utilized $291.8 million in borrowings from Term Loan A during the quarter ended June 30, 2025, net of deferred financing costs[278]. Shareholder and Corporate Actions - Following the Separation, Starz Entertainment Corp. issued $389.9 million in new 5.5% exchange notes due 2029, reducing the principal amount of the existing 5.5% Senior Notes to $325.1 million[184]. - Starz Entertainment Corp. shareholders received 1.12 shares of both New Lionsgate and Starz Entertainment Corp. common shares for each Class A common share held prior to the Separation[167]. - The change in fiscal year end from March 31 to December 31 was approved by the Board of Directors, with the next fiscal year end set for December 31, 2025[191]. Interest Rate and Currency Management - The Company entered into $150.0 million worth of pay-fixed interest rate swaps to manage interest rate risk, converting floating-rate borrowings to fixed-rate borrowings[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 denominated in British Pounds[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].
Lions Gate Entertainment(LGF_B) - 2026 Q1 - Quarterly Report