Company Separation and Structure - Starz Entertainment Corp. completed the separation from Old Lionsgate on May 6, 2025, resulting in two publicly traded companies: Starz Entertainment Corp. and Lionsgate Studios Holding Corp.[162] - The Starz Business primarily consists of Starz Networks, which distributes premium subscription video services in the U.S. and Canada, and international OTT services outside these regions[161]. Financial Performance - Total revenue for the three months ended September 30, 2025, decreased by $26.0 million, or 7.5%, to $320.9 million compared to $346.9 million in the same period of 2024[205]. - OTT revenue declined by $9.4 million, or 4.0%, from $232.2 million in 2024 to $222.8 million in 2025, while linear and other revenue decreased by $16.6 million, or 14.5%[205]. - Total revenue for the six months ended September 30, 2025, decreased by $53.9 million (7.8%) to $640.6 million, down from $694.5 million in 2024[238]. - OTT revenue declined by $22.7 million (4.9%) to $443.9 million for the six months ended September 30, 2025, compared to $466.6 million in 2024[238]. - Starz Networks Adjusted OIBDA decreased by $5.1 million to $21.8 million for the three months ended September 30, 2025, primarily due to lower revenue from fewer subscribers[236]. Subscriber Metrics - The number of total subscribers in the United States decreased from 17.83 million in September 2024 to 17.46 million in September 2025, a decline of 2.1%[209]. - Total Starz subscribers decreased from 23.20 million in September 2024 to 19.20 million in September 2025, reflecting a decline of 17.2%[209]. Expenses and Losses - Operating loss for the three months ended September 30, 2025, was $34.8 million, compared to an operating loss of $17.0 million in the same period of 2024, representing an increase in loss of 104.7%[205]. - Net loss from continuing operations increased by $22.0 million, or 72.8%, from $30.2 million in 2024 to $52.2 million in 2025[205]. - General and administrative expenses increased by $2.5 million, or 9.5%, from $26.3 million in 2024 to $28.8 million in 2025[205]. - General and administrative expenses rose by $3.0 million (13.2%) to $25.8 million for the three months ended September 30, 2025, from $22.8 million in 2024[220]. - Interest expense increased by $3.5 million to $15.8 million for the three months ended September 30, 2025, compared to the same period in 2024[223]. - Net loss from continuing operations for the three months ended September 30, 2025, was $52.6 million, up from a net loss of $30.6 million in the same period of 2024[225]. - Net loss from continuing operations for the six months ended September 30, 2025, was $95.1 million, compared to a net loss of $29.5 million in 2024[253]. Cash Flow and Debt Management - Cash and cash equivalents as of September 30, 2025, were $37.0 million, up from $17.8 million in 2024[258]. - Cash flow from operations, cash on hand, and availability under the $150 million senior secured revolving credit facility are expected to meet operational cash and debt service requirements for the next twelve months[270]. - Total future repayment of debt and other commitments under contractual obligations is projected to be $1,629.7 million, with $591.4 million due in the next 12 months[275]. - Net cash flows provided by operating activities for the six months ended September 30, 2025, were $39.3 million, an increase of $57.1 million compared to the same period in 2024[281]. - Cash provided by investing activities for the six months ended September 30, 2025, was $70.7 million, reflecting a net change of $160.7 million compared to 2024[282]. - Cash used in financing activities for the six months ended September 30, 2025, was $(90.8) million, a decrease of $184.2 million compared to the same period in 2024[283]. Restructuring and Strategic Review - During the six months ended September 30, 2024, Old Lionsgate executed a restructuring plan, exiting all international territories except Canada, India, and Southeast Asia, which was completed in May 2024[167]. - Starz continues to strategically review its content and performance as a standalone company following the separation[165]. Programming and Content Expenses - Programming amortization expenses decreased by $25.3 million, or 13.9%, from $182.1 million in 2024 to $156.8 million in 2025[205]. - The company premiered fewer original series in the three months ended September 30, 2025, contributing to decreased programming amortization[210]. - For the six months ended September 30, 2025, programming amortization decreased to $319.3 million from $330.0 million in 2024, a decline of $10.7 million or 3.2%[241]. Interest Rate Management - The company has entered into $150.0 million worth of pay-fixed interest rate swaps to manage interest rate risk, converting floating-rate borrowings to fixed-rate[289]. - The variable interest rate programming notes incur SOFR-based interest at a weighted average rate of approximately 8.8%[290]. - The average interest rate for Term Loan A is 7.2%[291]. - The fair value of Programming notes is $88.2 million with an average interest rate of 8.8%[291]. - The Production Loan has a fair value of $16.2 million and an average interest rate of 6.5%[291]. - The 5.5% Senior Notes have a fair value of $325.1 million, with a fixed interest rate of 5.5%[291].
Lions Gate Entertainment(LGF_A) - 2026 Q2 - Quarterly Report