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 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]. - 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]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $320.9 million, a decrease of $26.0 million or 7.5% compared to $346.9 million in the same period in 2024[205]. - OTT revenue decreased by $9.4 million or 4.0% to $222.8 million, while linear and other revenue declined by $16.6 million or 14.5% to $98.1 million[206]. - The total number of subscribers for Starz Networks decreased to 19.20 million as of September 30, 2025, down from 23.20 million a year earlier, reflecting a loss of 4.0 million subscribers[209]. - Operating loss increased to $34.8 million for the three months ended September 30, 2025, compared to a loss of $17.0 million in the same period in 2024, representing a 104.7% increase[206]. - Net loss from continuing operations was $52.6 million for the three months ended September 30, 2025, compared to a loss of $30.6 million in 2024, marking a 71.9% increase[206]. - Total revenue for the six months ended September 30, 2025, decreased by $53.9 million (7.8%) to $640.6 million 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]. - The company reported a net loss of $95.1 million for the six months ended September 30, 2025, compared to a net loss of $26.4 million in 2024, representing an increase of $68.7 million (260.2%)[238]. Expenses and Costs - A $10.0 million annual charge for corporate general and administrative expenses was allocated to the Starz Business under a Shared Services Agreement with Old Lionsgate[183]. - Advertising and marketing expenses increased by $2.9 million or 3.8% to $78.4 million for the three months ended September 30, 2025[206]. - General and administrative expenses rose by $2.5 million or 9.5% to $28.8 million for the same period[206]. - Advertising and marketing expenses increased by $3.2 million (4.3%) to $78.4 million for the three months ended September 30, 2025, compared to $75.2 million in the same period of 2024[216]. - 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]. - Depreciation and amortization expense increased by $6.7 million (16.3%) to $47.9 million for the three months ended September 30, 2025, compared to $41.2 million in 2024[221]. - General and administrative expenses increased by $6.3 million to $50.6 million, accounting for 9.0% of revenue, compared to $44.3 million or 8.0% of revenue in 2024[247]. - Share-based compensation expense totaled $11.3 million for the six months ended September 30, 2025, up from $9.6 million in 2024[248]. Debt and Financing - Starz 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, with total aggregate debt outstanding at $625.1 million[179]. - The company entered into a new credit agreement providing for a $300.0 million senior secured term loan and a $150.0 million senior secured revolving credit facility[180]. - Interest expense increased by $3.5 million (28.4%) to $15.8 million for the three months ended September 30, 2025, compared to $12.3 million in 2024[223]. - Interest expense increased by $5.9 million to $29.0 million for the six months ended September 30, 2025, primarily due to increased programming-related obligations[251]. - The company has entered into $150.0 million worth of pay-fixed interest rate swaps to manage interest rate risk[289]. - The variable interest rate programming notes incur SOFR-based interest at a weighted average rate of approximately 8.8%[290]. - As of September 30, 2025, the outstanding carrying value of Term Loan A is $300.0 million, and the 5.5% Senior Notes is $325.1 million[290]. - Total future repayment of debt and other commitments under contractual obligations is $1,629.7 million, with $591.4 million due in the next 12 months[275]. Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2025, were $37.0 million, an increase from $17.8 million in 2024[258]. - 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]. - Cash flow from operations, cash on hand, and availability under a $150 million undrawn revolving credit facility are expected to meet operational cash and debt service requirements for the next twelve months[270]. Content and Programming - Starz evaluated and strategically reviewed its content, cancelling certain programming in preparation for the separation[165]. - Programming amortization for the three months ended September 30, 2025, was $156.8 million, a decrease of $25.3 million or 13.9% from $182.1 million in 2024[206]. - For the six months ended September 30, 2025, programming amortization for Starz Networks was $319.3 million, a decrease of $10.7 million or 3.2% compared to $330.0 million in 2024[241]. - The estimated future cash outlay for impairment charges related to content is approximately $32.0 million through September 30, 2025[269]. - Programming related obligations included $88.2 million of programming notes and $16.2 million of production loans outstanding as of September 30, 2025[261]. Subscriber Metrics - The number of OTT subscribers in the United States increased to 12.29 million as of September 30, 2025, up from 11.62 million in 2024[209]. - 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]. - Adjusted OIBDA for Starz Networks was $55.2 million, a decrease of $29.0 million from $84.2 million in the same period of 2024[257].
Lions Gate Entertainment(LGF_B) - 2026 Q2 - Quarterly Report