Revenue Contributions - For the fiscal year ended March 31, 2023, the contributions to the Company's consolidated revenues from its reporting segments included Motion Picture at 34.3%, Television Production at 45.7%, and Media Networks at 40.1%[31]. - The Media Networks segment's revenue is derived from the Starz Domestic Platform and LIONSGATE+, with Starz Networks contributing 90.3% of the segment's revenue[33]. - The Motion Picture segment generated revenue from various sources, including theatrical releases, home entertainment, and international licensing, with home entertainment accounting for 45.1% of the segment's revenue[33]. - The Company reported intersegment revenue eliminations of (20.1)% of consolidated revenues for the fiscal year[31]. Film and Television Production - The Company released twenty (20) films theatrically in the U.S. during the fiscal year ended March 31, 2023, utilizing a platform-agnostic approach to maximize distribution opportunities[37]. - The Company has a disciplined approach to theatrical production, aiming to mitigate financial risks while maximizing box office success through strategic co-financing and pre-licensing agreements[34]. - Theatrical releases included titles such as "John Wick: Chapter 4" and "Prey for the Devil," which were part of the Company's strategy to capitalize on new distribution windows[38]. - Lionsgate's television business produced nearly 80 shows across more than 35 networks in fiscal 2023, including popular series on STARZ and other platforms[58]. Subscriber Growth and Strategy - As of March 31, 2023, STARZ had 20.3 million subscribers, excluding promotional subscribers[69]. - As of March 31, 2023, Starz had 10.0 million subscribers, including 0.6 million OTT subscribers in international territories[92]. - The company continues to expand its STARZ offering in emerging Asian markets through direct-to-consumer launches and partnerships with telco and broadband providers[50]. - Starz's international strategy includes expanding LIONSGATE+ in nearly 50 countries, with a focus on premium content targeting all adults[93]. Licensing and Ancillary Revenues - Ancillary revenues are generated from licensing films and television content to non-theatrical venues, including military bases and hospitals[54]. - The Global Products and Experiences division aims to drive incremental revenue through licensing and launching live shows, location-based entertainment, and merchandise[48]. - Lionsgate signed an agreement with IMG for global consumer products representation, expanding its merchandise offerings[52]. - Starz has exclusive multiyear output licensing agreements with Lionsgate and Universal for theatrical releases starting January 1, 2022, and January 1, 2023, respectively[84]. Financial Management and Debt - As of March 31, 2023, the company had interest rate swap agreements to fix the interest rate on $1.7 billion of variable rate LIBOR-based debt[419]. - The applicable margin for loans under the revolving credit facility and Term Loan A is LIBOR plus 1.75%, while Term Loan B is LIBOR plus 2.25%[421]. - A quarter point increase in interest rates on variable interest film-related obligations would result in $3.6 million in additional costs capitalized to respective film or television assets[422]. - The company redeemed all $518.7 million of its 5.875% Senior Notes and $545.6 million of its 6.375% Senior Notes, incurring a prepayment premium of $32.6 million[420]. Interest Rate Exposure - A 1% increase in interest rates would decrease the fair value of the company's 5.500% Senior Notes by approximately $23.1 million[423]. - The company’s variable interest film-related obligations incur SOFR and LIBOR-based interest, with applicable margins ranging from 1.15% to 3.50% per annum[422]. - The average interest rate for Term Loan A is 6.61%, with a total outstanding amount of $428.2 million[424]. - The average interest rate for Term Loan B is 7.11%, with a total outstanding amount of $831.7 million[424]. Employee and Operational Initiatives - The company employs approximately 1,500 full-time employees as of May 23, 2023[106]. - Starz is committed to diversity and inclusion initiatives, including targeted recruitment and internship programs[107]. - The company is transitioning its primary uplink facilities to a third party starting in fall 2023[88]. Future Financial Considerations - Future repayments of film-related obligations may vary, indicating potential fluctuations in cash flow[425]. - The company has no intention of entering into financial derivative contracts other than to hedge specific financial risks[417]. - The company enters into forward foreign exchange contracts to hedge foreign currency exposures on future production expenses[418]. - The company’s financial instruments include both variable and fixed rates, reflecting a diverse debt structure[424].
Lions Gate Entertainment(LGF_A) - 2023 Q4 - Annual Report