STARZ domestic OTT subscribers up 700,000 in 1Q 2023

Lionsgate Reports Results For Fourth Quarter Fiscal 2023

SANTA MONICA, Calif. and VANCOUVER, BC — Lionsgate (NYSE: LGF.A, LGF.B) today reported fourth quarter (quarter ended March 31, 2023) revenue of $1.1 billion, operating loss of $49.6 million and net loss attributable to Lionsgate shareholders of $96.8 million or $0.42 diluted net loss per share on 229.2 million diluted weighted average common shares outstanding. Adjusted net income attributable to Lionsgate shareholders in the quarter was $49.2 million or $0.21 adjusted diluted net earnings per share on 233.2 million diluted weighted average common shares outstanding, with Adjusted OIBDA of $138.0 million.

Full year fiscal 2023 (fiscal year ended March 31, 2023) revenue was $3.85 billion, operating loss was $1.86 billion, and net loss attributable to Lionsgate shareholders was $2.01 billion, or a $8.82 diluted net loss per share on 227.9 million diluted weighted average common shares outstanding. Adjusted net income attributable to Lionsgate shareholders was $8.8 million or adjusted diluted EPS of $0.04 and Adjusted OIBDA was $358.1 million for fiscal 2023.

“I’m pleased to report that we ended the fiscal year with another strong quarter,” said Lionsgate CEO Jon Feltheimer. “Our content businesses performed well, our library again achieved record trailing 12-month revenue, and STARZ continues to be profitable while growing subscribers and executing successfully on its bundling and packaging strategy. We enter Fiscal 24 with strong earnings momentum and all the elements in place for strong growth.”

Revenue from Lionsgate’s 18,000-title film and television library increased to a record $884 million for the trailing 12 months. Lionsgate ended the quarter with $272 million in available cash and an undrawn revolving credit facility of $1.25 billion. During the quarter, the Company purchased $58 million of its bonds for $39 million, a $19 million reduction in its net debt. After the quarter, the Company purchased an additional $85 million of its bonds for $61 million, a further $24 million reduction in its net debt.

Studio backlog from the Motion Picture and Television Production segments was $1.5 billion at March 31, 2023.

Fourth Quarter Results

Segment Results

Media Networks segment revenue grew 2.3% to $389.0 million compared to $380.2 million in the prior year quarter. Segment revenue reflected growth in domestic streaming revenue and LIONSGATE+ revenue partially offset by lower domestic linear revenue. Segment profit grew over 100% to $73.3 million compared to segment profit of $33.0 million in the prior year quarter, driven by growth in LIONSGATE+ revenue, lower distribution and marketing expenses, and lower content expenses at LIONSGATE+ associated with international market closures. Total global OTT subscribers increased by 1.3 million in the sequential quarter on a pro forma basis (i.e. excluding subscribers in territories exited or to be exited), including growth of 700K domestic OTT subscribers, and total global subscribers increased by 1.0 million in the sequential quarter, including STARZPLAY Arabia, a non-consolidated equity method investee.

During the quarter, as part of the previously announced assessment and curation of the Media Networks cost structure and content strategy, the Company recognized an $85.5 million restructuring charge for content impairment in the LIONSGATE+ territories.

Subscriber Information
(units in millions at end of period)

                                      6/30/21   9/30/21  12/31/21   3/31/22   6/30/22
                                     --------  --------  --------  --------  --------
Starz Domestic
 Linear                                  10.2      10.4       9.9       9.5       9.2
 OTT                                      9.7      10.4      11.0      11.5      12.2
  Total                                  20.1      20.6      20.9      21.0      21.4
Starz International
 Linear                                   1.8       1.8       1.8       1.8       1.8
 OTT                                      5.2       5.7       6.7      11.0      12.2
  Total                                   7.0       7.5       8.5      12.8      14.0
Total Starz
 Linear                                  12.0      12.2      11.7      11.3      11.0
 OTT                                     14.9      16.1      17.7      22.5      24.4
  Total Starz                            27.1      28.1      29.4      33.8      35.4
Starz Play Arabia(1)                      1.9       1.8       2.0       2.0       1.9
Total (including Starz Play Arabia)      28.9      30.0      31.4      35.8      37.3

Subscribers by Platform:
 Linear Subscribers                      12.2      12.0      11.7      11.3      11.0
 OTT Subscribers(2)                      18.0      16.7      19.7      24.5      26.3
  Total Global Subscribers               28.9      30.0      31.4      35.8      37.3

Notes:
(1) Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.
(2) OTT Subscribers includes subscribers of STARZPLAY Arabia, as presented above.

The Studio Business, comprised of the Motion Picture and Television Production segments, reported revenue of $823.6 million, an increase of 25% from $658.3 million in the prior year quarter. Segment profit of $122.6 million increased by 48% from $82.6 million in the prior year quarter. The year-over-year increase in revenue and segment profit was driven primarily by the strength of the theatrical slate, multi-platform releases and record library revenue.

Motion Picture segment revenue increased by 85% to $532.1 million compared to $288.1 million in the prior year quarter. Segment profit increased by 89% to $93.8 million compared to $49.5 million in the prior year quarter. Motion Picture revenue and segment profit growth were driven by the theatrical releases of the hit films John Wick: Chapter Four, Jesus Revolution and Plane in the quarter.

Television Production segment revenue decreased to $291.5 million compared to $370.2 million in the prior year quarter. Segment profit decreased to $28.8 million compared to $33.1 million in the prior year quarter. The revenue and segment profit decreases were driven by the timing and mix of content deliveries relative to strong segment results in the prior year quarter.