Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lions Gate Entertainment Corp (LGF.B, Financial) reported a solid quarter with strong performance in both Motion Picture and Television businesses.
- The company announced successful mid-budget films, contributing to profitability and a strong fiscal '26 slate.
- Starz returned to domestic OTT subscriber growth and expanded its distribution footprint with new bundling deals.
- The company achieved a record $954 million in trailing 12-month library revenue, showcasing effective content strategies.
- Lions Gate Entertainment Corp (LGF.B) secured new exclusive pay deals with Starz and Amazon Prime Video, enhancing the value of its post-theatrical window.
Negative Points
- The company reported a loss of $0.09 per share for the quarter, indicating financial challenges.
- Media Networks' revenue was down year over year due to the exit from international markets.
- The company's leverage remains high, with consolidated Lionsgate leverage at 6.5 times.
- The separation of Lionsgate Studios and Starz has been delayed, requiring updated financials and further SEC review.
- The industry is still recovering from strikes and wildfires, impacting content production and delivery timelines.
Q & A Highlights
Q: Can you explain the expected increase in Studio segment profit for the fourth quarter and the factors contributing to it?
A: The fourth quarter is expected to be strong, driven by the film side, TV, and Starz. The Studio benefits from carryover of midsized films and post-strike lift in TV with series like Ghost and The Rookie. Starz sees growth in OTT subscribers and benefits from price increases and cost controls. The Amazon Prime deal impacts future fiscal years, not the current quarter. Studio leverage is expected to decrease with strong fourth-quarter performance and free cash flow improvements. (James Barge, CFO)
Q: What is the status of the separation process, and what are the remaining steps to complete it?
A: The separation is pending SEC review. Financial statements need updating through December 2024, which will take a few weeks. A shareholder meeting is expected in mid- to late-April, with separation shortly thereafter. The Amazon film output deal will significantly impact Studio profits starting in 2026. (James Barge, CFO)
Q: How does the Amazon relationship affect Starz and the Studio, and what are the benefits?
A: The Amazon deal allows Starz to get titles earlier, leveraging P&A and extending the Pay 1 window to 2028. This benefits Starz by aligning with its separation strategy and provides a win-win-win for Starz, the Studio, and Amazon. (Jeffrey Hirsch, CEO of Starz; Jon Feltheimer, CEO)
Q: What is the outlook for content production and deliveries post-strike, and how does eOne contribute to library revenue?
A: The TV market faces pressure post-strike and fires, but Lionsgate is adapting with cost control and leveraging IP like Twilight and John Wick. eOne's library, including The Rookie, contributes significantly to revenue, trending above budget. The film slate for fiscal '26 is strong, with increased theater attendance expected. (Kevin Beggs, Chairman, TV Group; Jon Feltheimer, CEO)
Q: How is Lionsgate managing costs, and what are the learnings from the Borderlands experience?
A: Talent costs remain high, but Lionsgate focuses on innovative deals and production cost management. The Borderlands experience highlighted the importance of matching screenplay, talent, and budget. The company has evolved its criteria for greenlighting projects to mitigate risks. (Jon Feltheimer, CEO; Adam Fogelson, Chairman, Motion Picture Group)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
