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Item 7. Management’s Discussion and Analysis

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A discussion and analysis of our financial condition and results of operation for the fiscal year ended March 31, 2019 and year-to-year comparisons between fiscal 2020 and fiscal 2019 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020 , and is herein incorporated by reference.

Lions Gate Entertainment Corp.

(the “Company,” “Lionsgate,” "Lions Gate," “we,” “us” or “our”) is a global content leader whose films, television series, digital products and linear and over-the-top platforms reach next generation audiences around the world.

Lionsgate’s film and television properties support location-based entertainment venues and other branded attractions, as well as a video game business.

Lionsgate's content initiatives are backed by a nearly 17,000-title film and television library and delivered through a global sales and licensing infrastructure.

Combining the STARZ premium global subscription platform with world-class motion picture and television studio operations, Lions Gate Entertainment Corp.

(the “Company,” “Lionsgate,” "Lions Gate," “we,” “us” or “our”) brings a unique and varied portfolio of entertainment to consumers around the world.

Our film, television, subscription and location-based entertainment businesses are backed by a 17,000-title library and one of the largest collections of film and television franchises in the independent media space.

We classify our operations through three reporting segments:

Motion Picture, Television Production, and Media Networks (see further discussion below).

Impact of COVID-19

The impact of the ongoing COVID-19 global pandemic and measures to prevent its spread, and the resulting unprecedented economic uncertainty, are affecting our business in a number of ways.

To date, we have experienced early termination of the theatrical run of one of our films domestically and one of our films in the UK, delayed theatrical distribution of several films domestically and internationally, the delayed production of film and television content (resulting in changes in future release dates for some titles and series).

Our partners have also closed several location-based entertainment attractions based on our film and television properties.

We may not be able to accurately predict when theaters re-open, production resumes or if and when certain of our content will be released.

The full extent of the impact of the COVID-19 global pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict.

COVID-19 Global Pandemic

In fiscal 2021, the impacts associated with the ongoing COVID-19 global pandemic and measures to prevent its spread, and the resulting economic uncertainty, affected our business in a number of ways.

We experienced early termination and delays in theatrical distribution of our films, both domestically and internationally, as well as delays in the production of film and television content (resulting in continued changes in future release dates for some titles and series).

While we did begin (and, in certain instances, completed) production on a number of films and television series, and theaters began to reopen in 2021 in certain locations with reduced capacity, we are not able to accurately predict when theaters will re-open at scale, at what level consumers will return to movie theaters, when film production will fully resume, whether productions that have resumed will be paused again, the impact of incremental costs required to adhere to health and safety protocols, or if and when certain of our content will be released.

The full extent of impacts related to the COVID-19 global pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict.

Risk Factors for further details.

Conversely, television and streaming consumption around the globe has increased as well as home entertainment demand.

STARZ has experienced an increase in viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally.

This increase, however, may not be indicative of future results and growth may slow as governmental and other restrictions are relaxed, and as a result of the current and possible longer term negative economic impact of the pandemic.

In a number of instances, we have also been able to adapt to these new circumstances by releasing one of our theatrical films earlier on streaming platforms, completing post-production of one of our television series remotely and continuing the development of a number of our television series utilizing virtual writers’ rooms.

These changes in the way we operate may be helpful to partially offset some of the negative impacts from the pandemic, however the ultimate impact of these changes and the COVID-19 global pandemic cannot be predicted with certainty.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, including the worldwide closure of most theaters, international travel restrictions and the pausing of motion picture and television productions, during the fourth quarter of fiscal 2020 we have incurred $50.5 million in incremental costs which were expensed in the period.

These costs include $46.0 million reflected in direct operating expense, which include certain motion picture and television impairments and development charges associated with changes in performance expectations or the feasibility of completing the project, costs associated with the pausing of productions, including certain cast and crew costs and incremental costs associated with bad debt reserves.

In addition, these costs include $4.2 million reflected in distribution and marketing expense, which primarily consists of early marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit, and $0.3 million in restructuring and other costs primarily due to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic during this period.

Conversely, television and streaming consumption around the globe increased, as well as home entertainment demand.

STARZ experienced an increase in viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally.

However, it is too early to say whether this increase is indicative of future results and whether growth may slow as governmental and other restrictions are relaxed, and as a result of the current and possible longer term negative economic impact of the pandemic.

We continue, however, to adapt to these new circumstances.

For instance, we changed the release strategies of several of our theatrical films by releasing solely and/or earlier on streaming platforms, initially releasing on premium video-on-demand ("Premium VOD") market, or by licensing directly to streaming platforms.

We also began and completed post-production of several of our television series and continue the development of film properties and television series.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, including the worldwide closure of most theaters, international travel restrictions and the pausing of motion picture and television productions, during the fiscal years ended March 31, 2021 and 2020, we have incurred $70.5 million and $50.5 million, respectively, in incremental costs which were expensed in the period.

These costs include $50.6 million and $46.0 million, respectively, reflected in direct operating expense, which include incremental costs associated with film impairment due to changes in performance expectations, the pausing and restarting of productions including certain cast and crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic.

In addition, these costs include $16.9 million and $4.2 million, respectively, reflected in distribution and marketing expense, which primarily consists of contractual marketing spends for film releases and events that were canceled or delayed and will provide no economic benefit, and $3.0 million and $0.3 million in restructuring and other costs primarily due to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic during these periods.

We expect to incur additional incremental costs in future periods.

We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in our consolidated financial statements.

However, if the adverse economic impact and disruptions associated with the COVID-19 global pandemic continue to improve, we expect that the incremental costs we incur in future periods will decrease as compared to fiscal 2021.

We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this

time, and therefore no material amounts of insurance proceeds have been recorded in our consolidated financial statements.

See further discussion in the Results of Operations section below.

of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions as a result of the COVID-19 global pandemic.

The economic impact of the COVID-19 global pandemic and resulting societal changes will depend on numerous evolving factors that cannot be predicted with certainty.

There are a number of ways in which these uncertainties resulting from the COVID-19 global pandemic have impacted our current results of operations and could continue to impact our future results of operations.

These impacts include the incremental costs and losses discussed in the previous paragraph, lower revenues from the closure of movie theaters and postponement of theatrical releases, partially offset by lower theatrical production and marketing costs;

increased expenses associated with new health and safety protocols on motion picture and television productions;

changes in the timing of revenues for motion pictures and television productions associated with delays in production and delivery or release;

and while STARZ has experienced an increase in viewership of its content, future growth could be impacted by the timing of when productions will fully resume, and whether productions that have resumed will be paused again.

While we have experienced recent improvements in the United States with declining COVID-19 cases and increases in the number of people vaccinated, we expect that the ultimate impact of these disruptions, including the extent of any adverse impact on our business, results of operations and financial condition, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak (including the availability, effectiveness and/or public acceptance of any U.S.

Food and Drug Administration ("FDA")-approved COVID-19 vaccines), and global economic conditions related to the COVID-19 global pandemic.

All of these impacts could place limitations on our ability to execute on our business plan and materially and adversely affect our business, financial condition and results of operations.

We continue to monitor the situation, have actively implemented policies and procedures to address the situation, and may adjust our current policies and procedures as more information and guidance become available to address the evolving situation.

Accordingly, due to the evolving and uncertain nature of this situation, we are not able to estimate the full extent of the impact on our operating results, cash flows and financial position, particularly over the near to medium term.

We have implemented policies, procedures and protocols to address the situation and expect to continue to adjust our current policies and procedures as more information and guidance become available.

In addition, resurgences of COVID-19 in certain parts of the world, and the discovery of new variants of the virus, may result in the re-imposition of certain restrictions and may lead to more restrictions being implemented again to reduce the spread of COVID-19.

These measures could result in further interruptions to our operations.

Due to the evolving and uncertain nature of this situation, we are not able to estimate the full extent of the impact on our operating results, cash flows and financial position, particularly over the near to medium term.

Our revenues are derived from the Motion Picture, Television Production and Media Networks segments, as described below.

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Our Motion Picture segment includes revenues derived from the following:

• Theatrical.

Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by us directly in the U.S.

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In addition, we have revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, we share in the rental or sales revenues generated by the platform on a title-by-title basis.

• Television.

Television revenues are primarily derived from the licensing of our theatrical productions and acquired films to the linear pay, basic cable and free television markets.

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Our Television Production segment includes revenues derived from the following:

• Television.

Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television and syndication) of scripted and unscripted series, television movies, mini-series and non-fiction programming.

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Media Networks

Our Media Networks segment includes revenues derived from the following product lines:

Our Media Networks segment includes revenues derived from the following:

• Starz Networks.

Starz Networks’ revenues are derived from the domestic distribution of our STARZ branded premium subscription video services pursuant to affiliation agreements with U.S.

multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers and telecommunications companies, and over-the-top ("OTT") (collectively, “Distributors”), and on a direct-to-consumer basis.

Starz Networks’ revenues are derived from the domestic distribution of our STARZ branded premium subscription video services through over-the-top ("OTT") platforms and U.S.

multichannel video programming distributors (“MVPDs”) including cable operators, satellite television providers and telecommunications companies (collectively, “Distributors”) and on a direct-to-consumer basis through the Starz App.

• STARZPLAY International.

STARZPLAY International revenues are primarily derived from OTT distribution of the Company's STARZ branded premium subscription video services internationally.

STARZPLAY International revenues are primarily derived from OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S.

• Other Streaming Services.

Other Streaming Services revenues are derived primarily from our majority owned premium Spanish language streaming services business, Pantaya.

Other Streaming Services revenues are derived primarily from our formerly majority owned premium Spanish language streaming services business, Pantaya, which includes subscriber based streaming revenue and other distribution revenue.

We sold our interest in Pantaya on March 31, 2021, for approximately $123.6 million in cash, subject to certain customary adjustments pursuant to the terms of the agreement.

Under the terms of the purchase agreement, control of Pantaya transferred to Hemisphere Media Group on March 31, 2021, with the cash consideration transferred on April 1, 2021.

See Note 2 to our consolidated financial statements for further information.

Our primary operating expenses include direct operating expenses, distribution and marketing expenses and general and administration expenses.

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General and administration expenses include salaries and other overhead.

CRITICAL ACCOUNTING POLICIES

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are more fully described in Note 1 to our consolidated financial statements.

As disclosed in Note 1 to our consolidated financial statements, the preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The application of the following accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management.

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In some cases, changes in the accounting estimates are reasonably likely to occur from period to period.

In addition, the evolving and uncertain nature of the COVID-19 global pandemic could materially impact our estimates, particularly those that require consideration of forecasted financial information, in the near to medium term.

Accordingly, actual results could differ materially from our estimates.

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We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.

For a summary of all of our accounting policies, including the accounting policies discussed below, see Note 1 to our consolidated financial statements.

Accounting for Films and Television Programs and Program Rights.

We capitalize costs of production and acquisition, including financing costs and production overhead, to investment in films and television programs.

These costs for an

individual film or television program are amortized and participation and residual costs are accrued to direct operating expenses in the proportion that current year’s revenues bear to management’s estimates of the ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of such film or television program.

Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture.

We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management's most difficult, subjective and complex judgments.

Accounting for Films and Television Programs and Licensed Program Rights

On April 1, 2020, we adopted, on a prospective basis, new Financial Accounting Standards Board ("FASB") guidance on the accounting for costs of films and episodic television series.

Under that new guidance, capitalized costs for films or television program are amortized and tested for impairment based on whether the content is predominantly monetized individually or as a group.

See Note 1 to our consolidated financial statements for further information.

Film and Television Programs Monetized Individually.

For films and television programs monetized individually, film cost amortization, participations and residuals expense are based on management's estimates.

Costs of acquiring and producing films and television programs and of acquired libraries that are monetized individually are amortized and estimated liabilities for participations and residuals costs are accrued using the individual-film-forecast method, based on the ratio of the current period's revenues to management’s estimated remaining total gross revenues to be earned ("ultimate revenue").

Management's judgment is required in estimating ultimate revenue and the costs to be incurred throughout the life of each film or television program.

Management estimates ultimate revenues based on historical experience with similar titles or the title genre, the general public appeal of the cast, audience test results when available, actual performance (when available) at the box office or in markets currently being exploited, and other factors such as the quality and acceptance of motion pictures or programs that our competitors release into the marketplace at or near the same time, critical reviews, general economic conditions and other tangible and intangible factors, many of which we do not control and which may change.

For motion pictures, ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture.

The most sensitive factor affecting our estimate of ultimate revenues for a film intended for theatrical release is the film's theatrical performance, as subsequent revenues from the licensing and sale in other markets have historically been highly correlated to its theatrical performance.

After a film's release, our estimates of revenue from succeeding markets are revised based on historical relationships and an analysis of current market trends.

For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later.

For previously released film or television programs acquired as part of a library, ultimate revenue includes estimates over a period not to exceed twenty years from the date of acquisition.

The most sensitive factors affecting our estimate of ultimate revenues for a television series is whether the series will be ordered for a subsequent season and estimates of revenue in secondary markets other than the initial license fee.

The initial estimate of ultimate revenue may include estimates of revenues outside of the initial license window (i.e., international, home entertainment and other distribution platforms) and are based on historical experience for similar programs (genre, duration, etc.) based on the estimated number of seasons.

We regularly monitor the performance of each season, and evaluate whether impairment indicators are present (i.e., low ratings, cancellations or the season is not reordered), and based upon our review, we revise our estimates as needed and perform an impairment assessment if impairment indicators are present (see below).

For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition.

Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results.

In addition, in the normal course of our business, some films and titles are more successful or less successful than anticipated.

Management regularly reviews and revises when necessary its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value.

Management estimates the ultimate revenue based on experience with similar titles or title genre, the general public appeal of the cast, audience test results when available, actual performance (when available) at the box office or in markets currently being exploited, and other factors such as the quality and acceptance of motion pictures or programs that our competitors release into the marketplace at or near the same time, critical reviews, general economic conditions and other tangible and intangible factors, many of which we do not control and which may change.

An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically results in an impairment requiring a write-down of the film cost to the title’s fair value.

These write-downs are included in amortization expense within direct operating expenses in our consolidated statements of operations.

Investment in films and television programs is stated at the lower of amortized cost or estimated fair value.

The valuation of investment in films and television programs, whether released or unreleased, is reviewed on a title-by-title basis, when an event or change in circumstances indicates that the fair value of a film or television program is less than its unamortized cost.

In determining the fair value of our films and television programs, we generally employ a discounted cash flows ("DCF") methodology with assumptions for cash flows (a Level 3 fair value measurement, see Note 11 to our consolidated financial statements).

Key inputs employed in the DCF methodology include estimates of a film's ultimate revenue as discussed above, and costs as well as a discount rate.

The discount rate utilized in the DCF analysis is based on our weighted average cost of capital plus a risk premium representing the risk associated with producing a particular film or television program.

The fair value of any film costs associated with a film or television program that we plan to abandon is zero.

Additional amortization is recorded in the amount by which the unamortized costs exceed the estimated fair value of the film or television program.

Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in our future revenue estimates.

Program rights include content licensed from third parties and content produced by and licensed from the Television Production segment.

Program rights for films and television programs (including original series) exhibited by the Media Networks segment are generally amortized on a title-by-title or episode-by-episode basis over the anticipated number of exhibitions or license period.

We estimate the number of exhibitions based on the number of exhibitions allowed in the agreement and the expected usage of the content.

Certain other program rights are amortized to expense on a straight-line basis over the respective lives of the agreements.

Programming rights may include rights to more than one exploitation window under its output and library agreements.

See further discussion below under Impairment Assessment .

Film and Television Programs Monetized as a Group.

Licensed programming rights may include rights to more than one exploitation window under the Company's output and library agreements.

For films with multiple windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of each window which generally results in the majority of the cost allocated to the first window on newer releases.

Certain license agreements and productions may include additional ancillary rights in addition to the pay television rights.

The cost of the Media Networks’ third-party licensed content and produced content is allocated between the pay television market distributed by the Media Networks’ segment and the ancillary revenue markets (e.g., home video, digital platforms, international television, etc.) based on the estimated relative fair values of these markets.

Our estimates of fair value for the pay television and ancillary markets and windows of exploitation involve uncertainty and management judgment.

Programming costs vary due to the number of airings and cost of our original series, the number of films licensed and the cost per film paid under our output and library programming agreements.

The cost of the Media Networks' segments produced original content generally represents the license fees charged from the Television Production segment which are eliminated in consolidation.

The amount associated with the pay television market is reclassified to program rights when the program is aired and the portion attributable to the ancillary markets remains in investment in films and television programs.

The cost of the Media Networks’ third-party licensed content is allocated between the pay television market distributed by the Media Networks’ segment and the ancillary revenue markets (e.g., home video, digital platforms, international television, etc.) distributed by the Television Production segment based on the estimated relative fair values of these markets.

Estimates of fair value for the pay television and ancillary markets involve uncertainty as well as estimates of ultimate revenue.

All the costs of programming produced by the Television Production segment are included in investment in films and television programs and program rights, net and are classified as long term.

Amounts included in

program rights, other than internally produced programming, that are expected to be amortized within a year from the balance sheet date are classified as short-term.

Licensed content is stated at the lower of amortized cost or net realizable value, and produced original content is stated at the lower of amortized cost or estimated fair value, as discussed above.

Changes in management’s estimate of the anticipated exhibitions of films and original series on our networks could result in the earlier recognition of our programming costs than anticipated.

Conversely, scheduled exhibitions may not capture the appropriate usage of the program rights in current periods which would lead to the write-off of additional program rights in future periods and may have a significant impact on our future results of operations and our financial position.

The cost of program rights for films and television programs (including original series) exhibited by the Media Networks segment are generally amortized on an accelerated or straight-line basis based on the anticipated number of exhibitions or expected and historical viewership patterns or the license period on a title-by-title or episode-by-episode basis.

The number of exhibitions is estimated based on the number of exhibitions allowed in the agreement (if specified) and the expected usage of the content.

Participations and residuals are expensed in line with the amortization of production costs.

Changes in management’s estimate of the anticipated exhibitions and viewership patterns of films and original series on our networks could result in the earlier recognition of our programming costs than anticipated.

Conversely, scheduled exhibitions and expected viewership patterns may not capture the appropriate usage of the program rights in current periods which would lead to the write-off of additional program rights in future periods and may have a significant impact on our future results of operations and our financial position.

Impairment Assessment.

A film group or individual film or television program is evaluated for impairment when events or changes in circumstances indicate that the fair value of an individual film or film group is less than its unamortized cost.

If the result of the impairment test indicates that the carrying value exceeds the estimated fair value, an impairment charge will then be recorded for the amount of the difference.

Estimate of Fair Value.

For content that is predominantly monetized individually (primarily investment in film and television programs related to the Motion Picture and Television Production segments), the fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title.

For motion pictures intended for theatrical release, the discounted cash flow analysis used in the impairment evaluation prior to theatrical release is subjective as key inputs include estimates of future anticipated revenues, estimates of box office performance, which may differ from future actual results.

These estimates are based in part on the historical performance of similar films, test audience results when available, information regarding competing film releases, and critic reviews.

See further discussion of Valuation Assumptions below.

For content that is predominantly monetized as a group (primarily licensed program rights in the Media Networks segment and internally produced programming, as discussed above), the fair value is determined based on the present value of the discounted cash flows of the group using the lowest level for which identifiable cash flows are independent of other produced and licensed content.

The Company's film groups are generally aligned along the Company's networks and digital content offerings domestically (i.e., Starz Networks and Other Streaming Services) and by territory or groups of territories internationally, wherein content assets are shared across the various territories and therefore, the territory or group of territories is the film group.

Valuation Assumptions.

The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 11 to our consolidated financial statements).

The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program or film group.

The fair value of any film costs associated with a film or television program that management plans to abandon is zero.

Revenue Recognition.

Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.

Our Media Networks segment generates revenue primarily from the distribution of our STARZ branded premium subscription video services and from our majority owned premium Spanish language streaming services business, Pantaya.

Our Media Networks segment generates revenue primarily from the distribution of our STARZ branded premium subscription video services and, through March 31, 2021, from our formerly majority owned premium Spanish language streaming services business, Pantaya, which includes subscriber based streaming revenue and other distribution revenue.

We sold our interest in Pantaya on March 31, 2021, see Note 2 to our consolidated financial statements for further information.

Our content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties.

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Revenue from the sale of physical discs (DVDs, Blu-ray or 4K Ultra HD), referred to as "Packaged Media", in the retail market, net of an allowance for estimated returns and other allowances, is recognized on the later of receipt by the customer or “street date” (when it is available for sale by the customer).

Revenue from commissions are recognized as such services are provided.

Media Networks revenues may be based on a fixed fee, subject to nominal annual escalations, or a variable fee (i.e., a fee based on number of subscribers who receive our networks or other factors).

Media Networks programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor.

The variable distribution fee arrangements represent sales or usage based royalties and are recognized over the period of such sales or usage by the Company's distributor, which is the same period that the content is provided to the distributor.

Payments to distributors for marketing support costs for which Starz receives a discrete benefit are recorded as distribution and marketing costs, and payments to distributors for which Starz receives no discrete benefit are recorded as a reduction of revenue.

Sales Returns Allowance.

Revenues are recorded net of estimated returns and other allowances.

We estimate reserves for Packaged Media returns based on previous returns experience, point-of-sale data available from certain retailers, current

economic trends, and projected future sales of the title to the consumer based on the actual performance of similar titles on a title-by-title basis in each of the Packaged Media businesses.

We estimate reserves for Packaged Media returns based on previous returns experience, point-of-sale data available from certain retailers, current economic trends, and projected future sales of the title to the consumer based on the actual performance of similar titles on a title-by-title basis in each of the Packaged Media businesses.

Factors affecting actual returns include, among other factors, limited retail shelf space at various times of the year, success of advertising or other sales promotions, and the near term release of competing titles.

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An incremental change of 1% in our estimated sales returns rate (i.e., provisions for returns divided by gross sales of related product) for home entertainment products would have had an impact of approximately $2.0 million, $3.6 million and $4.2 million on our total revenue in the fiscal years ended March 31, 2021, 2020, and 2019, respectively.

Revenue from commissions are recognized as such services are provided.

Media Networks revenues may be based on a fixed fee, subject to nominal annual escalations, or a variable fee (i.e., a fee based on number of subscribers who receive our networks or other factors).

Media Networks programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor.

Goodwill and Indefinite-Lived Intangibles.

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Goodwill Impairment Assessment:

For fiscal 2019, due primarily to the decline in the market price of our common shares, we performed a quantitative goodwill impairment assessment for all of our reporting units.

Our quantitative goodwill impairment analysis of our reporting units indicated that the fair value of the reporting units exceeded their respective carrying values.

However, our Television business reporting unit was considered at risk for impairment due to relatively small changes in certain key assumptions that could cause an impairment of goodwill.

As a result, during fiscal 2020 we monitored all of our reporting units for changes in the business environment that could impact recoverability.

For the second quarter of fiscal 2020, due primarily to the sustained decline in the market price of our common shares, we updated our quantitative impairment assessment for three (Television, Media Networks and Motion Picture) of our reporting units.

The DCF analysis of fair values were determined primarily by discounting estimated future cash flows, which included perpetual nominal growth rates ranging from 1.5% to 4.0%, at a weighted average cost of capital (discount rate) ranging from 10% to 14%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.

Based on our quantitative impairment assessment for the second quarter of fiscal 2020, we determined that there were no goodwill impairments;

however, two of our reporting units (Television and Media Networks) were at risk for impairment due to relatively small changes in certain key assumptions that could cause an impairment of goodwill.

For our annual goodwill impairment test for fiscal 2020, due to the decline in the market price of our common shares in the fourth quarter ended March 31, 2020, which was significantly impacted by the economic uncertainty and market volatility resulting from the COVID-19 global pandemic, we updated our quantitative impairment assessment for all of our reporting units as of March 31, 2020.

For our annual goodwill impairment test for fiscal 2020, due to the decline in the market price of our common shares in the fourth quarter ended March 31, 2020, which was significantly impacted by the economic uncertainty and market volatility resulting from the COVID-19 global pandemic, we performed a quantitative impairment assessment for all of our reporting units as of March 31, 2020.

The DCF analysis of fair values were determined primarily by discounting estimated future cash flows, which included perpetual nominal growth rates ranging from 1.5% to 4.0%, at a weighted average cost of capital (discount rate) ranging from 11.5% to 15%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.

Based on our annual quantitative impairment assessment for fiscal 2020, we determined that two of our reporting units (Television and Media Networks) were at risk for impairment.

Based on our annual quantitative impairment assessment for fiscal 2020, we determined that two of our reporting units (Television and Media Networks) were at risk for impairment due to relatively small changes in certain key assumptions that could cause an impairment of goodwill.

We evaluated the sensitivity of our most critical assumptions used in the fair value analysis of our Television and Media Networks reporting units, including the discount rate, perpetual nominal growth rate and annual revenue growth rates.

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We determined that a decrease in annual revenue growth by 0.5% for our Television business reporting unit and 0.3% for our Media Networks reporting unit, and holding film cost spend and amortization the same and maintaining other expenses at the same percentage of revenue, the results would have triggered an impairment.

As a result of our quantitative assessment for fiscal 2020, we monitored all of our reporting units for changes in the business environment that could impact recoverability during fiscal 2021.

For our annual goodwill impairment test for fiscal 2021, due to the increase in the market price of our common shares since our most recent quantitative impairment assessment at March 31, 2020, the performance of the Television and Media Networks reporting units in fiscal 2021, and the improvement of overall economic conditions associated with the COVID-19 pandemic, we performed a qualitative assessment for all reporting units.

This assessment included consideration of, but not limited to, the results of our most recent quantitative impairment test, consideration of macroeconomic conditions, industry and market conditions, performance and current and projected cash flows of our reporting units, and changes in our share price.

Based upon our qualitative assessment, we concluded that it was more-likely-than-not that the fair value of our reporting units was greater than their carrying value.

Management will continue to monitor all of its reporting units for changes in the business environment that could impact the recoverability in future periods.

The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities.

Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include the duration of the COVID-19 global pandemic, its impact on the global economy and the creation and consumption of our content, and the timing of when production can resume and theaters can re-open;

adverse macroeconomic conditions;

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The amount of our customer relationship asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization recorded since the date of the Starz acquisition.

Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 17

Through the first quarter of fiscal 2020, we amortized the Starz Traditional Affiliate customer relationships discussed above on a straight-line basis over 17 years.

Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 17 years.

Through the first quarter of fiscal 2020 (see below), we amortized the Starz Traditional Affiliate customer relationships discussed above on a straight-line basis over 17 years.

Amortizable intangible assets are tested for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of the asset may not be recoverable.

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The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset.

The impairment test is performed at the lowest level of cash flows associated with the asset.

The impairment test is performed at the lowest level of cash flows

associated with the asset.

If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable.

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The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each reporting period for indicators of possible impairments or a change in the useful life or method of amortization of our finite-lived intangible assets.

Due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, in the second quarter of the fiscal year ended March 31, 2020, the Company determined it was appropriate to change the pattern of amortization of its Traditional Affiliate customer relationship intangible asset.

Accordingly, beginning in the second quarter of the fiscal year ended March 31, 2020, the Company has adopted an amortization method that reflects amortization in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset.

Due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, in the second quarter of fiscal 2020, the Company determined it was appropriate to change the pattern of amortization of its Traditional Affiliate customer relationship intangible asset.

Accordingly, beginning in the second quarter of fiscal 2020, the Company has adopted an amortization method that reflects amortization in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset.

This method results in greater amortization in the earlier years of the estimated useful life of the asset than the latter years.

See Note 1 to our consolidated financial statements under the Finite-Lived Intangible Assets section for further details.

During the fiscal year ended March 31, 2020, due to industry factors discussed in the preceding paragraph and the economic uncertainty from the COVID-19 global pandemic, we performed an impairment analysis of our amortizable intangible assets.

During fiscal 2021 and fiscal 2020, due to industry factors discussed in the preceding paragraph and the economic uncertainty from the COVID-19 global pandemic, we performed an impairment analysis of our amortizable intangible assets.

The impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset.

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Should the revenues from our Traditional Affiliate relationships decline more than the assumed attrition rates used in our current estimates, either as a result of decreases in subscriber rates or changes of the terms of our renewals of our Traditional Affiliate contracts, we may have indicators of impairment which could result in an impairment of our customer relationships intangible assets, or we may need to further shorten the useful life or adopt a more accelerated method of amortization both of which would increase the amount of amortization expense we record.

Sales Returns Allowance.

Revenues are recorded net of estimated returns and other allowances.

We believe that our estimates have been materially accurate in the past;

however, due to the judgment involved in establishing reserves, we may have adjustments to our historical estimates in the future.

Our estimate of future returns affects reported revenue and operating income.

If we underestimate the impact of future returns in a particular period, then we may record less revenue in later periods when returns exceed the estimated amounts.

If we overestimate the impact of future returns in a particular period, then we may record additional revenue in later periods when returns are less than estimated.

An incremental change of 1% in our estimated sales returns rate (i.e., provisions for returns divided by gross sales of related product) for home entertainment products would have had an impact of approximately $3.6 million, $4.2 million and $6.0 million on our total revenue in the fiscal years ended March 31, 2020 , 2019, and 2018, respectively.

Income Taxes.

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However, the assessment as to whether there will be sufficient taxable income in a jurisdiction to realize our net deferred tax assets in that jurisdiction is an estimate which could change in the future depending primarily upon the actual performance of our Company.

We will be required to continually evaluate the more likely than not assessment that our net deferred tax assets will be realized, and if operating results deteriorate in a particular jurisdiction, we may need to record a valuation allowance for

all or a portion of our deferred tax assets through a charge to our income tax provision.

As of March 31, 2021, we have a valuation allowance of $350.9 million against certain U.S.

and foreign deferred tax assets that may not be realized on a more likely than not basis.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, and has resulted in significant changes to the U.S.

federal corporate tax law.

Additionally, several state jurisdictions have enacted legislations to comply with federal changes and some foreign jurisdictions have enacted similar tax incentive legislations.

As the enactment dates of these laws are before the end of the reporting period, we have considered the applicable tax law changes to our current and deferred income tax expense as of March 31, 2020 and concluded that the impact was immaterial.

We are continuing to analyze the impact of these tax law changes to future periods.

Our effective tax rates differ from the federal statutory rate and are affected by many factors, including the overall level of pre-tax income (loss), the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, any changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, further interpretation and legislative guidance regarding the new CARES Act, changes in valuation allowances against our deferred tax assets, tax planning strategies available to us and other discrete items.

Consolidation and Other Investments.

We consolidate entities in which we own more than 50% of the voting common stock and control operations and also variable interest entities for which we are the primary beneficiary.

Investments in nonconsolidated affiliates in which we own more than 20% of the voting common stock or otherwise exercise significant influence over operating and financial policies, but not control of the nonconsolidated affiliate, are accounted for using the equity method of accounting.

Investments in nonconsolidated affiliates in which we own less than 20% of the voting common stock, or do not exercise significant influence over operating and financial policies, are recorded at fair value using quoted market prices if the investment has a readily determinable fair value.

If an equity investment's fair value is not readily determinable, we will recognize it at cost less any impairment, adjusted for observable price changes in orderly transactions in the investees' securities that are identical or similar to our investments in the investee.

The unrealized gains and losses and the adjustments related to the observable price changes are recognized in net income (loss).

We regularly review our investments for impairment, including when the carrying value of an investment exceeds its market value and whether the decline in value is other-than-temporary.

For investments accounted for using the equity method of accounting or equity investments without a readily determinable fair value, we evaluate information available (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists.

Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of our investment.

The estimation of fair value and whether an other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions.

As of March 31, 2020, our investments included investments in equity method investees of $34.3 million , and other investments of $6.0 million .

If we determine that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings.

Factors that are considered by us in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis, (ii) the financial condition of the investee, and (iii) our intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

Business Combinations.

We account for our business combinations under the acquisition method of accounting.

Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value.

Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities.

Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

Our effective tax rates differ from the federal statutory rate and are affected by many factors, including the overall level of pre-tax income (loss), the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, any changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, changes in valuation allowances against our deferred tax assets, tax planning strategies available to us and other discrete items.

Recent Accounting Pronouncements

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The following table sets forth our consolidated results of operations for the fiscal years ended March 31, 2021 and 2020:

Increase (Decrease)

March 31, Increase (Decrease)

2021 2020 Amount Percent

(Amounts in millions)

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Restructuring and other 24.7 24.3 0.4 1.6 %

Gain on sale of Pantaya (44.1) — (44.1) n/a

Total expenses 3,100.9 3,887.2 (786.3) (20.2) %

Operating income

Operating income 170.6 2.8 167.8 nm

Interest expense (181.5) (191.3) 9.8 (5.1) %

Shareholder litigation settlements

Interest and other income 5.8 8.8 (3.0) (34.1) %

Other expense (6.7) (11.1) 4.4 (39.6) %

Gain (loss) on extinguishment of debt

Loss on investments

Gain on extinguishment of debt — 5.4 (5.4) (100.0) %

Gain (loss) on investments 0.5 (0.5) 1.0 (200.0) %

Equity interests loss (6.1) (17.2) 11.1 (64.5) %

Loss before income taxes (17.4) (203.1) 185.7 (91.4) %

Income tax (provision) benefit

Income tax provision (17.1) (3.3) (13.8) nm

Net loss (34.5) (206.4) 171.9 (83.3) %

Net loss attributable to noncontrolling interest 15.6 18.0 (2.4) (13.3) %

Net loss attributable to Lions Gate Entertainment Corp.

Consolidated revenues increased in fiscal 2020 , due to increases in Motion Picture, Television Production and to a lesser extent, Media Networks revenues.

These increases were partially offset by increases in intersegment eliminations due to higher Television Production revenues (a substantial portion of intersegment eliminations relates to Television Production revenue) for licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.

Motion Picture revenue increased due to higher theatrical and home entertainment revenue primarily driven by the performance of the films released from our Fiscal 2020 Theatrical Slate, offset partially by lower television and other revenue.

Media Networks revenue increased due to increased revenue across STARZPLAY International and Other Streaming Services, offset by a slight decrease from Starz Networks.

shareholders $ (18.9) $ (188.4) $ 169.5 (90.0) %

_______________________

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Consolidated revenues decreased in fiscal 2021, primarily due to decreases in Motion Picture and Television Production revenues, which were negatively impacted by the COVID-19 global pandemic, partially offset by increased Media Networks revenues and lower intersegment eliminations associated with lower Television Production revenues (a substantial portion of intersegment eliminations relates to Television Production revenue) for licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.

With theaters mostly closed during fiscal 2021 due to circumstances associated with the COVID-19 global pandemic, Motion Picture revenue decreased primarily due to lower theatrical, international revenue, and home entertainment packaged media revenue due to fewer theatrical and home entertainment releases in fiscal 2021, and to a lesser extent, lower television and other revenue.

Television Production revenue decreased due to lower domestic television revenue with decreased intersegment revenues from the licensing of Starz original series and fewer television episodes delivered in fiscal 2021 largely because of the pausing of productions associated with the COVID-19 global pandemic.

The decrease in Television Production revenue was also, to a lesser extent, due to lower other revenue.

These decreases were partially offset by an increase in home entertainment digital media revenue and international revenue.

The increase in Media Networks revenue was due to increased revenue across STARZPLAY International, Starz Networks and Other Streaming Services.

See further discussion in the Segment Results of Operations section below.

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2021 2020 Increase (Decrease)

% of Segment Revenues

Amount % of Segment Revenues Amount % of Segment Revenues Amount Percent

(Amounts in millions)

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Media Networks 677.5 43.4 680.2 45.7 (2.7) (0.4) %

COVID-19 related costs

Intersegment eliminations

COVID-19 related charges 50.6 nm 46.0 nm 4.6 n/a

Other 3.0 nm 85.6 nm (82.6) (96.5) %

Intersegment eliminations (190.0) nm (275.8) nm 85.8 (31.1) %

$ 1,725.9 52.8 % $ 2,226.1 57.2 % $ (500.2) (22.5) %

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Direct operating expenses increased in fiscal 2020 , due to increases from Media Networks and Motion Picture, as well as COVID-19 related costs, and certain programming and content charges included in "other" (as further described below).

The increase in Television Production direct operating expense were more than offset by the increase in intersegment eliminations which primarily relate to Television Production direct operating costs associated with licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.

Media Networks direct operating expense increased due to higher programming amortization at STARZPLAY International, which was partially offset by lower direct operating expense at Starz Networks, which included a benefit of $39.7 million associated with the modification of a content licensing arrangement net of amortization for related changes in content availability and air dates.

Motion Picture direct operating expense increased due to increased Motion Picture revenue and higher investment-in-film write-downs.

Direct operating expenses decreased in fiscal 2021, primarily due to lower Motion Picture and Television Production revenue and lower other direct operating expense related to certain programming and content charges in fiscal 2020 (as further described below), and to a lesser extent, slightly lower Media Networks direct operating expense.

These decreases were partially offset by an increase from COVID-19 related charges (as further described below).

The decrease in Television Production direct operating expense was partially offset by the decrease in intersegment eliminations, which primarily relate to Television Production direct operating costs associated with licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.

The decrease from Media Networks was due to lower programming amortization at STARZPLAY International, which was partially offset by a benefit at Starz Networks in fiscal 2020 of $39.7 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates.

See further discussion in the Segment Results of Operations section below.

COVID-19 Related Costs.

As a direct result of the COVID-19 global pandemic, during the fourth quarter of fiscal 2020 we have incurred $46.0 million in incremental costs which were expensed in the period, reflected in consolidated direct operating expense, and are excluded from segment direct operating expense.

These costs include certain motion picture and television impairments and development charges associated with changes in performance expectations or the feasibility of completing the project, and costs associated with the pausing of productions, including certain cast and crew costs and incremental costs associated with bad debt reserves.

COVID-19 Related Charges.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, during fiscal 2021 and fiscal 2020, we incurred $50.6 million and $46.0 million in incremental costs which were expensed in the periods which are included in consolidated direct operating expense and are excluded from segment direct operating expense.

These costs include incremental costs associated with film impairment due to changes in performance expectations, the pausing and restarting of productions including certain cast and crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic.

We expect to incur additional incremental costs in future periods.

A majority of these costs relate to our Motion Picture segment.

We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in our consolidated financial statements.

During fiscal 2020 and 2019, in connection with recent management changes, we implemented changes to our programming and broadcasting strategy including programming acquired or produced under prior management.

As a result, we recorded certain programming and content charges of $76.5 million and $35.1 million in fiscal 2020 and 2019, respectively, which are excluded from segment operating results but included in direct operating expense in the consolidated statement of operations and reflected in the "other" line item above.

If the adverse economic impact and disruptions associated with the COVID-19 global pandemic continue to improve, we expect that the incremental costs we incur in future periods will decrease as compared to fiscal 2021.

We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore no material amounts of insurance proceeds have been recorded in our consolidated financial statements.

During fiscal 2020, in connection with management changes, we implemented changes to our programming and broadcasting strategy including programming acquired or produced under prior management.

As a result, we recorded certain programming and content charges of $76.5 million in fiscal 2020, which are excluded from segment operating results but included in direct operating expense in the consolidated statement of operations and reflected in the "other" line item above.

In addition, "other" direct operating expenses in the table above includes the amortization of the non-cash fair value adjustments on film and television assets associated with the application of purchase accounting related to recent acquisitions.

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Distribution and marketing expenses by segment were as follows for the fiscal years ended March 31, 2021 and 2020:

Year Ended March 31,

Increase (Decrease)

Year Ended March 31, Increase (Decrease)

2021 2020 Amount Percent

(Amounts in millions)

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Media Networks 501.8 426.1 75.7 17.8 %

COVID-19 related costs

theatrical P&A expense included in Motion Picture distribution and marketing expense

COVID-19 related charges 16.9 4.2 12.7 n/a

Other 0.6 0.5 0.1 20.0 %

$ 719.3 $ 1,008.7 $ (289.4) (28.7) %

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Distribution and marketing expenses increased in fiscal 2020 primarily due to increased Media Networks distribution and marketing expense across Starz Networks, STARZPLAY International and Other Streaming Services, and to a lesser extent, increased Motion Picture theatrical P&A associated with an increased number of theatrical releases, partially offset by a slight decrease in Television Production distribution and marketing expense.

theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 71.2 $ 351.8 $ (280.6) (79.8) %

Distribution and marketing expenses decreased in fiscal 2021 due to a decrease in Motion Picture theatrical P&A, international and home entertainment distribution and marketing expense, partially offset by increased Media Networks distribution and marketing expense and COVID-19 related charges (as further described below).

The decrease in Motion Picture theatrical P&A and international distribution and marketing expense was primarily impacted by the COVID-19 global pandemic and associated closure of theaters.

The increase in Media Networks distribution and marketing expense was driven by increases at STARZPLAY International and Starz Networks.

See further discussion in the Segment Results of Operations section below.

As a direct result of the COVID-19 global pandemic, during the fourth quarter of fiscal 2020 we have incurred $4.2 million in costs primarily related to early marketing spends for film releases and events that have been canceled or delayed and thus will provide no economic benefit.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, during fiscal 2021 and fiscal 2020 we have incurred $16.9 million and $4.2 million, respectively, in costs primarily related to contractual marketing spends for film releases and events that were canceled or delayed and thus will provide no economic benefit.

These charges are excluded from segment operating results.

We expect to incur additional incremental costs in future periods.

General and Administrative Expenses.

General and administrative expenses by segment were as follows for the fiscal years ended March 31, 2021 and 2020:

Increase (Decrease)

% of Revenues

March 31, Increase (Decrease)

2021 % of Revenues 2020 % of Revenues Amount Percent

(Amounts in millions)

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Media Networks 93.9 87.5 6.4 7.3 %

Corporate 113.7 99.7 14.0 14.0 %

356.5 10.9% 329.3 8.5% 27.2 8.3 %

Share-based compensation expense 82.9 48.5 34.4 70.9 %

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Total general and administrative expenses $ 486.6 14.9% $ 430.4 11.1% $ 56.2 13.1 %

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General and administrative expenses decreased in fiscal 2020 , resulting from decreases in Media Networks, Corporate, Television Production, and Motion Picture general and administrative expenses and a slight decrease in share-based compensation expense, partially offset by increased purchase accounting and related adjustments.

General and administrative expenses increased in fiscal 2021, resulting from an increase in share-based compensation expense, as further described below, and increases in Corporate, Television Production, Media Networks, and Motion Picture general and administrative expenses, partially offset by decreased purchase accounting and related adjustments.

See further discussion in the Segment Results of Operations section below.

Corporate general and administrative expenses decreased $4.5 million , or 4.3% , primarily due to decreases in professional fees.

The decrease in share-based compensation expense included in general and administrative expense in the year ended March 31, 2020 , as compared to the year ended March 31, 2019 is primarily due to lower compensation expense associated with the replacement of Starz share-based payment awards.

Additionally, the decrease in share-based compensation expense is due to lower fair values associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved.

Corporate general and administrative expenses increased $14.0 million, or 14.0%, primarily due to an increase in cash based incentive compensation partially offset by a decrease in professional fees.

The increase in share-based compensation expense included in general and administrative expense in the fiscal year ended March 31, 2021, as compared to the fiscal year ended March 31, 2020 is primarily due to higher fair values associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved.

Additionally, the increase in share-based compensation expense is due to an increase in the number of share-based payment awards incurring expense in fiscal 2021, as compared to fiscal 2020.

The following table presents share-based compensation expense by financial statement line item:

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Purchase accounting and related adjustments represent the charge for the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense.

The increase reflects amounts related to 3 Arts Entertainment, as fiscal 2019 included purchase accounting and related adjustments from the acquisition date of May 29, 2018, as compared to a full year in fiscal 2020.

Purchase accounting and related adjustments decreased $5.4 million, or 10.3%, primarily due to the expense associated with the earned distributions related to 3 Arts Entertainment.

Depreciation and Amortization Expense.

Depreciation and amortization of $197.7 million for fiscal 2020 increased $34.3 million from $163.4 million in fiscal 2019 , due to a change in the amortization method for the Starz Traditional Affiliate customer relationships in the second quarter of fiscal 2020, which resulted in an increase to amortization expense of $38.7 million in fiscal 2020.

See Note 1 to our consolidated financial statements under the Finite-Lived Intangible Assets section for further details.

Depreciation and amortization of $188.5 million for fiscal 2021 decreased $9.2 million from $197.7 million in fiscal 2020.

Restructuring and Other.

Restructuring and other decreased $53.7 million in fiscal 2020 as compared to fiscal 2019, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable.

Restructuring and other increased $0.4 million in fiscal 2021 as compared to fiscal 2020, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable.

Restructuring and other costs were as follows for the fiscal year ended March 31, 2021 and 2020 (see Note 16 to our consolidated financial statements):

Year Ended March 31,

Increase (Decrease)

Year Ended March 31, Increase (Decrease)

2021 2020 Amount Percent

(Amounts in millions)

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Severance (1)

Accelerated vesting on equity awards (see Note 14)

Cash $ 14.8 $ 12.3 $ 2.5 20.3 %

Accelerated vesting on equity awards (see Note 14) 3.5 0.6 2.9 nm

Total severance costs 18.3 12.9 5.4 41.9 %

COVID-19 related costs (2)

COVID-19 related charges (2)

3.0 0.3 2.7 nm

Transaction and related costs (3)

3.4 11.1 (7.7) (69.4) %

Severance costs in the fiscal years ended March 31, 2020 and 2019 were primarily related to restructuring activities in connection with recent acquisitions, and other cost-saving initiatives.

During the year ended March 31, 2020, the Company has incurred certain costs including costs primarily related to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic.

Transaction and related costs in the fiscal years ended March 31, 2020 and 2019 reflect transaction, integration and legal costs incurred associated with certain strategic transactions and legal matters.

In fiscal 2019, these costs were primarily related to the legal fees associated with the Starz class action lawsuits and other matters and, to a lesser extent, costs related to the acquisition of 3 Arts Entertainment and other strategic transactions.

$ 24.7 $ 24.3 $ 0.4 1.6 %

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(1) Severance costs in the fiscal years ended March 31, 2021 and 2020 were primarily related to restructuring activities in connection with cost-saving initiatives and recent acquisitions.

(2) During the years ended March 31, 2021 and 2020, the Company has incurred certain costs including costs primarily related to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic.

(3) Transaction and related costs in the fiscal years ended March 31, 2021 and 2020 reflect transaction, integration and legal costs incurred associated with certain strategic transactions, restructuring activities and legal matters.

Gain on Sale of Pantaya.

Gain on sale of Pantaya of $44.1 million for fiscal 2021 represents the gain before income taxes on the sale of the Company's 75% majority interest in Pantaya on March 31, 2021.

This gain amount is net of $69.0 million of goodwill allocated from the Media Networks segment as required under the applicable goodwill accounting guidance.

Pantaya was previously reflected in the Company's Media Networks segment (see the Segment Results of Operations section below).

See Note 2 to our consolidated financial statements.

Interest Expense.

Interest expense of $191.3 million in fiscal 2020 decreased $7.6 million from fiscal 2019 .

Interest expense of $181.5 million in fiscal 2021 decreased $9.8 million from fiscal 2020 due to lower interest expense on the term loans partially offset by an increase in amortization of debt financing costs and other non-cash interest.

The decrease in interest expense on the term loans is primarily due to reductions of the outstanding principal amounts from required principal payments during fiscal 2020 and fiscal 2021, and the lower LIBOR rate in fiscal 2021.

The increase in amortization of debt financing costs and other non-cash interest is due to the amortization of unrealized losses in accumulated other comprehensive loss related to de-designated interest rate swaps which are being amortized to interest expense (see Note 16 to our consolidated financial statements).

The following table sets forth the components of interest expense for the fiscal years ended March 31, 2021 and 2020:

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Revolving credit facility $ 4.2 $ 6.4

Term loans 38.1 76.0

5.875% Senior Notes 30.5 30.6

6.375% Senior Notes 34.8 35.1

Amortization of debt discount and financing costs

Interest on dissenting shareholders' liability (3)

Amortization of financing costs and other non-cash interest (2)

Total interest expense $ 181.5 $ 191.3

______________________

The 6.375% Senior Notes were issued in February 2019, therefore fiscal 2020 includes a full year of interest expense, as compared to fiscal 2019, which includes approximately two months of interest expense.

Amounts include interest expense related to the Company's interest rate swap agreements (see Note 19 to our consolidated financial statements), finance lease obligations and other interest.

Represents interest accrued in connection with the previously outstanding dissenting shareholders' liability associated with the Starz Merger.

Shareholder Litigation Settlements.

Shareholder litigation settlements of $114.1 million in fiscal 2019 was related to previous shareholder litigation in connection with the Starz merger and includes the following:

(i) $54.8 million for the net

expense recorded for the settlement of the fiduciary litigation (representing the settlement amount of $92.5 million , net of aggregate insurance reimbursement of $37.8 million , and (ii) $59.3 million related to the appraisal litigation, representing the amount by which the settlement amount of approximately $964 million exceeded the previously accrued (at date of acquisition) dissenting shareholders' liability plus interest through the date agreed in the settlement.

There were no comparable charges in fiscal 2020 .

(1) Amounts include payments associated with the Company's interest rate swaps (see Note 19 to our consolidated financial statements).

(2) Amounts include the amortization of unrealized losses in accumulated other comprehensive loss related to de-designated interest rate swaps which are being amortized to interest expense (see Note 19 to our consolidated financial statements).

Other Expense.

Other expense of $11.1 million for fiscal 2020 compared to other expense of $4.7 million for fiscal 2019 , and represented the loss related to our monetization of accounts receivable programs (see Note 20 to our consolidated financial statements).

Gain (Loss) on Extinguishment of Debt.

Gain on extinguishment of debt of $5.4 million in fiscal 2020 related primarily to the repurchase of a portion of the 5.875% Senior Notes, 6.375% Senior Notes and Term Loan B.

This compared to a loss of $1.9 million in fiscal 2019 related to early repayments on the Term Loan B.

Other expense of $6.7 million for fiscal 2021 compared to other expense of $11.1 million for fiscal 2020, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 20 to our consolidated financial statements).

Gain on Extinguishment of Debt.

Gain on extinguishment of debt of $5.4 million in fiscal 2020 related primarily to the repurchase of a portion of the 5.875% Senior Notes, 6.375% Senior Notes and Term Loan B, with no comparable gain in fiscal 2021.

See Note 7 to our consolidated financial statements.

Loss on Investments.

Loss on investments of $0.5 million for fiscal 2020 compared to loss on investments of $87.6 million for fiscal 2019 .

The loss on investments in fiscal 2020 represents unrealized losses on equity securities.

The loss on investments in fiscal 2019 included a loss of $44.6 million in connection with the March 15, 2019 sale of our 50.0% equity interest in Pop, and other-than-temporary impairments on our investments of $36.8 million .

Gain (Loss) on Investments.

Gain on investments of $0.5 million for fiscal 2021 included a gain on sale of equity securities without readily determinable fair values of $4.6 million and unrealized gains on equity securities of $1.6 million, which were offset by impairments of $5.7 million on equity method investments and equity securities without readily determinable fair values that were written down to their estimated fair value.

This compared to loss on investments of $0.5 million for fiscal 2020 which represented unrealized losses on equity securities.

Equity Interests Loss.

Equity interests loss of $17.2 million in fiscal 2020 compared to equity interests loss of $42.9 million in fiscal 2019 .

In fiscal 2019, the equity interest loss included equity losses from Pop (50.0% equity interest sold in March 2019), and higher equity losses from other equity investees.

Income Tax (Provision) Benefit.

We had an income tax provision of $3.3 million in fiscal 2020 , compared to a benefit of $8.5 million in fiscal 2019 .

Equity interests loss of $6.1 million in fiscal 2021 compared to equity interests loss of $17.2 million in fiscal 2020 due to lower losses from our equity method investees.

Income Tax Provision.

We had an income tax provision of $17.1 million in fiscal 2021, compared to a provision of $3.3 million in fiscal 2020.

Our income tax provision differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and certain minimum taxes and foreign withholding taxes.

Our income tax provision for fiscal 2020 was also impacted by the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

In fiscal 2019, our income tax benefit was also impacted by the tax deductions generated by our capital structure, which included certain foreign affiliate dividends in our Canadian jurisdiction that could be received without being subject to tax under Canadian tax law.

However, our income tax benefit for the fiscal year ended March 31, 2019 was offset by valuation allowances against certain U.S.

and foreign deferred tax assets, certain minimum taxes imposed by the Tax Act, and the nondeductible portion of our shareholder litigation settlements.

Our income tax provision for fiscal 2021 and fiscal 2020 was also impacted by the change in uncertain tax benefits due to the expiration of statutory limitations and additional settlements with tax authorities.

At March 31, 2021, we had U.S.

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credit carryforwards related to foreign taxes paid of approximately $77.3 million to offset future federal income taxes that will expire beginning in 2022.

Net Income (Loss) Attributable to Lions Gate Entertainment Corp.

Net Loss Attributable to Lions Gate Entertainment Corp.

Shareholders.

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Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration expenses.

and content strategy, and, when applicable, certain costs related to the COVID-19 global pandemic, and purchase accounting and related adjustments.

Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and associated programming and content strategy, and, when applicable, certain charges related to the COVID-19 global pandemic, and purchase accounting and related adjustments.

The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses.

The reconciliation of segment profit to the Company's consolidated income (loss) before income taxes is presented in Note 17 to the consolidated financial statements.

The reconciliation of segment profit to the Company's consolidated loss before income taxes is presented in Note 17 to the consolidated financial statements.

Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the fiscal years ended March 31, 2021 and 2020:

Increase (Decrease)

March 31, Increase (Decrease)

2021 2020 Amount Percent

(Amounts in millions)

Motion Picture Segment:

Revenue $ 1,081.1 $ 1,670.9 $ (589.8) (35.3) %

Direct operating expense 508.3 810.2 (301.9) (37.3) %

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Segment profit $ 295.6 $ 208.7 $ 86.9 41.6 %

theatrical P&A expense included in distribution and marketing expense

theatrical P&A and Premium VOD expense included in distribution and marketing expense $ 71.2 $ 351.8 $ (280.6) (79.8) %

Direct operating expense as a percentage of revenue 47.0 % 48.5 %

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Other Film (2)

Feature Film (1)

Total Feature Film (1)

Other Film (2)

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Motion Picture Revenue

Theatrical $ 8.8 $ 3.2 $ 12.0 $ 326.1 $ 29.5 $ 355.6 $ (343.6)

Home Entertainment

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Total Home Entertainment 307.8 293.2 601.0 430.8 274.0 704.8 (103.8)

Television 179.3 50.9 230.2 189.8 57.3 247.1 (16.9)

International 135.4 81.6 217.0 255.2 85.8 341.0 (124.0)

Other 9.6 11.3 20.9 19.8 2.6 22.4 (1.5)

$ 640.9 $ 440.2 $ 1,081.1 $ 1,221.7 $ 449.2 $ 1,670.9 $ (589.8)

____________________

(1) Feature Film:

Includes theatrical releases through our Lionsgate and Summit Entertainment film labels, which includes films developed and produced in-house, films co-developed and co-produced and films acquired from third parties.

(2) Other Film:

Includes direct-to-DVD motion pictures, acquired and licensed brands, third-party library product and ancillary-driven platform theatrical releases through our specialty films distribution labels including Lionsgate Premiere, through Good Universe, and with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.

Theatrical revenue increased $139.8 million , or 64.8% , in fiscal 2020 as compared to fiscal 2019 , primarily driven by the performance of the Feature Films released in fiscal 2020, and included significant revenue from Knives Out, John Wick:

With theaters mostly closed during fiscal 2021 due to circumstances associated with the COVID-19 global pandemic, theatrical revenue decreased $343.6 million, or 96.6%, in fiscal 2021 as compared to fiscal 2020.

Fiscal 2020 included significant revenue from Knives Out, John Wick:

Chapter 3 - Parabellum, Angel Has Fallen, Midway and Rambo:

In addition, fiscal 2020 included the release of 12 Feature Films, as compared to 11 Feature Films released in fiscal 2019.

This increase was partially offset by a decrease from Other Film driven by theatrical revenue in the prior year period from Overboard and Extinction .

As a result of the COVID-19 global pandemic, in March 2020 we had to prematurely terminate the theatrical run of our Feature Film, I Still Believe , which was released on March 13, 2020 and had its theatrical run suspended on March 17, 2020.

Accordingly, theatrical revenues for fiscal 2020 were impacted by this early termination.

See further discussion below on the impact of COVID-19.

Home entertainment revenue increased $112.6 million , or 19.0% , in fiscal 2020 , as compared to fiscal 2019 , driven by an increase of $165.2 million from our Feature Films, which was partially offset by a decrease of $52.6 million from Other Film.

The increase in Feature Film home entertainment revenue was due to the performance of our Fiscal 2020 Theatrical Slate, and in particular, significant digital and packaged media revenues from John Wick:

Last Blood, while fiscal 2021 included revenue from the limited theatrical release of Chaos Walking and Fatale.

Home entertainment revenue decreased $103.8 million, or 14.7%, in fiscal 2021, as compared to fiscal 2020, due to a decrease of $117.4 million in packaged media revenues as a result of fewer home entertainment releases from our fiscal 2021 theatrical slate in our Feature Film category due to circumstances associated with the COVID-19 global pandemic, and decreases in our Other Films category.

The decrease in packaged media revenues was partially offset by increased digital media revenues of $13.6 million, which included increases in our Other Films category from The Secret:

Dare to Dream and Force of Nature.

Digital media revenue in our Feature Film category in fiscal 2021 included the Premium VOD release of Antebellum, and the initial release on a streaming platform of Run and from our fiscal 2020 theatrical slate revenues from I Still Believe and Knives Out.

Digital media revenue in our Feature Film category in fiscal 2020 included significant digital media revenue from John Wick:

Chapter 3 - Parabellum.

The increase was also, to a lesser extent, due to a greater number of Feature Films released on home entertainment.

The decrease in revenue from Other Film was primarily due to home entertainment revenue in fiscal 2019 from I Can Only Imagine, Overboard, and Hostiles .

Television revenue decreased $27.3 million , or 9.9% , in fiscal 2020 , as compared to fiscal 2019 , due primarily to fewer Feature Films from our 2019 Theatrical Slates with television windows opening in fiscal 2020 as compared to the number of Feature Films from our Fiscal 2018 Theatrical Slate with television windows opening in fiscal 2019.

Other revenue decreased $18.5 million , or 45.2% , in fiscal 2020 , as compared to fiscal 2019 , due to Feature Film revenues from an other ancillary market licensing arrangement in fiscal 2019.

We expect that Motion Picture segment revenues will decrease in fiscal 2021 due to delays in domestic and international theatrical distribution and production as a result of the closure of theaters and paused productions throughout the U.S., Canada, and worldwide due to COVID-19.

The extent of the impact on Motion Picture segment revenues, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, global economic conditions, the ability for theaters to re-open at a scale to attract motion pictures and the rate of consumers' return to the theater.

Television revenue decreased $16.9 million, or 6.8%, in fiscal 2021, as compared to fiscal 2020, due to fewer television windows opening (and revenue recognized) than in fiscal 2020.

International revenue decreased $124.0 million, or 36.4%, in fiscal 2021, as compared to fiscal 2020 due to lower revenue from our fiscal 2021 theatrical slate, which had limited new theatrical releases due to circumstances associated with the COVID-19 global pandemic, as compared to the revenue generated from our fiscal 2020 theatrical slate in fiscal 2020, which included significant international revenue from John Wick:

Chapter 3 - Parabellum and Knives Out.

If the adverse economic impact and disruptions associated with the COVID-19 global pandemic continue to improve, we currently expect that Motion Picture segment revenues will increase in fiscal 2022 as compared to fiscal 2021.

The extent of the increase, if any, to Motion Picture segment revenues, will depend on, among other things, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the continued effectiveness of actions taken to contain or mitigate the outbreak (including the availability, effectiveness and/or public acceptance of any FDA-approved COVID-19 vaccines), potential resurgences of COVID-19 in certain parts of the world, and the discovery of new variants of the virus which could result in the re-imposition of certain restrictions and may lead to more restrictions being implemented again to reduce the spread of COVID-19, general global economic conditions, the rate at which theaters are able to re-open at scale, the rate of consumers' return to the theaters, and the impact of a potentially crowded marketplace from movies which are awaiting theatrical release in the market.

The evolving and uncertain nature of the situation could result in further interruptions to our operations, including delays in domestic and international theatrical distribution and production and the pausing of productions, which could impact Motion Picture segment revenues.

Direct Operating Expense.

The increase in direct operating expenses is due to an increase in Motion Picture revenues, and higher investment-in-film write-downs, which were partially offset by decreased direct operating expenses as a percentage of motion pictures revenue.

Investment in film write-downs included in Motion Picture segment direct operating expense for the period increased to $42.1 million in fiscal 2020, as compared to approximately $22.9 million in fiscal 2019.

The decrease in direct operating expenses as a percentage of motion picture revenue was driven by the change in the mix of titles and product categories generating revenue in fiscal 2020 as compared to fiscal 2019, and in particular, the Fiscal 2020 Theatrical Slate releases in fiscal 2020 (John Wick:

Chapter 3 - Parabellum, Knives Out, Angel Has Fallen, Midway ) as compared to the Fiscal 2019 Theatrical Slate releases in fiscal 2019 ( The Spy Who Dumped Me, Robin Hood ).

The decrease in direct operating expenses is due to a decrease in Motion Picture revenues.

The small decrease in direct operating expenses as a percentage of motion picture revenue was driven by the change in the mix of titles and product categories generating revenue in fiscal 2021 as compared to fiscal 2020.

In particular, the decrease was impacted by the lower amortization rate of the fiscal 2016 and prior theatrical slate titles and acquired and licensed libraries generating revenue in fiscal 2021 as compared to fiscal 2020.

Investment in film write-downs included in Motion Picture segment direct operating expense for fiscal 2021 were $19.4 million, as compared to $42.1 million in fiscal 2020.

Distribution and Marketing Expense.

The increase in distribution and marketing expense in fiscal 2020 is primarily due to higher theatrical P&A spending on a greater number of Feature Film theatrical releases.

In fiscal 2020 , approximately $10.8 million of P&A was incurred in advance for films to be released in fiscal 2021, such as Antebellum, Spiral, Barb and Star Go to Visa Del Mar, and Run.

In fiscal 2019 , approximately $31.6 million of P&A was incurred in advance for films to be released in fiscal 2020, such as Hellboy, Long Shot and John Wick:

The decrease in distribution and marketing expense in fiscal 2021 is primarily due to lower theatrical P&A and international distribution and marketing expense associated with the closure of theaters during fiscal 2021 due to circumstances associated with the COVID-19 global pandemic, and to a lesser extent, lower home entertainment distribution and marketing expense.

Theatrical P&A and Premium VOD expense in fiscal 2021 includes expense associated with the release of Antebellum, Chaos Walking, Fatale, and Barb and Star Go to Vista Del Mar.

In fiscal 2021, approximately $7.2 million of P&A and Premium VOD expense was incurred in advance for films to be released in fiscal 2022.

In fiscal 2020, approximately $10.8 million of P&A and Premium VOD expense was incurred in advance for films to be released in fiscal 2021, such as Antebellum, Spiral, Barb and Star Go to Visa Del Mar, and Run .

Gross Contribution.

Gross contribution of the Motion Picture segment for fiscal 2020 increased as compared to fiscal 2019 , primarily due to increased Motion Picture revenue and lower direct operating expenses as a percentage of Motion Picture revenue.

While Motion Picture revenue declined during the period as discussed above, gross contribution of the Motion Picture segment for fiscal 2021 increased $88.3 million, or 28.2%, as compared to fiscal 2020 due to lower Motion Picture distribution and marketing expense as a percentage of Motion Picture revenue, and lower direct operating expense as a percentage of Motion Picture revenue, as discussed above.

General and Administrative Expense.

General and administrative expenses of the Motion Picture segment decreased $0.8 million , or 0.8% , primarily due to decreases in professional fees.

General and administrative expenses of the Motion Picture segment increased $1.4 million, or 1.3%, due to increases in cash based incentive compensation, partially offset by decreases in salaries and wages associated with restructuring initiatives, and decreases in rent, facility, and travel and related costs.

Television Production

The table below sets forth Television Production gross contribution and segment profit for the fiscal years ended March 31, 2021 and 2020:

Increase (Decrease)

March 31, Increase (Decrease)

2021 2020 Amount Percent

(Amounts in millions)

Television Production Segment:

Revenue $ 831.8 $ 1,001.3 $ (169.5) (16.9) %

Direct operating expense 676.5 879.9 (203.4) (23.1) %

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Gross contribution as a percentage of revenue 15.2 % 9.1 %

The table below sets forth Television Production revenue and the changes in revenue by media for the fiscal years ended March 31, 2020 and 2019 :

Increase (Decrease)

Television Production

(Amounts in millions)

The table below sets forth Television Production revenue and changes in revenue by media for the fiscal years ended March 31, 2021 and 2020:

March 31, Increase (Decrease)

2021 2020 Amount Percent

Television Production (Amounts in millions)

Television $ 474.0 $ 715.7 $ (241.7) (33.8) %

International 164.5 152.7 11.8 7.7 %

Home Entertainment Revenue

Digital 127.1 57.4 69.7 121.4 %

Packaged Media 5.7 3.4 2.3 67.6 %

Total Home Entertainment Revenue 132.8 60.8 72.0 118.4 %

Other 60.5 72.1 (11.6) (16.1) %

$ 831.8 $ 1,001.3 $ (169.5) (16.9) %

The primary component of Television Production revenue is domestic television revenue.

Domestic television revenue increased in fiscal 2020 as compared to fiscal 2019 , due to an increase in syndicated licensing revenue, and increased intersegment revenues from the licensing of Starz original series.

These increases were offset partially by decreased revenue from fewer television episodes delivered, and decreased license fees from unscripted television programs in fiscal 2020 as compared to fiscal 2019.

International revenue in fiscal 2020 increased $16.7 million , or 12.3% , as compared to fiscal 2019 , primarily due to revenue from Mythic Quest:

Raven's Banquet Season 1, Orange Is the New Black Season 7, Dear White People Season 3, and Greenleaf Season 4, and intersegment revenue from STARZPLAY International from the Starz original series The Rook Season 1, Power Season 6, Vida Season 2, and The Spanish Princess Season 1 in fiscal 2020.

This compared to revenue in fiscal 2019 from Orange Is the New Black Seasons 6 & 7, Step Up:

High Water Season 2, Greenleaf Season 3, Ash vs.

Evil Dead Season 3, and Power Season 5.

Home entertainment revenue in fiscal 2020 decreased $13.7 million , or 18.4% , as compared to fiscal 2019 , primarily driven by decreases from digital media revenue in fiscal 2019 for The Royals, and the Starz original series, The Missing Season 2 and Black Sails Season 4, which were partially offset by increased digital media revenue in fiscal 2020 for Are We There Yet .

Other revenue increased in fiscal 2020 as compared to fiscal 2019 due to a full year of revenue in fiscal 2020 from 3 Arts Entertainment, which compared to revenue in fiscal 2019 from the acquisition date of May 29, 2018 to March 31, 2019.

Revenue of 3 Arts Entertainment was negatively impacted by a small amount in our fiscal year ended March 31, 2020 as a result of the COVID-19 global pandemic, and will be more significantly impacted in the fiscal year ended March 31, 2021, the extent of which will depend on when film and television productions and releases return to pre COVID-19 levels.

The extent of the impact of the COVID-19 global pandemic on Television Production revenues, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions.

Domestic television revenue decreased in fiscal 2021 as compared to fiscal 2020, due to decreased intersegment revenues from the licensing of Starz original series (fiscal 2020 included significant revenue from Power Season 6), fewer television episodes delivered, and decreased revenue from reality television series, all of which were negatively impacted by disruptions associated with the COVID-19 global pandemic and the associated pausing of productions which resulted in the delay of television episodes delivered in fiscal 2021.

In addition, fiscal 2020 included significant revenue from Ambitions and House of Payne .

International revenue in fiscal 2021 increased $11.8 million, or 7.7%, as compared to fiscal 2020 , due to increased intersegment revenues from STARZPLAY International from the licensing of Starz original series, and in particular, Power Book II:

Home entertainment revenue in fiscal 2021 increased $72.0 million, or 118.4%, as compared to fiscal 2020 , driven by digital media revenue in fiscal 2021 for the second syndication license of Mad Men Seasons 1 - 7, and digital media revenue for Power Season 6, partially offset by digital media revenue in fiscal 2020 for Power Season 5.

Other revenue decreased in fiscal 2021 as compared to fiscal 2020.

Revenue of 3 Arts Entertainment was negatively impacted in fiscal 2021 as a result of the COVID-19 global pandemic related disruptions.

While television production has mostly resumed, the extent of the future impact on other revenue of the COVID-19 global pandemic is uncertain and will depend on film and television productions and releases fully returning to and remaining at pre COVID-19 levels.

If the adverse economic impact and disruptions associated with the COVID-19 global pandemic continue to improve, we currently expect that Television Production segment revenues will increase in fiscal 2022 as compared to fiscal 2021.

The extent of the increase, if any, to Television Production segment revenues, will depend on, among other things, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the continued effectiveness of actions taken to contain or mitigate the outbreak (including the availability, effectiveness and/or public acceptance of any FDA-approved COVID-19 vaccines), potential resurgences of COVID-19 in certain parts of the world, and the discovery of new variants of the virus which could result in the re-imposition of certain restrictions and may lead to more restrictions being implemented again to reduce the spread of COVID-19, and general global economic conditions.

The evolving and uncertain nature of the situation could result in further interruptions to our operations, including delays in domestic and international distribution and production throughout the U.S., Canada and worldwide, and the pausing of productions, which could impact Television Production segment revenues.

Direct Operating Expense.

Direct operating expense of the Television Production segment in fiscal 2020 increased $105.4 million , or 13.6% , due to the increase in Television Production revenues.

Direct operating expenses as a percentage of television production revenue increased primarily due to the mix of titles generating revenue in fiscal 2020 as compared to fiscal 2019.

In particular, fiscal 2019 included significant revenue from higher margin television series, such as Orange Is The New Black and Step Up:

High Water as compared to fiscal 2020 which included new television programs (Manhunt, Zoey's Extraordinary Playlist, Mythic Quest:

Raven's Banquet, Kevin Hart:

Don't F**k This Up, The Rook, Ambitions) , which typically result in higher amortization expenses in relation to revenues initially.

Direct operating expense of the Television Production segment in fiscal 2021 decreased $203.4 million, or 23.1%, due to the decrease in Television Production revenues.

Direct operating expenses as a percentage of television production revenue decreased due to the mix of titles generating revenue in fiscal 2021 as compared to fiscal 2020.

In particular, fiscal 2021 included significant revenue from Mad Men, which has a lower amortization rate relative to the amortization rate of the Television Production segment, and due to the COVID-19 global pandemic related disruptions, fiscal 2021 included fewer deliveries of newer shows in which direct operating expense is typically higher as a percentage of revenue.

Gross Contribution.

Gross contribution of the Television Production segment for fiscal 2020 decreased as compared to fiscal 2019 even though revenues increased, due to higher direct operating expenses as a percentage of television production revenue, partially offset by lower distribution and marketing expense.

Gross contribution of the Television Production segment for fiscal 2021 increased as compared to fiscal 2020, due to lower direct operating expenses as a percentage of television production revenue, partially offset by lower television production revenue.

General and Administrative Expense.

General and administrative expenses of the Television Production segment decreased $6.2 million , or 14.3% , primarily due to decreases in salaries and related expenses, incentive compensation and professional fees.

Fiscal 2019 includes general and administrative expenses of 3 Arts Entertainment from the acquisition date of May 29, 2018.

General and administrative expenses of the Television Production segment increased $5.4 million, or 14.5%, due to an increase in incentive compensation partially offset by decreases in travel and related expenses.

Media Networks

The table below sets forth Media Networks gross contribution and segment profit for the fiscal years ended March 31, 2021 and 2020:

Increase (Decrease)

March 31, Increase (Decrease)

2021 2020 Amount Percent

(Amounts in millions)

Media Networks Segment:

Revenue $ 1,562.7 $ 1,486.8 $ 75.9 5.1 %

Direct operating expense 677.5 680.2 (2.7) (0.4) %

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The following table sets forth the Media Networks segment profit by product line.

March 31, 2020

March 31, 2019

Starz Networks

STARZPLAY International

Other Streaming Services

Total Media Networks

Starz Networks

STARZPLAY International

Other Streaming Services

Total Media Networks

Our majority interest in Pantaya (reflected in and representing substantially all of Other Streaming Services) was sold on March 31, 2021, see Note 2 to our consolidated financial statements for further information.

Year Ended Year Ended

March 31, 2021 March 31, 2020

Starz Networks STARZPLAY International Other Streaming Services Total Media Networks Starz Networks STARZPLAY International Other Streaming Services Total Media Networks

(Amounts in millions)

Media Networks Segment:

Revenue $ 1,446.9 $ 65.5 $ 50.3 $ 1,562.7 $ 1,430.1 $ 22.9 $ 33.8 $ 1,486.8

Direct operating expense 576.7 89.0 11.8 677.5 554.3 120.1 5.8 680.2

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The table below sets forth, for the periods presented, subscriptions to our Media Networks and STARZPLAY Arabia services.

The pro forma subscriber data as of March 31, 2019 reflects the number of subscribers as of March 31, 2019, adjusted to remove the estimated number of subscribers to MVPD video packages or MVPD bundles that include the Starz service for distributors who dropped or removed Starz from these highly distributed MVPD video packages or MVPD bundles.

This is a key metric to show prior period subscribers on a comparable basis to March 31, 2020 quarter-end subscribers.

An MVPD video package is an offering by our distributors to its customers of multiple distinct video networks or services for a single recurring price where there is no distinction of price on any one specific network.

An MVPD bundle is an offering by our distributors to its customers of two or more distinct MVPD services, such as video, internet and phone, sold on a subscription basis to a consumer or subscriber for a single price, and may include additional premium channels, like STARZ, to promote the bundle offering.

March 31, March 31,

(Amounts in millions)

Domestic Subscribers

Other Streaming Services (1)

International Subscribers

Starz Domestic

Linear Subscribers 10.9 12.1

OTT Subscribers 10.0 6.8

Total 20.9 18.9

STARZPLAY International

Linear Subscribers 1.9 1.9

OTT Subscribers 4.9 1.3

Total 6.8 3.2

Linear Subscribers 12.8 14.0

OTT Subscribers 14.9 8.1

Total Starz 27.7 22.1

STARZPLAY Arabia (1)

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___________________

Represents subscribers of our premium Spanish-language streaming service, Pantaya, which was launched in the quarter ended September 30, 2017.

(1) Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.

(2) Due to the March 31, 2021 sale of Pantaya, total domestic and international subscribers, OTT subscribers and total global subscribers amounts have been adjusted from amounts previously reported for March 31, 2020 to exclude Pantaya in order to be consistent with the presentation at March 31, 2021.

Subscribers of Pantaya (all OTT) at March 31, 2021 and March 31, 2020 amounted to 0.9 million and 0.7 million, respectively.

(3) OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.

The increase in Media Networks' revenue was driven by higher STARZPLAY International revenue of $20.8 million , increased Other Streaming Services revenue of $15.8 million , partially offset by decreased Starz Networks' revenue of $10.8 million .

STARZPLAY International revenue increased as a result of subscriber and revenue growth in the international territories launched in fiscal 2019, and additional territories launched since March 31, 2019.

Other Streaming Services revenue increased due to subscriber growth.

Starz Networks' revenue decreased as a result of declines in revenue from traditional linear services, which was mostly offset by higher OTT revenue resulting from increased subscriptions.

As a result of the COVID-19 global pandemic, television and streaming consumption around the globe has increased and home entertainment demand continues.

For instance, STARZ has experienced an increase in viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally.

This increase in subscribers is dependent upon future economic conditions, our ability to deliver original content and may vary due to changes in consumer viewing and subscription patterns, such as declining linear subscribers and increasing subscribers to OTT services.

This increase may not be indicative of future results and growth may slow as governmental and other restrictions are relaxed, and as a result of the current and possible longer term negative economic impact of the pandemic.

The increase in Media Networks' revenue was driven by higher STARZPLAY International revenue of $42.6 million, increased Starz Networks' revenue of $16.8 million and increased Other Streaming Services revenue of $16.5 million.

STARZPLAY International revenue increased as a result of subscriber and revenue growth in the international territories previously launched, and additional territories launched since March 31, 2020.

Starz Networks' revenue increased as a result of higher OTT revenue resulting from increased subscriptions, partially offset by declines in revenue from traditional linear services.

As a result of events related to the COVID-19 global pandemic, television and streaming consumption around the globe increased, as well as home entertainment demand.

STARZ experienced an increase in viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally.

This increase in subscribers is dependent upon future economic conditions, our ability to deliver original content and may vary due to changes in consumer viewing and subscription patterns.

During fiscal 2021 and fiscal 2020, the following original series premiered on STARZ:

Year Ended March 31, 2020

Year Ended March 31, 2019

Year Ended March 31, 2021 Year Ended March 31, 2020

First Quarter:

Vida Season 3

The Spanish Princess

Hightown Season 1

Vida Season 2

Sweetbitter Season 1

The Rook Season 1

Vida Season 1

Wrong Man Season 1

Second Quarter:

P-Valley Season 1

Sweetbitter Season 2

Power Season 5

Power Season 6A

America to Me

Power Book II:

Ghost Power Season 6A

Power Confidential Season 1

Warriors of Liberty City

Third Quarter:

Dublin Murders

Outlander Season 4

Counterpart Season 2

Third Quarter:* Third Quarter:

Inside the NXIVM Cult Dublin Murders

The Spanish Princess Season 2

Fourth Quarter:

Power Season 6B

American Gods Season 3

Wrong Man Season 2

Now Apocalypse Season 1

Outlander Season 5

Power Season 6B

Min in Kilts Wrong Man Season 2

The Gloaming Outlander Season 5

* In addition, while Power Book II:

Ghost premiered in the second quarter ended September 30, 2020, the series returned with a mid-season premiere in the third quarter in December 2020.

Direct Operating and Distribution and Marketing Expenses .

Direct operating and distribution and marketing expenses primarily represent programming cost amortization and advertising and marketing costs, respectively.

The level of programing cost amortization and advertising and marketing costs and thus the gross contribution margin for the Media Networks' segment can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during the period.

The level of programming cost amortization and advertising and marketing costs and thus the gross contribution margin for the Media Networks' segment can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during the period.

Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere.

In addition, the launch of the STARZPLAY international service has and will continue to result in an increase in expenses as the service continues to expand.

The increase in Media Networks direct operating expenses is due to higher direct operating expenses at STARZPLAY International, which were partially offset by lower Starz Networks' direct operating expenses in fiscal 2020 .

Direct operating expenses at STARZPLAY International increased as a result of higher programming cost amortization related to the launch and operation of STARZPLAY in additional international territories since March 31, 2019.

The decrease in direct operating expense at Starz Networks was due to a benefit of $39.7 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates, and lower programming amortization related to our Starz Originals.

This benefit was partially offset by higher programming amortization related to theatrical releases under our programming output agreement, and higher development expense related to our Starz Originals.

The increase in Media Networks distribution and marketing expense is due to increases at Starz Networks, STARZPLAY International, and to a lesser extent, Other Streaming Services.

Starz Networks' distribution and marketing expense increased due to increased operating costs associated with increased OTT revenue and increased marketing spend.

Distribution and marketing expense for STARZPLAY International increased due to an increase in advertising and marketing costs in order to drive subscriber growth in the international territories launched in fiscal 2019, and additional territories launched since March 31, 2019.

The increase in distribution and marketing expense for Other Streaming Services was primarily attributable to increased advertising and marketing costs in order to drive subscriber growth.

The decrease in Media Networks direct operating expenses is due to lower direct operating expenses at STARZPLAY International, offset by increases at Starz Networks and, to a lesser extent, Other Streaming Services in fiscal 2021.

Direct operating expenses at STARZPLAY International decreased as a result of write downs of programming costs during fiscal 2020 and prior periods, which reduced the programming cost basis being amortized in fiscal 2021, partially offset by the continued expansion of STARZPLAY International.

The increase in Starz Networks direct operating expense was due to a benefit in fiscal 2020 of $39.7 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates, and higher programming amortization related to theatrical releases under our programming output agreement with Sony, partially offset by lower programming cost amortization related to our Starz Originals due to fewer series premieres and lower development expense.

The increase in Media Networks distribution and marketing expense is due primarily to an increase at STARZPLAY International from increased advertising and marketing costs in order to drive subscriber growth in the international territories previously launched, and additional territories launched since March 31, 2020.

In addition, Starz Networks distribution and marketing expense increased due to an increase in operating expense related to continued growth in the OTT service and increased advertising and marketing to drive subscriber growth.

Gross Contribution.

Gross contribution of the Media Networks segment for fiscal 2020 was primarily from Starz Networks, offset partially by negative contributions from STARZPLAY International which has continued to expand in additional territories, and to a lesser extent, negative contribution from Other Streaming Services.

The decrease in gross contribution compared to fiscal 2019 was primarily due to higher negative contributions from STARZPLAY International, and lower gross contribution from Starz Networks driven by increased distribution and marketing expense.

The increase in gross contribution compared to fiscal 2020 was due to lower negative contributions from STARZPLAY International and Other Streaming Services, partially offset by a decrease at Starz Networks driven by the benefit in direct operating expense in fiscal 2020 as discussed above.

General and Administrative Expense.

General and administrative expenses of the Media Networks segment in fiscal 2020 decreased from fiscal 2019, driven by a decrease in Starz Networks, partially offset by increased general and administrative expenses for STARZPLAY International.

The decrease in Starz Networks resulted from a decrease in payroll and related costs.

General and administrative expenses of the Media Networks segment in fiscal 2021 increased from fiscal 2020, driven by slight increases across STARZPLAY International, Starz Networks and Other Streaming Services.

Liquidity and Capital Resources

Sources and Uses of Cash

Our liquidity and capital resources have been provided principally through cash generated from operations, debt, and our production loans.

Our liquidity and capital resources have been provided principally through cash generated from operations, corporate debt, our production loans, the monetization of trade accounts receivable and our Production Tax Credit Facility (as defined and further described below).

As of March 31, 2021, we had cash and cash equivalents of $528.7 million.

Our debt at March 31, 2021 primarily consisted of a $1.5 billion five-year revolving credit facility (with no amounts outstanding at March 31, 2021) due March 2023 (the "Revolving Credit Facility"), a five-year term loan A facility due March 2023 (the "Term Loan A"), a seven-year term loan B facility due March 2025 (the "Term Loan B", and, together with the Revolving Credit Facility and the Term Loan A, the "Senior Credit Facilities"), 5.875% senior notes due 2024 (the "5.875% Senior Notes"), and 6.375% senior notes due 2024 (the "6.375% Senior Notes").

See below for our refinancing and debt transaction activities subsequent to March 31, 2021.

In addition, in January 2021, as amended on March 31, 2021, we entered into a non-recourse senior secured revolving credit facility (the "Production Tax Credit Facility") based on collateral consisting of certain of the Company’s tax credit receivables.

The maximum principal amount of the Production Tax Credit Facility is $220.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction.

Advances under the Production Tax Credit Facility bear interest at a rate equal to, at our option, LIBOR plus 1.50% per annum or the base rate plus 0.50% per annum.

The Production Tax Credit Facility matures on January 27, 2025.

As of March 31, 2021, the Company had $120.0 million outstanding under the Production Tax Credit Facility, and there was $79.2 million available under the Production Tax Credit Facility.

Subsequent to March 31, 2021, we completed the following debt transactions:

Senior Notes Redemption and Issuance.

On April 1, 2021, we redeemed in full the $518.7 million outstanding principal amount of the 5.875% Senior Notes due November 2024 and the $545.6 million outstanding principal amount of the 6.375% Senior Notes due February 2024.

In connection with the early redemption of the 5.875% Senior Notes and the 6.375% Senior Notes, we paid a prepayment premium of $15.2 million and $17.4 million, respectively, plus accrued and unpaid interest to the date of redemption, pursuant to the terms of the indentures governing the 5.875% Senior Notes and the 6.375% Senior Notes, respectively.

In connection with the redemption of the 5.875% Senior Notes and the 6.375% Senior Notes, on April 1, 2021, we issued $1.0 billion aggregate principal amount of 5.500% Senior Notes due April 15, 2029.

Credit Agreement Amendment.

On April 6, 2021, we amended our Credit Agreement to, among other things, extend the maturity (the "Extension") of a portion of its revolving credit commitments, amounting to $1.25 billion, and a portion of its outstanding term A loans, amounting to $444.9 million, to April 6, 2026 (the "2026 Term Loan A"), and make certain other changes to the covenants and other provisions therein.

After giving effect to the Extension, $250.00 million of revolving credit commitments and $215.1 million of term A loans remained outstanding with a maturity of March 22, 2023 (the "2023 Term Loan A").

The 2026 Term Loan A requires mandatory quarterly principal payments beginning September 30, 2022 at a quarterly rate of 1.25%, then at quarterly rates of 1.75% beginning September 30, 2023, and 2.50% beginning September 30, 2024 through March 31, 2026, with the balance payable at maturity.

The 2023 Term Loan A will continue to require mandatory quarterly principal payments under the original repayment schedule, at quarterly rates of 2.50% beginning June 30, 2021, with the balance payable at maturity.

Term Loan B Repurchases.

In April and May 2021, we completed a series of repurchases of the Term Loan B and, in aggregate, paid $60.1 million to repurchase $60.5 million principal amount of the Term Loan B.

See Note 22 to our consolidated financial statements for further information.

Our principal uses of cash in operations include the funding of film and television productions, film and programming rights acquisitions, and the distribution and marketing of films and television programs.

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principal and interest payments) requirements, equity method or other equity investments, quarterly cash dividends, the purchase of common shares under our share repurchase program, capital expenditures, and acquisitions of businesses.

In addition, the Company has a redeemable noncontrolling interest balance of $167.8 million related to its acquisition of a controlling interest in Pilgrim Media Group and 3 Arts Entertainment, which may require the use of cash in the event the holders of the noncontrolling interests require the Company to repurchase their interests (see Note 12 to our consolidated financial statements).

In addition, the Company has a redeemable noncontrolling interest balance of $219.1 million as of March 31, 2021 related to its acquisition of a controlling interest in Pilgrim Media Group and 3 Arts Entertainment, which may require the use of cash in the event the holders of the noncontrolling interests require the Company to repurchase their interests (see Note 12 to our consolidated financial statements).

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise.

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In addition, the launch of the Company's STARZPLAY international service has and will require capital investment as the service expands to other international territories.

In the short-term, while a portion of our revenue has been reduced as a result of the COVID-19 global pandemic, our cash requirements for productions and marketing spends have also been reduced.

As previously discussed, in some areas we have experienced increases in revenue and viewership of our content.

We expect that the ultimate impact of these disruptions, including the extent of any adverse impact on our business, results of operations and financial condition, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions.

As a result, we cannot predict the outcome of the full extent of the COVID-19 global pandemic on our operating results, cash flows and financial position.

However, we currently believe that cash flow from operations, cash on hand, revolving credit facility availability, the monetization of trade accounts receivable, tax-efficient financing, and available production financing will be adequate to meet known operational cash and debt service (i.e.

In the short-term, while a portion of our revenue has been reduced as a result of disruptions associated with the COVID-19 global pandemic, our cash requirements for productions and marketing spends have also been reduced.

While we cannot predict the outcome of the disruptions associated with the COVID-19 global pandemic on our operating results, cash flows and financial position, we currently expect that as production activity increases and theaters begin to reopen, our cash requirements for productions and marketing spends will increase in fiscal 2022 as compared to fiscal 2021.

However, we currently believe that cash flow from operations, cash on hand, revolving credit facility availability, the monetization of trade accounts receivable, tax-efficient financing, the availability of our Production Tax Credit Facility, and available production financing will be adequate to meet known operational cash and debt service (i.e.

principal and interest payments) requirements for the foreseeable future, including the funding of future film and television production, film and programming rights acquisitions and theatrical and home entertainment release schedules, and future equity method or other investment funding requirements, and international expansion.

However, we may seek alternative sources of capital in connection with the STARZPLAY international expansion.

We monitor our cash flow liquidity, availability, fixed charge coverage, capital base, film spending and leverage ratios with the long-term goal of maintaining our credit worthiness.

Our current financing strategy is to fund operations and to leverage investment in films and television programs through our cash flow from operations, our revolving credit facility, single-purpose production financing, government incentive programs, film funds, distribution commitments, and the monetization of trade accounts receivable.

In addition, we continue to expand our STARZPLAY international service and may acquire businesses or assets, including individual films or libraries that are complementary to our business.

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Our ability to obtain any additional financing will depend on, among other things, our business plans, operating performance and the condition of the capital markets at the time we seek financing.

Additionally, the COVID-19 global pandemic has caused disruption in the capital markets, which could make financing more difficult and/or expensive, and we may not be able to

obtain such financing.

Additionally, circumstances related to the COVID-19 global pandemic has caused disruption in the capital markets, which could make financing more difficult and/or expensive, and we may not be able to obtain such financing.

We may also dispose of businesses or assets, including individual films or libraries, and use the net proceeds from such dispositions to fund operations or such acquisitions, or to repay debt.

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On February 2, 2016, our Board of Directors authorized to increase our previously announced share repurchase plan from $300 million to $468 million.

To date, including repurchases subsequent to March 31, 2020 of approximately $1.0 million, approximately $288.1 million of our common shares have been purchased under the plan, leaving approximately $179.9 million of authorized potential purchases.

The remaining $179.9 million of our common shares authorized under the plan may be purchased from time to time at our discretion, including quantity, timing and price thereof, and will be subject to market conditions.

To date, approximately $288.1 million of our common shares have been purchased under the plan, leaving approximately $179.9 million of authorized potential repurchases.

The remaining $179.9 million of our common shares authorized under the plan may be purchased from time to time at our discretion, including

quantity, timing and price thereof, and will be subject to market conditions.

Such purchases will be structured as permitted by securities laws and other legal requirements.

During the fiscal year ended March 31, 2020 , we repurchased 0.7 million of our Class A voting shares for an aggregate cost of $3.8 million , with a weighted average repurchase price per share of $5.43 .

During the fiscal year ended March 31, 2021, the Company repurchased 0.2 million of its Class A voting shares for an aggregate cost of $1.0 million, with an average repurchase price per share of $5.75.

The amount of dividends, if any, that we pay to our shareholders is determined by our Board of Directors, at its discretion, and is dependent on a number of factors, including our financial position, results of operations, cash flows, capital requirements and restrictions under our credit agreements, and shall be in compliance with applicable law.

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Capacity to Pay Dividends.

At March 31, 2020 , the capacity to pay dividends under the Senior Credit Facilities and the 5.875% Senior Notes and 6.375% Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $206.4 million and accumulated deficit of $16.9 million were deemed free of restrictions at March 31, 2020 .

At March 31, 2021, the capacity to pay dividends under the Senior Credit Facilities and the 5.875% Senior Notes and 6.375% Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $34.5 million and accumulated deficit of $82.9 million were deemed free of restrictions from paying dividends at March 31, 2021.

Discussion of Operating, Investing, Financing Cash Flows

Cash and cash equivalents increased by $136.8 million for the fiscal year ended March 31, 2020 and decreased by $193.5 million for the fiscal year ended March 31, 2019, before foreign exchange effects on cash.

Cash and cash equivalents increased by $206.3 million for the fiscal year ended March 31, 2021 and increased by $136.8 million for the fiscal year ended March 31, 2020, before foreign exchange effects on cash.

Components of these changes are discussed below in more detail.

Operating Activities.

Cash flows provided by operating activities for the fiscal years ended March 31, 2020 and 2019 were as follows:

Cash flows provided by (used in) operating activities for the fiscal years ended March 31, 2021 and 2020 were as follows:

Year Ended March 31,

2021 2020 Net Change

(Amounts in millions)

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Operating income $ 170.6 $ 2.8 $ 167.8

Depreciation and amortization 188.5 197.7 (9.2)

Amortization of films and television programs and program rights 1,189.8 1,706.7 (516.9)

Non-cash share-based compensation 89.0 50.5 38.5

Gain on sale of Pantaya (44.1) — (44.1)

Cash interest (136.7) (176.4) 39.7

Current income tax provision (13.7) (4.2) (9.5)

Shareholder litigation settlement charges and interest

Other non-cash charges included in operating activities 72.3 66.2 6.1

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Investment in films and television programs and program rights (1,616.7) (1,545.3) (71.4)

Accounts payable and accrued liabilities 32.7 (31.8) 64.5

Other changes in operating assets and liabilities (66.1) (49.1) (17.0)

Changes in operating assets and liabilities (1,516.2) (1,228.7) (287.5)

Net Cash Flows Provided By Operating Activities

Cash flows provided by operating activities for the fiscal year ended March 31, 2020 were $614.6 million compared to cash flows provided by operating activities of $427.5 million for the fiscal year ended March 31, 2019 .

The increase in cash provided by operating activities for fiscal 2020 as compared to fiscal 2019 is due to higher cash flows from operations before changes in operating assets and liabilities, which in fiscal 2019 included the portion of the shareholder litigation settlement associated with the Starz merger.

The increase was partially offset by an increase in cash used from changes in operating assets and liabilities which were driven by lower decreases in accounts receivable and other assets, and increases in investment in films and television programs and program rights.

In addition, cash flows provided by operating activities for the year ended March 31, 2020 benefited by approximately $253.0 million from the monetization of accounts receivables programs, as compared to a benefit of $347.0 million for the year ended March 31, 2019 (see Note 20 to our consolidated financial statements).

Net Cash Flows Provided By (Used In) Operating Activities $ (0.5) $ 614.6 $ (615.1)

Cash flows used in operating activities for the fiscal year ended March 31, 2021 were $0.5 million compared to cash flows provided by operating activities of $614.6 million for the fiscal year ended March 31, 2020.

The increase in cash used in operating activities for fiscal 2021 as compared to fiscal 2020 is due to lower cash flows from operations before changes in operating assets and liabilities, and greater cash used from changes in operating assets and liabilities as shown above.

The greater use of cash from changes in operating assets and liabilities was driven by lower decreases in accounts receivable, net and other assets, and greater cash used for investment in films and television programs and program rights.

These decreases were partially offset by lower use of cash from increases in accounts payable and accrued liabilities, as reflected above, and the receipt of $64.3 million from the Internal Revenue Service related to the Company's net operating loss carryback claim which is subject to review and included in other liabilities until the review is completed.

In addition, cash flows used in operating activities for the fiscal year ended March 31, 2021 included a net benefit of approximately $28.2 million from the monetization

of accounts receivables programs, as compared to a benefit of approximately $253.0 million for the year ended March 31, 2020 (see Note 20 to our consolidated financial statements).

Investing Activities.

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Investing Activities:

Proceeds from the sale of equity method investees, net of transaction costs

Proceeds from the sale of equity method and other investments $ 4.1 $ —

Investment in equity method investees and other (0.2) (20.6)

Business acquisitions, net of cash acquired of $5.5 in 2019

Capital expenditures (35.0) (31.1)

Net Cash Flows Used In Investing Activities $ (31.1) $ (51.7)

Cash used in investing activities of $51.7 million for the fiscal year ended March 31, 2020 compared to cash used in investing activities of $121.7 million for the fiscal year ended March 31, 2019 , as reflected above.

The change was primarily due to cash used in fiscal 2019 for the purchase of 3 Arts Entertainment, net of cash acquired, and less cash used in fiscal 2020

for investment in equity method investees and capital expenditures, offset partially by the net proceeds from the sale of our equity interest in Pop in fiscal 2019.

Cash flows used in investing activities of $31.1 million for the fiscal year ended March 31, 2021 compared to cash flows used in investing activities of $51.7 million for the fiscal year ended March 31, 2020, primarily due to lower investment in equity method investees and other, as reflected above.

In addition, on March 31, 2021, the Company sold its 75% majority interest in Pantaya to Hemisphere Media Group for approximately $123.6 million in cash which was paid on April 1, 2021, therefore the receivable for the purchase consideration is included in other current assets as of March 31, 2021 and excluded from the consolidated statement of cash flows, as a non-cash investing activity, for the year ended March 31, 2021 (see Note 20 to our consolidated financial statements).

Financing Activities.

Cash flows used in financing activities for the fiscal years ended March 31, 2020 and 2019 were as follows:

Cash flows provided by (used in) financing activities for the fiscal years ended March 31, 2021 and 2020 were as follows:

Year Ended March 31,

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Debt - repurchases and repayments (267.6) (1,033.4)

Net (repayments of) proceeds from debt

Net repayments of debt (67.6) (181.3)

Production loans - borrowings 273.7 59.0

Production loans - repayments (53.0) (293.8)

Net (repayments of) proceeds from production loans

Net proceeds from (repayments of) production loans 220.7 (234.8)

Production tax credit facility advances 118.8 —

Repurchase of common shares (2.2) (2.6)

Payment of dissenter liability accrued at acquisition

Other financing activities (31.8) (7.4)

Net Cash Flows Used In Financing Activities

Cash flows used in financing activities of $426.1 million for the fiscal year ended March 31, 2020 compared to cash flows used in financing activities of $499.3 million for the fiscal year ended March 31, 2019 .

Net Cash Flows Provided By (Used In) Financing Activities $ 237.9 $ (426.1)

Cash flows provided by financing activities of $237.9 million for the fiscal year ended March 31, 2021 compared to cash flows used in financing activities of $426.1 million for the fiscal year ended March 31, 2020.

Cash flows provided by financing activities for fiscal 2021 primarily reflects net production loan borrowings of $220.7 million as production activity increased in the third and fourth quarters of fiscal 2021, Production Tax Credit Facility advances of $118.8 million, and net debt repayments of $67.6 million representing required repayments on our term loans.

In addition, other financing activities in fiscal 2021 includes $22.3 million for interest rate swap settlement payments due to an other-than-insignificant financing element on a portion of our interest rate swaps (see Note 19 to our consolidated financial statements), $7.7 million for tax withholding required on equity awards, and cash used for the repurchase of common shares of $2.2 million.

Cash flows used in financing activities for fiscal 2020 primarily reflects net production loan repayments of $234.8 million and net debt repurchases and repayments of $181.3 million.

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• Voluntary prepayments totaling $101.9 million in principal outstanding under the Term Loan B, together with accrued and unpaid interest.

Cash flows used in financing activities for fiscal 2019 primarily reflects the payment of the dissenting shareholders' liability accrued at acquisition associated with the Starz merger, net debt borrowings of $328.5 million , net production loan borrowings of $32.7 million, and cash paid for dividends of $57.4 million.

Net debt borrowings of $328.5 million in fiscal 2019 included the below transactions:

On February 4, 2019 we issued $550.0 million aggregate principal amount of 6.375% Senior Notes.

We used the proceeds of the 6.375% Senior Notes to pay down outstanding amounts under our Revolving Credit Facility and for working capital purposes.

On April 15, 2018, the 1.25% convertible senior subordinated notes due April 2018 (the "April 2013 1.25% Notes") matured, and upon maturity, we repaid the outstanding principal amount of $60.0 million, together with accrued and unpaid interest.

Voluntary prepayments totaling $130.0 million in principal outstanding under the Term Loan B, together with accrued and unpaid interest.

See Note 7 to our consolidated financial statements for a discussion of our debt.

Production Loans

See Note 10 to our consolidated financial statements for a discussion of our production loans.

Production Loans and Production Tax Credit Facility

See Note 10 to our consolidated financial statements for a discussion of our production loans and production tax credit facility.

Table of Debt and Contractual Commitments

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Year Ended March 31,

2022 2023 2024 2025 2026 Thereafter Total

(Amounts in millions)

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Revolving credit facility (1)

$ — $ — $ — $ — $ — $ — $ —

Term Loan A (1)

75.0 585.0 — — — — 660.0

Term Loan B (1)

12.5 12.5 12.5 915.1 — — 952.6

5.875% Senior Notes (2)

— — — 518.7 — — 518.7

6.375% Senior Notes (2)

Film obligations and production loans (1)

— — 545.6 — — — 545.6

Film obligations, production loans and production tax credit facility (3)

385.0 140.2 45.8 125.7 4.5 6.6 707.8

Operating lease obligations (4)

Finance lease obligations (2)

47.6 41.1 25.8 15.0 15.4 34.0 178.9

520.1 778.8 629.7 1,574.5 19.9 40.6 3,563.6

Contractual commitments by expected repayment date (off-balance sheet arrangements)

Film obligation and production loan commitments (5)

365.5 304.7 112.0 33.0 33.0 1.0 849.2

Interest payments (6)

135.6 131.0 105.9 59.8 — — 432.3

Other contractual obligations 135.5 58.4 21.9 9.7 7.9 50.4 283.8

636.6 494.1 239.8 102.5 40.9 51.4 1,565.3

Total future repayment of debt and other commitments under contractual obligations (7)

$ 1,156.7 $ 1,272.9 $ 869.5 $ 1,677.0 $ 60.8 $ 92.0 $ 5,128.9

___________________

(1) On April 6, 2021, the Company amended its Credit Agreement to extend the maturity of a portion of its revolving credit commitments, amounting to $1.25 billion, and a portion of its outstanding term A loans, amounting to $444.9 million to April 6, 2026.

Additionally, in April and May 2021, we completed a series of repurchases of the Term Loan B and, in aggregate, paid $60.1 million to repurchase $60.5 million principal amount of the Term Loan B.

See Note 22 to our consolidated financial statements for subsequent events.

(2) On April 1, 2021, the 5.875% Senior Notes and 6.375% Senior Notes were redeemed in full and $1.0 billion aggregate principal amount of 5.500% Senior Notes due April 2029 were issued.

See Note 22 to our consolidated financial statements for subsequent events.

(3) Film obligations include minimum guarantees, theatrical marketing obligations, and accrued licensed program rights obligations.

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Repayment dates are based on anticipated delivery or release date of the related film or contractual due dates of the obligation.

Production tax credit facility represent amounts due at March 31, 2021 under our Production Tax Credit Facility, and the repayment date represents the maturity date of the Production Tax Credit Facility (January 27, 2025), however net advances and payments under the Production Tax Credit Facility can fluctuate depending on the amount of collateral available.

See Note 10 to our consolidated financial statements.

(4) See Note 8 to our consolidated financial statements for further information on leases.

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The amounts include estimated future interest payments associated with the commitment.

Includes cash interest payments on our debt (including interest on finance lease obligations), excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

(6) Includes cash interest payments on our debt outstanding at March 31, 2021, excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

See footnotes (1) and (2) above for debt transactions subsequent to March 31, 2021 (see Note 22 - Subsequent Events).

(7) Not included in the amounts above are $219.1 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 12 to our consolidated financial statements).

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis