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Item 7. Management’s Discussion and Analysis

2022-05-26 compared with 2021-05-28 · 408 added, 335 removed, 553 unchanged (57% of the section changed)

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A discussion and analysis of our financial condition and results of operation for the fiscal year ended March 31, 2020 and year-to-year comparisons between fiscal 2021 and fiscal 2020 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, 2021 , and is herein incorporated by reference.

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.

Lionsgate Entertainment Corp.

(the “Company,” “Lionsgate,” "Lions Gate," “we,” “us” or “our”) encompasses world-class motion picture and television studio operations aligned with the STARZ premium global subscription platform to bring a unique and varied portfolio of entertainment to consumers around the world.

The Company’s film, television, subscription and location-based entertainment businesses are backed by a 17,000-title library and a valuable collection of iconic film and television franchises.

We classify our operations through three reporting segments:

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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.

Since fiscal 2020, the economic, social and regulatory impacts associated with the ongoing COVID-19 global pandemic (including its variants), continued measures to prevent its spread, and the resulting economic uncertainty, have affected our business in a number of ways.

We experienced 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).

Although film and television production have generally resumed, we continue to see disruption of production activities depending on local circumstances.

We also cannot predict whether productions that have resumed will be paused again, or the impact of incremental costs required to adhere to health and safety protocols.

Additionally, although the lifting of the quarantines have enabled many theaters to reopen, we are unable to predict how shifting government mandates or guidance regarding COVID-19 restrictions will impact patronage and theater capacity.

In turn, production delays (and fewer theatrical releases) have limited the availability of film content to be sold in distribution windows subsequent to the theatrical release, and have resulted in delays of release of new television content, including on our STARZ platform.

The impact of these disruptions and the extent of their adverse impact on our financial and operating results will be dictated by the length of time that such disruptions continue, which will, in turn, depend on the currently unknowable duration and severity of the impacts of COVID-19 and its variants, and among other things, the impact of governmental actions imposed in response to COVID-19 and individuals’ and companies’ responses regarding health matters going forward.

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 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.

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.

2022 2021 2020

COVID-19 related charges (benefit) included in:

Direct operating expense (1)

$ (3.6) $ 50.6 $ 46.0

Distribution and marketing expense (2)

Restructuring and other (3)

Total COVID-19 related charges (benefit) $ (2.3) $ 70.5 $ 50.5

(1) Amounts reflected in direct operating expense include incremental costs associated with the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs, net of insurance recoveries.

In fiscal 2021 and 2020, these amounts also included film impairment due to changes in

performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

In the fiscal year ended March 31, 2022, insurance recoveries exceeded the incremental costs expensed in the year, resulting in a net benefit included in direct operating expense.

(2) Amounts reflected in distribution and marketing expense primarily consist of contractual marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit.

(3) Amounts reflected in restructuring and other represent certain incremental general and administrative costs associated with the COVID-19 global pandemic, such as costs related to transitioning the Company to a remote-work environment, costs associated with return-to-office safety protocols and other incremental general and administrative costs associated with the COVID-19 global pandemic.

We expect to incur additional incremental costs related to the COVID-19 global pandemic in future periods, especially if there is a continued spread of recent and new variants.

We are in the process of seeking additional insurance recovery for some of the costs already incurred and expect to seek insurance recovery for any additional incremental costs.

The ultimate amount of insurance recovery cannot be estimated at this time.

See further discussion in the Results of Operations section below.

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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;

These impacts include the incremental costs and losses presented in the table above, lower revenues from the closure or reopenings of movie theaters and postponement of theatrical releases, partially offset by lower theatrical production and marketing costs, or lower box office revenues from pre-pandemic levels due to shifts in viewing;

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.

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

and while STARZ initially experienced an increase in viewership during the fiscal year ended March 31, 2021 of its content, future growth could be impacted by whether productions that have resumed will be paused again, and future consumer viewing patterns as the pandemic eases.

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 (including recent and new variants), 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.

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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.

In addition, resurgences of COVID-19, and the discovery and spread of recent and 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.

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

We refer to our Motion Picture and Television Production segments collectively as our Studio Business.

Our revenues are derived from the U.S., Canada, the United Kingdom and other foreign countries.

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countries individually comprised greater than 10% of total revenues for the years ended March 31, 2022, 2021 and 2020.

Studio Business

Motion Picture:

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• Home Entertainment.

Home entertainment revenues are derived from the sale or rental of our film productions and acquired or licensed films and certain television programs (including theatrical and direct-to-video releases) on packaged media and through digital media platforms (including pay-per-view and video-on-demand platforms, electronic sell through, and digital rental).

packaged media and through digital media platforms (including pay-per-view and video-on-demand platforms, electronic sell through, and digital rental).

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.

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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.

In addition, when a license in our traditional pay television window is made to a subscription video-on-demand ("SVOD") or other digital platform, the revenues are included here.

• International.

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Television revenues include fixed fee arrangements as well as arrangements in which we earn advertising revenue from the exploitation of certain content on television networks.

Television revenues also include revenue from licenses to subscription-video-on-demand ("SVOD") platforms in which the initial license of a television series is to an SVOD platform.

Television revenues also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform.

• International.

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Home entertainment revenues are derived from the sale or rental of television production movies or series on packaged media and through digital media platforms.

Other revenues are derived from, among others, the licensing of our television programs to other ancillary markets, the sales and licensing of music from the television broadcasts of our productions, and from commissions earned and executive producer fees related to talent management.

Other revenues are derived from, among others, the licensing of our television programs to other ancillary markets, the sales and licensing of music from the television broadcasts of our productions, and from commissions and executive producer fees earned related to talent management.

Media Networks

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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 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.

Through March 31, 2021, our Media Networks segment also included revenues derived from Other Streaming Services, which represented revenues derived primarily from our formerly majority owned premium Spanish language streaming services business, Pantaya, which included 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.

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.

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Residuals represent amounts payable to various unions or “guilds” such as the Screen Actors Guild - American Federation of Television and Radio Artists, Directors Guild of America, and Writers Guild of America, based on the performance of the film or television program in certain ancillary markets or based on the individual’s (i.e., actor, director, writer) salary level in the television market.

Distribution and marketing expenses primarily include the costs of theatrical prints and advertising (“P&A”) and of DVD/Blu-ray duplication and marketing.

Distribution and marketing expenses primarily include the costs of theatrical prints and advertising (“P&A”) and premium video-on-demand ("Premium VOD") expense and of DVD/Blu-ray duplication and marketing.

Theatrical P&A includes the costs of the theatrical prints delivered to theatrical exhibitors and the advertising and marketing cost associated with the theatrical release of the picture.

Premium VOD expense represents the advertising and marketing cost associated with the Premium VOD release of the picture.

DVD/Blu-ray duplication represents the cost of the DVD/Blu-ray product and the manufacturing costs associated with creating the physical products.

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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.

Capitalized costs for films or television programs are amortized and tested for impairment based on whether the content is predominantly monetized individually or as a group.

Film and Television Programs Monetized Individually.

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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 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 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 historical viewership patterns, anticipated number of exhibitions expected 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.

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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.

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.

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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.

The Company's film groups are generally aligned along the Company's networks and digital content offerings domestically (i.e., Starz Networks and, through March 31, 2021, 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.

Content removed from the service and abandoned is written down to its fair value, if any, determined using a discounted cash flow approach.

Valuation Assumptions.

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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.

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 management’s future revenue estimates.

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The results of these valuation methodologies are weighted as to their relative importance and a single fair value is determined.

The fair value of our reporting units is reconciled to the market value of our equity, determined based on the average prices of our common shares just prior to the period end.

The fair value of our reporting units is reconciled to the market value of our equity, determined based on

the average prices of our common shares just prior to the period end.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors.

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Goodwill Impairment Assessment:

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 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.

For our Television business reporting unit, we determined that an increase in the discount rate of up to 3.3% would not have impacted the test results, assuming no changes to other factors.

For our Media Networks reporting unit, we determined that an increase in the discount rate of up to 0.7% or a reduction of the perpetual nominal growth rate of up to 1.33% would not have impacted the test results, assuming no changes to other factors.

We also performed a sensitivity analysis on annual revenue growth.

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.

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 previous 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 as compared to fiscal 2020, 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.

For our annual goodwill impairment test for fiscal 2022, due to overall macroeconomic conditions, including the uncertainty of the longer-term economic impacts of the COVID-19 global pandemic, the competitive environment for subscribers and its impact on subscriber growth rates and our businesses, we performed a quantitative impairment assessment for all of our reporting units as of January 1, 2022.

The DCF analysis components of the fair value estimates were determined primarily by discounting estimated future cash flows, which included weighted average perpetual nominal growth rates ranging from 1.5% to 3.5%, at a weighted average cost of capital (discount rate) ranging from 10.5% to 11.8%, 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 2022, the Company determined that one of our reporting units (Media Networks) was at risk for impairment due to relatively small changes in certain key assumptions that could cause an impairment of goodwill.

The fair value analysis of our Media Networks reporting unit indicated that the fair value exceeded the related carrying value by approximately 10%.

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

For our Media Networks reporting unit, we determined that an increase in the discount rate of up to 0.7% or a reduction of the perpetual nominal growth rate of up to 1.4% would not have impacted the test results, assuming no changes to other factors.

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 remaining production can resume and remaining theaters can re-open;

adverse macroeconomic conditions;

volatility in the equity and debt markets which could result in higher weighted-average cost of capital;

the commercial success of our television programming and our motion pictures;

the commercial success of our television programming and motion pictures;

our continual contractual relationships with our customers;

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MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to $1.18 billion.

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.

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 16 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.

The Starz Traditional Affiliate customer relationship intangible asset is amortized in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset, which results in greater amortization in the earlier years of the estimated useful life of the asset than the latter 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 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 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.

For fiscal 2022 and fiscal 2021, due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, 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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The following table sets forth our consolidated results of operations for the fiscal years ended March 31, 2022 and 2021.

The Media Networks segment results of operations for the fiscal year ended March 31, 2021 included our formerly majority owned premium Spanish language streaming services business, Pantaya (representing substantially all of Other Streaming Services).

We sold our interest in Pantaya on March 31, 2021.

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

March 31, Increase (Decrease)

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(Amounts in millions)

Studio Business

Motion Picture $ 1,185.3 $ 1,081.1 $ 104.2 9.6 %

Television Production 1,531.0 831.8 699.2 84.1 %

Total Studio Business 2,716.3 1,912.9 803.4 42.0 %

Media Networks 1,536.2 1,562.7 (26.5) (1.7) %

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Total expenses 3,595.3 3,100.9 494.4 15.9 %

Operating income 170.6 2.8 167.8 nm

Operating income 9.0 170.6 (161.6) (94.7) %

Interest expense (176.0) (181.5) 5.5 (3.0) %

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

Interest and other income 30.8 5.8 25.0 nm

Other expense (10.9) (6.7) (4.2) 62.7 %

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

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

Loss on extinguishment of debt (28.2) — (28.2) n/a

Gain on investments 1.3 0.5 0.8 160.0 %

Equity interests loss (3.0) (6.1) 3.1 (50.8) %

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

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

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

Loss before income taxes (177.0) (17.4) (159.6) nm

Income tax provision (28.4) (17.1) (11.3) 66.1 %

Net loss (205.4) (34.5) (170.9) nm

Net loss attributable to noncontrolling interest 17.2 15.6 1.6 10.3 %

Net loss attributable to Lions Gate Entertainment Corp.

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

shareholders $ (188.2) $ (18.9) $ (169.3) nm

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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.

Consolidated revenues increased $332.8 million in fiscal 2022 reflecting an increase of $803.4 million from our Studio Business, offset by a decrease of $26.5 million from our Media Networks business, and an increase in intersegment eliminations, which primarily relate to the licensing of product from our Studio Business (primarily our Television Production segment) to the Media Networks segment.

Motion Picture revenue increased $104.2 million in fiscal 2022 due to a greater number of theatrical and international releases as theaters have reopened, increased television revenue, and increased digital media home entertainment revenue.

These increases were offset partially by lower packaged media home entertainment revenue and other revenue.

Motion Picture revenue included $38.0 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $18.2 million from fiscal 2021.

Television Production revenue increased $699.2 million due to increased intersegment revenues from the licensing of Starz original series, and a greater number of television episodes delivered to third-parties as compared to fiscal 2021, which was negatively impacted by the pausing of productions associated with the COVID-19 global pandemic.

Television Production revenue included $610.2 million of revenue from licensing Television Production segment product to our Media Networks segment, representing an increase of $425.9 million from fiscal 2021.

The increases in Television Production and Motion Picture revenue were partially offset by increased intersegment eliminations primarily associated with higher Television Production revenues for licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.

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

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Direct operating expenses

Studio Business

Motion Picture $ 547.1 46.2 % $ 508.3 47.0 % $ 38.8 7.6 %

Television Production 1,373.9 89.7 676.5 81.3 697.4 103.1 %

Total Studio Business 1,921.0 70.7 1,184.8 61.9 736.2 62.1 %

Media Networks 747.9 48.7 677.5 43.4 70.4 10.4 %

COVID-19 related charges (3.6) nm 50.6 nm (54.2) n/a

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

Other 44.4 nm 3.0 nm 41.4 nm

Intersegment eliminations (645.5) nm (190.0) nm (455.5) 239.7 %

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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.

Direct operating expenses increased in fiscal 2022, due to higher Television Production and Motion Picture revenue, and higher Media Networks direct operating expense and other direct operating expense (as further described below), partially offset by lower COVID-19 related charges (as further described below).

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

The increase in Media Networks direct operating expense was driven by increases at STARZPLAY International of $52.1 million and at Starz Networks of $30.1 million.

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

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.

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.

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, certain incremental costs were incurred and expensed and included in consolidated direct operating expense and excluded from segment direct operating expense.

In fiscal 2022, direct operating expense included a benefit of $3.6 million from insurance recoveries in excess of incremental costs associated with the pausing and restarting of productions including

paying/hiring certain cast and crew, maintaining idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic.

In fiscal 2021, the charges of $50.6 million include incremental costs associated with film impairment due to changes in performance expectations, the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic.

We may incur additional incremental costs for direct operating expenses related to the COVID-19 global pandemic in future periods, depending on if there is a continued spread of recent and new variants.

We are in the process of seeking additional insurance recovery for some of the costs already incurred and expect to seek insurance recovery for any additional incremental costs.

The ultimate amount of insurance recovery cannot be estimated at this time.

In the fourth quarter of the fiscal year ended March 31, 2022, we performed a strategic review of original programming on the STARZ platform, which identified certain titles with limited viewership or strategic purpose which were removed from the STARZ service and abandoned by the Media Networks segment.

As a result, we recorded certain programming and content charges of $36.9 million in fiscal 2022, 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.

Other direct operating expenses in the table above also includes $5.9 million representing charges related to Russia's invasion of Ukraine, primarily related to bad debt reserves for accounts receivable from customers in Russia, which are excluded from segment operating results but included in direct operating expense in the consolidated statements of operations.

In addition, the remaining amounts of "other" direct operating expenses in the table above consists of 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.

Distribution and Marketing Expenses.

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Distribution and marketing expenses

Studio Business

Motion Picture $ 282.2 $ 171.0 $ 111.2 65.0 %

Television Production 33.0 29.0 4.0 13.8 %

Total Studio Business 315.2 200.0 115.2 57.6 %

Media Networks 545.1 501.8 43.3 8.6 %

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theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 153.3 $ 71.2 $ 82.1 115.3 %

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.

Distribution and marketing expenses increased in fiscal 2022 due to increased Motion Picture and Media Networks distribution and marketing expense.

The increase in Motion Picture distribution and marketing expense is due to increased theatrical P&A related to more theatrical releases in fiscal 2022 as compared to fiscal 2021 due to the opening of theaters and completion of productions.

The increase in Media Networks distribution and marketing expense was due to an increase at Starz Networks of $74.1 million due to increased spend on our Starz Originals and to drive growth in subscriptions and an increase in operating expense related to continued growth in the OTT service, and to a lesser extent, an increase at STARZPLAY International of $9.0 million, partially offset by a decrease of $39.8 million due to the sale of Pantaya on March 31, 2021.

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

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.

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 2022 and 2021, we incurred $0.2 million and $16.9 million, respectively, in costs primarily related to contractual marketing spends for film releases and events that have been 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.

We may incur additional incremental costs for distribution and marketing expenses in future periods, depending on if there is a continued spread of recent and new variants.

General and Administrative Expenses.

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General and administrative expenses

Studio Business

Motion Picture $ 93.1 $ 106.2 $ (13.1) (12.3) %

Television Production 40.2 42.7 (2.5) (5.9) %

Total Studio Business 133.3 148.9 (15.6) (10.5) %

Media Networks 88.0 93.9 (5.9) (6.3) %

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Total general and administrative expenses $ 475.4 13.2% $ 486.6 14.9% $ (11.2) (2.3) %

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.

General and administrative expenses decreased in fiscal 2022, resulting from decreased Corporate, Motion Picture, Television Production and Media Networks general and administrative expenses, partially offset by increases in share-based compensation expense and purchase accounting and related adjustments.

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

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.

Corporate general and administrative expenses decreased $16.6 million, or 14.6%, primarily due to a decrease in incentive based compensation.

The increase in share-based compensation expense included in general and administrative expense in the fiscal year ended March 31, 2022, as compared to the fiscal year ended March 31, 2021 is primarily due to an increase in the number of share-based payment awards incurring expense in fiscal 2022 as compared to fiscal 2021.

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.

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.

Purchase accounting and related adjustments increased $11.5 million, or 24.4%, primarily due to the expense associated with the earned distributions related to 3 Arts Entertainment.

Depreciation and Amortization Expense.

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

Depreciation and amortization of $177.9 million for fiscal 2022 decreased $10.6 million from $188.5 million in fiscal 2021 due to lower amortization expense related to our customer relationship intangible assets.

Restructuring and Other.

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 decreased $7.9 million in fiscal 2022 as compared to fiscal 2021, 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, 2022 and 2021 (see Note 15 to our consolidated financial statements):

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Cash $ 4.6 $ 14.8 $ (10.2) (68.9) %

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

Accelerated vesting on equity awards (see Note 13 to our consolidated financial statements) — 3.5 (3.5) nm

Total severance costs 4.6 18.3 (13.7) (74.9) %

COVID-19 related charges (2)

3.0 0.3 2.7 nm

1.1 3.0 (1.9) (63.3) %

Transaction and related costs (3)

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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.

(1) Severance costs in the fiscal years ended March 31, 2022 and 2021 were primarily related to restructuring activities in connection with cost-saving initiatives.

(2) Amounts represent certain incremental general and administrative costs associated with the COVID-19 global pandemic, such as costs related to transitioning the Company to a remote-work environment, costs associated with return-to-office safety protocols, and other incremental general and administrative costs associated with the COVID-19 global pandemic.

(3) Transaction and related costs in the fiscal years ended March 31, 2022 and 2021 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.

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 former 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.

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Interest Expense.

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).

Interest expense of $176.0 million in fiscal 2022 decreased $5.5 million from fiscal 2021 due to a lower average interest rate on the Senior Notes in fiscal 2022, and lower average balances on the term loans due to repurchases of the Term Loan B in fiscal 2022 and required repayments.

These decreases were partially offset by an increase in other non-cash interest 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 18 to our consolidated financial statements).

The following table sets forth the components of interest expense for the fiscal years ended March 31, 2022 and 2021:

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Senior Notes 54.8 65.3

6.375% Senior Notes 34.8 35.1

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

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(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 18 to our consolidated financial statements).

Interest and Other Income.

Interest and other income of $30.8 million for the fiscal year ended March 31, 2022 compared to interest and other income of $5.8 million for the fiscal year ended March 31, 2021, due to insurance recoveries on prior shareholder litigation of $22.7 million in fiscal 2022 and other gains (see Note 17 to our consolidated financial statements).

Other Expense.

Other expense of $10.9 million for fiscal 2022 compared to other expense of $6.7 million for fiscal 2021, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 19 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.

Loss on Extinguishment of Debt.

Loss on extinguishment of debt of $28.2 million for fiscal 2022 related to the write-off of a portion of debt issuance costs (including a portion of call premiums) associated with the redemption of the 5.875% Senior Notes and 6.375% Senior Notes and associated issuance of the 5.500% Senior Notes, the amendment of our credit agreement to extend the maturity of a portion of our revolving credit commitments and a portion of our outstanding term A loans, repurchases of the Term Loan B, and the termination of a portion of our revolving credit commitments.

There was no comparable loss in fiscal 2021.

See Note 7 to our consolidated financial statements.

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.

Gain on Investments.

Gain on investments of $1.3 million for fiscal 2022 compared to a gain on investments of $0.5 million for fiscal 2021.

Equity Interests Loss.

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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.

We had an income tax provision of $28.4 million in fiscal 2022, compared to an income tax provision of $17.1 million in fiscal 2021.

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 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.

Our income tax provision for fiscal 2022 was also impacted by an interest accrual on uncertain tax benefits, additional uncertain tax benefits related to state income taxes identified during state tax audits, and release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

Our income tax provision for fiscal 2021 was also impacted by an interest accrual on uncertain tax benefits, and release of uncertain tax benefits due to the expiration of statutory limitations and settlements with tax authorities.

At March 31, 2022, we had U.S.

net operating loss carryforwards of approximately $1,225.7 million available to reduce future federal income taxes which expire beginning in 2029 through 2039, state net operating loss carryforwards of approximately $740.1 million available to reduce future state income taxes which expire in varying amounts beginning 2022, Canadian loss carryforwards of $7.4 million which will expire beginning in 2028, and Luxembourg loss carryforwards of $591.0 million which will expire beginning in 2036.

net operating loss carryforwards of approximately $1,602.2 million available to reduce future federal income taxes which expire beginning in 2029 through 2042, state net operating loss carryforwards of approximately $910.6 million available to reduce future state income taxes which expire in varying amounts beginning 2023, Canadian loss carryforwards of $3.9 million which will expire beginning in 2028, Luxembourg loss carryforwards of $413.0 million which will expire beginning in 2036, and other foreign jurisdiction loss carryforwards of $12.8 million which will expire beginning in 2028.

In addition, at March 31, 2022, we had U.S.

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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.

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.

Segment profit excludes, when applicable, 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/or programming and content strategy, certain charges related to the COVID-19 global pandemic, charges resulting from Russia's invasion of Ukraine, 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 loss before income taxes is presented in Note 16 to the consolidated financial statements.

Segment Presentation

We refer to our Motion Picture and Television Production segments collectively as our Studio Business.

The table below sets forth the revenues, gross contribution and segment profit of our collective Studio Business and Media Networks segment.

March 31, Increase (Decrease)

2022 2021 Amount Percent

(Amounts in millions)

Studio Business

Motion Picture $ 1,185.3 $ 1,081.1 $ 104.2 9.6 %

Television Production 1,531.0 831.8 699.2 84.1 %

Total Studio Business $ 2,716.3 $ 1,912.9 $ 803.4 42.0 %

Media Networks 1,536.2 1,562.7 (26.5) (1.7) %

Intersegment eliminations (648.2) (204.1) (444.1) 217.6 %

$ 3,604.3 $ 3,271.5 $ 332.8 10.2 %

Gross Contribution

Studio Business

Motion Picture $ 356.0 $ 401.8 $ (45.8) (11.4) %

Television Production 124.1 126.3 (2.2) (1.7) %

Total Studio Business $ 480.1 $ 528.1 $ (48.0) (9.1) %

Media Networks 243.2 383.4 (140.2) (36.6) %

Intersegment eliminations (2.7) (14.1) 11.4 (80.9) %

$ 720.6 $ 897.4 $ (176.8) (19.7) %

Segment Profit

Studio Business

Motion Picture $ 262.9 $ 295.6 $ (32.7) (11.1) %

Television Production 83.9 83.6 0.3 0.4 %

Total Studio Business $ 346.8 $ 379.2 $ (32.4) (8.5) %

Media Networks 155.2 289.5 (134.3) (46.4) %

Intersegment eliminations (2.7) (14.1) 11.4 (80.9) %

$ 499.3 $ 654.6 $ (155.3) (23.7) %

See the following discussion for further detail of our individual segments.

Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the fiscal years ended March 31, 2022 and 2021:

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Year Ended March 31,

2022 2021 (1)

Total Increase (Decrease)

Feature Film (1)

Lionsgate Original Releases (2)

Other Film (3)

Total Feature Film (1)

Total Lionsgate Original Releases (2)

Other Film (3)

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____________________

(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.

(1) During the quarter ended March 31, 2022, we changed the presentation of the categories in the table above to "Lionsgate Original Releases" and "Other Film", and changed the definitions of these categories as described further below, in order to be consistent with how management is now reviewing the Motion Picture segment.

Through December 31, 2021, we had previously presented a "Feature Film" and "Other Film" category.

Accordingly, amounts presented in the table above for fiscal 2021 have been conformed to the current fiscal year presentation.

(2) Lionsgate Original Releases:

Includes titles originally planned for a wide theatrical release by Lionsgate, including titles that have changed from a planned wide theatrical release to an initial direct-to-streaming release.

These releases include films developed and produced in-house, films co-developed and co-produced and films acquired or licensed from third parties.

In addition, Lionsgate Original Releases also includes multi-platform and direct-to-platform motion pictures originally released or licensed by Lionsgate, and the licensing of our original release motion picture content to other ancillary markets (location-based entertainment, games, etc.).

(3) 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.

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:

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.

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.

Includes acquired and licensed brands and libraries originally released by other parties such as third-party library product, including our titles released by acquired companies prior to our acquisition of the company (i.e., Summit Entertainment library), and titles released with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.

Theatrical revenue increased $53.3 million in fiscal 2022, as compared to fiscal 2021, due to an increase of $45.5 million from Lionsgate Original Releases driven by a greater number of theatrical slate releases ( The Hitman's Wife's Bodyguard, American Underdog, Spiral and Moonfall, among others) , as theaters have reopened.

In fiscal 2021, theaters were mostly closed due to circumstances associated with the COVID-19 global pandemic.

Home entertainment revenue increased $11.1 million, or 1.8%, in fiscal 2022, as compared to fiscal 2021, due to higher digital media revenue of $35.6 million, offset by lower packaged media revenue of $24.5 million.

The increase in digital media revenue primarily related to a Lionsgate Original Release direct-to-platform (i.e., SVOD) motion picture licensing agreement in fiscal 2022.

Television revenue increased $27.7 million, or 12.0%, in fiscal 2022, as compared to fiscal 2021, due to an increase from Lionsgate Original Releases of $17.4 million due to a greater number of television windows opening for our theatrical slate titles (and revenue recognized) than in fiscal 2021.

In addition, Other Film increased $10.3 million due to higher revenue from our acquired library titles.

International revenue increased $17.4 million, or 8.0%, in fiscal 2022, as compared to fiscal 2021 due to an increase from Lionsgate Original Releases of $21.4 million, offset by a decrease in Other Film of $4.0 million.

The increase in Lionsgate Original Releases related to higher revenue in fiscal 2022 from our fiscal 2021 and 2020 theatrical slates, as compared to fiscal 2021, which had limited new significant theatrical releases due to circumstances associated with the COVID-19 global pandemic.

If the adverse economic impact and disruptions associated with the COVID-19 global pandemic improve, we currently expect that Motion Picture segment revenues will increase in fiscal 2023 as compared to fiscal 2022.

The extent of the increase, if any, to Motion Picture segment revenues, will depend on, among other things, the duration and spread of the pandemic (including recent and new variants), 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, and the discovery and spread of recent and 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 continued 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 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.

The increase in direct operating expenses is due to higher Motion Picture revenue.

The slight 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 the current fiscal year as compared to the prior fiscal year.

In particular, the decrease was due to the lower amortization rate of the fiscal 2022 theatrical slate titles generating revenue in the current fiscal year, as compared to the amortization rate of the fiscal 2021 theatrical slate titles in the prior fiscal year, which reflected higher investment in film write-downs.

Investment in film write-downs included in Motion Picture segment direct operating expense in fiscal 2022 were $1.2 million, as compared to $19.4 million in fiscal 2021.

Distribution and Marketing Expense.

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 .

The increase in distribution and marketing expense in fiscal 2022 is due to increased theatrical P&A and Premium VOD expense related to more theatrical releases in fiscal 2022 and P&A incurred in advance for films to be released in subsequent quarters, as compared to fiscal 2021, which was impacted by the closure of theaters as a result of circumstances associated with the COVID-19 global pandemic.

In fiscal 2022, approximately $14.1 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters ( The Unbearable Weight of Massive Talent, The Unbreakable Boy, The Devil's Light, Borderlands ), compared to approximately $7.2 million in fiscal 2021 in the Motion Picture segment.

Gross Contribution.

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.

Gross contribution of the Motion Picture segment for fiscal 2022 decreased $45.8 million, or 11.4%, as compared to fiscal 2021 due to higher Motion Picture distribution and marketing expense as a percentage of Motion Picture revenue, partially offset by higher Motion Picture revenue and slightly lower direct operating expense as a percentage of Motion Picture revenue.

General and Administrative Expense.

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.

General and administrative expenses of the Motion Picture segment decreased $13.1 million, or 12.3%, due to a decrease in incentive based compensation.

Television Production

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

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.

Domestic television revenue increased in fiscal 2022 as compared to fiscal 2021, due to an increase of $369.7 million from intersegment revenues from the licensing of Starz original series (Power Book III:

Raising Kanan, Power Book IV:

Force, High Town, Heels Season 1 , BMF Season 1 , Step Up:

Highwater Season 3 , among others) to Starz Networks, and an increase from a greater number of television episodes delivered to third-parties ( Minx Season 1, Home Economics Season 2, Love Life Season 2, Acapulco Season 1, Dear White People Season 4 , and Welcome to Flatch Season 1 among others).

Fiscal 2021 was 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.

International revenue in fiscal 2022 increased $92.0 million, or 55.9%, as compared to fiscal 2021 , due to an increase of of $41.0 million from intersegment revenues from the licensing of Starz original series ( Power Book III:

Raising Kanan Season 1, Heels Season 1, Power Book IV:

Forc e Season 1) to STARZPLAY International, and revenue from third-parties in fiscal 2022 for Pam & Tommy Season 1, Dear White People Season 4, and Acapulco Season 1.

Home entertainment revenue in fiscal 2022 decreased $40.8 million, or 30.7%, as compared to fiscal 2021 , due to digital media revenue in fiscal 2021 for the second syndication license of Mad Men Seasons 1 to 7 and digital media revenue for Power Season 6, which compared to digital media revenue in fiscal 2022 from Weeds Seasons 1 to 8 and Welcome to Flatch Season 1.

Other revenue increased in fiscal 2022 as compared to fiscal 2021, primarily due to revenue of 3 Arts Entertainment, which was negatively impacted in fiscal 2021 as a result of the COVID-19 global pandemic related disruptions.

While television production has 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 improve, we currently expect that Television Production segment revenues will increase in fiscal 2023 as compared to fiscal 2022.

The extent of the increase to Television Production segment revenues, will depend on, among other things, the duration and spread of the pandemic (including recent and new variants), 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, and the discovery and spread of recent and 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 continued 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 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.

Direct operating expense of the Television Production segment in fiscal 2022 increased $697.4 million, or 103.1%, 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 2022 as compared to fiscal 2021, and in particular, fiscal 2022 included a greater number of newer shows in which direct operating expense is typically higher as a percentage of revenue.

Due to the increase in cost associated with production and changes in season orders,

fiscal 2022 also included increased write-downs to fair value of investment in film and television programs amounting to $34.9 million in aggregate, as compared to $10.3 million in fiscal 2021.

This compared to lower direct operating expenses as a percentage of television revenue in fiscal 2021, which included significant revenue from Mad Men, which has a lower amortization rate relative to the amortization rate of the Television Production segment, and fiscal 2021 included fewer deliveries of newer shows primarily associated with the pausing of productions due to the COVID-19 global pandemic related disruptions.

Gross Contribution.

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.

Gross contribution of the Television Production segment for fiscal 2022 decreased slightly by $2.2 million as compared to fiscal 2021 on significantly higher revenue which was offset by higher direct operating expenses as a percentage of television production revenue.

General and Administrative Expense.

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.

General and administrative expenses of the Television Production segment decreased $2.5 million, or 5.9%, due to a decrease in incentive based compensation.

Media Networks

The table below sets forth Media Networks gross contribution and segment profit for the fiscal years ended March 31, 2022 and 2021.

The Media Networks segment results of operations for fiscal 2021 included our formerly majority owned premium Spanish language streaming services business, Pantaya (representing substantially all of our former Other Streaming Services product line).

We sold our interest in Pantaya on March 31, 2021.

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

March 31, Increase (Decrease)

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

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, 2022 March 31, 2021

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

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

(Amounts in millions)

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Subscriber Data.

The number of period-end service subscribers is a key metric to evaluate a non-ad supported subscription video service as a growing or decreasing subscriber base is a key indicator of the health of the overall business.

The number of period-end service subscribers is a key metric which management uses to evaluate a non-ad supported subscription video service.

We believe this key metric provides useful information to investors as a growing or decreasing subscriber base is a key indicator of the health of the overall business.

Service subscribers may impact revenue differently depending on specific distribution agreements we have with our distributors which may include fixed fees, rates per basic video household or a rate per STARZ subscriber.

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(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.

(2) Due to the March 31, 2021 sale of Pantaya, total domestic and international subscribers, OTT subscribers and total global subscribers amounts exclude Pantaya as of March 31, 2022 and 2021.

(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 $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.

Media Networks revenue decreased $26.5 million reflecting a decrease of $50.3 million due to the sale of Pantaya on March 31, 2021, and a decrease of $18.0 million at Starz Networks, partially offset by increased revenue at STARZPLAY International of $41.8 million as a result of subscriber and revenue growth in the international territories previously launched, and additional territories launched since March 31, 2021.

Starz Networks' revenue decreased as a result of declines in revenue of $131.8 million from traditional linear services, which were mostly offset by higher OTT revenue of $111.9 million resulting from increased subscriptions.

During fiscal 2022 and fiscal 2021, the following original series premiered on STARZ:

Year Ended March 31, 2022 Year Ended March 31, 2021

Title Premiere Date Title Premiere Date

First Quarter:

Vida Season 3

The Spanish Princess

Hightown Season 1

Vida Season 2

The Rook Season 1

The Girlfriend Experience Season 3

May 2, 2021 Vida Season 3

April 26, 2020

Run the World Season 1

May 16, 2021 Hightown Season 1

Blindspotting Season 1

June 13, 2021

Second Quarter:

P-Valley Season 1

Sweetbitter Season 2

Power Book III:

Raising Kanan Season 1

July 18, 2021 P-Valley Season 1

July 12, 2020

Heels Season 1

August 15, 2021 Power Book II:

Ghost September 6, 2020

BMF - Black Mafia Family Season 1

September 26, 2021

Third Quarter:

Hightown Season 2

October 17, 2021 The Spanish Princess Season 2

October 11, 2020

Power Book II:

Ghost Power Season 6A

Power Confidential Season 1

Third Quarter:* Third Quarter:

Inside the NXIVM Cult Dublin Murders

The Spanish Princess Season 2

Ghost Season 2

November 21, 2021 Seduced:

Inside the NXIVM Cult October 18, 2020

Fourth Quarter:

American Gods Season 3

Power Season 6B

Min in Kilts Wrong Man Season 2

The Gloaming Outlander Season 5

Power Book IV:

Force Season 1

February 6, 2022 American Gods Season 3

January 10, 2021

Outlander Season 6

March 6, 2022 Men in Kilts February 14, 2021

Shining Vale Season 1

March 6, 2022 The Gloaming March 21, 2021

___________________

(1) In addition, BMF - Black Mafia Family Season 1 premiered on September 26, 2021, with the majority of episodes airing during the three months ended December 31, 2021.

(2) 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.

Ghost Season 1 premiered in the three months ended September 30, 2020, the series returned with a mid-season premiere in December 2020.

Direct Operating and Distribution and Marketing Expenses .

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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 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.

The increase in Media Networks direct operating expenses is due to increases at STARZPLAY International of $52.1 million, and at Starz Networks of $30.1 million in fiscal 2022.

These increases were partially offset by a decrease of $11.8 million due to the sale of Pantaya on March 31, 2021.

Direct operating expenses at STARZPLAY International increased as a result of the continued expansion of STARZPLAY International.

The increase in Starz Networks direct operating expense was primarily due to higher programming cost amortization related to our Starz Originals of $123.3 million due to a higher number of, and more expensive, series premieres, partially offset by lower programming amortization of $91.6 million related to theatrical releases under our programming output agreements.

The increase in Media Networks distribution and marketing expense is due to an increase of $74.1 million at Starz Networks due to increased spend on our Starz Originals and increased spend to drive growth in our subscriptions and an increase in operating expense related to continued growth in the OTT service, and an increase of $9.0 million at STARZPLAY International due primarily to increased advertising and marketing to drive growth in subscribers.

These increases were partially offset by a decrease of $39.8 million due to the sale of Pantaya on March 31, 2021.

Gross Contribution.

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.

The decrease in gross contribution compared to fiscal 2021 was due to decreases at Starz Networks of $122.2 million and STARZPLAY International of $19.3 million, driven by higher direct operating expense and distribution and marketing expense, partially offset by higher STARZPLAY International revenue, all as described above.

General and Administrative Expense.

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.

General and administrative expenses of the Media Networks segment in fiscal 2022 decreased from fiscal 2021, driven by decreases of $7.6 million due to the sale of Pantaya on March 31, 2021, and $4.3 million at Starz Networks, offset by an increase of $6.0 million at STARZPLAY International.

Liquidity and Capital Resources

Sources and Uses of Cash

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).

Sources of Cash

Our liquidity and capital requirements in fiscal 2022 were provided principally through cash generated from operations, corporate debt, our production and related loans, IP Credit Facility and other financing obligations (as further discussed below), and the monetization of trade accounts receivable.

As of March 31, 2022, we had cash and cash equivalents of $371.2 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.

Corporate Debt

Our corporate debt at March 31, 2022, excluding production and related loans and the IP Credit Facility discussed further below, consisted of the following:

• Senior Credit Facilities:

◦ Revolving Credit Facility.

We have a $1.25 billion revolving credit facility (with no amounts outstanding at March 31, 2022) due April 2026 (the "Revolving Credit Facility").

We maintain significant availability under our Revolving Credit Facility, which is currently used to meet our short-term liquidity requirements, and could also be used for longer term liquidity requirements.

◦ Term Loan A.

We have a term loan A facility, of which a portion of its outstanding loans, amounting to $444.9 million at March 31, 2022 is due April 2026 (the "2026 Term Loan A") and a portion of its outstanding loans, amounting to $193.6 million at March 31, 2022 was due March 2023 (the "2023 Term Loan A" and together with the 2026 Term Loan A, the "Term Loan A").

In April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the 2023 Term Loan A of $193.6 million (see Note 21 to our consolidated financial statements for subsequent events).

◦ Term Loan B.

We have a 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"), with $844.2 million outstanding at March 31, 2022.

• Senior Notes:

We have $1.0 billion outstanding of 5.500% senior notes due 2029 (the "5.500% Senior Notes") at March 31, 2022.

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

Production and Related Loans, IP Credit Facility and Other Financing Obligations

We utilize our production and related loans, IP Credit Facility and other financing obligations to fund our film and television productions or licenses.

Our production and related loans, IP Credit Facility and other financing obligations at March 31, 2022 include the following:

• Production and Related Loans:

Production and related loans include individual loans for the production or license of film and television programs that we produce or license and amounts outstanding under our $235.0 million non-recourse senior secured revolving credit facility due January 2025 based on collateral consisting of certain of the Company’s tax credit receivables (the "Production Tax Credit Facility").

At March 31, 2022, there was $1,286.7 million outstanding of production and related loans.

• IP Credit Facility and Other Financing Obligations:

In July 2021, as amended on September 30, 2021, certain of our subsidiaries entered into a senior secured amortizing term credit facility due July 2026 (the "IP Credit Facility") based on the collateral consisting solely of certain of our rights in certain library titles, including the Spyglass and other recently acquired libraries.

The maximum principal amount of the IP Credit Facility is $140.0 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.

At March 31, 2022, there was $123.5 million outstanding under our IP Credit Facility.

On March 31, 2022 certain subsidiaries of the Company entered into a committed secured revolving credit facility (the "Investment Grade Receivables (IGR) Facility") based on collateral consisting of certain of the Company's fixed fee or minimum guarantee contracts where cash will be received in the future.

The maximum principal amount of the IGR Facility is $125.0 million, subject to the amount of eligible collateral contributed to the facility.

The IGR Facility revolving period finishes on March 31, 2025, at which point cash collections from the underlying collateral is used to repay the facility.

The facility maturity date is up to 2 years and 90 days after the revolving period ends, currently June 28, 2027.

As of March 31, 2022, there were no amounts outstanding under the IGR Facility, however, on April 1, 2022, the Company received $125.0 million under the IGR Facility.

See Note 21 to our consolidated financial statements for Subsequent Events.

See Note 8 to our consolidated financial statements for a discussion of our production and related loans, IP Credit Facility and other financing obligations.

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

We also use cash for debt service (i.e.

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.

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

Redeemable Noncontrolling Interests.

In addition, the Company has a redeemable noncontrolling interest balance of $321.2 million as of March 31, 2022 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 11 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.

Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

• 3 Arts Entertainment.

The noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable beginning May 29, 2023, for a 60 day period.

Beginning 30 days after the expiration of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period.

• Pilgrim Media Group.

Pursuant to an amendment dated April 2, 2021, the put and call rights associated with the noncontrolling interest were extended and modified, such that the noncontrolling interest holder has a right to put and the Company has a right to call a portion of the noncontrolling interest, equal to 25% of Pilgrim Media Group, at fair value, exercisable for thirty (30) days beginning November 12, 2022.

In addition, the noncontrolling interest holder has a right to put and the Company has a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable for thirty (30) days beginning November 12, 2024, as amended.

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

Such repurchases or exchanges or refinancings, if any, will depend on prevailing market conditions, our liquidity requirements, our assessment of opportunities to lower interest expense, contractual restrictions and other factors, and such repurchases or exchanges could result in a charge from the early extinguishment of debt.

The amounts involved may be material.

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The nature of our business is such that significant initial expenditures are required to produce, acquire, distribute and market films and television programs, while revenues from these films and television programs are earned over an extended period of time after their completion or acquisition.

We expect to continue to increase our investments in film and television programs and film and programming rights acquisitions.

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 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.

In the short-term, we currently expect that our cash requirements for productions and marketing spends will increase in fiscal 2023 as compared to fiscal 2022, due to the expected increase in film and television programs, productions or acquisitions in fiscal 2023.

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, IP Credit Facility and IGR Facility and other financing obligations, and available production or license financing will be adequate to meet known operational cash and debt service (i.e.

principal and interest payments) requirements for the next twelve months and beyond, 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.

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, the monetization of trade accounts receivable, and our Production Tax Credit Facility.

Our current financing strategy is to fund operations and to leverage investment in films and television programs in the short-term and long-term through our cash flow from operations, our revolving credit facility, production and related loans, government incentive programs, film funds, the monetization of trade accounts receivable, our Production Tax Credit Facility, our IP Credit Facility, our IGR Facility, and other financing obligations.

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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If additional financing beyond our existing cash flows from operations and credit facilities cannot fund such transactions, there is no assurance that such financing will be available on terms acceptable to us.

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, 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.

Our ability to obtain any additional financing will depend on, among other things, our business plans, operating performance, the condition of the capital markets at the time we seek financing, and short and long-term debt ratings assigned by independent rating agencies.

Additionally, circumstances related to the COVID-19 global pandemic, inflation and rising interest rates 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.

Material Cash Requirements from Known Contractual and Other Obligations.

Our material cash requirements from known contractual and other obligations primarily relate to our corporate debt and film related and other obligations.

The following table sets forth our significant contractual and other obligations as of March 31, 2022 and the estimated timing of payment:

Total Next 12 Months Beyond 12 Months

(Amounts in millions)

Future annual repayment of debt and other obligations recorded as of March 31, 2022 (on-balance sheet arrangements)

Corporate debt (1) :

Revolving credit facility $ — $ — $ —

Term Loan A (1)

638.5 210.3 428.2

Term Loan B 844.2 12.5 831.7

5.500% Senior Notes 1,000.0 — 1,000.0

Film related and other obligations (2)

1,688.6 951.1 737.5

Operating lease obligations (3)

200.7 41.4 159.3

4,372.0 1,215.3 3,156.7

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

Film related obligations commitments (4)

793.2 510.9 282.3

Interest payments on corporate debt (5)

591.8 118.0 473.8

Other contractual obligations 387.9 147.5 240.4

1,772.9 776.4 996.5

Total future repayment of debt and other commitments under contractual obligations (6)

$ 6,144.9 $ 1,991.7 $ 4,153.2

___________________

(1) See Note 7 to our consolidated financial statements for further information on our corporate debt.

In April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the 2023 Term Loan A of $193.6 million, together with accrued and unpaid interest (see Note 21 to our consolidated financial statements for subsequent events).

(2) Film related and other obligations include program rights and film obligations, production and related loans, and our IP Credit Facility, included on the consolidated balance sheets.

See Note 8 to our consolidated financial statements for further information.

On April 1, 2022, the Company received $125.0 million under the IGR Facility, due beyond 12 months, not reflected in the amounts above (see Note 21 to our consolidated financial statements for subsequent events).

(3) See Note 9 to our consolidated financial statements for further information on leases.

(4) Film related obligations commitments include distribution and marketing commitments, minimum guarantee commitments, program rights commitments, and production loan commitments not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition.

See Note 17 to our consolidated financial statements for further information.

(5) Includes cash interest payments on our corporate debt, 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) Not included in the amounts above are $321.2 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 11 to our consolidated financial statements).

We are obligated to pay programming fees for all qualifying films that are released theatrically in the U.S.

by Sony’s Columbia Pictures, Screen Gems, Sony Pictures Classics and TriStar labels through 2021.

We do not license films produced by Sony Pictures Animation.

The programming fees to be paid by us to Sony are based on the quantity and domestic theatrical exhibition receipts of qualifying films.

We also have an exclusive multiyear post pay-one output licensing agreement with Universal for live-action films theatrically released in the U.S.

starting January 1, 2022.

The Universal agreement provides us with rights to exhibit these films immediately following their pay-one windows.

We are unable to estimate the amounts to be paid under the Universal agreement for films that have not yet been released in theaters, however, such amounts are expected to be significant.

In addition, as of March 31, 2022, we had gross unrecognized tax benefits of $70.2 million.

We are unable to reasonably predict the ultimate amount or timing of settlement of our unrecognized tax benefits because, until formal resolutions are reached, reasonable estimates of the amount and timing of cash settlements with the respective taxing authorities are not practicable.

However, we estimate the liability for unrecognized tax benefits will decrease in the next twelve months by $79.9 million as a result of projected audit settlements in certain jurisdictions.

For additional details of commitments and contingencies, see Note 17 to our consolidated financial statements.

The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person.

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As of March 31, 2022, the Company was in compliance with all applicable covenants.

The 5.875% Senior Notes and 6.375% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.

The 5.500% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.

As of March 31, 2022, the Company was in compliance with all applicable covenants.

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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.

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, 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.

During the fiscal year ended March 31, 2022, the Company did not repurchase any common shares.

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, 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.

At March 31, 2022, the capacity to pay dividends under the Senior Credit Facilities and the Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $205.4 million and accumulated deficit of $369.7 million were deemed free of restrictions from paying dividends at March 31, 2022.

Discussion of Operating, Investing, Financing Cash Flows

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.

Cash, cash equivalents and restricted cash decreased by $142.0 million for the fiscal year ended March 31, 2022 and increased by $206.3 million for the fiscal year ended March 31, 2021, before foreign exchange effects on cash.

Components of these changes are discussed below in more detail.

Operating Activities.

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

Cash flows used in operating activities for the fiscal years ended March 31, 2022 and 2021 were as follows:

Year Ended March 31,

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Cash interest (125.5) (136.7) 11.2

Interest and other income and expense, net 19.9 (0.9) 20.8

Current income tax provision (30.1) (13.7) (16.4)

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

Other amortization 92.5 73.2 19.3

Cash flows from operations before changes in operating assets and liabilities 1,811.4 1,515.7 295.7

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Changes in operating assets and liabilities (2,472.3) (1,516.2) (956.1)

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).

Net Cash Flows Used In Operating Activities $ (660.9) $ (0.5) $ (660.4)

Cash flows used in operating activities for the fiscal year ended March 31, 2022 were $660.9 million compared to cash flows used in operating activities of $0.5 million for the fiscal year ended March 31, 2021.

The increase in cash used in operating activities is due to greater cash used from changes in operating assets and liabilities as shown above, partially offset by increased cash flows from operations before changes in operating assets and liabilities, which includes the receipt of $22.7 million from insurance recoveries on prior shareholder litigation reflected in the interest and other income and expense, net line item above.

The greater use of cash from changes in operating assets and liabilities was driven by increased cash used for investment in films and television programs and program rights due to increased production activity in fiscal 2022 as compared to fiscal 2021, which was impacted by the pausing of productions associated with the COVID-19 global pandemic, and increases in accounts receivable, net and other assets.

In addition, cash flows used in operating activities for the fiscal year ended March 31, 2022 included a net use of cash of approximately $151.4 million from the monetization of accounts receivables programs, as compared to a net benefit of approximately $46.4 million for the year ended March 31, 2021 (see Note 19 to our consolidated financial statements).

Investing Activities.

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Investing Activities:

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

Proceeds from the sale of Pantaya $ 123.6 $ —

Proceeds from the sale of other investments 1.5 4.1

Investment in equity method investees and other (14.0) (0.2)

Distributions from equity method investees 7.2 —

Acquisition of assets (film library and related assets) (161.4) —

Increase in loans receivable (4.3) —

Capital expenditures (33.1) (35.0)

Net Cash Flows Used In Investing Activities $ (80.5) $ (31.1)

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).

Cash flows used in investing activities of $80.5 million for the fiscal year ended March 31, 2022 compared to cash flows used in investing activities of $31.1 million for the fiscal year ended March 31, 2021, primarily due to cash used for the acquisition of a film library and related assets and investment in equity method investees and other as reflected above, offset by proceeds from the sale of Pantaya (see Note 2 to our consolidated financial statements) during the fiscal year ended March 31, 2022.

Financing Activities.

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

Cash flows provided by financing activities for the fiscal years ended March 31, 2022 and 2021 were as follows:

Year Ended March 31,

(Amounts in millions)

Debt - borrowings $ 200.0 $ 852.1

Debt - borrowings, net of debt issuance and redemption costs $ 2,448.4 $ 200.0

Debt - repurchases and repayments (2,693.9) (267.6)

Net repayments of debt (67.6) (181.3)

Production loans - borrowings 273.7 59.0

Production loans - repayments (53.0) (293.8)

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

Production tax credit facility advances 118.8 —

Net repayments and repurchases of debt (245.5) (67.6)

Production and related loans - borrowings, net of debt issuance costs 1,043.2 392.5

Production and related loans - repayments (256.1) (53.0)

Net proceeds from production and related loans 787.1 339.5

IP Credit Facility and other financing advances, net of debt issuance costs 210.2 —

IP Credit Facility and other financing repayments (91.5) —

Net proceeds from IP Credit Facility and other financing 118.7 —

Repurchase of common shares — (2.2)

Other financing activities (60.9) (31.8)

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.

Net Cash Flows Provided By Financing Activities $ 599.4 $ 237.9

Cash flows provided by financing activities of $599.4 million for the fiscal year ended March 31, 2022 compared to cash flows provided by financing activities of $237.9 million for the fiscal year ended March 31, 2021.

Cash flows provided by financing activities for fiscal 2022 primarily reflects net production and related loan borrowings of $787.1 million as production activity increased in fiscal 2022, and the net IP Credit Facility and other financing advances of $118.7 million, offset by net debt repayments and repurchases of $245.5 million (discussed below).

In addition, other financing activities in fiscal 2022 includes $28.5 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 18 to our consolidated financial statements), and $35.1 million for tax withholding required on equity awards.

Net debt repayments and repurchases of $245.5 million in fiscal 2022 included the below transactions and associated debt issuance and redemption costs, along with required repayments on our term loans:

• On April 1, 2021, we redeemed in full all $518.7 million outstanding principal amount of our 5.875% Senior Notes and all $545.6 million outstanding principal amount of our 6.375% Senior Notes, and paid a prepayment premium of $15.2 million and $17.4 million on the 5.875% Senior Notes and 6.375% Senior Notes, respectively, plus accrued and unpaid interest to the date of redemption.

• On April 1, 2021, in connection with the redemption of the 5.875% Senior Notes and the 6.375% Senior Notes, we issued $1.0 billion aggregate principal amount of 5.500% Senior Notes.

• On April 6, 2021, we amended our Credit Agreement to, among other things, extend the maturity of a portion of our revolving credit commitments, amounting to $1.25 billion, and a portion of our outstanding term A loans, amounting to $444.9 million to April 6, 2026.

• During fiscal 2022, the Company also completed a series of repurchases of the Term Loan B and, in aggregate, paid $95.3 million to repurchase $96.0 million principal amount of the Term Loan B.

Cash flows provided by financing activities for fiscal 2021 primarily reflects net production and related loan borrowings of $339.5 million as production activity increased in the third and fourth quarters of fiscal 2021, and net debt repayments of $67.6 million.

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 18 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.

In addition, cash flows used in financing activities for fiscal 2020 reflects cash used for the repurchase of common shares of $2.6 million.

Net debt repurchases and repayments of $181.3 million in fiscal 2020 included the below transactions:

• In March 2020, we paid $1.0 million to repurchase $1.3 million principal amount of the 5.875% Senior Notes, and we paid $3.5 million to repurchase $4.4 million principal amount of the 6.375% Senior Notes.

• In March 2020, we paid $22.0 million to repurchase $28.0 million principal amount of the Term Loan B.

• Voluntary prepayments totaling $101.9 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 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

The following table sets forth our future annual repayment of debt, and our contractual commitments as of March 31, 2021:

Year Ended March 31,

2022 2023 2024 2025 2026 Thereafter Total

(Amounts in millions)

Future annual repayment of debt and other obligations recorded as of March 31, 2021 (on-balance sheet arrangements)

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)

— — 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)

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.

Production loans represent loans for the production of film and television programs that we produce.

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.

(5) Film obligation commitments include distribution and marketing commitments, minimum guarantee commitments, and program rights commitments.

Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute.

The payment dates of these amounts are primarily based on the anticipated release date of the film.

Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future.

Program rights commitments represent contractual commitments under programming license agreements related to films that are not available for exhibition until some future date (see below for further details).

Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred.

Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment.

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

(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).

We are obligated to pay programming fees for all qualifying films that are released theatrically in the U.S.

by Sony’s Columbia Pictures, Screen Gems, Sony Pictures Classics and TriStar labels through 2021.

We do not license films produced by Sony Pictures Animation.

The programming fees to be paid by us to Sony are based on the quantity and domestic theatrical exhibition receipts of qualifying films.

Since the term of the output programming agreement with Sony applies to all films released theatrically through December 31, 2021, the Company is obligated to pay fees for films that have not yet been released in theaters.

We are unable to estimate the amounts to be paid under these agreements for films that have not yet been released in theaters, however, such amounts are expected to be significant.

We have also entered into agreements with a number of other motion picture producers and are obligated to pay fees for the rights to exhibit certain films that are released by these producers.

For additional details of commitments and contingencies, see Note 18 to our consolidated financial statements.

Remaining Performance Obligations and Backlog

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The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.3 billion at March 31, 2022 (March 31, 2021 - $1.2 billion), respectively.

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements and other relationships with unconsolidated entities that will affect our liquidity or capital resources.

We have no special purpose entities that provided off-balance sheet financing, liquidity or market or credit risk support, nor do we engage in leasing, hedging or research and development services that could expose us to liability that is not reflected on the face of our consolidated financial statements.

Our commitments to fund operating leases, minimum guarantees, production loans, equity method investment funding requirements and all other contractual commitments not reflected on the face of our consolidated financial statements are presented in the table above.

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