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COVID-19 Global Pandemic
−Removed: 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.
+Added: 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, 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).
−Removed: Although film and television production have generally resumed, we continue to see disruption of production activities depending on local circumstances.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Although film and television production have resumed, we continue to see some disruption of production activities depending on local circumstances.
+Added: Additionally, although the lifting of quarantines enabled many theaters to reopen, we are unable to predict patronage and theater capacity going forward.
+Added: 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 duration and severity of the COVID-19 global pandemic and its variants, and among other things, the impact of governmental actions imposed in response to the COVID-19 global pandemic, 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.
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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, as presented in the table below:
−Removed: Three Months Ended
+Added: Three Months Ended Six Months Ended
+Added: September 30, September 30,
+Added: 2022 2021 2022 2021
(Amounts in millions)
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$ (6.1) $ (1.0) $ (7.1) $ 0.5
+Added: Distribution and marketing expense — 0.2 — 0.3
Restructuring and other (2)
+Added: — 0.5 0.1 0.8
Total COVID-19 related charges (benefit) $ (6.1) $ (0.3) $ (7.0) $ 1.6
−Removed: (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 of $1.0 million in the three months ended June 30, 2022 (three months ended June 30, 2021 - $5.9 million).
−Removed: In the three months ended June 30, 2022, insurance recoveries exceeded the incremental costs expensed in the quarter, resulting in a net benefit included in direct operating expense.
−Removed: (2) 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
−Removed: environment, costs associated with return-to-office safety protocols and other incremental general and administrative costs associated with the COVID-19 global pandemic.
+Added: (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 of $6.9 million and $7.9 million, respectively, in the three and six months ended September 30, 2022 (three and six months ended September 30, 2021 - insurance recoveries of $2.8 million and $8.7 million, respectively).
+Added: In the three and six months ended September 30, 2022 and the three months ended September 30, 2021, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense.
+Added: (2) 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.
−Removed: 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.
+Added: We are in the process of seeking additional insurance recovery for some of the costs already incurred.
The ultimate amount of insurance recovery cannot be estimated at this time.
See further discussion in the Results of Operations section below.
−Removed: The economic impact of the COVID-19 global pandemic and resulting societal changes will depend on numerous evolving factors that cannot be predicted with certainty.
There are a number of ways in which these uncertainties resulting from the COVID-19 global pandemic have impacted our current results of operations and could continue to impact our future results of operations.
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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.
−Removed: 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.
−Removed: Food and Drug Administration ("FDA")-approved COVID-19 vaccines), and global economic conditions related to the COVID-19 global pandemic.
−Removed: All of these impacts could place limitations on our ability to execute on our business plan and materially and adversely affect our business, financial condition and results of operations.
−Removed: 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.
−Removed: 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.
−Removed: These measures could result in further interruptions to our operations.
−Removed: Due to the evolving and uncertain nature of this situation, we are not able to estimate the full extent of the impact on our operating results, cash flows and financial position, particularly over the near to medium term.
+Added: International Restructuring and Goodwill Impairment
+Added: For the quarter ended September 30, 2022, due to continued adverse macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began implementing a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).
+Added: As a result of this restructuring, we recorded charges of $218.9 million in the three months ended September 30, 2022, reflecting charges of $213.0 million for content impairment of its film group assets in certain international territories and severance charges of $5.9 million, which are included in the restructuring and other line item in the unaudited condensed consolidated statements of operations (see Note 14 to our unaudited condensed consolidated financial statements).
+Added: During the quarter ended September 30, 2022, we recorded a goodwill impairment charge of $1.475 billion related to the Media Networks reporting unit.
+Added: Management's Discussion and Analysis, "Critical Accounting Policies and Estimates", Goodwill and Indefinite-Lived Intangible Assets and Note 5 to our unaudited condensed consolidated financial statements for further information.
Our revenues are derived from the Motion Picture, Television Production and Media Networks segments, as described below.
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None of the non-U.S.
−Removed: countries individually comprised greater than 10% of total revenues for the three months ended June 30, 2022 and 2021.
+Added: countries individually comprised greater than 10% of total revenues for the three and six months ended September 30, 2022 and 2021.
Studio Business
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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.
−Removed: In addition, when a license in our traditional pay
−Removed: television window is made to a subscription video-on-demand ("SVOD") or other digital platform, the revenues are included here.
+Added: 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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multichannel video programming distributors (“MVPDs”) including cable operators, satellite television providers and telecommunications companies (collectively, “Distributors”), and on a direct-to-consumer basis through the Starz App.
−Removed: • STARZPLAY International.
−Removed: STARZPLAY International revenues are primarily derived from OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S.
+Added: • LIONSGATE+.
+Added: LIONSGATE+ revenues are primarily derived from OTT distribution of the STARZ premium subscription video services outside of the U.S.
+Added: (formerly STARZPLAY International).
Our primary operating expenses include direct operating expenses, distribution and marketing expenses and general and administration expenses.
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Marketing costs for Media Networks includes advertising, consumer marketing, distributor marketing support and other marketing costs.
−Removed: In addition, distribution and
−Removed: marketing costs includes our Media Networks segment operating costs for the direct-to-consumer service, transponder expenses and maintenance and repairs.
+Added: In addition, distribution and marketing costs includes our Media Networks segment operating costs for the direct-to-consumer service, transponder expenses and maintenance and repairs.
General and administration expenses include salaries and other overhead.
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In addition, in the normal course of our business, some films and titles are more successful or less successful than anticipated.
−Removed: Management regularly reviews and revises when necessary its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value (see below).
+Added: regularly reviews and revises when necessary its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value (see below).
An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically results in an impairment requiring a write-down of the film cost to the title’s fair value.
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Content removed from the service and abandoned is written down to its fair value, if any, determined using a discounted cash flow approach.
+Added: For the three months ended September 30, 2022, due to the macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).
+Added: This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).
+Added: As a result of this restructuring, the Company has recorded charges of $213.0 million in the three months ended September 30, 2022 for content impairment of its film group assets in certain international territories.
+Added: These charges are excluded from segment results and included in restructuring and other in the unaudited condensed consolidated statement of operations.
+Added: See Note 3 and Note 14 to our unaudited condensed consolidated financial statements.
Valuation Assumptions.
The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 8 to our unaudited condensed consolidated financial statements).
−Removed: 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.
+Added: 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
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.
Revenue Recognition.
−Removed: Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television,
−Removed: and international market places.
+Added: Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.
Our Media Networks segment generates revenue primarily from the distribution of our STARZ branded premium subscription video services.
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If we overestimate the impact of future returns in a particular period, then we may record additional revenue in later periods when returns are less than estimated.
−Removed: An incremental change of 1% in our estimated sales returns rate (i.e., provisions for returns divided by gross sales of related product) for home entertainment products would have had an impact of approximately $0.3 million on our total revenue in the three months ended June 30, 2022 (2021 - $0.5 million).
+Added: An incremental change of 1% in our estimated sales returns rate (i.e., provisions for returns divided by gross sales of related product) for home entertainment products would have had an impact of approximately $0.2 million and $0.6 million, respectively, on our total revenue in the three and six months ended September 30, 2022 (three and six months ended September 30, 2021 - $0.4 million and $1.0 million, respectively).
Revenue from commissions are recognized as such services are provided.
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Media Networks revenue is also generated through the distribution of our SVOD service directly to consumer through the Starz App.
−Removed: The variable distribution fee arrangements represent sales or usage based royalties, which are recognized over the period of such sales or usage by our distributor, which is the same period that the content is provided to the distributor.
+Added: The variable distribution fee arrangements represent sales or usage based royalties,
+Added: which are recognized over the period of such sales or usage by our distributor, which is the same period that the content is provided to the distributor.
Estimates of revenue generated but not yet reported to us by our distribution partners are made based on the estimated number of subscribers using historical trends and recent reporting.
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Subscribers through the Starz App are billed in advance of the start of their monthly or annual membership and revenues are recognized ratably over each applicable membership period.
−Removed: Payments to distributors for marketing support
−Removed: costs for which Starz receives a discrete benefit are recorded as distribution and marketing costs, and payments to distributors for which Starz receives no discrete benefit are recorded as a reduction of revenue.
+Added: Payments to distributors for marketing support costs for which Starz receives a discrete benefit are recorded as distribution and marketing costs, and payments to distributors for which Starz receives no discrete benefit are recorded as a reduction of revenue.
Goodwill and Indefinite-Lived Intangibles.
−Removed: At June 30, 2022, the carrying value of goodwill and indefinite-lived intangible assets was $2.8 billion and $250.0 million, respectively.
+Added: At September 30, 2022, the carrying value of goodwill and indefinite-lived intangible assets was $1.29 billion and $250.0 million, respectively.
Our indefinite-lived intangible assets consist of trade names primarily representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016.
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Components are aggregated into a single reporting unit if they share similar economic characteristics.
−Removed: Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at June 30, 2022, were Motion Picture (goodwill of $394 million), Media Networks (goodwill of $1.97 billion), and our Television (goodwill of $309 million) and Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.
+Added: Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at September 30, 2022, were Motion Picture (goodwill of $394 million), Media Networks (goodwill of $493.9 million, net of $1.475 billion impairment recorded in the quarter ended September 30, 2022, as discussed further below), and our Television (goodwill of $309 million) and Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.
Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value.
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As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment tests will prove to be an accurate prediction of the future.
−Removed: Goodwill Impairment Assessment:
−Removed: 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.
−Removed: 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.
+Added: Goodwill Impairment Assessments:
+Added: 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, and 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.
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%.
−Removed: 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.
−Removed: 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.
−Removed: During the three months ended June 30, 2022, we evaluated the current macroeconomic and microeconomic environments in relation to the current and expected performance of our reporting units.
−Removed: Based on this evaluation, we determined there were no events or circumstances that would have resulted in changes to the underlying key assumptions and judgments used in our goodwill impairment test at a significance level that would indicate that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value.
−Removed: Management will continue to monitor all of its reporting units for changes in the business environment that could impact the recoverability in future periods.
+Added: During the quarter ended September 30, 2022, due to continued adverse macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on our growth in subscribers worldwide, we began implementing a plan to restructure our LIONSGATE+ business (formerly STARZPLAY International).
+Added: This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).
+Added: Our Starz domestic operations have also been impacted by these current market conditions and we have revised our subscriber growth and forecasted cash flow assumptions and implemented certain cost-saving measures.
+Added: Additionally, companies in the media and entertainment industry, and particularly those with significant streaming platforms, have experienced a decline in market valuations, and reflecting this industry trend, as well as potential capital market transactions, and the factors discussed above, the market price of our common shares has continued to decline since June 30, 2022.
+Added: Accordingly, we updated our quantitative impairment assessment for all of our reporting units based on the most recent data and expected growth trends.
+Added: 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 13.0%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.
+Added: Based on our quantitative impairment assessment, the Company determined that the fair value of our reporting units exceeded the carrying values for all of our reporting units, except the Media Networks reporting unit which was previously disclosed as a reporting unit "at risk" of impairment.
+Added: The analysis resulted in a goodwill impairment charge of $1.475 billion, related to our Media Networks reporting unit goodwill, which is recorded as a separate line item "goodwill impairment" in the unaudited condensed consolidated statement of operations (see Note 5 to the unaudited condensed consolidated financial statements).
+Added: Management will continue to monitor all of its reporting units for further 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.
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our subscriber growth rates domestically and internationally across our traditional and OTT platforms and changes in consumer behavior.
−Removed: While historical performance and current expectations have resulted in fair values of our reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.
+Added: If our assumptions are not realized, it is possible that additional impairment charges may need to be recorded in the future.
Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment:
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The Company also considered the macroeconomic impact including the uncertainty around the COVID-19 global pandemic, and the resulting uncertain long-term economic impact on discount rates and growth rates, as well as the impact from tax law changes inclusive of the reduction of the federal tax rate since the acquisition of Starz.
−Removed: During the three months ended June 30, 2022, there were no events or circumstances that would indicate that it is more-likely-than-not that the fair value of our indefinite-lived trade names is less than its carrying value.
+Added: During the three months ended September 30, 2022, due to the events and their impact discussed above related to our Media Networks reporting unit, we performed a quantitative impairment assessment of our indefinite-lived trade names.
+Added: Based on the quantitative impairment assessment of our trade names, we concluded that the fair value of our trade names was more than its carrying amount, and therefore our trade names were not considered at risk of impairment.
Finite-Lived Intangible Assets.
−Removed: At June 30, 2022, the carrying value of our finite-lived intangible assets was approximately $1.16 billion.
+Added: At September 30, 2022, the carrying value of our finite-lived intangible assets was approximately $1.12 billion.
Our finite-lived intangible assets primarily relate to customer relationships associated with U.S.
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Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 16 years.
−Removed: 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.
+Added: The Starz Traditional Affiliate customer relationship intangible asset is amortized in the proportion that current period
+Added: 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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Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required.
−Removed: During the three months ended June 30, 2022, there were no events or circumstances that would indicate that the carrying amount of our finite-lived intangible assets may not be recoverable.
+Added: During the three months ended September 30, 2022, due to the events and their impact discussed above related to our Media Networks reporting unit, we updated our impairment analysis of our amortizable intangible assets.
+Added: Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required.
Determining whether an intangible asset is recoverable or impaired requires various estimates and assumptions, including whether events or circumstances indicate that the carrying amount of the asset may not be recoverable, determining estimates of future cash flows for the assets involved and, when applicable, the assumptions applied in determining fair value, including discount rates, growth rates, market risk premiums and other assumptions about the economic environment.
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RESULTS OF OPERATIONS
−Removed: Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021
+Added: Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021
Consolidated Results of Operations
−Removed: The following table sets forth our consolidated results of operations for the three months ended June 30, 2022 and 2021:
+Added: The following table sets forth our consolidated results of operations for the three months ended September 30, 2022 and 2021:
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
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Media Networks 396.1 384.7 11.4 3.0 %
−Removed: Intersegment eliminations (198.4) (158.4) (40.0) 25.3 %
+Added: Intersegment eliminations (175.8) (163.8) (12.0) nm
Total revenues 875.2 887.8 (12.6) (1.4) %
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Depreciation and amortization 45.2 44.4 0.8 1.8 %
−Removed: Restructuring and other 8.0 3.2 4.8 150.0 %
+Added: Restructuring and other 233.2 3.5 229.7 nm
+Added: Goodwill impairment 1,475.0 — 1,475.0 n/a
Total expenses 2,622.8 858.0 1,764.8 205.7 %
3 unchanged sentences
Other expense (5.4) (2.7) (2.7) 100.0 %
−Removed: Loss on extinguishment of debt (1.3) (26.6) 25.3 n/a
−Removed: Gain (loss) on investments 1.8 (0.1) 1.9 nm
−Removed: Equity interests income 0.9 0.7 0.2 28.6 %
−Removed: Loss before income taxes (116.6) (45.2) (71.4) 158.0 %
+Added: Gain (loss) on extinguishment of debt 3.4 (0.4) 3.8 nm
+Added: Gain (loss) on investments (3.1) 1.5 (4.6) (306.7) %
+Added: Equity interests income (loss) (0.1) 0.4 (0.5) (125.0) %
+Added: Income (loss) before income taxes (1,808.3) 8.7 (1,817.0) nm
Income tax provision (5.0) (5.6) 0.6 (10.7) %
−Removed: Net loss (122.6) (51.7) (70.9) 137.1 %
+Added: Net income (loss) (1,813.3) 3.1 (1,816.4) nm
Net loss attributable to noncontrolling interest 2.2 4.4 (2.2) (50.0) %
−Removed: Net loss attributable to Lions Gate Entertainment Corp.
−Removed: shareholders $ (119.0) $ (45.4) $ (73.6) 162.1 %
+Added: Net income (loss) attributable to Lions Gate Entertainment Corp.
+Added: shareholders $ (1,811.1) $ 7.5 $ (1,818.6) nm
_______________________
nm - Percentage not meaningful.
−Removed: Consolidated revenues decreased $7.3 million in the three months ended June 30, 2022 reflecting a slight decrease of $1.1 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, offset by an increase of $33.8 million from our Studio Business.
−Removed: Motion Picture revenue decreased $12.4 million in the current quarter due primarily to fewer theatrical slate releases generating revenue in the quarter, lower packaged media home entertainment revenue, and decreased television revenue.
−Removed: These decreases were offset by increased digital media home entertainment revenue and international revenue.
−Removed: Motion Picture revenue included $3.5 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing a decrease of $0.9 million from the three months ended June 30, 2021.
−Removed: Television Production revenue increased $46.2 million due to increased intersegment revenues from the licensing of Starz original series, and increased third-party revenue from reality television programs.
−Removed: Television Production revenue included $194.9 million of revenue from licensing Television Production segment product to our Media Networks segment, representing an increase of $40.9 million from the three months ended June 30, 2021.
−Removed: The increase in Television Production revenue was partially offset by increased intersegment eliminations associated with higher Television Production revenues for licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.
−Removed: Media Networks revenue decreased $1.1 million reflecting a decrease of $8.6 million at Starz Networks, partially offset by increased revenue at STARZPLAY International of $7.5 million.
+Added: Consolidated revenues decreased $12.6 million in the three months ended September 30, 2022 reflecting a decrease of $12.0 million from our Studio 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.
+Added: These were partially offset by an increase of $11.4 million from our Media Networks business.
+Added: Motion Picture revenue decreased $106.9 million in the current quarter due primarily to lower television revenue, home entertainment revenue, international revenue and theatrical revenue.
+Added: Motion Picture revenue included $10.2 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $7.4 million from the three months ended September 30, 2021.
+Added: Television Production revenue increased $94.9 million due to increased domestic television revenue from a greater number of television episodes delivered, increased international revenue and digital home entertainment revenue.
+Added: Television Production revenue included $165.6 million of revenue from licensing Television Production segment product to our Media Networks segment, representing an increase of $4.6 million from the three months ended September 30, 2021.
+Added: The increase in Television Production revenue was partially offset by slightly increased intersegment eliminations associated with higher Television Production revenues for licenses of original series to Starz Networks and LIONSGATE+, both in the Media Networks segment.
+Added: Media Networks revenue increased $11.4 million reflecting increased revenue at LIONSGATE+ of $12.5 million, partially offset by a decrease of $1.1 million at Starz Networks.
See further discussion in the Segment Results of Operations section below.
Direct Operating Expenses.
−Removed: Direct operating expenses by segment were as follows for the three months ended June 30, 2022 and 2021:
+Added: Direct operating expenses by segment were as follows for the three months ended September 30, 2022 and 2021:
Three Months Ended
+Added: September 30,
2022 2021 Increase (Decrease)
7 unchanged sentences
Media Networks 225.2 56.9 200.9 52.2 24.3 12.1 %
−Removed: COVID-19 related charges (1.0) nm 1.6 nm (2.6) (162.5) %
−Removed: Other 0.2 nm 0.5 nm (0.3) (60.0) %
−Removed: Intersegment eliminations (193.3) nm (167.0) nm (26.3) 15.7 %
+Added: COVID-19 related charges (benefit) (6.1) nm (1.0) nm (5.1) nm
+Added: Other 8.5 nm 0.6 nm 7.9 nm
+Added: Intersegment eliminations (159.0) nm (160.7) nm 1.7 nm
$ 563.5 64.4 % $ 483.2 54.4 % $ 80.3 16.6 %
1 unchanged sentence
nm - Percentage not meaningful.
−Removed: Direct operating expenses increased in the three months ended June 30, 2022 due to higher direct operating expenses of the Media Networks segment and our Studio Business, partially offset by higher intersegment eliminations.
−Removed: The increase in Media Networks direct operating expense was driven by increases at Starz Networks of $72.8 million and STARZPLAY International of $15.6 million.
−Removed: The increase at the Studio Business reflects higher direct operating expenses of the Television Production segment due to higher revenues, and higher direct operating expenses of the Motion Picture segment due to higher direct operating expense as a percentage of Motion Picture revenue due to the mix of product in the current quarter.
−Removed: The increase in intersegment eliminations is due to increased revenue from licenses of original series to Starz Networks and STARZPLAY International, as discussed above.
+Added: Direct operating expenses increased in the three months ended September 30, 2022 due to higher direct operating expenses of our Studio Business and Media Networks segment.
+Added: The increase at the Studio Business reflects higher direct operating expenses of the Television Production segment due to higher revenues from Television Production, offset by lower direct operating expenses of the Motion Picture segment due to lower Motion Picture revenue.
+Added: The increase in Media Networks direct operating expense was driven by increases at LIONSGATE+ of $15.2 million and Starz Networks of $9.1 million due to higher programming cost amortization, and foreign currency fluctuations at LIONSGATE+ related to the strengthening U.S.
See further discussion in the Segment Results of Operations section below.
−Removed: COVID-19 Related Charges.
+Added: COVID-19 Related Charges (Benefit).
As discussed previously, we incurred certain incremental costs associated with the COVID-19 global pandemic.
−Removed: In the three months ended June 30, 2022, direct operating expense included a benefit of $1.0
−Removed: 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 (three months ended June 30, 2021 - charges of $1.6 million).
−Removed: 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.
−Removed: 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.
+Added: In the three months ended September 30, 2022, direct operating expense included a benefit of $6.1 million from insurance recoveries in excess of incremental costs associated with the pausing and restarting of productions
+Added: including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic (three months ended September 30, 2021 - benefit of $1.0 million).
+Added: 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 new variants which may result in disruptions to our operations.
+Added: We are in the process of seeking additional insurance recovery for some of the costs already incurred.
The ultimate amount of insurance recovery cannot be estimated at this time.
−Removed: Other direct operating expenses in the table above includes share-based compensation, and the three months ended June 30, 2021 also 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.
+Added: In the three months ended September 30, 2022, in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment, the Company wrote off approximately $7.2 million of development costs as a result of changes in strategy across its theatrical slate.
+Added: These charges 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.
+Added: In addition, "other" direct operating expense includes share-based compensation, and 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.
−Removed: Distribution and marketing expenses by segment were as follows for the three months ended June 30, 2022 and 2021:
+Added: Distribution and marketing expenses by segment were as follows for the three months ended September 30, 2022 and 2021:
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
6 unchanged sentences
Media Networks 125.8 155.5 (29.7) (19.1) %
+Added: COVID-19 related charges — 0.2 (0.2) (100.0) %
Other 0.2 0.2 — — %
+Added: Intersegment eliminations 1.1 — 1.1 n/a
$ 184.6 $ 216.9 $ (32.3) (14.9) %
theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 23.0 $ 21.5 $ 1.5 7.0 %
−Removed: Distribution and marketing expenses decreased in the three months ended June 30, 2022, due to lower Studio Business distribution and marketing expense, offset by increased Media Networks distribution and marketing expense.
−Removed: The decrease at the Studio Business reflects lower Motion Picture theatrical P&A and Premium VOD expense associated with fewer releases in the current quarter.
−Removed: The increase in Media Networks distribution and marketing expense was due to an increase at Starz Networks of $24.8 million resulting from an increase in spend to increase awareness of first season original series premieres and drive growth in subscribers, and an increase at STARZPLAY International of $8.5 million.
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: Distribution and marketing expenses decreased in the three months ended September 30, 2022, due to lower Media Networks distribution and marketing expense, and lower Studio Business distribution and marketing expense.
+Added: The decrease in Media Networks distribution and marketing expense was due to a decrease at Starz Networks of $23.8 million and a decrease at LIONSGATE+ of $5.9 million resulting from timing and volume of our Starz Originals' premieres.
+Added: The decrease at the Studio Business reflects lower Motion Picture home entertainment distribution and marketing expense associated with fewer releases in the current quarter.
See further discussion in the Segment Results of Operations section below.
General and Administrative Expenses.
−Removed: General and administrative expenses by segment were as follows for the three months ended June 30, 2022 and 2021:
+Added: General and administrative expenses by segment were as follows for the three months ended September 30, 2022 and 2021:
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 % of Revenues 2021 % of Revenues Amount Percent
11 unchanged sentences
Total general and administrative expenses $ 121.3 13.9% $ 110.0 12.4% $ 11.3 10.3 %
−Removed: General and administrative expenses decreased in the three months ended June 30, 2022, resulting from decreased share-based compensation expense, Corporate, and Motion Picture general and administrative expenses, and purchase accounting and related adjustments, partially offset by increases in Media Networks and Television Production general and administrative expenses.
+Added: General and administrative expenses increased in the three months ended September 30, 2022, resulting from increased share-based compensation expense, purchase accounting and related adjustments, Media Networks and Studio Business general and administrative expenses.
See further discussion in the Segment Results of Operations section below.
−Removed: Corporate general and administrative expenses decreased $1.3 million, or 5.3%, primarily due to a decrease in incentive based compensation.
−Removed: The decrease in share-based compensation expense included in general and administrative expense in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021 is primarily due to lower fair values associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved.
+Added: Corporate general and administrative expenses in the three months ended September 30, 2022 was comparable to the three months ended September 30, 2021.
+Added: The increase in share-based compensation expense included in general and administrative expense in the three months ended September 30, 2022, as compared to the three months ended September 30, 2021 is primarily due to share-based
+Added: compensation expense associated with the Company's incentive based compensation program.
The following table presents share-based compensation expense by financial statement line item:
Three Months Ended
+Added: September 30,
(Amounts in millions)
5 unchanged sentences
Total share-based compensation expense $ 26.6 $ 20.4
−Removed: _______________________
−Removed: (1) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.
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.
−Removed: Purchase accounting and related adjustments decreased $0.4 million, or 2.4%, primarily due to the expense associated with the earned distributions related to 3 Arts Entertainment.
+Added: Purchase accounting and related adjustments increased $2.4 million, or 22.2%, primarily due to the expense associated with the earned distributions related to 3 Arts Entertainment.
Depreciation and Amortization Expense.
−Removed: Depreciation and amortization of $42.4 million for the three months ended June 30, 2022 decreased $0.9 million from $43.3 million in the three months ended June 30, 2021 due to lower amortization expense related to our customer relationship intangible assets.
+Added: Depreciation and amortization of $45.2 million in the three months ended September 30, 2022 increased $0.8 million, from $44.4 million in the three months ended September 30, 2021.
Restructuring and Other.
−Removed: Restructuring and other increased $4.8 million in the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable.
−Removed: Restructuring and other costs were as follows for the three months ended June 30, 2022 and 2021 (see Note 13 to our unaudited condensed consolidated financial statements):
+Added: Restructuring and other increased $229.7 million in the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable.
+Added: Restructuring and other costs were as follows for the three months ended September 30, 2022 and 2021 (see Note 14 to our unaudited condensed consolidated financial statements):
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
1 unchanged sentence
Restructuring and other:
+Added: Content and other impairments (1)
+Added: $ 218.8 $ — $ 218.8 n/a
Severance (2)
−Removed: Cash $ 2.8 $ 2.4 $ 0.4 16.7 %
−Removed: Accelerated vesting on equity awards (see Note 11 to our unaudited condensed consolidated financial statements) 0.6 — 0.6 n/a
−Removed: Total severance costs 3.4 2.4 1.0 41.7 %
+Added: 9.6 1.3 8.3 nm
COVID-19 related charges (3)
1 unchanged sentence
Transaction and related costs (4)
−Removed: 4.5 0.5 4.0 nm
4.8 1.7 3.1 182.4 %
+Added: $ 233.2 $ 3.5 $ 229.7 nm
_______________________
nm - Percentage not meaningful.
−Removed: (1) Severance costs in the three months ended June 30, 2022 and 2021 were primarily related to restructuring activities in connection with cost-saving initiatives.
+Added: (1) For the three months ended September 30, 2022, due to the macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).
+Added: This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).
+Added: As a result of this restructuring, the Company has recorded charges of $213.0 million in the three months ended September 30, 2022 for content impairment of its film group assets in certain international territories.
+Added: These charges are excluded from segment results and included in restructuring and other in the unaudited condensed consolidated statement of operations.
+Added: The Company expects to incur additional charges ranging from approximately $75 million to $100 million in the next six months primarily related to certain contractual content commitments and other items as we fully implement the plan.
+Added: These amounts also reflect the estimated net future cash expenditures for these charges.
+Added: In addition, the Company expects future cash expenditures of approximately $75 million related to the content charges recorded in the three months ended September 30, 2022.
+Added: Amounts in the three months ended September 30, 2022 also include an impairment of an operating lease right-of-use asset amounting to $5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company.
+Added: The impairment reflects a decline in market conditions since the inception of the lease impacting potential sublease opportunities, and represents the difference between the estimated fair value, which was determined based on the expected discounted future cash flows of the lease asset, and the carrying value.
+Added: (2) In connection with the international restructuring described above, the Company has implemented certain cost-saving initiatives both domestically and internationally, and has recorded severance charges of $5.9 million in the three months ended September 30, 2022 related to the Media Networks segment.
+Added: In addition, due to the changes in the marketplace and certain management, and the implementation of certain cost-saving initiatives and the streamlining of operations, the Company recorded additional severance charges of $3.7 million primarily related to the Motion Picture segment.
(3) 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.
−Removed: (3) Transaction and related costs in the three months ended June 30, 2022 and 2021 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.
+Added: (4) Transaction and related costs in the three and six months ended September 30, 2022 and 2021 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.
+Added: Goodwill Impairment.
+Added: Goodwill impairment of $1.475 billion for the three months ended September 30, 2022 reflects the impairment charge recorded in the current quarter related to the Media Networks reporting unit, as discussed in Item 2.
+Added: Management's Discussion and Analysis, "Critical Accounting Policies and Estimates", Goodwill and Indefinite-Lived Intangible Assets (see Note 5 to our unaudited condensed consolidated financial statements).
+Added: There was no comparable charge in the three months ended September 30, 2021.
Interest Expense.
−Removed: Interest expense of $46.1 million in the three months ended June 30, 2022 increased $4.4 million from the three months ended June 30, 2021.
−Removed: The following table sets forth the components of interest expense for the three months ended June 30, 2022 and 2021:
+Added: Interest expense of $57.3 million for the three months ended September 30, 2022 increased $13.3 million, from $44.0 million in the three months ended September 30, 2021.
+Added: The following table sets forth the components of interest expense for the three months ended September 30, 2022 and 2021:
Three Months Ended
+Added: September 30,
(Amounts in millions)
6 unchanged sentences
_______________________
−Removed: (1) Amounts include payments associated with the Company's interest rate swaps (see Note 16 to our unaudited condensed consolidated financial statements).
−Removed: (2) Amounts include the amortization of unrealized losses in accumulated other comprehensive income (loss) related to de-designated interest rate swaps which are being amortized to interest expense.
+Added: (1) Amounts include payments associated with the Company's interest rate swaps (see Note 17 to our unaudited condensed consolidated financial statements) and interest payments associated with the Company's film related financing and other obligations (Production Tax Credit Facility, IP Credit Facility, Backlog Financing Facility and other).
+Added: (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.
The decrease is due to the amortization of unrealized gains in accumulated other comprehensive income (loss) related to the termination of certain of our interest rate swaps on May 20, 2022 (see Note 17 to our unaudited condensed consolidated financial statements).
Interest and Other Income.
−Removed: Interest and other income of $1.3 million for the three months ended June 30, 2022 compared to interest and other income of $3.9 million for the three months ended June 30, 2021, due to insurance recoveries on prior shareholder litigation of $2.5 million in the prior year's quarter (see Note 15 to our unaudited condensed consolidated financial statements).
+Added: Interest and other income of $1.8 million for the three months ended September 30, 2022 compared to interest and other income of $24.1 million for the three months ended September 30, 2021, due to insurance recoveries on prior shareholder litigation of $20.2 million in the prior year's quarter (see Note 16 to our unaudited condensed consolidated financial statements).
Other Expense.
−Removed: Other expense of $5.0 million for the three months ended June 30, 2022 compared to other expense of $1.7 million for the three months ended June 30, 2021, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 17 to our unaudited condensed consolidated financial statements).
−Removed: Loss on Extinguishment of Debt.
−Removed: Loss on extinguishment of debt of $1.3 million for the three months ended June 30, 2022 represented a loss for the write-off of debt issuance costs associated with the voluntary prepayment of the entire outstanding amount of Term Loan A due March 22, 2023.
−Removed: In the three months ended June 30, 2021, the loss on extinguishment of debt of $26.6 million 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, and repurchases of the Term Loan B.
+Added: Other expense of $5.4 million for the three months ended September 30, 2022 compared to other expense of $2.7 million for the three months ended September 30, 2021, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 18 to our unaudited condensed consolidated financial statements).
+Added: Gain (Loss) on Extinguishment of Debt.
+Added: Gain on extinguishment of debt of $3.4 million for the three months ended September 30, 2022 represented a gain associated with the 5.500% Senior Notes repurchased at a discount in the current quarter, partially offset by the write-off of debt issuance costs.
+Added: This compared to a loss on extinguishment of debt of $0.4 million in the three months ended September 30, 2021 related to the write-off of debt issuance costs.
See Note 6 to our unaudited condensed consolidated financial statements.
−Removed: Gain on Investments.
−Removed: Gain on investments of $1.8 million for the three months ended June 30, 2022 compared to a loss on investments of $0.1 million for the three months ended June 30, 2021 due to equity securities sold in the current quarter.
−Removed: Equity Interests Income.
−Removed: Equity interests income of $0.9 million in the three months ended June 30, 2022 compared to equity interests income of $0.7 million in the three months ended June 30, 2021.
+Added: Gain (Loss) on Investments.
+Added: Loss on investments of $3.1 million for the three months ended September 30, 2022 compared to a gain on investments of $1.5 million for the three months ended September 30, 2021.
+Added: Equity Interests Income (Loss).
+Added: Equity interests loss of $0.1 million in the three months ended September 30, 2022 compared to equity interests income of $0.4 million in the three months ended September 30, 2021.
Income Tax Provision.
−Removed: We had an income tax provision of $6.0 million in the three months ended June 30, 2022, compared to an income tax provision of $6.5 million in the three months ended June 30, 2021.
+Added: We had an income tax provision of $5.0 million in the three months ended September 30, 2022, compared to an income tax provision of $5.6 million in the three months ended September 30, 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.
−Removed: Our income tax provision for the three months ended June 30, 2022 and 2021 was also impacted by an interest accrual on uncertain tax benefits.
−Removed: Net Loss Attributable to Lions Gate Entertainment Corp.
+Added: Our income tax provision for the three months ended September 30, 2022 was also impacted by an interest accrual on uncertain tax benefits.
+Added: Our income tax provision for the three months ended September 30, 2021 was also impacted by an interest accrual on uncertain tax benefits, and the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.
+Added: Net Income (Loss) Attributable to Lions Gate Entertainment Corp.
Shareholders.
−Removed: Net loss attributable to our shareholders for the three months ended June 30, 2022 was $119.0 million, or basic and diluted net loss per common share of $0.53 on 225.6 million weighted average common shares outstanding.
−Removed: This compares to net loss attributable to our shareholders for the three
−Removed: months ended June 30, 2021 of $45.4 million, or basic and diluted net loss per common share of $0.20 on 221.8 million weighted average common shares outstanding.
+Added: Net loss attributable to our shareholders for the three months ended September 30, 2022 was $1,811.1 million, or basic and diluted net loss per common share of $7.95 on 227.9 million weighted average common shares outstanding.
+Added: This compares to net income attributable to our shareholders for the three months ended September 30, 2021 of $7.5 million, or basic net income per common share of $0.03 on 224.4 million weighted average common shares outstanding and diluted net income per common share of $0.03 on 228.5 million weighted average common shares outstanding.
Segment Results of Operations
6 unchanged sentences
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
25 unchanged sentences
Motion Picture
−Removed: The table below sets forth Motion Picture gross contribution and segment profit for the three months ended June 30, 2022 and 2021:
+Added: The table below sets forth Motion Picture gross contribution and segment profit for the three months ended September 30, 2022 and 2021:
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
12 unchanged sentences
nm - Percentage not meaningful.
−Removed: The table below sets forth Motion Picture revenue by media and product category for the three months ended June 30, 2022 and 2021:
−Removed: Three Months Ended June 30,
+Added: The table below sets forth Motion Picture revenue by media and product category for the three months ended September 30, 2022 and 2021:
+Added: Three Months Ended September 30,
2022 2021 Total Increase (Decrease)
17 unchanged sentences
Through December 31, 2021, we had previously presented a "Feature Film" and "Other Film" category.
−Removed: Accordingly, amounts presented in the table above for the three months ended June 30, 2021 have been conformed to the current period presentation.
+Added: Accordingly, amounts presented in the table above for the three months ended September 30, 2021 have been conformed to the current period presentation.
(2) Lionsgate Original Releases:
4 unchanged sentences
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.
−Removed: Theatrical revenue decreased $17.5 million in the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 due to a decrease of $17.5 million from Lionsgate Original Releases driven by fewer theatrical slate releases generating revenue in the quarter.
−Removed: Home entertainment revenue increased $8.1 million, or 5.5%, in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, due to higher digital media revenue of $20.0 million, offset by lower packaged media revenue of $11.9 million driven by Lionsgate Original Releases.
−Removed: The increase in digital media revenue was due to an increase of $13.6 million from Lionsgate Original Releases due to higher revenue from direct-to-platform (i.e., SVOD) releases, and an increase of $6.4 million from Other Film due to higher revenue from our acquired library titles.
−Removed: Television revenue decreased $5.5 million, or 10.8%, in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, due to a decrease from Lionsgate Original Releases of $10.8 million due to fewer television windows opening for our theatrical slate titles than in the prior year's quarter, offset by an increase from Other Film of $5.3 million due to higher revenue from our acquired library titles.
−Removed: International revenue increased $2.9 million, or 4.6%, in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021 due to an increase from Lionsgate Original Releases, and from our Other Film acquired library titles.
+Added: Theatrical revenue decreased $10.0 million in the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 due to a decrease of $7.3 million from Other Film due to lower revenue from our acquired library titles.
+Added: Home entertainment revenue decreased $45.2 million, or 28.1%, in the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, due to lower digital media revenue of $27.9 million, and lower packaged media revenue of $17.3 million driven by Lionsgate Original Releases.
+Added: The decreases in digital and packaged media revenue were due to decreases of $19.5 million and $11.5 million, respectively, from Lionsgate Original Releases due to revenue in the prior year's quarter from The Hitman's Wife's Bodyguard (a fiscal 2022 theatrical release) .
+Added: In addition, the decreases in digital and packaged media were due to decreases of $8.4 million and $5.8 million, respectively, from Other Film due to lower revenue from our acquired library titles.
+Added: Television revenue decreased $39.2 million, or 43.1%, in the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, due to a decrease from Lionsgate Original Releases of $36.3 million due to fewer television windows opening for our theatrical slate titles than in the prior year's quarter, and lower revenue recognized for those titles.
+Added: In particular, the current quarter included revenue from Moonfall (a fiscal 2022 theatrical release), as compared to revenue from Chaos Walking and Barb and Star Go to Vista Del Mar (both fiscal 2021 theatrical releases) in the prior year's quarter.
+Added: International revenue decreased $13.8 million, or 23.3%, in the three months ended September 30, 2022, as compared to the three months ended September 30, 2021 due to a decrease from Lionsgate Original Releases of $17.1 million due to lower revenue generated from our fiscal 2023 and fiscal 2022 theatrical state titles in the current quarter as compared to the fiscal 2022 and fiscal 2021 theatrical slate titles in the prior year's quarter.
Direct Operating Expense.
−Removed: The increase in direct operating expenses is due to higher expense as a percentage of motion picture revenue in the current quarter.
−Removed: The increase in direct operating expenses as a percentage of motion picture revenue is driven by the change in the mix of titles and product categories generating revenue in the current quarter as compared to the prior year's quarter, including higher expense related to direct-to-platform Lionsgate Original Releases (which require less marketing cost and generally carry less risk, and thus the film cost is higher as a percentage of revenue) representing approximately 3.7% of the increase, and increased development write-offs on Lionsgate Original Releases in the current quarter, representing approximately 4.7% of the increase.
−Removed: Investment in film write-downs included in Motion Picture segment direct operating expense in the three months ended June 30, 2022 were $0.5 million, as compared to none in the three months ended June 30, 2021.
+Added: The decrease in direct operating expenses is due to lower motion picture revenue in the current quarter.
+Added: The decrease in direct operating expenses as a percentage of motion picture revenue is driven by the change in the mix of titles and product categories generating revenue in the current quarter as compared to the prior year's quarter.
+Added: In particular, the current quarter reflected the lower amortization rate of our fiscal 2022 and prior theatrical slate titles, as compared to the higher amortization rate of our fiscal 2021 and prior theatrical slate titles in the prior year's quarter.
+Added: Investment in film write-downs included in Motion Picture segment direct operating expense were not significant in the three months ended September 30, 2022 or the three months ended September 30, 2021.
Distribution and Marketing Expense.
−Removed: The decrease in distribution and marketing expense in the three months ended June 30, 2022 is due to lower theatrical P&A and Premium VOD expense associated with fewer releases in the current quarter.
−Removed: In the three months ended June 30, 2022 approximately $5.3 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $2.7 million in the three months ended June 30, 2021 in the Motion Picture segment.
+Added: The decrease in distribution and marketing expense in the three months ended September 30, 2022 is due to lower home entertainment distribution and marketing expense associated with fewer releases in the current quarter.
+Added: In the three months ended September 30, 2022, approximately $9.6 million of theatrical P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $4.2 million in the prior year's quarter in the Motion Picture segment.
Gross Contribution.
−Removed: Gross contribution of the Motion Picture segment for the three months ended June 30, 2022 increased as compared to the three months ended June 30, 2021 due to lower Motion Picture distribution and marketing expense, partially offset by lower Motion Picture revenue and higher direct operating expense as a percentage of Motion Picture revenue.
+Added: Gross contribution of the Motion Picture segment for the three months ended September 30, 2022 decreased as compared to the three months ended September 30, 2021, due to lower Motion Picture revenue, partially offset by lower direct operating expense and distribution and marketing expense.
General and Administrative Expense.
−Removed: General and administrative expenses of the Motion Picture segment in the three months ended June 30, 2022 decreased $1.8 million, or 7.4%, primarily due to a decrease in incentive based compensation.
+Added: General and administrative expenses of the Motion Picture segment in the three months ended September 30, 2022 was comparable to the three months ended September 30, 2021.
Television Production
−Removed: The table below sets forth Television Production gross contribution and segment profit for the three months ended June 30, 2022 and 2021:
+Added: The table below sets forth Television Production gross contribution and segment profit for the three months ended September 30, 2022 and 2021:
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
9 unchanged sentences
Gross contribution as a percentage of revenue 5.5 % 11.3 %
−Removed: The table below sets forth Television Production revenue and changes in revenue by media for the three months ended June 30, 2022 and 2021:
+Added: The table below sets forth Television Production revenue and changes in revenue by media for the three months ended September 30, 2022 and 2021:
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
−Removed: Television Production (Amounts in millions)
+Added: (Amounts in millions)
+Added: Television Production Revenue
Television $ 294.2 $ 228.2 $ 66.0 28.9 %
7 unchanged sentences
The primary component of Television Production revenue is domestic television revenue.
−Removed: Domestic television revenue increased in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, due to an increase of $14.0 million from intersegment revenues from the licensing of Starz original series (Power Book III:
−Removed: Raising Kanan, The Serpent Queen Season 1 , P-Valley Season 2 , Party Down Season 3 , among others) to Starz Networks, and increased third-party revenue from reality television programs.
−Removed: International revenue in the three months ended June 30, 2022 increased $11.8 million, or 17.5% as compared to the three months ended June 30, 2021 due to an increase of $12.9 million from intersegment revenues from the licensing of Starz original series ( The Serpent Queen Season 1, Power Book III:
−Removed: Raising Kanan Season 2, Party Down Season 3, P-Valley Season 2) to STARZPLAY International.
−Removed: Home entertainment revenue in the three months ended June 30, 2022 increased $5.4 million, or 20.1% as compared to the three months ended June 30, 2021 due to digital media revenue from Heels Season 1 and The First Lady Season 1 in the current quarter, which compared to digital media revenue in the prior year's quarter for Weeds Seasons 1 to 8 and Welcome to Flatch Season 1.
−Removed: Other revenue in the three months ended June 30, 2022 was comparable to the three months ended June 30, 2021, and primarily includes revenue of 3 Arts Entertainment.
+Added: Domestic television revenue increased in the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, due to a greater number of television episodes delivered, which included revenue in the current quarter from Mythic Quest Season 3, Acapulco Season 2, Home Economics Season 3.
+Added: International revenue in the three months ended September 30, 2022 increased $17.4 million, or 30.5%, due to significant revenue in the current quarter from Mythic Quest Season 3 and Acapulco Season 2, as compared to significant revenue in the prior year's quarter from Acapulco Season 1.
+Added: Home entertainment revenue in the three months ended September 30, 2022 increased $8.9 million due to digital media revenue from Ghosts Season 1 and Nashville Seasons 1 to 6 in the current quarter, which compared to digital media revenue in the prior year's quarter for Weeds Seasons 1 to 8.
+Added: Other revenue increased $2.6 million in the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, and primarily includes revenue of 3 Arts Entertainment.
Direct Operating Expense.
−Removed: Direct operating expense of the Television Production segment in the three months ended June 30, 2022 increased $28.0 million, or 7.7% due to the increase in Television Production revenues.
−Removed: Direct operating expenses as a percentage of television production revenue decreased slightly as compared to the prior year's quarter, which included higher write-downs to fair value of investment in film and television programs.
−Removed: The current quarter included write-downs to fair value of investment in film and television programs amounting to $1.2 million in aggregate, as compared to $25.0 million in the prior year's quarter.
+Added: Direct operating expense of the Television Production segment in the three months ended September 30, 2022 increased $107.0 million, or 36.8% due to the increase in Television Production revenues.
+Added: Direct operating expenses as a percentage of television production revenue increased primarily due to the mix of titles generating revenue in the current quarter as compared to the prior year's quarter, and in particular, the current quarter included a greater number of deliveries of newer shows in which direct operating expense is typically higher as a percentage of revenue and increased amortization from a show that was not renewed for a second season.
Gross Contribution.
−Removed: Gross contribution of the Television Production segment for the three months ended June 30, 2022 increased as compared to the three months ended June 30, 2021, due to increased television production revenue and lower direct operating expenses as a percentage of television production revenue.
+Added: Gross contribution of the Television Production segment for the three months ended September 30, 2022 decreased as compared to the three months ended September 30, 2021, due to increased direct operating expenses as a percentage of television production revenue, offset by increased television production revenue.
General and Administrative Expense.
1 unchanged sentence
Media Networks
−Removed: The table below sets forth Media Networks gross contribution and segment profit for the three months ended June 30, 2022 and 2021:
+Added: The table below sets forth Media Networks gross contribution and segment profit for the three months ended September 30, 2022 and 2021.
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2022 2021 Amount Percent
11 unchanged sentences
Three Months Ended Three Months Ended
−Removed: June 30, 2022 June 30, 2021
−Removed: Starz Networks STARZPLAY International Total Media Networks Starz Networks STARZPLAY International Total Media Networks
+Added: September 30, 2022 September 30, 2021
+Added: Starz Networks LIONSGATE+ Total Media Networks Starz Networks LIONSGATE+ Total Media Networks
(Amounts in millions)
11 unchanged sentences
The table below sets forth, for the periods presented, subscriptions to our Media Networks and STARZPLAY Arabia services.
−Removed: June 30, June 30,
+Added: September 30, September 30,
(Amounts in millions)
3 unchanged sentences
Total 21.0 20.6
−Removed: STARZPLAY International
Linear Subscribers 1.8 1.8
13 unchanged sentences
(2) OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.
−Removed: Media Networks revenue decreased $1.1 million reflecting a decrease of $8.6 million at Starz Networks, partially offset by increased revenue at STARZPLAY International of $7.5 million as a result of subscriber and revenue growth in the international territories previously launched, and additional territories launched since June 30, 2021.
+Added: Media Networks revenue increased $11.4 million reflecting increased revenue at LIONSGATE+ of $12.5 million as a result of subscriber and revenue growth in the international territories previously launched, and additional territories launched since September 30, 2021, partially offset by a decrease of $1.1 million at Starz Networks.
Starz Networks' revenue decreased as a result of declines in revenue of $34.7 million from traditional linear services, which were mostly offset by higher OTT revenue of $32.8 million resulting from increased subscriptions.
−Removed: During the three months ended June 30, 2022 and 2021, the following original series premiered on STARZ:
−Removed: Three Months Ended June 30, 2022 Three Months Ended June 30, 2021
+Added: During the three months ended September 30, 2022 and 2021, the following original series premiered on STARZ:
+Added: Three Months Ended September 30, 2022 Three Months Ended September 30, 2021
Title Premiere Date Title Premiere Date
+Added: Second Quarter:
+Added: Second Quarter:
+Added: Power Book III:
+Added: Raising Kanan Season 2
+Added: August 14, 2022 Power Book III:
+Added: Raising Kanan Season 1
+Added: July 18, 2021
+Added: Serpent Queen Season 1
+Added: September 11, 2022 Heels Season 1
+Added: August 15, 2021
+Added: BMF - Black Mafia Family Season 1
+Added: September 26, 2021
+Added: Direct Operating and Distribution and Marketing Expenses .
+Added: Direct operating and distribution and marketing expenses primarily represent programming cost amortization and advertising and marketing costs, respectively.
+Added: The level of programming cost amortization and advertising and marketing costs and thus the gross contribution margin for the Media Networks' segment can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during the period.
+Added: Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere.
+Added: In addition, the LIONSGATE+ international service, in its remaining territories, has and will continue to result in an increase in expenses as the service continues to expand.
+Added: The increase in Media Networks direct operating expenses is due to increases at LIONSGATE+ of $15.2 million and Starz Networks of $9.1 million in the three months ended September 30, 2022.
+Added: Direct operating expenses at LIONSGATE+ increased as a result of higher programming cost amortization and foreign currency fluctuations related to the strengthening U.S.
+Added: The increase in Starz Networks direct operating expense was primarily due to higher programming cost amortization due to our Starz Originals of $11.4 million, higher programming cost amortization of $3.7 million related to library content, and other increases in direct operating expenses, partially offset by a benefit in the current quarter of $10.0 million associated with the modification of a content licensing arrangement.
+Added: The decrease in Media Networks distribution and marketing expense is due to a decrease of $23.8 million at Starz Networks and $5.9 million at LIONSGATE+, resulting from timing and volume of our Starz Originals' premieres.
+Added: During the three months ended September 30, 2022, we premiered two series as compared to three series during the prior year's quarter, as presented in the table above.
+Added: Gross Contribution.
+Added: The increase in gross contribution compared to the three months ended September 30, 2021 was due to increases at Starz Networks of $13.6 million and LIONSGATE+ of $3.2 million, due to lower distribution and marketing expense, and higher LIONSGATE+ revenue, partially offset by higher direct operating expense, all as described above.
+Added: General and Administrative Expense.
+Added: General and administrative expenses of the Media Networks segment in the three months ended September 30, 2022 increased slightly from the prior year's quarter, due to increases of $0.6 million at Starz Networks, and $0.7 million at LIONSGATE+.
+Added: Six Months Ended September 30, 2022 Compared to Six Months Ended September 30, 2021
+Added: Consolidated Results of Operations
+Added: The following table sets forth our consolidated results of operations for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: (Amounts in millions)
+Added: Studio Business
+Added: Motion Picture $ 502.8 $ 622.1 $ (119.3) (19.2) %
+Added: Television Production 863.2 722.1 141.1 19.5 %
+Added: Total Studio Business 1,366.0 1,344.2 21.8 1.6 %
+Added: Media Networks 777.3 767.0 10.3 1.3 %
+Added: Intersegment eliminations (374.2) (322.2) (52.0) 16.1 %
+Added: Total revenues 1,769.1 1,789.0 (19.9) (1.1) %
+Added: Direct operating 1,160.0 969.3 190.7 19.7 %
+Added: Distribution and marketing 396.2 434.5 (38.3) (8.8) %
+Added: General and administration 224.9 240.6 (15.7) (6.5) %
+Added: Depreciation and amortization 87.6 87.8 (0.2) (0.2) %
+Added: Restructuring and other 241.3 6.7 234.6 nm
+Added: Goodwill impairment 1,475.0 — 1,475.0 n/a
+Added: Total expenses 3,585.0 1,738.9 1,846.1 106.2 %
+Added: Operating income (loss) (1,815.9) 50.1 (1,866.0) nm
+Added: Interest expense (103.4) (85.7) (17.7) 20.7 %
+Added: Interest and other income 3.1 28.0 (24.9) (88.9) %
+Added: Other expense (10.4) (4.3) (6.1) 141.9 %
+Added: Gain (loss) on extinguishment of debt 2.1 (27.1) 29.2 n/a
+Added: Gain (loss) on investments (1.3) 1.5 (2.8) nm
+Added: Equity interests income 0.8 1.1 (0.3) (27.3) %
+Added: Loss before income taxes (1,925.0) (36.4) (1,888.6) nm
+Added: Income tax provision (11.0) (12.1) 1.1 (9.1)%
+Added: Net loss (1,936.0) (48.5) (1,887.5) nm
+Added: Net loss attributable to noncontrolling interest 5.9 10.6 (4.7) (44.3) %
+Added: Net loss attributable to Lions Gate Entertainment Corp.
+Added: shareholders $ (1,930.1) $ (37.9) $ (1,892.2) nm
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: Consolidated revenues decreased $19.9 million in the six months ended September 30, 2022 reflecting increased intersegment eliminations, which primarily relate to the licensing of product from our Studio Business (primarily our Television Production segment) to the Media Networks segment, partially offset by an increase of $10.3 million from our Media Networks business and an increase of $21.8 million from our Studio Business resulting from the changes in Motion Picture revenue and Television Production revenue as discussed below.
+Added: Motion Picture revenue decreased $119.3 million in the current period due primarily to fewer theatrical slate releases generating revenue in the period, and lower television, home entertainment, and international revenue.
+Added: Motion Picture revenue included $13.7 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $6.5 million from the six months ended September 30, 2021.
+Added: Television Production revenue increased $141.1 million due to a greater number of television episodes delivered, increased intersegment revenues from the licensing of Starz original series, and increased third-party revenue from reality television programs.
+Added: Television Production revenue included $360.5 million of revenue from licensing Television Production segment product to our Media Networks segment, representing an increase of $45.5 million from the six months ended September 30, 2021.
+Added: The increase in Television Production revenue was partially offset by increased intersegment eliminations associated with higher Television Production revenues for licenses of original series to Starz Networks and LIONSGATE+, both in the Media Networks segment.
+Added: Media Networks revenue increased $10.3 million reflecting increased revenue at LIONSGATE+ of $19.9 million, partially offset by a decrease of $9.6 million at Starz Networks.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: Direct Operating Expenses.
+Added: Direct operating expenses by segment were as follows for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30,
+Added: 2022 2021 Increase (Decrease)
+Added: Amount % of Segment Revenues Amount % of Segment Revenues Amount Percent
+Added: (Amounts in millions)
+Added: Direct operating expenses
+Added: Studio Business
+Added: Motion Picture $ 247.8 49.3 % $ 280.1 45.0 % $ (32.3) (11.5) %
+Added: Television Production 790.6 91.6 655.6 90.8 135.0 20.6 %
+Added: Total Studio Business 1,038.4 76.0 935.7 69.6 102.7 11.0 %
+Added: Media Networks 472.4 60.8 359.8 46.9 112.6 31.3 %
+Added: COVID-19 related charges (benefit) (7.1) nm 0.5 nm (7.6) nm
+Added: Other 8.7 nm 1.0 nm 7.7 nm
+Added: Intersegment eliminations (352.4) nm (327.7) nm (24.7) 7.5 %
+Added: $ 1,160.0 65.6 % $ 969.3 54.2 % $ 190.7 19.7 %
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: Direct operating expenses increased in the six months ended September 30, 2022 due to higher direct operating expenses of the Media Networks segment and our Studio Business, partially offset by higher intersegment eliminations.
+Added: The increase in Media Networks direct operating expense was driven by increases at Starz Networks of $81.9 million and LIONSGATE+ of $30.7 million due to higher programming cost amortization, and foreign currency fluctuations at LIONSGATE+ related to the strengthening U.S.
+Added: The increase at the Studio Business reflects higher direct operating expenses of the Television Production segment due to higher revenues from Television Production, partially offset by lower direct operating expenses of the Motion Picture segment due to lower revenues.
+Added: The increase in intersegment eliminations is due to increased revenue from licenses of original series to Starz Networks and LIONSGATE+, as discussed above.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: COVID-19 Related Charges (Benefit).
+Added: As discussed previously, we incurred certain incremental costs associated with the COVID-19 global pandemic.
+Added: In the six months ended September 30, 2022, direct operating expense included a benefit of $7.1 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 (six months ended September 30, 2021 - charges of $0.5 million).
+Added: 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 new variants which may result in disruptions to our operations.
+Added: We are in the process of seeking additional insurance recovery for some of the costs already incurred.
+Added: The ultimate amount of insurance recovery cannot be estimated at this time.
+Added: In the quarter ended September 30, 2022, in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment, the Company wrote off approximately $7.2 million of development costs as a result of changes in strategy across its theatrical slate.
+Added: These charges 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.
+Added: In addition, "other" direct operating expense includes share-based compensation, and 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.
+Added: Distribution and Marketing Expenses.
+Added: Distribution and marketing expenses by segment were as follows for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: (Amounts in millions)
+Added: Distribution and marketing expenses
+Added: Studio Business:
+Added: Motion Picture $ 103.2 $ 148.8 $ (45.6) (30.6) %
+Added: Television Production 18.3 15.5 2.8 18.1 %
+Added: Total Studio Business 121.5 164.3 (42.8) (26.0) %
+Added: Media Networks 273.3 269.6 3.7 1.4 %
+Added: COVID-19 related charges — 0.3 (0.3) (100.0) %
+Added: Other 0.4 0.3 0.1 33.3 %
+Added: Intersegment eliminations 1.0 — 1.0 n/a
+Added: $ 396.2 $ 434.5 $ (38.3) (8.8) %
+Added: theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 49.3 $ 79.3 $ (30.0) (37.8) %
+Added: Distribution and marketing expenses decreased in the six months ended September 30, 2022, due to lower Studio Business distribution and marketing expense, offset by slightly increased Media Networks distribution and marketing expense.
+Added: The decrease at the Studio Business reflects lower Motion Picture theatrical P&A and Premium VOD expense associated with fewer releases in the current period, and lower home entertainment distribution and marketing expense.
+Added: The slight increase in Media Networks distribution and marketing expense was due to increases at LIONSGATE+ of $2.7 million and at Starz Networks of $1.0 million.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: General and Administrative Expenses.
+Added: General and administrative expenses by segment were as follows for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 % of Revenues 2021 % of Revenues Amount Percent
+Added: (Amounts in millions)
+Added: General and administrative expenses
+Added: Studio Business
+Added: Motion Picture $ 45.7 $ 47.1 $ (1.4) (3.0) %
+Added: Television Production 21.3 19.5 1.8 9.2 %
+Added: Total Studio Business 67.0 66.6 0.4 0.6 %
+Added: Media Networks 47.6 43.9 3.7 8.4 %
+Added: Corporate 47.9 48.8 (0.9) (1.8) %
+Added: 162.5 9.2% 159.3 8.9% 3.2 2.0 %
+Added: Share-based compensation expense 33.2 54.1 (20.9) (38.6) %
+Added: Purchase accounting and related adjustments 29.2 27.2 2.0 7.4 %
+Added: Total general and administrative expenses $ 224.9 12.7% $ 240.6 13.4% $ (15.7) (6.5) %
+Added: General and administrative expenses decreased in the six months ended September 30, 2022, resulting from decreased share-based compensation expense, Corporate, and Motion Picture general and administrative expenses, partially offset by increases in Media Networks and Television Production general and administrative expenses and purchase accounting and related adjustments.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: Corporate general and administrative expenses decreased $0.9 million, or 1.8%, primarily due to a decrease in incentive based compensation.
+Added: The decrease in share-based compensation expense included in general and administrative expense in the six months ended September 30, 2022, as compared to the six months ended September 30, 2021 is primarily due to lower fair values associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved.
+Added: The following table presents share-based compensation expense by financial statement line item:
+Added: Six Months Ended
+Added: September 30,
+Added: (Amounts in millions)
+Added: Share-based compensation expense by expense category
+Added: General and administrative expense $ 33.2 $ 54.1
+Added: Restructuring and other (1)
+Added: Direct operating expense 0.8 0.5
+Added: Distribution and marketing expense 0.4 0.3
+Added: Total share-based compensation expense $ 35.0 $ 54.9
+Added: _______________________
+Added: (1) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.
+Added: 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.
+Added: Purchase accounting and related adjustments increased $2.0 million, or 7.4%, primarily due to the expense associated with the earned distributions related to 3 Arts Entertainment.
+Added: Depreciation and Amortization Expense.
+Added: Depreciation and amortization of $87.6 million for the six months ended September 30, 2022 decreased $0.2 million from $87.8 million in the six months ended September 30, 2021.
+Added: Restructuring and Other.
+Added: Restructuring and other increased $234.6 million in the six months ended September 30, 2022 as compared to the six months ended September 30, 2021, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable.
+Added: Restructuring and other costs were as follows for the six months ended September 30, 2022 and 2021 (see Note 14 to our unaudited condensed consolidated financial statements):
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: (Amounts in millions)
+Added: Restructuring and other:
+Added: Content and other impairment (1)
+Added: $ 218.8 $ — $ 218.8 n/a
+Added: Severance (2)
+Added: Cash 12.4 3.8 8.6 226.3 %
+Added: Accelerated vesting on equity awards (see Note 12 to our unaudited condensed consolidated financial statements)
+Added: 0.6 — 0.6 n/a
+Added: Total severance costs 13.0 3.8 9.2 242.1 %
+Added: COVID-19 related charges (3)
+Added: 0.1 0.8 (0.7) (87.5) %
+Added: Transaction and related costs (4)
+Added: 9.4 2.1 7.3 nm
+Added: $ 241.3 $ 6.7 $ 234.6 nm
+Added: _______________________
+Added: nm - Percentage not meaningful
+Added: (1) For the three months ended September 30, 2022, due to the macro and microeconomic conditions, including the competitive environment, continued inflationary trends and recessionary economies worldwide and its impact on the Company's growth in subscribers worldwide, the Company began a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International).
+Added: This restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).
+Added: As a result of this restructuring, the Company has recorded charges of $213.0 million in the quarter ended September 30, 2022 for content impairment of its film group assets in certain international territories.
+Added: These charges are excluded from segment results and included in restructuring and other in the unaudited condensed consolidated statement of operations.
+Added: The Company expects to incur additional charges ranging from approximately $75 million to $100 million in the next six months primarily related to certain contractual content commitments and other items as we fully implement the plan.
+Added: These amounts also reflect the estimated net future cash expenditures for these charges.
+Added: In addition, the Company expects future cash expenditures of approximately $75 million related to the content charges recorded in the three months ended September 30, 2022.
+Added: Amounts in the six months ended September 30, 2022 also include an impairment of an operating lease right-of-use asset amounting to $5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company.
+Added: The impairment reflects a decline in market conditions since the inception of the lease impacting potential sublease opportunities, and represents the difference between the estimated fair value, which was determined based on the expected discounted future cash flows of the lease asset, and the carrying value.
+Added: (2) In connection with the international restructuring described above, the Company has implemented certain cost-saving initiatives both domestically and internationally, and has recorded severance charges of $5.9 million in the quarter ended September 30, 2022 related to the Media Networks segment.
+Added: In addition, due to the changes in the marketplace and certain management, and the implementation of certain cost-saving initiatives and the streamlining of operations, the Company recorded additional severance charges of $3.7 million primarily related to the Motion Picture segment.
+Added: (3) 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.
+Added: (4) Transaction and related costs in the six months ended September 30, 2022 and 2021 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.
+Added: Goodwill Impairment.
+Added: Goodwill impairment of $1.475 billion for the six months ended September 30, 2022 reflects the impairment charge recorded in the current quarter related to the Media Networks reporting unit, as discussed in Item 2.
+Added: Management's Discussion and Analysis, "Critical Accounting Policies and Estimates", Goodwill and Indefinite-Lived Intangible Assets (see Note 5 to our unaudited condensed consolidated financial statements).
+Added: There was no comparable charge in the six months ended September 30, 2021.
+Added: Interest Expense.
+Added: Interest expense of $103.4 million in the six months ended September 30, 2022 increased $17.7 million from the six months ended September 30, 2021.
+Added: The following table sets forth the components of interest expense for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30,
+Added: (Amounts in millions)
+Added: Interest Expense
+Added: Revolving credit facility $ 7.3 $ 3.5
+Added: Term loans 23.4 16.9
+Added: Senior Notes 27.3 27.1
+Added: Amortization of debt financing costs and other non-cash interest (2)
+Added: Total interest expense $ 103.4 $ 85.7
+Added: ______________________
+Added: (1) Amounts include payments associated with the Company's interest rate swaps (see Note 17 to our unaudited condensed consolidated financial statements) and interest payments associated with the Company's film related financing and other obligations (Production Tax Credit Facility, IP Credit Facility, Backlog Financing Facility and other).
+Added: (2) Amounts include the amortization of unrealized losses in accumulated other comprehensive income (loss) related to de-designated interest rate swaps which are being amortized to interest expense.
+Added: The decrease is due to the amortization of unrealized gains in accumulated other comprehensive income (loss) related to the termination of certain of our interest rate swaps on May 20, 2022 (see Note 17 to our unaudited condensed consolidated financial statements).
+Added: Interest and Other Income.
+Added: Interest and other income of $3.1 million for the six months ended September 30, 2022 compared to interest and other income of $28.0 million for the six months ended September 30, 2021, due to insurance recoveries on prior shareholder litigation of $22.7 million in the prior year's period (see Note 16 to our unaudited condensed consolidated financial statements).
+Added: Other Expense.
+Added: Other expense of $10.4 million for the six months ended September 30, 2022 compared to other expense of $4.3 million for the six months ended September 30, 2021, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 18 to our unaudited condensed consolidated financial statements).
+Added: Gain (Loss) on Extinguishment of Debt.
+Added: Gain on extinguishment of debt of $2.1 million for the six months ended September 30, 2022 represented a gain associated with the 5.500% Senior Notes repurchased at a discount in the current quarter, partially offset by the write-off of debt issuance costs associated with the voluntary prepayment of the entire outstanding amount of Term Loan A due March 22, 2023 and the repurchase of the Senior Notes.
+Added: In the six months ended September 30, 2021, the loss on extinguishment of debt of $27.1 million 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, and repurchases of the Term Loan B.
+Added: See Note 6 to our unaudited condensed consolidated financial statements.
+Added: Gain (Loss) on Investments.
+Added: Loss on investments of $1.3 million for the six months ended September 30, 2022 compared to a gain on investments of $1.5 million for the six months ended September 30, 2021.
+Added: Equity Interests Income.
+Added: Equity interests income of $0.8 million in the six months ended September 30, 2022 compared to equity interests income of $1.1 million in the six months ended September 30, 2021.
+Added: Income Tax Provision.
+Added: We had an income tax provision of $11.0 million in the six months ended September 30, 2022, compared to an income tax provision of $12.1 million in the six months ended September 30, 2021.
+Added: 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.
+Added: Our income tax provision for the six months ended September 30, 2022 and 2021 was also impacted by an interest accrual on uncertain tax benefits, and the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.
+Added: Net Loss Attributable to Lions Gate Entertainment Corp.
+Added: Shareholders.
+Added: Net loss attributable to our shareholders for the six months ended September 30, 2022 was $1,930.1 million, or basic and diluted net loss per common share of $8.51 on 226.8 million weighted average common shares outstanding.
+Added: This compares to net loss attributable to our shareholders for the six months ended September 30, 2021 of $37.9 million, or basic and diluted net loss per common share of $0.17 on 223.1 million weighted average common shares outstanding.
+Added: Segment Results of Operations
+Added: The segment results of operations presented below do not include the elimination of intersegment transactions which are eliminated when presenting consolidated results, and exclude items separately identified in the restructuring and other line item in the unaudited condensed consolidated statements of operations.
+Added: The Company's primary measure of segment performance is segment profit.
+Added: See Note 15 to the unaudited condensed consolidated financial statements for our definition of segment profit and a reconciliation of segment profit to the Company's consolidated loss before income taxes.
+Added: Segment Presentation
+Added: We refer to our Motion Picture and Television Production segments collectively as our Studio Business.
+Added: The table below sets forth the revenues, gross contribution and segment profit of our collective Studio Business and Media Networks segment.
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: (Amounts in millions)
+Added: Studio Business
+Added: Motion Picture $ 502.8 $ 622.1 $ (119.3) (19.2) %
+Added: Television Production 863.2 722.1 141.1 19.5 %
+Added: Total Studio Business $ 1,366.0 $ 1,344.2 $ 21.8 1.6 %
+Added: Media Networks 777.3 767.0 10.3 1.3 %
+Added: Intersegment eliminations (374.2) (322.2) (52.0) 16.1 %
+Added: $ 1,769.1 $ 1,789.0 $ (19.9) (1.1) %
+Added: Gross Contribution
+Added: Studio Business
+Added: Motion Picture $ 151.8 $ 193.2 $ (41.4) (21.4) %
+Added: Television Production 54.3 51.0 3.3 6.5 %
+Added: Total Studio Business $ 206.1 $ 244.2 $ (38.1) (15.6) %
+Added: Media Networks 31.6 137.6 (106.0) (77.0) %
+Added: Intersegment eliminations (22.8) 5.5 (28.3) (514.5) %
+Added: $ 214.9 $ 387.3 $ (172.4) (44.5) %
+Added: Segment Profit
+Added: Studio Business
+Added: Motion Picture $ 106.1 $ 146.1 $ (40.0) (27.4) %
+Added: Television Production 33.0 31.5 1.5 4.8 %
+Added: Total Studio Business $ 139.1 $ 177.6 $ (38.5) (21.7) %
+Added: Media Networks (16.0) 93.7 (109.7) (117.1) %
+Added: Intersegment eliminations (22.8) 5.5 (28.3) (514.5) %
+Added: $ 100.3 $ 276.8 $ (176.5) (63.8) %
+Added: See the following discussion for further detail of our individual segments.
+Added: Motion Picture
+Added: The table below sets forth Motion Picture gross contribution and segment profit for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: (Amounts in millions)
+Added: Motion Picture Segment:
+Added: Revenue $ 502.8 $ 622.1 $ (119.3) (19.2) %
+Added: Direct operating expense 247.8 280.1 (32.3) (11.5) %
+Added: Distribution & marketing expense 103.2 148.8 (45.6) (30.6) %
+Added: Gross contribution 151.8 193.2 (41.4) (21.4) %
+Added: General and administrative expenses 45.7 47.1 (1.4) (3.0) %
+Added: Segment profit $ 106.1 $ 146.1 $ (40.0) (27.4) %
+Added: theatrical P&A and Premium VOD expense included in distribution and marketing expense $ 49.3 $ 79.3 $ (30.0) (37.8) %
+Added: Direct operating expense as a percentage of revenue 49.3 % 45.0 %
+Added: Gross contribution as a percentage of revenue 30.2 % 31.1 %
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: The table below sets forth Motion Picture revenue by media and product category for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended September 30,
+Added: 2022 2021 Total Increase (Decrease)
+Added: Lionsgate Original Releases (1)
+Added: Other Film (2)
+Added: Total Lionsgate Original Releases (1)
+Added: Other Film (2)
+Added: (Amounts in millions)
+Added: Motion Picture Revenue
+Added: Theatrical $ 14.5 $ 2.4 $ 16.9 $ 34.7 $ 9.7 $ 44.4 $ (27.5)
+Added: Home Entertainment
+Added: Digital Media 148.0 83.1 231.1 156.9 85.1 242.0 (10.9)
+Added: Packaged Media 19.0 17.0 36.0 37.8 27.4 65.2 (29.2)
+Added: Total Home Entertainment 167.0 100.1 267.1 194.7 112.5 307.2 (40.1)
+Added: Television 79.1 20.9 100.0 123.1 18.5 141.6 (41.6)
+Added: International 83.2 28.0 111.2 98.5 23.6 122.1 (10.9)
+Added: Other 4.6 3.0 7.6 4.0 2.8 6.8 0.8
+Added: $ 348.4 $ 154.4 $ 502.8 $ 455.0 $ 167.1 $ 622.1 $ (119.3)
+Added: ____________________
+Added: (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.
+Added: Through December 31, 2021, we had previously presented a "Feature Film" and "Other Film" category.
+Added: Accordingly, amounts presented in the table above for the six months ended September 30, 2022 have been conformed to the current period presentation.
+Added: (2) Lionsgate Original Releases:
+Added: 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.
+Added: These releases include films developed and produced in-house, films co-developed and co-produced and films acquired or licensed from third parties.
+Added: 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.).
+Added: (3) Other Film:
+Added: 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.
+Added: Theatrical revenue decreased $27.5 million in the six months ended September 30, 2022 as compared to the six months ended September 30, 2021 due to a decrease of $20.2 million from Lionsgate Original Releases driven by fewer theatrical slate releases generating revenue in the period, and a decrease of $7.3 million from Other Film due to lower revenue from our acquired library titles.
+Added: Home entertainment revenue decreased $40.1 million, or 13.1%, in the six months ended September 30, 2022, as compared to the six months ended September 30, 2021, due to lower packaged media revenue of $29.2 million and lower digital media revenue of $10.9 million driven by Lionsgate Original Releases.
+Added: The decreases in packaged and digital media revenue were due to decreases of $18.8 million and $8.9 million, respectively, from Lionsgate Original Releases due to lower revenue from our theatrical slate titles and multi-platform releases, and offset by higher digital media revenue from direct-to-platform (i.e., SVOD) releases.
+Added: In addition, the decrease in packaged media revenue was due to a decrease of $10.4 million from Other Film due to lower revenue from our acquired library titles.
+Added: Television revenue decreased $41.6 million, or 29.4%, in the six months ended September 30, 2022, as compared to the six months ended September 30, 2021, due to a decrease from Lionsgate Original Releases of $44.0 million due to fewer television windows opening for our theatrical slate titles than in the prior year's quarter, and lower revenue recognized for those titles.
+Added: In particular, the current period included revenue from American Underdog and Moonfall (both fiscal 2022 theatrical releases), as compared to revenue from Chaos Walking, Barb and Star Go to Vista Del Mar and Fatale (all fiscal 2021 theatrical releases) in the prior year's period.
+Added: International revenue decreased $10.9 million, or 8.9%, in the six months ended September 30, 2022, as compared to the six months ended September 30, 2021 due to a decrease from Lionsgate Original Releases of $15.3 million due to lower revenue generated from our fiscal 2023 and fiscal 2022 theatrical slate titles in the current period as compared to the fiscal 2022 and fiscal 2021 theatrical slate titles in the prior year's quarter, partially offset by increased revenue from direct-to-platform releases.
+Added: Direct Operating Expense.
+Added: The decrease in direct operating expenses is due to lower motion picture revenue in the current period.
+Added: The increase in direct operating expenses as a percentage of motion picture revenue is driven by the change in the mix of titles and product categories generating revenue in the current period as compared to the prior year's period, including higher expense related to direct-to-platform Lionsgate Original Releases (which require less marketing cost and generally carry less risk, and thus the film cost is higher as a percentage of revenue) contributing approximately 1.9% to the increase, and increased development write-offs on Lionsgate Original Releases in the current period, contributing approximately 4.2% to the increase.
+Added: Investment in film write-downs included in Motion Picture segment direct operating expense in the six months ended September 30, 2022 were $0.5 million, as compared to $0.1 million in the six months ended September 30, 2021.
+Added: Distribution and Marketing Expense.
+Added: The decrease in distribution and marketing expense in the six months ended September 30, 2022 is due to lower theatrical P&A and Premium VOD expense associated with fewer releases in the current period, and lower home entertainment distribution and marketing expense.
+Added: In the six months ended September 30, 2022 approximately $14.8 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $5.6 million in the six months ended September 30, 2021 in the Motion Picture segment.
+Added: Gross Contribution.
+Added: Gross contribution of the Motion Picture segment for the six months ended September 30, 2022 decreased as compared to the six months ended September 30, 2021 due to lower Motion Picture revenue, and higher direct operating expense as a percentage of Motion Picture revenue, partially offset by lower distribution and marketing expense.
+Added: General and Administrative Expense.
+Added: General and administrative expenses of the Motion Picture segment in the six months ended September 30, 2022 decreased $1.4 million, or 3.0%, primarily due to a decrease in incentive based compensation.
+Added: Television Production
+Added: The table below sets forth Television Production gross contribution and segment profit for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: (Amounts in millions)
+Added: Television Production Segment:
+Added: Revenue $ 863.2 $ 722.1 $ 141.1 19.5 %
+Added: Direct operating expense 790.6 655.6 135.0 20.6 %
+Added: Distribution & marketing expense 18.3 15.5 2.8 18.1 %
+Added: Gross contribution 54.3 51.0 3.3 6.5 %
+Added: General and administrative expenses 21.3 19.5 1.8 9.2 %
+Added: Segment profit $ 33.0 $ 31.5 $ 1.5 4.8 %
+Added: Direct operating expense as a percentage of revenue 91.6 % 90.8 %
+Added: Gross contribution as a percentage of revenue 6.3 % 7.1 %
+Added: The table below sets forth Television Production revenue and changes in revenue by media for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: Television Production (Amounts in millions)
+Added: Television $ 595.6 $ 500.4 $ 95.2 19.0 %
+Added: International 153.7 124.4 29.3 23.6 %
+Added: Home Entertainment
+Added: Digital 73.9 57.8 16.1 27.9 %
+Added: Packaged Media 1.4 3.2 (1.8) (56.3) %
+Added: Total Home Entertainment 75.3 61.0 14.3 23.4 %
+Added: Other 38.6 36.3 2.3 6.3 %
+Added: $ 863.2 $ 722.1 $ 141.1 19.5 %
+Added: The primary component of Television Production revenue is domestic television revenue.
+Added: Domestic television revenue increased in the six months ended September 30, 2022, as compared to the six months ended September 30, 2021, due to a greater number of television episodes delivered, which included revenue in the current period from The First Lady Season 1, Mythic Quest Season 3 and Acapulco Season 2, an increase of $21.7 million from intersegment revenues from the licensing of Starz original series (Power Book II:
+Added: Ghost Season 3, P-Valley Season 2 , Power Book III:
+Added: Raising Kanan, and The Serpent Queen Season 1 , among others) to Starz Networks, and increased third-party revenue from reality television programs.
+Added: International revenue in the six months ended September 30, 2022 increased $29.3 million, or 23.6% as compared to the six months ended September 30, 2021 due to significant revenue in the current period from Mythic Quest Season 3, The First Lady Season 1 and Acapulco Season 2, as compared to significant revenue in the prior year's period from Dear White People Season 4 and Acapulco Season 1.
+Added: In addition, the increase reflects an increase of $8.8 million from intersegment revenues from the licensing of Starz original series to LIONSGATE+.
+Added: Home entertainment revenue in the six months ended September 30, 2022 increased $14.3 million, or 23.4% as compared to the six months ended September 30, 2021 due to an increase of $14.8 million from digital media intersegment revenues from the licensing of Starz original series.
+Added: In addition, significant digital media revenue in the current period included Ghosts Season 1, Nashville Seasons 1 to 6, and The First Lady Season 1, and in the prior year's period included Weeds Seasons 1 to 8 and Welcome to Flatch Season 1.
+Added: Other revenue in the six months ended September 30, 2022 increased slightly from the six months ended September 30, 2021, and primarily includes revenue of 3 Arts Entertainment.
+Added: Direct Operating Expense.
+Added: Direct operating expense of the Television Production segment in the six months ended September 30, 2022 increased $135.0 million, or 20.6% due to the increase in Television Production revenues.
+Added: Direct operating expenses as a percentage of television production revenue increased slightly as compared to the prior year's period, reflecting an increase in the current period for a greater number of deliveries of newer shows in which direct operating expense is typically higher as a percentage of revenue and increased amortization from one show that was not renewed for a second season, offset by a decrease from higher write-downs to fair value of investment in film and television programs in the prior year's period.
+Added: The current period included write-downs to fair value of investment in film and television programs amounting to $4.7 million in aggregate, as compared to $26.6 million in the prior year's period.
+Added: Gross Contribution.
+Added: Gross contribution of the Television Production segment for the six months ended September 30, 2022 increased as compared to the six months ended September 30, 2021, due to increased television production revenue and slightly higher direct operating expenses as a percentage of television production revenue.
+Added: General and Administrative Expense.
+Added: General and administrative expenses of the Television Production segment increased $1.8 million, or 9.2% primarily due to an increase in salaries and related expenses.
+Added: Media Networks
+Added: The table below sets forth Media Networks gross contribution and segment profit for the six months ended September 30, 2022 and 2021:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2022 2021 Amount Percent
+Added: (Amounts in millions)
+Added: Media Networks Segment:
+Added: Revenue $ 777.3 $ 767.0 $ 10.3 1.3 %
+Added: Direct operating expense 472.4 359.8 112.6 31.3 %
+Added: Distribution & marketing expense 273.3 269.6 3.7 1.4 %
+Added: Gross contribution 31.6 137.6 (106.0) (77.0) %
+Added: General and administrative expenses 47.6 43.9 3.7 8.4 %
+Added: Segment profit $ (16.0) $ 93.7 $ (109.7) (117.1) %
+Added: Direct operating expense as a percentage of revenue 60.8 % 46.9 %
+Added: Gross contribution as a percentage of revenue 4.1 % 17.9 %
+Added: The following table sets forth the Media Networks segment profit by product line:
+Added: Six Months Ended Six Months Ended
+Added: September 30, 2022 September 30, 2021
+Added: Starz Networks LIONSGATE+ Total Media Networks Starz Networks LIONSGATE+ Total Media Networks
+Added: (Amounts in millions)
+Added: Media Networks Segment:
+Added: Revenue $ 707.1 $ 70.2 $ 777.3 $ 716.7 $ 50.3 $ 767.0
+Added: Direct operating expense 375.8 96.6 472.4 293.9 65.9 359.8
+Added: Distribution & marketing expense 219.9 53.4 273.3 218.9 50.7 269.6
+Added: Gross contribution 111.4 (79.8) 31.6 203.9 (66.3) 137.6
+Added: General and administrative expenses 34.1 13.5 47.6 32.5 11.4 43.9
+Added: Segment profit $ 77.3 $ (93.3) $ (16.0) $ 171.4 $ (77.7) $ 93.7
+Added: Media Networks revenue increased $10.3 million reflecting increased revenue at LIONSGATE+ of $19.9 million as a result of subscriber and revenue growth in the international territories previously launched, and additional territories launched since September 30, 2021, partially offset by a decrease of $9.6 million at Starz Networks.
+Added: Starz Networks' revenue decreased as a result of declines in revenue of $71.7 million from traditional linear services, which were mostly offset by higher OTT revenue of $60.6 million resulting from increased subscriptions.
+Added: During the six months ended September 30, 2022 and 2021, the following original series premiered on STARZ:
+Added: Six Months Ended September 30, 2022 Six Months Ended September 30, 2021
+Added: Title Premiere Date Title Premiere Date
First Quarter:
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Who is Ghislaine Maxwell June 26, 2022
+Added: Second Quarter:
+Added: Second Quarter:
+Added: Power Book III:
+Added: Raising Kanan Season 2
+Added: August 14, 2022 Power Book III:
+Added: Raising Kanan Season 1
+Added: July 18, 2021
+Added: Serpent Queen Season 1
+Added: September 11, 2022 Heels Season 1
+Added: August 15, 2021
+Added: BMF - Black Mafia Family Season 1
+Added: September 26, 2021
Direct Operating and Distribution and Marketing Expenses .
2 unchanged sentences
Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere.
−Removed: 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.
−Removed: The increase in Media Networks direct operating expenses is due to increases at Starz Networks of $72.8 million and STARZPLAY International of $15.6 million in the three months ended June 30, 2022.
−Removed: The increase in Starz Networks direct operating expense was primarily due to higher programming cost amortization related to our Starz Originals of $79.5 million primarily related to higher cost original series premieres, partially offset by lower programming amortization of $13.3 million related to theatrical releases under our programming output agreements.
−Removed: Direct operating expenses at STARZPLAY International increased as a result of the continued expansion of STARZPLAY International and foreign currency fluctuations related to the strengthening U.S.
−Removed: The increase in Media Networks distribution and marketing expense is due to an increase of $24.8 million at Starz Networks and $8.5 million at STARZPLAY International, resulting from an increase in spend to increase awareness of first season original series premieres and drive growth in subscribers.
+Added: In addition, the LIONSGATE+ international service, in its remaining territories, has and will continue to result in an increase in expenses as the service continues to expand.
+Added: The increase in Media Networks direct operating expenses is due to increases at Starz Networks of $81.9 million and LIONSGATE+ of $30.7 million in the six months ended September 30, 2022.
+Added: The increase in Starz Networks direct operating expense was primarily due to higher programming cost amortization related to our Starz Originals of $91.0 million primarily related to higher cost original series premieres, and higher programming cost amortization of $6.8 million related to library content, partially offset by lower programming amortization of $12.7 million related to theatrical releases under our programming output agreements and a benefit in the current period of $10.0 million associated with the modification of a content licensing arrangement.
+Added: Direct operating expenses at LIONSGATE+ increased as a result of higher programming cost amortization and foreign currency fluctuations related to the strengthening U.S.
+Added: The slight increase in Media Networks distribution and marketing expense is due to an increase of $1.0 million at Starz Networks and $2.7 million at LIONSGATE+.
Gross Contribution.
−Removed: The decrease in gross contribution compared to the three months ended June 30, 2021 was due to decreases at Starz Networks of $106.2 million and STARZPLAY International of $16.6 million, driven by higher direct operating expense and distribution and marketing expense, partially offset by higher STARZPLAY International revenue, all as described above.
+Added: The decrease in gross contribution compared to the six months ended September 30, 2021 was due to decreases at Starz Networks of $92.5 million and LIONSGATE+ of $13.5 million, driven by higher direct operating expense, partially offset by higher LIONSGATE+ revenue, as described above.
General and Administrative Expense.
−Removed: General and administrative expenses in the three months ended June 30, 2022 increased slightly from the prior year's quarter, due to increases of $1.1 million at Starz Networks, and $1.3 million at STARZPLAY International.
+Added: General and administrative expenses in the six months ended September 30, 2022 increased slightly from the prior year's period, due to increases of $1.6 million at Starz Networks, and $2.1 million at LIONSGATE+.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Cash
−Removed: Our liquidity and capital requirements in the three months ended June 30, 2022 were provided principally through cash generated from operations, corporate debt, our film related financing and other obligations (as further discussed below), and the monetization of trade accounts receivable.
−Removed: As of June 30, 2022, we had cash and cash equivalents of $378.5 million.
+Added: Our liquidity and capital requirements in the six months ended September 30, 2022 were provided principally through cash generated from operations, corporate debt, our film related financing and other obligations (as further discussed below), and the monetization of trade accounts receivable.
+Added: As of September 30, 2022, we had cash and cash equivalents of $557.1 million.
Corporate Debt
−Removed: Our corporate debt at June 30, 2022, excluding film related financing and other obligations discussed further below, consisted of the following:
+Added: Our corporate debt at September 30, 2022, excluding film related financing and other obligations discussed further below, consisted of the following:
• Senior Credit Facilities:
◦ Revolving Credit Facility.
−Removed: We have a $1.25 billion revolving credit facility (with no amounts outstanding at June 30, 2022) due April 2026 (the "Revolving Credit Facility").
+Added: We have a $1.25 billion revolving credit facility (with no amounts outstanding at September 30, 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.
−Removed: We have a term loan A facility due April 2026 (the "Term Loan A"), with $444.9 million outstanding at June 30, 2022.
+Added: We have a term loan A facility due April 2026 (the "Term Loan A"), with $439.3 million outstanding at September 30, 2022.
◦ Term Loan B.
−Removed: 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 $841.0 million outstanding at June 30, 2022.
+Added: 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 $837.9 million outstanding at September 30, 2022.
• Senior Notes:
−Removed: We have $1.0 billion outstanding of 5.500% senior notes due 2029 (the "5.500% Senior Notes") at June 30, 2022.
−Removed: In July 2022, we repurchased $18.7 million principal amount of the 5.500% Senior Notes for $14.6 million, together with accrued and unpaid interest.
−Removed: See Note 18 - Subsequent Events to our unaudited condensed consolidated financial statements.
+Added: We have $981.4 million outstanding of 5.500% senior notes due 2029 (the "5.500% Senior Notes") at September 30, 2022.
See Note 6 to our unaudited condensed consolidated financial statements for a discussion of our corporate debt.
1 unchanged sentence
We utilize our film related financing and other obligations to fund our film and television productions or licenses.
−Removed: Our film related financing and other obligations at June 30, 2022 include the following:
+Added: Our film related financing and other obligations at September 30, 2022 include the following:
• Production Loans:
−Removed: Production loans represent individual loans for the production of film and television programs that we produce or license.
−Removed: The majority of the Company's production loans have contractual repayment dates either at or near the expected completion date, with the exception of certain loans containing repayment dates on a longer term basis.
−Removed: At June 30, 2022, there was $1,135.0 million outstanding of production loans.
+Added: Production loans represent individual and multi-title loans for the production of film and television programs that we produce or license.
+Added: The majority of the Company's production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis.
+Added: At September 30, 2022, there was $1,444.6 million outstanding of production loans.
• Programming Notes:
Programming notes represent individual loans for the license of film and television programs that we license.
−Removed: The Company's programming notes have contractual repayment dates in July 2022.
−Removed: At June 30, 2022, there was $56.2 million outstanding of programming notes.
+Added: The Company's programming notes have contractual repayment dates in January 2023.
+Added: At September 30, 2022, there was $21.1 million outstanding of programming notes.
• Production Tax Credit Facility:
−Removed: We have a $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").
−Removed: At June 30, 2022, there was $233.7 million outstanding of production and related loans.
+Added: We have a $235.0 million limited-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").
+Added: At September 30, 2022, there was $235.0 million outstanding under the Production Tax Credit Facility.
• IP Credit Facility:
−Removed: 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.
+Added: In July 2021, as amended in September 2022, certain of our subsidiaries entered into a senior secured amortizing term credit facility due July 2027 (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 $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.
−Removed: At June 30, 2022, there was $114.0 million outstanding under the IP Credit Facility.
+Added: At September 30, 2022, there was $161.9 million outstanding under the IP Credit Facility.
• Backlog Financing Facility and Other:
2 unchanged sentences
The maximum principal amount of the Backlog Financing Facility as of June 30, 2022 was $175.0 million, subject to the amount of eligible collateral contributed to the facility.
−Removed: In August 2022, the Company amended its Backlog Financing Facility and increased the maximum principal amount of the Backlog Financing Facility from $125.0 million to $175.0 million (see Note 18 - Subsequent Events to our unaudited condensed consolidated financial statements).
The Backlog Financing Facility revolving period finishes on May 16, 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 August 14, 2027.
−Removed: As of June 30, 2022, there was $125.0 million outstanding under the Backlog Financing Facility.
−Removed: On June 28, 2022, the Company borrowed $118.6 million under a loan agreement which is secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements (the "Distribution Loan Agreement").
−Removed: The loan agreement matures on December 28, 2025.
−Removed: Outstanding loan balances must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees.
+Added: As of September 30, 2022, there was $175.0 million outstanding under the Backlog Financing Facility.
+Added: In June 2022, the Company borrowed $118.6 million under a loan agreement which is secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements (the "June 2022 Distribution Loan Agreement"), which was to mature on December 28, 2025, of which $18.6 million was repaid during the quarter ended September 30, 2022, and the remaining outstanding amount of $100.0 million was repaid on October 3, 2022 (see Note 19 - Subsequent Events to our unaudited condensed consolidated financial statements).
+Added: In September 2022, the Company borrowed $43.4 million under a loan agreement which matures on March 28, 2026 (the "September 2022 Distribution Loan Agreement", and together with the June 2022 Distribution Loan Agreement, the "Distribution Loan Agreements").
+Added: Outstanding loan balances under the Distribution Loan Agreements must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees.
See Note 7 to our unaudited condensed consolidated financial statements for a discussion of our film related and other financing obligations.
7 unchanged sentences
Redeemable Noncontrolling Interests.
−Removed: In addition, the Company has a redeemable noncontrolling interest balance of $336.6 million as of June 30, 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 8 to our unaudited condensed consolidated financial statements).
+Added: In addition, the Company has a redeemable noncontrolling interest balance of $343.2 million as of September 30, 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 9 to our unaudited condensed consolidated financial statements).
• 3 Arts Entertainment.
10 unchanged sentences
We expect to continue to increase our investments in film and television programs and film and programming rights acquisitions.
−Removed: 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.
+Added: In addition, the LIONSGATE+ international service, in its remaining territories, has and will require capital investment as the service continues to expand.
+Added: In connection with the restructuring of our LIONSGATE+ business previously discussed under Item 2.
+Added: Management's Discussion and Analysis, "Overview", we expect to incur additional charges ranging from approximately $75 million to $100 million in the next six months primarily related to certain contractual content commitments and other items as we fully implement the plan.
+Added: These amounts also reflect the estimated net future cash expenditures for these charges.
+Added: In addition, the Company expects future cash expenditures of approximately $75 million related to the content charges recorded in the three months ended September 30, 2022.
In the short-term, we currently expect that our cash requirements for productions will increase and that our cash requirements for marketing spends will be comparable 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 Backlog Financing Facility and other financing obligations, and available production or license financing will be adequate to meet known operational cash and debt service (i.e.
−Removed: 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.
+Added: 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 in our remaining international territories.
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 in the short-term and long-term through our cash flow from operations, our revolving credit facility, production loans and programming notes, government incentive programs, film funds, the monetization of trade accounts receivable, our Production Tax Credit Facility, our IP Credit Facility, our Backlog Financing Facility, and other financing obligations.
−Removed: 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.
+Added: In addition, we continue to expand our LIONSGATE+ international service, in its remaining territories, and may acquire businesses or assets, including individual films or libraries that are complementary to our business.
Any such transaction could be financed through our cash flow from operations, credit facilities, equity or debt financing.
5 unchanged sentences
Our material cash requirements from known contractual and other obligations primarily relate to our corporate debt and film related and other obligations.
−Removed: The following table sets forth our significant contractual and other obligations as of June 30, 2022 and the estimated timing of payment:
+Added: The following table sets forth our significant contractual and other obligations as of September 30, 2022 and the estimated timing of payment:
Total Next 12 Months Beyond 12 Months
(Amounts in millions)
−Removed: Future annual repayment of debt and other obligations recorded as of June 30, 2022 (on-balance sheet arrangements)
+Added: Future annual repayment of debt and other obligations recorded as of September 30, 2022 (on-balance sheet arrangements)
Corporate debt (1) :
19 unchanged sentences
(1) See Note 6 to our unaudited condensed consolidated financial statements for further information on our corporate debt.
−Removed: In July 2022, we repurchased $18.7 million principal amount of the 5.500% Senior Notes for $14.6 million, together with accrued and unpaid interest.
−Removed: See Note 18 - Subsequent Events to our unaudited condensed consolidated financial statements for further information.
(2) Film related and other obligations include program rights and film obligations, and film related financing and other obligations (i.e., production loans, Production Tax Credit Facility, programming notes, Backlog Financing Facility and other, and IP Credit Facility), included on the consolidated balance sheets.
11 unchanged sentences
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.
−Removed: In addition, as of June 30, 2022, we had gross unrecognized tax benefits of $70.2 million.
+Added: In addition, as of September 30, 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.
3 unchanged sentences
In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly.
−Removed: As of June 30, 2022, the Company was in compliance with all applicable covenants.
+Added: As of September 30, 2022, the Company was in compliance with all applicable covenants.
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.
−Removed: As of June 30, 2022, the Company was in compliance with all applicable covenants.
+Added: As of September 30, 2022, the Company was in compliance with all applicable covenants.
Share Repurchase Plan.
3 unchanged sentences
Such purchases will be structured as permitted by securities laws and other legal requirements.
−Removed: During the three months ended June 30, 2022, the Company did not repurchase any common shares.
+Added: During the three months ended September 30, 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.
Capacity to Pay Dividends.
−Removed: At June 30, 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 $122.6 million and accumulated deficit of $504.7 million were deemed free of restrictions from paying dividends at June 30, 2022.
+Added: At September 30, 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 $1,936.0 million and accumulated deficit of $2,320.4 million were deemed free of restrictions from paying dividends at September 30, 2022.
Discussion of Operating, Investing, Financing Cash Flows
−Removed: Cash, cash equivalents and restricted cash increased by $24.8 million for the three months ended June 30, 2022 and decreased by $261.3 million for the three months ended June 30, 2021, before foreign exchange effects on cash.
+Added: Cash, cash equivalents and restricted cash increased by $220.5 million for the six months ended September 30, 2022 and decreased by $78.4 million for the six months ended September 30, 2021, before foreign exchange effects on cash.
Components of these changes are discussed below in more detail.
Operating Activities.
−Removed: Cash flows used in operating activities for the three months ended June 30, 2022 and 2021 were as follows:
−Removed: Three Months Ended
+Added: Cash flows used in operating activities for the six months ended September 30, 2022 and 2021 were as follows:
+Added: Six Months Ended
+Added: September 30,
2022 2021 Net Change
4 unchanged sentences
Non-cash share-based compensation 35.0 54.9 (19.9)
+Added: Goodwill impairment 1,475.0 — 1,475.0
+Added: Content and other impairments 218.9 — 218.9
Cash interest (89.5) (61.5) (28.0)
11 unchanged sentences
Net Cash Flows Used In Operating Activities $ (139.4) $ (332.5) $ 193.1
−Removed: Cash flows used in operating activities for the three months ended June 30, 2022 were $0.2 million compared to cash flows used in operating activities of $348.7 million for the three months ended June 30, 2021.
+Added: Cash flows used in operating activities for the six months ended September 30, 2022 were $139.4 million compared to cash flows used in operating activities of $332.5 million for the six months ended September 30, 2021.
The lower cash used in operating activities is due to lower cash used from changes in operating assets and liabilities as shown above, partially offset by lower cash flows from operations before changes in operating assets and liabilities.
−Removed: The lower use of cash from changes in operating assets and liabilities was driven by proceeds from the termination of interest rate swaps (see further discussion below for interest rate swap transactions in the current quarter), decreases in accounts receivable, net and other assets, increases in accounts payable and accrued liabilities and other changes in operating assets and liabilities, partially offset by increased cash used for investment in films and television programs and program rights.
−Removed: In addition, cash flows used in operating activities for the three months ended June 30, 2022 included a net benefit of approximately $13.9 million from the monetization of accounts receivables programs, as compared to a net use of cash of approximately $51.0 million for the three months ended June 30, 2021 (see Note 17 to our unaudited condensed consolidated financial statements).
−Removed: During the three months ended June 30, 2022, we terminated certain interest rate swaps (a portion of which were considered hybrid instruments with a financing component and an embedded at-market derivative that was a designated cash flow hedge), and received approximately $56.4 million.
−Removed: The $56.4 million received was classified in the unaudited condensed consolidated statement of cash flows as cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion of the termination of swaps, and a use of cash in financing activities of $134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million) (see Financing Activities below).
+Added: The lower use of cash from changes in operating assets and liabilities was driven by proceeds from the termination of interest rate swaps (see further discussion below for interest rate swap transactions in the current period), lower increases in accounts receivable, net and other assets, lower cash used for investment in films and television programs and program rights, and lower decreases in accounts payable and accrued liabilities, partially offset by higher cash used from other changes in operating assets and liabilities.
+Added: In addition, cash flows used in operating activities for the six months ended September 30, 2022 included a net use of cash of approximately $10.9 million from the monetization of accounts receivables programs, as compared to a net use of cash of approximately $46.2 million for the six months ended September 30, 2021 (see Note 18 to our unaudited condensed consolidated financial statements).
+Added: During the six months ended September 30, 2022, we terminated certain interest rate swaps (a portion of which were considered hybrid instruments with a financing component and an embedded at-market derivative that was a designated cash flow hedge), and received approximately $56.4 million.
+Added: The $56.4 million received was classified in the unaudited condensed consolidated statement of cash flows as cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion of the termination of swaps, and a use of cash in financing activities of $134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the
+Added: termination date amounting to $3.2 million) (see Financing Activities below).
See Note 17 to our unaudited condensed consolidated financial statements.
Investing Activities.
−Removed: Cash flows provided by (used in) investing activities for the three months ended June 30, 2022 and 2021 were as follows:
−Removed: Three Months Ended
+Added: Cash flows used in investing activities for the six months ended September 30, 2022 and 2021 were as follows:
+Added: Six Months Ended
+Added: September 30,
(Amounts in millions)
3 unchanged sentences
Distributions from equity method investees — 2.6
+Added: Acquisition of assets (film library and related assets) — (161.4)
Capital expenditures (21.5) (14.6)
−Removed: Net Cash Flows Provided By (Used In) Investing Activities $ (14.8) $ 115.7
−Removed: Cash flows used in investing activities of $14.8 million for the three months ended June 30, 2022 compared to cash flows provided by investing activities of $115.7 million for the three months ended June 30, 2021, primarily due to the receipt of proceeds during the three months ended June 30, 2021 from the sale of Pantaya (see Note 2 to our unaudited condensed consolidated financial statements).
+Added: Net Cash Flows Used In Investing Activities $ (36.0) $ (61.8)
+Added: Cash flows used in investing activities of $36.0 million for the six months ended September 30, 2022 compared to cash flows used in investing activities of $61.8 million for the six months ended September 30, 2021, primarily due to cash used for the acquisition of a film library and related assets and investment in equity method investees as reflected above, offset by the receipt of proceeds during the six months ended September 30, 2021 from the sale of Pantaya.
Financing Activities.
−Removed: Cash flows provided by (used in) financing activities for the three months ended June 30, 2022 and 2021 were as follows:
−Removed: Three Months Ended
+Added: Cash flows provided by financing activities for the six months ended September 30, 2022 and 2021 were as follows:
+Added: Six Months Ended
+Added: September 30,
(Amounts in millions)
6 unchanged sentences
Other financing activities (149.8) (44.8)
−Removed: Net Cash Flows Provided By (Used In) Financing Activities $ 39.8 $ (28.3)
−Removed: Cash flows provided by financing activities of $39.8 million for the three months ended June 30, 2022 compared to cash flows used in financing activities of $28.3 million for the three months ended June 30, 2021.
−Removed: Cash flows provided by financing activities for the three months ended June 30, 2022 primarily reflects net film related financing and other obligations borrowings of $370.3 million, offset by net debt repayments of $196.7 million due to the April 2022 voluntarily prepayment of the entire outstanding principal amount of $193.6 million of the Term Loan A due March 22, 2023 and required repayments on the Term Loan B.
−Removed: In addition, other financing activities in the three months ended June 30, 2022 includes $134.5 million for interest rate swap settlement payments due to $134.5 million for the pay down of the financing component of our terminated interest rate swaps in the current quarter (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million) (see discussion above in Operating Activities , and Note 16 to our unaudited condensed consolidated financial statements).
+Added: Net Cash Flows Provided By Financing Activities $ 395.9 $ 315.9
+Added: Cash flows provided by financing activities of $395.9 million for the six months ended September 30, 2022 compared to cash flows provided by financing activities of $315.9 million for the six months ended September 30, 2021.
+Added: Cash flows provided by financing activities for the six months ended September 30, 2022 primarily reflects net film related financing and other obligations borrowings of $765.7 million due to net borrowings under production loans and the Production Tax Credit Facility of $411.4 million and increased net borrowings under the Backlog Financing Facility, IP Credit Facility and Distribution Loans of $354.3 million, offset by net debt repayments of $220.0 million.
+Added: Net debt repayments and repurchases of $220.0 million in the six months ended September 30, 2022 included the below transactions, along with required repayments on our term loans:
+Added: • In April 2022, we voluntarily prepaid the entire outstanding principal amount of the Term Loan A due March 22, 2023 of $193.6 million, together with accrued and unpaid interest.
+Added: • In July 2022, we repurchased $18.7 million principal amount of the 5.500% Senior Notes for $14.6 million, together with accrued and unpaid interest.
+Added: In addition, other financing activities in the six months ended September 30, 2022 includes $134.5 million for interest rate swap settlement payments due to $134.5 million for the pay down of the financing component of our terminated interest rate
+Added: swaps in the current period (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million) (see discussion above in Operating Activities , and Note 17 to our unaudited condensed consolidated financial statements).
Other financing activities also includes tax withholding required on equity awards of $16.2 million.
−Removed: Cash flows used in financing activities of $28.3 million for the three months ended June 30, 2021 primarily reflects net debt repayments of $174.0 million, and net film related financing and other obligations borrowings of $163.2 million, as production activity increased in the three months ended June 30, 2021.
−Removed: In addition, other financing activities in the three months ended June 30, 2021 includes $6.9 million for interest rate swap settlement payments due to a financing component on a portion of our interest rate swaps (see Note 16 to our unaudited condensed consolidated financial statements).
−Removed: Net debt repayments and
−Removed: repurchases of $174.0 million in the three months ended June 30, 2021 included the below transactions and associated debt issuance and redemption costs, along with required repayments on our term loans:
+Added: Cash flows provided by financing activities of $315.9 million for the six months ended September 30, 2021 primarily reflects net film related financing and other obligations borrowings of $589.1 million, as production activity increased in the six months ended September 30, 2021, offset by net debt repayments and repurchases of $228.4 million.
+Added: In addition, other financing activities in the six months ended September 30, 2021 includes $14.4 million for interest rate swap settlement payments due to a financing component on a portion of our interest rate swaps (see Note 17 to our unaudited condensed consolidated financial statements).
+Added: Net debt repayments and repurchases of $228.4 million in the six months ended September 30, 2021 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.
1 unchanged sentence
• 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.
−Removed: • During the three months ended June 30, 2022, the Company completed a series of repurchases of the Term Loan B and, in aggregate, paid $51.1 million to repurchase $51.5 million principal amount of the Term Loan B.
+Added: • During the six months ended September 30, 2022, the Company 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.
Remaining Performance Obligations and Backlog
Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog).
−Removed: As disclosed in Note 9 to our unaudited condensed consolidated financial statements, remaining performance obligations were $1.9 billion at June 30, 2022 (March 31, 2022 - $1.8 billion).
−Removed: The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.5 billion at June 30, 2022 (March 31, 2022 - $1.3 billion).
+Added: As disclosed in Note 10 to our unaudited condensed consolidated financial statements, remaining performance obligations were $2.1 billion at September 30, 2022 (March 31, 2022 - $1.8 billion).
+Added: The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.6 billion at September 30, 2022 (March 31, 2022 - $1.3 billion).
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.