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Item 1A. Risk Factors

2023-05-25 compared with 2022-05-26 · 288 added, 247 removed, 295 unchanged (64% of the section changed)

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Risks Related to Our Business

The impact of the COVID-19 global pandemic could continue to materially and adversely affect our business, financial condition, and results of operations.

Since fiscal 2020, the impacts associated with the ongoing COVID-19 global pandemic (including its variants), 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).

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

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

Additionally, although theaters have reopened in certain locations subject to capacity limitations and shifting government mandates or guidance regarding COVID-19 restrictions.

With reduced capacity, we are not able to accurately predict when theaters will re-open at scale, at what level consumers will return to movie theaters and the impact of a potentially crowded marketplace from movies which are awaiting theatrical release in the market.

Fewer theatrical releases and production delays have limited the availability of film content to be sold in distribution windows subsequent to the theatrical release.

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’ risk tolerance regarding health matters going forward.

We have incurred and will continue to incur additional costs to address government regulations and the safety of our employees and talent.

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

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

We face substantial capital requirements and financial risks.

The production, acquisition and distribution of motion picture and television content requires substantial capital.

A significant amount of time may elapse between our expenditure of funds and the receipt of revenues after release or distribution of such content.

Although we reduce the risks of production exposure through tax credit programs, government and industry programs, co-financiers and other sources, we cannot assure you that we will continue to successfully implement these arrangements or that we will not be subject to substantial financial risks relating to the production, acquisition and distribution of future motion picture and television content.

Additionally, the production, completion and distribution of motion picture and television content can be subject to a number of uncertainties, including delays and increased expenditures due to disruptions or events beyond our control.

As a result, if production incurs substantial budget overruns, we may have to seek additional financing or fund the overrun ourselves.

We cannot make assurances regarding the availability of such additional financing on terms

acceptable to us, or that we will recoup these costs.

For instance, increased costs or budget overruns incurred with respect to a particular film may prevent a picture from being completed or released or may result in a delayed release and the postponement to a potentially less favorable date, all of which could cause a decline in box office performance, and, thus, the overall financial success of such film.

The production, acquisition and distribution of motion picture and television content requires substantial capital and may subject us to financial risks.

A significant amount of time may elapse between our expenditure of funds and the receipt of revenues after release or distribution of such content and we cannot assure you that we are able to successfully implement arrangements to reduce the risks of production exposure such as tax credit, government or industry programs.

Additionally, we may experience delays and increased expenditures due to disruptions or events beyond our control and if a production incurs substantial budget overruns, we may have to seek additional financing or fund the overrun itself.

We cannot make assurances regarding the availability of such additional financing on terms acceptable to us, or that we will recoup these costs.

Increased costs or budget overruns incurred with respect to a particular film may prevent a picture from being completed or released or may result in a delayed release and the postponement to a potentially less favorable date, all of which could cause a decline in box office performance, and, thus, the overall financial success of such film.

Any of the foregoing could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

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The amount of production costs that will be amortized each quarter depends on, among other things, how much future revenue we expect to receive from each project.

Unamortized production costs are evaluated for impairment each reporting period on a project-by-project basis.

If estimated remaining revenue is not sufficient to recover the unamortized production costs, including, for instance, because of delayed theatrical distribution of films as a result of the COVID-19 global pandemic and its effects, those costs will be written down to fair value.

In any given quarter, if we lower our previous forecast with respect to total anticipated revenue from any film or other project, we may be required to accelerate amortization or record impairment charges with respect to the unamortized costs, even if we previously recorded impairment charges for such film or other project.

Unamortized production costs are evaluated for impairment each reporting period on a project-by-project basis when events or changes in circumstances indicate that the fair value of a film is less than its unamortized cost.

These events and changes in circumstances include, among others, an adverse change in the expected performance of a film prior to its release, actual costs substantially in excess of budgeted cost for the film, delays or changes in release plans and actual performance subsequent to the film’s release being less than previously expected performance estimates.

In any given quarter, if we lower our previous forecast with respect to total anticipated revenue from any film or other project or increase our previous forecast of cost of making or distribution of the film, we may be required to accelerate amortization or record impairment charges with respect to the unamortized costs, even if we previously recorded impairment charges for such film or other project.

Such impairment charges could adversely impact our business, operating results and financial condition.

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As changes in our business environment occur, we may adjust our business strategies to meet these changes, which may include growing a particular area of business or restructuring a particular business or asset.

In addition, external events including changing technology, changing consumer patterns, acceptance of our theatrical and television offerings and changes in macroeconomic condition, including the volatility and uncertainty in financial markets as a result of the COVID-19 global pandemic and Russia’s invasion of Ukraine, may impair the value of our assets.

When these occur, we may incur costs to change our business strategy and may need to write down the value of assets.

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In any of these events, our costs may increase, we may have significant charges associated with the write-down of assets, or returns on new investments may be lower than prior to the change in strategy, plans for growth or restructuring.

In March 2023, we announced that we had confidentially submitted a draft registration statement on Form 10 with the SEC relating to the proposed spin-off of our studio business, consisting of our Television Production and Motion Picture segments.

The proposed spin-off will be subject to the satisfaction of a number of conditions and our board of directors may decide not to proceed with the spin-off at any time.

A failure to satisfy required conditions, or disruptions in market conditions, could delay the completion of the proposed spin-off for a significant period of time or prevent it from occurring at all.

Additionally, the proposed spin-off is complex in nature, and unanticipated developments or changes, including disruptions in general market conditions, changes in law or challenges in executing the spin-off, may affect our ability to complete the spin-off on the terms or on the timeline we announced, or at all.

These or other developments could cause us not to realize some of all of the expected benefits, or to realize them on a different timeline than expected.

Although we intend for the spin-off to be tax-free to shareholders for U.S.

federal income tax purposes, we expect to incur non-U.S.

cash taxes on the preparatory restructuring.

Moreover, there can be no assurance that the proposed spinoff will qualify as tax-free to shareholders for U.S.

federal income tax purposes.

If we are unable to complete the proposed spin-off, we will have incurred costs without realizing the benefits of such transaction.

Whether or not the spin-off is completed, our businesses may face material challenges as a result of the spin-off, including the diversion of management’s attention from ongoing business concerns and impact on the businesses of the Company;

maintaining employee morale and retaining and attracting key management and other employees;

retaining existing or attracting new business and operational relationships, including with customers, suppliers, employees and other counterparties;

establishing transition service agreements and standalone readiness for key functions, and potential negative reactions from investors or the financial community.

Moreover, completion of the spin-off will result in independent public companies that are smaller, less diversified companies with more limited businesses.

As a result, each company may be more vulnerable to global economic trends, geopolitical risks and changing market conditions, which could have a material adverse effect on its business, financial condition, cash flows and results of operations.

Each of the separate companies will also incur ongoing costs, including costs of operating as independent public companies, that the separated businesses will no longer be able to share.

Additionally, we cannot predict whether the market value of our common shares and the common shares of each of the new independent companies after the spin-off will be, in the aggregate, less than, equal to or greater than the market value of our common shares prior to the spin-off.

Our revenues and results of operations may fluctuate significantly.

Our results of operations depend significantly upon the commercial success of the motion picture, television and other content that we sell, license or distribute, which cannot be predicted with certainty.

In particular, the underperformance at the box office of one or more motion pictures in any period may cause our revenue and earnings results for that period (and potentially, subsequent periods) to be less than anticipated, in some instances, to a significant extent.

Accordingly, our results of operations may fluctuate significantly from period to period, and the results of any one period may not be indicative of the results for any future periods.

The underperformance at the box office of one or more motion pictures in any period may cause our revenue and earnings results for that period (and potentially, subsequent periods) to be less than anticipated.

Our results of operations also fluctuate due to the timing, mix, number and availability of our theatrical motion picture and home entertainment releases, as well as license periods for content.

Our operating results may increase or decrease during a particular period or fiscal year due to differences in the number and/or mix of films released compared to the corresponding period in the prior fiscal year.

Moreover, low ratings for television programming produced by us may lead to the cancellation of a program and can negatively affect future license fees for the cancelled program.

If we decide to no longer air programming due to low ratings or other factors, we could incur significant programming impairments, which could have a material adverse effect on our results of operations in a given period.

Moreover, low ratings for television programming produced by us may lead to the cancellation of a program resulting in significant programming impairments in a given period and can negatively affect license fees for the cancelled program in future periods.

In addition, the comparability of our results may be affected by changes in accounting guidance or changes in our ownership of certain assets and businesses.

Accordingly, our results of operations from year to year may not be directly comparable to prior reporting periods.

As a result of the factors above, our results of operations may fluctuate and differ from period to period, and therefore may not be indicative of the results for any future periods or directly comparable to prior reporting periods.

We do not have long-term arrangements with many of our production or co-financing partners.

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There is no guarantee that we will produce, acquire or distribute future content by any creative producer or co-financing partner, and a failure to do so could adversely affect our business, financial condition, operating results, liquidity and prospects.

We rely on a few major retailers and distributors to sell our packaged media and the loss of any of those could reduce our revenues and operating results.

A small number of other retailers and distributors account for a material percentage of our revenues in Home Entertainment for our Motion Picture segment.

We rely on a few major retailers and distributors and the loss of any of those could reduce our revenues and operating results.

A small number of retailers and distributors account for a material percentage of the revenues in home entertainment for our Motion Picture segment.

We do not have long-term agreements with retailers.

We depend on distributors that carry our STARZ programming, and no assurance can be given that we will be able to maintain and renew these affiliation agreements on favorable terms or at all.

STARZ currently distributes programming through affiliation agreements with many distributors, including Altice, Amazon, Charter, Comcast, Cox, DIRECTV, DISH Network, Hulu and Verizon.

These agreements are scheduled to expire at various dates through 2026.

The largest distributors can have significant leverage in their relationship with certain programmers, including STARZ.

Furthermore, STARZ depends on a limited number of major global partners to distribute its content internationally.

The renewal negotiation process for affiliation agreements is typically lengthy.

In certain cases, renewals are not agreed upon prior to the expiration of a given agreement, while the programming typically continues to be carried by the relevant distributor pursuant to the other terms and conditions in the affiliation agreement.

STARZ may be unable to obtain renewals with our current distributors on acceptable terms, if at all.

STARZ may also be unable to successfully negotiate affiliation agreements with new distributors to carry our programming.

The failure to renew affiliation agreements on acceptable terms, or the failure to negotiate new affiliation agreements at all, in each case covering a material portion of households, could result in a discontinuation of carriage, or could otherwise materially adversely affect our subscriber growth, revenue and earnings which could materially adversely affect our business, financial condition, operating results, liquidity and prospects.

Moreover, given the limited number of global partners, the loss of one more of STARZ global partners could materially adversely affect our international business, operating results, and growth prospects.

Increasing rates paid by distributors to other programmers may result in increased rates charged to their subscribers for their services, making it more costly for subscribers to purchase our STARZ services.

The amounts paid by distributors to certain programming networks for the rights to carry broadcast networks and sports networks have increased in recent years.

As a result, distributors have passed on some of these increases to their subscribers.

The rates that subscribers pay for programming from distributors continue to increase each year and these increases may impact our ability, as a premium subscription video provider, to increase or even maintain our subscriber levels and may adversely impact our revenue and earnings which could have a materially adverse effect on our business, financial condition, operating results, liquidity and prospects.

In addition, in fiscal 2023, we generated over 10% of our revenue from one external customer.

We cannot assure you that we will continue to maintain favorable relationships with our retailers and distributors or that they will not be adversely affected by economic conditions, including as a result of global pandemics, such as COVID-19, wars, such as Russia’s invasion of Ukraine (including sanctions therefrom), rising interest rates, inflation or a recession.

A significant portion of our library revenues comes from a small number of titles.

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If we cannot acquire new product and the rights to popular titles through production, distribution agreements, acquisitions, mergers, joint ventures or other strategic alliances, or renew expiring rights to titles generating a significant portion of our revenue on acceptable terms, any such failure could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

We are subject to risks associated with possible acquisitions, dispositions, business combinations, or joint ventures.

From time to time, we engage in discussions and activities with respect to possible acquisitions, sale of assets, business combinations, or joint ventures intended to complement or expand our business.

However, we may not realize the anticipated benefit from the transactions we pursue;

there may be liabilities assumed that we did not discover or that we underestimated in the course of performing our due diligence;

the negotiation of the transaction and the integration of the acquired business could require us to incur significant costs and cause diversion of management's time and resources;

the transaction could result in impairment of goodwill and other intangibles, development write-offs and other related expenses;

the transaction may pose challenges in the consolidation and integration of information technology, accounting systems, personnel and operations;

we may have difficulty managing the combined entity in the short term if we experience a significant loss of management personnel during the transition period after a significant acquisition.

No assurance can be given that expansion or acquisition opportunities will be successful, completed on time, or that we will realize expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.

Any of the foregoing could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

If we determine to sell individual properties, libraries or other assets or businesses, we will benefit from the net proceeds realized from such sales.

However, our revenues may suffer in the long term due to the disposition of a revenue generating asset, or the timing of such dispositions may be poor, causing us to fail to realize the full value of the disposed asset, all of which may diminish our ability to service our indebtedness and repay our notes and our other indebtedness at maturity.

Furthermore, our future growth may be inhibited if the disposed asset contributed in a significant way to the diversification of our business platform.

Our success depends on attracting and retaining key personnel.

Our success depends upon the continued efforts, abilities and expertise of our executive teams and other key employees, including production, creative and technical personnel, including, in turn, on our ability to identify, attract, hire, train and retain such personnel.

We have entered into employment agreements with top executive officers and production executives but do not currently have significant “key person” life insurance policies for any employee.

Although it is standard in the industry to rely on employment agreements as a method of retaining the services of key employees, these agreements cannot assure us of the continued services of such employees.

We cannot assure you that we will be successful in identifying, attracting, hiring, training and retaining such personnel in the future, and our inability to do so could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Our success depends on external factors in the motion picture and television industry.

Generally, the popularity of our programs depends on many factors, including the critical acclaim they receive, the format of their initial release, their talent, their genre and their specific subject matter, audience reaction, the quality and acceptance of content that our competitors release into the marketplace at or near the same time, critical reviews, the availability of alternative forms of entertainment and leisure activities, general economic conditions and other tangible and intangible factors, many of which we do not control and all of which may change.

In addition, because a title’s performance in ancillary markets, such as home video and pay and free television, is often directly related to its box office performance or television ratings, poor box office results or poor television ratings may negatively affect future revenue streams.

Our success will depend on the experience and judgment of our management to select and develop new investment and production opportunities.

Our business also depends in part upon viewer preferences and audience acceptance of STARZ’s network programming.

These factors are difficult to predict and are subject to influences beyond our control, such as the quality and appeal of competing programming, general economic conditions and the availability of other entertainment activities.

We may not be able to anticipate and react effectively to shifts in tastes and interests in markets.

A change in viewer preferences could cause STARZ’s programming to decline in popularity, which could jeopardize renewal of affiliation agreements with distributors.

In addition, our competitors may have more flexible programming arrangements, as well as greater amounts of available content, distribution and capital resources and may be able to react more quickly than we can to shifts in tastes and interests.

To an increasing extent, the success of our business, including STARZ, depends on exclusive original programming and our ability to accurately predict how audiences will respond to our original programming.

The ongoing impact of the COVID-19 global pandemic could continue to materially and adversely affect our business, financial condition, and results of operations.

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

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

Although film and television production have generally resumed in full, disruption of production activities could occur again, depending on local circumstances.

We cannot predict whether productions will be paused again or the impact of incremental costs required to adhere to new health and safety protocols.

Additionally, although theaters have generally reopened, we are not able to accurately predict if and at what level consumers will return to movie theaters.

We have incurred and we may continue to incur additional costs to address any government regulations and the safety of our employees and talent.

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

Changes in consumer behavior, as well as evolving technologies and distribution models, may negatively affect our business, financial condition or results of operations.

Our success depends on our ability to anticipate and adapt to shifting content consumption patterns.

The ways in which viewers consume content, and technology and business models in our industry, continue to evolve, and new distribution platforms, as well as increased competition from new entrants and emerging technologies, have added to the complexity of maintaining predictable revenues.

Developments in technology and new content delivery products and services have also led to an increased amount of video content, as well as changes in consumers’ expectations regarding the availability of video content and their willingness to pay for access to such content.

These changes include the increase in the number of advertising-based video on demand services or free, ad-supported streaming linear channels (also known as FAST channels) or increased cord-cutting.

If we fail to successfully exploit emerging technologies and effectively anticipate or adapt to emerging competitors, content distribution platforms, changes in consumer behavior and shifting business models, this could have a material adverse effect on our competitive position, business, financial condition and results of operations.

Our success depends on the appeal and availability of desired programming.

Our success depends, in part, upon popularity, viewer preferences and audience acceptance of our content (including STARZ’s and LIONSGATE+’s programming).

These preferences are difficult to predict and are subject to influences beyond our control, such as the critical acclaim of our content, the format in which content is released, the talent involved, the genre and specific subject matter of our content, audience reaction to our content, the quality and acceptance of content that our competitors release into the marketplace, and the availability of alternative forms of entertainment and leisure activities (including user-generated content).

A change in viewer preferences could cause STARZ’s and LIONSGATE+’s programming to decline in popularity, which could jeopardize renewal of affiliation agreements with distributors.

Reduced popularity of our programs or negative publicity associated with our content or brands may decrease our audience share and viewer reach and could have a material adverse effect on our business, financial condition and results of operations.

In addition, our competitors may have more flexible programming arrangements, as well as greater amounts of available content, distribution and capital resources and may be able to copy our successful programming strategies to our detriment or react more quickly than we can to shifts in tastes and interests.

To an increasing extent, the success of STARZ and LIONSGATE+ depends on exclusive original programming and our ability to accurately predict how audiences will respond to our original programming.

We must invest substantial amounts in the production and marketing of our original programming before we learn whether such content will reach anticipated audience acceptance levels.

Because original programming often involves a greater degree of financial commitment, as compared to acquired programming that we license from third parties, and because our branding strategies depend significantly on a relatively small number of original series, a failure to anticipate viewer preferences for such series could be especially detrimental to our business.

We compete with other programming services, including cable programming, national broadcast television, local broadcast television stations and digital services to secure desired programming, the competition for which has increased as the number of programming services has increased.

Increased competition may drive up talent and production costs and may force some programming services to commit to straight-to-series orders for programming instead of a pilot order.

If we commit to straight-to-series orders and those series do not meet anticipated production or quality standards or are otherwise not accepted by audiences, revisions to the programming may be necessary, which could increase production costs.

We also compete with other programming networks, including cable television, national broadcast television, local broadcast television stations and digital services to secure desired programming.

Some content providers increasingly resist licensing their content to third parties, such as STARZ or LIONSGATE+, which may impede our ability to secure desired programming.

Increased competition may drive up talent and production costs and has required us to increasingly commit to straight-to-series orders for programming instead of pilot orders.

If a straight-to-series order does not meet anticipated production or quality

standards or is otherwise not accepted by audiences, revisions to the programming may be necessary, which could increase production costs.

The increased financial commitment for a straight-to-series order also could increase the risks associated with such an order.

Other programming services that are affiliated with programming sources such as movie or television studios or film libraries may have a

competitive advantage over us in this area.

Some of these competitors have exclusive contracts with motion picture studios or independent motion picture distributors or own film libraries.

Global economic turmoil and regional economic conditions could adversely affect our business.

Global economic turmoil, such as that created by the COVID-19 global pandemic and its effects, and Russia’s invasion of Ukraine, including the indirect impacts as a result of sanctions and economic disruptions, may cause a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, levels of intervention from the U.S.

federal government and other foreign governments, decreased consumer confidence, overall slower economic activity and extreme volatility in credit, equity and fixed income markets.

A decrease in economic activity in the U.S.

or in other regions of the world in which we do business could adversely affect demand for our content, thus reducing our revenues and earnings.

A decline in economic conditions could reduce performance of our theatrical, television and home entertainment releases.

In addition, an increase in price levels generally could result in a shift in consumer demand away from the entertainment we offer, which could also adversely affect our revenues and, at the same time, increase our costs.

For instance, lower household income and decreases in U.S.

consumer discretionary spending, which is sensitive to general economic conditions, may affect cable television and other video service subscriptions, in particular with respect to digital programming packages, premium video programming packages and premium a la carte services on which our networks are typically carried.

A reduction in spending may cause a decrease in subscribers to our networks, which could have a materially adverse impact on our business, financial condition, operating results, liquidity and prospects.

Moreover, financial institution failures may cause us to incur increased expenses or make it more difficult to finance any future acquisitions, or engage in other financing activities.

We could be adversely affected by strikes or other union job actions.

We are directly or indirectly dependent upon highly specialized union members who are essential to the production of motion pictures and television content.

A strike by, or a lockout of, one or more of the unions that provide personnel essential to the production of motion pictures or television content could delay or halt our ongoing production activities, or could cause a delay or interruption in our release of new motion pictures and television content.

A strike may result in increased costs and decreased revenue, which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Unforeseen business interruptions from circumstances or events out of our control could adversely affect our operations.

Our operations are vulnerable to outages and interruptions due to fire, floods, power loss, telecommunications failures, pandemics such as the COVID-19 global pandemic, and similar events beyond our control.

Our headquarters are located in Southern California, which is subject to natural disasters such as earthquakes and wildfires.

Delays caused by such natural disaster or weather impacts could adversely affect our ability to meet deadlines, could suspend production and may increase our costs.

Although we have developed certain plans to respond in the event of a disaster, there can be no assurance that they will be effective in the event of a specific disaster.

In the event of a short-term power outage, we have installed uninterrupted power source equipment designed to protect our equipment.

A long-term power outage, however, could disrupt our operations.

We also experienced a disruption to our business as a result of the COVID-19 global pandemic, which, in certain instances, increased our costs and delayed or suspended production of our programming.

We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our business operations, including content production, as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, members, partners and stockholders.

It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our members, suppliers or vendors, or on our financial results.

In addition to the potential direct impacts to our business, the global economy may continue to be impacted as a result of the actions taken in response to COVID-19.

To the extent that such a weakened global economy impacts consumers’ ability or willingness to pay for our service or vendors’ ability to provide services to us, especially those related to our content productions, we could see our business and results of operations negatively impacted.

Although we currently carry business interruption insurance for potential losses (including earthquake-related losses), there can be no assurance that such insurance will be sufficient to compensate us for losses that may occur or that such insurance may continue to be available on affordable terms.

Any losses or damages incurred by us could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

STARZ’s programming is transmitted from STARZ’s uplink center in Englewood, Colorado.

STARZ uses this center for a variety of purposes, including signal processing, satellite uplinking, program editing, on-air promotions, creation of programming segments (i.e., interstitials) to fill short gaps between featured programs, quality control and live and recorded playback.

STARZ’s uplink center is equipped with backup generator power and other redundancies.

However, like other facilities, this facility is subject to interruption from fire, lightning, adverse weather conditions and other natural causes.

Equipment failure, employee misconduct or outside interference could also disrupt the facility’s services.

STARZ has made arrangements at a third-party facility to uplink STARZ’s linear channels and services to STARZ’s satellites in the event STARZ is unable to do so from this facility.

Additionally, STARZ currently has direct fiber connectivity to certain of STARZ’s distributors, which would allow continuous operation with respect to a significant segment of STARZ’s subscriber base in the event of a satellite transmission interruption.

Notwithstanding these precautions, any significant or prolonged interruption of operations at STARZ’s facility, and any failure by STARZ’s third-party facility to perform as intended, would have a materially adverse effect on our business, financial condition, operating results, liquidity and prospects.

In addition, our success in the U.S.

is dependent upon our continued ability to transmit STARZ’s programming to distributors through STARZ’s satellite uplink facility.

STARZ has entered into long-term satellite transponder leases that expire in 2023 for carriage of the STARZ networks’ programming.

These leases provide for replacement transponders and/or replacement satellites, as applicable, throughout the term of the leases to ensure continued carriage of STARZ programming in the event of transponder or satellite failures.

Termination or interruption of satellite transmissions may occur and could have a materially adverse effect on our business, financial condition, operating results, liquidity and prospects.

Despite STARZ’s efforts to secure transponder capacity with long-term satellite transponder leases, there is a risk that when these leases expire, we may not be able to secure capacity on a transponder on the same or similar terms, if at all.

We face substantial competition in all aspects of our business.

We cannot assure you that we will ultimately be successful in negotiating renewals of our programming rights agreements or in negotiating adequate substitute agreements.

In the event that these agreements expire or are terminated and are not replaced by programming content, including additional original programming, acceptable to our distributors and subscribers, it could have a material adverse effect on our business, financial condition and results of operations.

We depend on distributors that carry our STARZ and Lionsgate+ programming, and no assurance can be given that we will be able to maintain and renew these affiliation agreements on as favorable terms or at all.

STARZ and LIONSGATE+ currently distribute programming through affiliation agreements with many distributors, including Altice, Amazon, Charter, Comcast, Cox, DIRECTV, DISH Network, Hulu and Verizon.

These agreements are scheduled to expire at various dates into 2027 .

The largest distributors can have significant leverage in their relationships with certain programmers, including us.

If there is further consolidation in the industry, these distributors may have additional leverage in negotiating their affiliation agreements with us, which may result in less favorable terms to us.

It is possible that we may be unable to obtain renewals with our current distributors on as favorable terms, if at all, or negotiate affiliation agreements with new distributors to carry our programming.

Such failure could result in a discontinuation of carriage, or could otherwise materially adversely affect our subscriber growth, revenue and earnings.

In addition, affiliation agreements are complex and individually negotiated.

If we were to disagree with one of the counterparties on the interpretation of an affiliation agreement, it could damage our relationship with that counterparty.

Furthermore, we depend on a limited number of major global partners to distribute our content internationally, and the loss of one or more of STARZ and LIONSGATE+ global partners could have a material adverse effect on our business, financial condition and results of operations.

Our efforts to attract and retain subscribers for STARZ services may not be successful, which may adversely affect our business.

Our ability to continue to attract subscribers will depend in part on our ability to consistently provide compelling content choices, effectively market our services, as well as provide a quality user experience for direct-to-consumer subscribers.

At times, certain of our distributors do not allow us to participate in marketing campaigns or other promotional activities to market our services or may not surface or position us favorably on their platforms.

Our inability to participate in the marketing of our services or limited discoverability on distributor platforms may put us at a competitive disadvantage.

If our distributors do not sign up new subscribers to our services, we may lose subscribers.

Furthermore, we face increasing competition from other streaming providers and our competitors’ relative service levels, content offerings, pricing and related features may adversely impact our ability to attract and retain subscribers.

For example, in the future, it is possible that prices for our services may increase, which could result in subscribers cancelling their subscriptions or potential subscribers not choosing to sign up for our services.

We continually seek to add new subscriptions both to replace canceled subscriptions and to grow beyond our current subscription base and this may require us to incur significantly higher marketing expenditures than we currently anticipate.

While we permit multiple users within the same household to share a single account for noncommercial purposes, if account sharing is abused, our ability to add new subscribers may be hindered and our results of operations may be adversely impacted.

If we are unable to successfully compete with current and new competitors in both retaining our existing subscriptions and attracting new subscriptions, our results of operations could be materially adversely affected.

STARZ relies, in part, on third party sales platforms as well as third-party internet-connected devices for distribution of our direct-to-consumer service.

Our direct-to-consumer service relies, in part, on sales platforms owned by third parties, some of which are affiliated with or have investments in competing streaming products, to make our service available to our subscribers and viewers.

If these third parties do not continue to provide access to our direct-to-consumer service on their platforms or are unwilling to do so on terms acceptable to us, our business could be adversely affected.

If we are not successful in maintaining existing or creating new relationships with these third parties, our ability to retain subscribers and grow our business could be adversely impacted.

We also currently offer the ability to stream our STARZ and LIONSGATE+ direct-to-consumer service through a host of internet-connected devices, including TVs, computers, and mobile devices.

If we encounter licensing, technological, regulatory, business or other impediments to delivering our streaming content to our subscribers via these devices, our ability to retain subscribers and grow our business could be adversely impacted.

We are subject to payment processing risk.

Subscribers to our STARZ and LIONSGATE+ direct-to-consumer service pay for our service using a variety of different payment methods, including credit and debit cards.

We rely on internal systems and those of third parties to process payment.

Acceptance and processing of these payment methods are subject to certain rules, regulations, and industry standards, including data storage requirements, additional authentication requirements for certain payment methods, and require payment of interchange and other fees.

To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules, regulations or industry standards concerning payments, loss of payment partners and/or disruptions or failures in our payment processing systems, partner systems or payment products, including products we use to update payment information, our revenue, operating expenses and results of operations could be adversely impacted.

In addition, from time to time, we encounter fraudulent use of payment methods, which could impact our results of operations and if not adequately controlled and managed could create negative consumer perceptions of our service.

If we are unable to maintain our fraud and chargeback rate at acceptable levels, card networks may impose fines, our card approval rate may be impacted and we may be subject to additional card authentication requirements.

We face substantial competition in all aspects of our business, including competition for marketing and carriage of our services.

We are an independent distributor and producer.

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studios are part of large diversified corporate groups with a variety of other operations that can provide both the means of distributing their products and stable sources of earnings that may allow them to better offset fluctuations in the financial performance of their motion picture and television operations.

The subscription video programming industry is highly competitive.

Our STARZ networks compete with other programming networks and other video programming services for marketing and distribution by distributors.

We face intense competition from other providers of programming networks for the right to be carried by a particular distributor and for the right to be carried by such distributor on a particular “tier” or in a particular “package” of service.

Certain programming networks affiliated with broadcast networks like ABC, CBS, Fox or NBC or other programming networks affiliated with sports and certain general entertainment networks with strong viewer ratings, have a competitive advantage over our networks in obtaining distribution through the “bundling” of carriage agreements for such programming networks with a distributor’s right to carry the affiliated broadcasting network.

The inability of our programming networks to be carried by one or more distributors, or the inability of our programming networks to be placed on a particular tier or programming package could have a materially adverse effect on our business, financial condition, operating results, liquidity and prospects.

We must successfully respond to technological changes and alternative forms of delivery or storage to remain competitive.

The entertainment industry continues to undergo significant developments as advances in technologies and new methods of product delivery and storage (including the emergence of alternative distribution platforms), and certain changes in consumer behavior driven by these developments emerge.

New technologies affect the demand for our content, the manner in which our content is distributed to consumers, the sources and nature of competing content offerings and the time and manner in which consumers acquire and view our content.

New technologies also may affect our ability to maintain or grow our business and may increase our capital expenditures.

We and our distributors must adapt our businesses to shifting patterns of content consumption and changing consumer behavior and preferences through the adoption and exploitation of new technologies.

If we cannot successfully exploit these and other emerging technologies, our appeal to targeted audiences might decline which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Moreover, our services compete with other video programming services for marketing and distribution.

We face intense competition from other providers of programming services for the right to be carried by a particular distributor, for the right to be carried by such distributor on a particular tier, in a particular package of service or in bundles with other services, and for prominent placement and effective merchandising on distributor and advertising platforms.

To the extent distributors remove us from tiers or packages in which we are currently carried, or we are limited in our ability to be merchandised or marketed effectively, it could have a materially adverse impact on our business, financial condition and results of operations.

Moreover, certain of our competitors have long operating histories, large customer bases, strong brand recognition, exclusive rights to certain content, large content libraries, and significant financial, marketing and other resources.

Certain of our distributors have affiliated video programming services that they may choose to favor in terms of carriage, marketing and/or placement over STARZ of LIONSGATE+.

Certain of our distributors also own or control marketing channels, app stores and/or distribution platforms that are important to STARZ and LIONSGATE+.

In addition, certain programming networks affiliated with broadcast networks like ABC, CBS, Fox or NBC or other programming networks affiliated with sports and certain general entertainment networks with strong viewer ratings, have a competitive advantage over our services in obtaining distribution through the “bundling” of carriage agreements for such programming networks with a distributor’s right to carry the affiliated broadcasting network.

If distributors refuse to carry our services, choose to offer, market, promote and/or position affiliated services more favorably than our services or take actions that are detrimental to STARZ and LIONSGATE+ in terms of owned or controlled marketing channels, app stores or distribution platforms, it could have a material adverse effect on our business, financial condition and results of operations.

Through new and existing distribution channels, consumers also have increasing options to access entertainment video.

Traditional providers of entertainment video, including broadcasters and cable network operators, as well as internet-based e-commerce or entertainment video providers are increasing their streaming video offerings.

Such providers may offer more compelling content or secure better terms from suppliers, adopt more aggressive pricing and devote more resources to product development, technology, infrastructure, content acquisitions and marketing.

If we are unable to successfully or profitably compete with current and new competitors, our business will be adversely affected.

We face economic, political, regulatory, and other risks from doing business internationally.

We distribute content outside the U.S.

We have operations and distribute content outside the U.S.

and derive revenues from international sources.

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• laws and policies adversely affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws;

sanctions imposed on countries, entities and individuals with whom we conduct business (such as those imposed

due to Russia’s invasion of Ukraine);

• sanctions imposed on countries, entities and individuals with whom we conduct business (such as those imposed due to Russia’s invasion of Ukraine);

• the impact of trade disputes;

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• changes in local regulatory requirements including regulations designed to stimulate local productions, promote and preserve local culture and economic activity (including local content quotas, investment obligations, local ownership requirements, and levies to support local film funds);

• differing degrees of consumer protection laws and changes in these laws;

• differing degrees of employee or labor laws and changes in these laws that may impact our ability to hire and retain foreign employees;

• strikes or other employment actions that may make it difficult to produce and/or localize content;

• censorship requirements that may cause us to remove or edit popular content, leading to consumer disappointment, brand tarnishment or consumer dissatisfaction;

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• international jurisdictions where laws are less protective of intellectual property and varying attitudes towards the piracy of intellectual property;

laws and policies relating to data privacy and security such as the European Union General Data Protection Regulation;

• establishing and protecting a new brand identity in competitive markets;

financial instability and increased market concentration of buyers in foreign television markets, including in European pay television markets;

the instability of foreign economies and governments;

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• the spread of communicable diseases (such as the COVID-19 global pandemic), which may impact business in such jurisdictions.

and war and acts of terrorism (such as Russia’s invasion of Ukraine).

For additional information about the data privacy and security laws and regulations to which we are or may become subject and about the risks to our business associated with such laws and regulations see, “Our activities are subject to a variety of stringent and changing obligations which may adversely impact our operations” and “Service disruptions or failures of the Company’s or our vendors’ information systems and networks” sections respectively.

Additionally, with respect to our direct-to-consumer offerings, these risks may include:

differing technical, architectural and payment processing systems and costs as well as consumer use and acceptance of electronic payment methods, such as credit cards;

availability of reliable broadband connectivity and wide area networks in targeted areas for expansion;

low usage and/or penetration of internet-connected consumer electronic devices;

new and different sources of competition;

and laws and policies relating to consumer protection.

We are managing and adjusting our international business to address varied content offerings, consumer customs and practices, in particular those dealing with e-commerce and streaming video, as well as differing and changing legal and regulatory environments.

As online streaming grows in international markets, governments may look to introduce new or extend legacy regulations to these services, in particular those related to broadcast media, consumer privacy and tax.

While we believe our legal and regulatory positions are consistent with the laws and regulations in the jurisdictions in which we conduct our business, it is possible that we will be required to comply with new regulations or legislation or new interpretations of existing regulations or legislation.

In such an event, increased jurisdictional legal or regulatory oversight and/or action could cause us to incur additional expenses or alter our business model.

Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences.

We are subject to risks associated with possible acquisitions, dispositions, business combinations, or joint ventures.

From time to time, we engage in discussions and activities with respect to possible acquisitions, sale of assets, business combinations, joint ventures intended to complement or expand our business, or other transactions, such as the proposed spin-off of our studio business, consisting of our Television Production and Motion Picture segments .

However, we may not realize the anticipated benefit from the transactions we pursue;

there may be liabilities assumed that we did not discover or that we underestimated in the course of performing our due diligence;

the negotiation of the transaction and the integration of the acquired business could require us to incur significant costs and cause diversion of management's time and resources;

the transaction could result in impairment of goodwill and other intangibles, development write-offs and other related expenses;

the transaction may pose challenges in the consolidation and integration of information technology, accounting systems, personnel and operations;

and we may have difficulty managing the combined entity in the short term if we experience a significant loss of management personnel during the transition period after a significant acquisition.

No assurance can be given that expansion, acquisition or other opportunities will be successful, completed on time, or that we will realize expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.

Any of the foregoing could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

If we determine to sell individual properties, libraries or other assets or businesses, we will benefit from the net proceeds realized from such sales.

Furthermore, our future growth may be inhibited if the disposed asset contributed in a significant way to the diversification of our business platform.

Our success depends on attracting and retaining key personnel and artistic talent.

such personnel.

We have entered into employment agreements with top executive officers and production executives but do not currently have significant “key person” life insurance policies for any employee.

In addition, we depend on the availability of a number of actors, writers, directors, producers and others, who are employees of third-party production companies that create our original programming.

Global economic turmoil and economic instability could adversely affect our business.

Global economic turmoil or economic instability resulting from, such events as, global pandemics, wars, inflation, rising interest rates, bank failures or a recession, may cause a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, levels of intervention from the U.S.

federal government and other foreign governments, decreased consumer confidence and spending, overall slower economic activity and extreme volatility in credit, equity and fixed income markets.

A decrease in economic activity in the U.S.

or in other regions of the world in which we do business could adversely affect demand for our content, thus reducing our revenues and earnings.

A decline in economic conditions could reduce performance of our theatrical, television and home entertainment releases.

For instance, lower household income and decreases in U.S.

consumer discretionary spending, which is sensitive to general economic conditions, may affect consumer demand for video service subscriptions, in particular with respect to premium video service subscriptions such as STARZ and LIONGATE+.

Economic conditions also could adversely impact our distributors, resulting in larger than anticipated subscriber declines or distributors exiting the market entirely.

A reduction in consumer spending or distributor financial difficulties or failures could lead to a decrease in the number of STARZ or LIONSGATE+ subscribers, which could have a materially adverse impact on our business, financial condition and results of operations.

Moreover, financial institution failures may make it more difficult to finance any future acquisitions, or engage in other financing activities.

We could be adversely affected by labor disputes, strikes or other union job actions.

We are directly or indirectly dependent upon highly specialized union members who are essential to the production of motion pictures and television content, including writers, directors, actors and other talent as well as trade employees and others who are subject to collective bargaining agreements.

In general, a labor dispute, work stoppage, work slowdown, strike by, or a lockout of, one or more of the unions that provide personnel essential to the production of motion pictures or television content, including the ongoing strike by the Writers’ Guild of America, and/or potential strikes from the Directors Guild or Screen Actors Guild, could delay or halt our ongoing production activities, or could cause a delay or interruption in our release of new motion pictures and television content.

Labor disputes have in the past, and may restrict our access to content, result in work stoppages, and may result in increased costs and decreased revenue, which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Business interruptions from circumstances or events out of our control could adversely affect our operations.

Our operations are vulnerable to outages and interruptions due to fire, floods, power loss, telecommunications failures, war or acts of terrorism, pandemics such as the COVID-19 global pandemic, work stoppages and strikes, and similar events beyond our control.

Our headquarters are located in Southern California, which is subject to natural disasters such as earthquakes.

Although we have developed certain plans to respond in the event of a disaster, there can be no assurance that they will be effective in the event of a specific disaster.

In the event of a short-term power outage, we have installed uninterrupted power source equipment designed to protect our equipment.

A long-term power outage, however, could disrupt our operations.

Any losses or damages incurred by us could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Protecting and defending against intellectual property claims may have a material adverse effect on our business.

Our ability to compete depends, in part, upon successful protection of our intellectual property.

We attempt to protect proprietary and intellectual property rights to our productions through available copyright and trademark laws and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations.

We attempt to protect proprietary and intellectual property rights to our productions through available copyright and trademark laws and licensing and

distribution arrangements with reputable international companies in specific territories and media for limited durations.

Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries where we distribute our products.

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Additionally, one of the risks of the film and television production business is the possibility that others may claim that our productions and production techniques misappropriate or infringe the intellectual property rights of third parties.

From time to time we are subject to claims and legal proceedings regarding alleged infringement

by us of the intellectual property rights (including patents) of third parties.

From time to time, we are subject to claims and legal proceedings regarding alleged infringement by us of the intellectual property rights (including patents) of third parties.

Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, require the development of alternative technology or business practices, injunctions against us, or payments for licenses or damages.

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Regardless of the validity or the success of the assertion of any such claims, we could incur significant costs and diversion of resources in enforcing our intellectual property rights or in defending against such claims, which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Our business involves risks of liability claims for content of material, which could adversely affect our business, results of operations and financial condition.

As a distributor of media content, we may face potential liability for defamation, invasion of privacy, negligence, copyright or trademark infringement, and other claims based on the nature and content of the materials distributed.

Our business involves risks of liability claims for content of material, which could adversely affect our business, financial condition and results of operations.

As a distributor of media content, we may face potential liability for defamation, invasion of privacy, negligence, copyright or trademark infringement, claims related to the adult nature of some of our content, other claims based on the nature and content of the materials distributed, or statements made by personnel or talent regarding or promoting those materials or attributable to our business.

These types of claims have been brought, sometimes successfully, against producers and distributors of media content.

Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business and results of operations.

Piracy of films and television programs could adversely affect our business over time.

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We cannot assure you that even the highest levels of security and anti-piracy measures will prevent piracy.

Service disruptions or failures of the Company’s or our third-party service providers’ information systems and networks as a result of computer viruses, misappropriation of data or other bad acts, natural disasters, extreme weather, accidental releases of information or other similar events, may disrupt our businesses, damage our reputation, expose us to regulatory investigations, actions, litigation, fines and penalties or have a negative impact on our results of operations including but not limited to d loss of revenue or profit, loss of customers or sales and other adverse consequences.

In the ordinary course of our business, we may process proprietary, confidential, and sensitive data, including personal information, intellectual property, and trade secrets (collectively, sensitive information).

We may rely upon third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts.

Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.

Cyberattacks, malicious internet-based activity, and online and offline fraud are prevalent and continue to increase.

These threats are becoming increasingly difficult to detect.

Service disruptions or failures of the Company’s or our third-party service providers’ information systems and networks may disrupt our businesses, damage our reputation, expose us to regulatory investigations, actions, litigation, fines and penalties or have a negative impact on our results of operations including but not limited to loss of revenue or profit, loss of customers or sales and other adverse consequences.

In the ordinary course of our business, we and the third parties in which we rely process proprietary, confidential, and sensitive data, including personal information, intellectual property, and trade secrets (collectively, sensitive information).

Our ability to monitor third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.

In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive

information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.

Threats such as cyberattacks, malicious internet-based activity, and online and offline fraud are becoming more prevalent and are increasingly difficult to detect.

These threats come from a variety of sources, including traditional computer “hackers,” threat actors, personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors.

We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures and other similar threats.

Ransomware attacks, including by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.

We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks, malicious code, malware (, denial-of-service attacks, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures and other similar threats.

In particular, ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.

Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products/services) or the third-party information technology systems that support us and our services.

The COVID-19 pandemic and our remote workforce poses increased risks to our information technology systems and data, as more of our employees work from home, utilizing network connections outside our premises.

Future or past business transactions

(such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

Any of the previously identified or similar threats could cause a security incident or other interruption.

A security incident or other interruption could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information.

Further, a partially remote workforce created by the COVID-19 global pandemic poses increased risks to our information technology systems and data, as certain employees work from home on a full or part-time basis, utilizing network connections outside our premises.

Business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information.

A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our services.

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While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.

We may be unable in the future to detect vulnerabilities in our information technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred.

Despite our efforts to identify and remediate vulnerabilities, if any, in our information technology systems (including our products), our efforts may not be successful.

We take steps to detect and remediate vulnerabilities, but may not be able to detect and remediate all vulnerabilities because the threat and techniques used to exploit change frequently and are often sophisticated in nature.

Therefore, such vulnerabilities could be exploited but, may not be detected until after a security incident has occurred.

These vulnerabilities pose material risk to our business.

Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.

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Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences.

If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.

These consequences may include:

government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);

If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as:

government enforcement actions (;

additional reporting requirements and/or oversight;

restrictions on processing sensitive information (including personal data);

litigation (including class claims);

restrictions on processing sensitive information;

indemnification obligations;

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monetary fund diversions;

interruptions in our operations (including availability of data);

interruptions in our operations;

financial loss;

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We may not have adequate insurance coverage to compensate it for any losses associated with such events.

Our activities are subject to a variety of stringent and changing obligations which may adversely impact our operations.

Failure of, or disruptions to, our technology facilities could adversely affect our business.

STARZ’s programming is currently transmitted from STARZ’s uplink center in Englewood, Colorado.

STARZ is moving its primary uplink facilities from the Englewood location and is outsourcing them to a third party starting in the fall of 2023.

Primary uplink facilities used by STARZ are equipped with backup generator power and other redundancies.

However, like other facilities, uplink facilities are subject to interruption from fire, adverse weather conditions and other natural causes.

Equipment failure, employee misconduct or third-party interference could also disrupt the facility’s services.

STARZ has arrangements at a separate third-party back-up facility to uplink STARZ’s linear channels and services to STARZ’s satellites in the event STARZ is unable to do so from its primary facility.

Notwithstanding these precautions, any significant or prolonged interruption of operations at STARZ’s primary facility, and any failure by STARZ’s back-up third-party facility to perform as intended, could have a materially adverse effect on our business, financial condition and results of operations.

STARZ’s success in the U.S.

is also dependent upon our continued ability to transmit STARZ’s programming to distributors.

STARZ has entered into multi-year satellite transponder leases for carriage of the STARZ networks’ programming.

Termination or interruption of satellite transmissions may occur and could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Despite STARZ’s efforts to secure transponder capacity with multi-year satellite transponder leases, there is a risk that when these leases expire, we may not be able to secure capacity on a transponder on the same or similar terms, if at all.

We rely upon “cloud” computing services to operate certain aspects of our service and any disruption of or interference with our use of our “cloud” computing servicer could impact our operations and our business could be adversely impacted.

We utilize “cloud” computing services to deliver a distributed computing infrastructure platform for our business operations.

We have architected our software and computer systems so as to utilize data processing, storage capabilities and other services provided by our current “cloud” computing service provider and we run our computing via such “cloud” computing service provider.

Given this, along with the fact that switching “cloud” computing services to another provider may be difficult, any problems faced by our “cloud” computing provider, including technological or business related disruptions, as well as cybersecurity threats and regulatory interference, or any unanticipated interference with our use of our current “cloud” service provider could impact our operations and our business could be adversely impacted.

Our activities are subject to stringent and evolving obligations which may adversely impact our operations.

Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions;

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and other adverse business consequences.

The global legal and regulatory environment governing our collection, generation, use, storage, disclosure and transfer (commonly known as processing) of personal information and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, and sensitive third-party data is complex and continually evolving.

In the ordinary course of our business, we collect and use the personal information of subscribers and potential subscribers through our websites and applications and those of third parties.

Data Privacy and Security.

In the ordinary course of its business, we collect, generate, use, store, process, disclose, transmit, share and transfer (collectively “processing”) personal information and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, and sensitive third-party data, through our websites and applications and those of third parties.

Among other purposes, we use this information to engage with users, promote our programming, and monitor the use of our digital platforms.

Our collection and use of personal information may subject us to a number of complicated domestic and foreign data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws.

For example, the California Consumer Privacy Act of 2018 (“CCPA”) imposes obligations on covered businesses.

These obligations include, but are not limited to, providing specific disclosures in privacy notices and affording California residents certain rights related to their personal data.

The CCPA allows for statutory fines for noncompliance (up to $7,500 per violation).

In addition, it is anticipated that the California Privacy Rights Act of 2020 (“CPRA”), effective January 1, 2023, will expand the CCPA.

Additionally, the CPRA establishes a new California Privacy Protection Agency to implement and enforce the CPRA, which could increase the risk of enforcement.

Other states have enacted data privacy laws.

For example, Virginia passed the Consumer Data Protection Act, Colorado passed the Colorado Privacy Act, Utah passed the Utah Consumer Privacy Act and Connecticut passed the Data Privacy and Online Monitoring Act all four of which differ from the CPRA and become effective in 2023 .

In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.

Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.

For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”) and Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No.

13,709/2018) impose strict requirements for processing personal data.

For example, under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros or 4% of annual global revenue, whichever is greater.

Further, individuals may initiate litigation related to processing of their personal information.

In addition, privacy advocates and industry groups have proposed, and may propose, standards with which we may be legally or contractually bound to comply.

Certain jurisdictions have enacted data localization laws and cross-border personal data transfer laws, which could make it more difficult to transfer information across jurisdictions (such as transferring or receiving personal data that originates in the EU or in other foreign jurisdictions).

Existing mechanisms that facilitate cross-border personal data transfers may change or be invalidated.

For example, absent appropriate safeguards or other circumstances, the EU GDPR generally restricts the transfer of personal data to countries outside of the European Economic Area (“EEA”) that the European Commission does not consider to provide an adequate level of data privacy and security, such as the United States.

The European Commission released a set of “Standard Contractual Clauses” (“SCCs”) that are designed to be a valid mechanism to facilitate personal data transfers out of the EEA to these jurisdictions.

Currently, these Standard Contractual Clauses are a valid mechanism to transfer personal data outside of the EEA, but there exists some uncertainty regarding whether the SCCs will remain a valid mechanism.

Additionally, the SCCs impose additional compliance burdens, such as conducting transfer impact assessments to determine whether additional security measures are necessary to protect the at-issue personal data.

In addition, Switzerland and the UK similarly restrict personal data transfers outside of those jurisdictions to countries such as the United States that do not provide an adequate level of personal data protection, and certain countries outside Europe (e.g., Brazil) have also passed or are considering laws requiring local data residency or otherwise impeding the transfer of personal data across borders, any of which could increase the cost and complexity of doing business.

If we cannot implement a valid compliance mechanism for cross-border data transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or other foreign jurisdictions.

The inability to import personal information to the United States could significantly and negatively impact our business operations;

limiting our ability to collaborate with parties that are subject to such cross-border data transfer or localization laws;

or requiring us to increase our personal data processing capabilities and infrastructure in foreign jurisdictions at significant expense.

Obligations related to data privacy and security are quickly changing in an increasingly stringent fashion, creating some uncertainty as to the effective future legal framework.

Our collection and use of personal information may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security .

In the U.S, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws.

For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal information of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.

The CCPA allows for civil penalties (up to $7,500 per violation) and allows private litigants affected by certain data breaches to recover significant statutory damages.

In addition, the California Privacy Rights Act of 2020 (“CPRA”), expands the CCPA’s requirements, including by adding a new right for individuals to correct their personal information and establishing a new regulatory agency to implement and enforce the law.

Other states, including Colorado and Virginia have passed comprehensive privacy laws, and similar laws are being considered in several other states, as well as at the federal and local levels.

These developments further complicate compliance efforts and increase legal risk and compliance costs for us and the third parties upon whom we rely.

Outside the U.S, an increasing number of laws, regulations, and industry standards apply to data privacy and security.

For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No.

13,709/2018) and Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”) impose strict requirements for processing personal data.

For example, under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions;

fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater;

or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.

Additionally, under various privacy laws and other obligations, we may be required to obtain certain consents to process personal data.

Our inability or failure to do so could result in adverse consequences.

In the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the U.S.

or other countries.

Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.

In particular, the European Economic Area (“EEA”) and the United Kingdom (“UK”) have significantly restricted the transfer of personal data to the U.S.

and other countries whose privacy laws it believes are inadequate.

Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.

Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the U.S.

in compliance with law, such as the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the U.S.

If there is no lawful manner for us to transfer personal data from the EEA, the UK or other jurisdictions to the U.S., or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against processing or transferring of personal data necessary to operate our business.

Additionally, some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of the EEA for allegedly violating the GDPR’s cross-border data transfer limitations.

We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful.

For example, certain privacy laws, such as the GDPR and the CCPA, require specific contractual restrictions on service providers.

We publish privacy policies, marketing materials and other statements regarding data privacy and security.

If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences.

Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty.

Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.

Preparing for and complying with these obligations requires significant resources and may necessitate changes to our information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.

Although we endeavor to comply with all applicable data privacy and security obligations, we may at times fail (or be perceived to have failed) to do so.

Preparing for and complying with these obligations requires significant resources and may necessitate changes to its information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.

We may at times fail (or be perceived to have failed) in efforts to comply with data privacy and security obligations.

Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply with such obligations, which could negatively impact our business operations and compliance posture.

For example, any failure by a third-party processor to comply with applicable law, regulations, or contractual obligations could result in adverse effects, including inability to or interruption in our ability to operate our business and proceedings against us by governmental entities or others.

Complying with these and any future regulations, or related contractual or other obligations, may increase our operating costs and adversely impact our ability to market products and service customers, including through our STARZ direct-to-consumer business (which may be subject to additional consumer legal claims and increased regulation).

Any actual or perceived failure to comply with these or any future regulations, or related contractual or other obligations, could disrupt our business, inhibit our ability to retain existing customers

or attract new customers, lead to investigations, claims, and proceedings by governmental entities and private parties, damages for breach of contract, litigation (including class-related claims), additional reporting requirements and/or oversight;

bans on processing personal information, orders to destroy or not use personal information and other significant costs, fines, penalties, or other liabilities, as well as harm to our reputation and market position.

It is possible that increased domestic or foreign regulation of data utilization practices, including self-regulation or findings under existing laws that limit our ability to collect, transfer and use information and other data, could have an adverse effect on our business.

Failure to comply with these obligations could subject us to liability, and to the extent that we need to alter our business model or practices to adapt to these obligations, we could incur additional expenses.

If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including, but not limited to:

government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);

litigation (including class-action claims);

additional reporting requirements and/or oversight;

bans on processing personal data;

or orders to destroy or not use personal data.

Any of these events could have a material adverse effect on our reputation, business, or financial condition, including, but not limited to:

loss of customers;

interruptions or stoppages in business operations;

inability to process personal data or to operate in certain jurisdictions;

limited ability to develop or commercialize our products;

expenditure of time and resources to defend any claim or inquiry;

adverse publicity;

or substantial changes to our business model or operations.

Consumer Protection Laws.

The continued growth and development of the market for online commerce may lead to more stringent consumer protection laws both domestically and internationally, which may impose additional burdens on us.

United States some examples include the Children's Online Privacy Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Video Privacy Protection Act.

In addition, many states have enacted laws regulating automatically renewing online subscription services.

If authorities start taking increased enforcement action related to statutes governing perceived unfair deceptive acts and practices, we could suffer additional costs, complaints and/or regulatory investigations or fines.

Other changes in consumer protection laws and the interpretations thereof, could have a materially adverse effect on our business, financial condition and results of operations.

Levies/Taxes.

Governments are increasingly looking to introduce regulations related to media and tax that may apply to our services.

For example, some international governments have enacted or are considering enacting laws that impose levies and other financial obligations on media operators located outside their jurisdiction.

Other changes in levy or tax laws and the interpretations thereof could have a materially adverse effect on our business, financial condition and results of operations.

Network Regulations .

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Regulations governing our services are subject to the political process and have been in constant flux historically.

We cannot assure you that we will be able to anticipate material changes in laws or regulatory requirements or that future legislation, new regulation or deregulation will not have a materially adverse effect on our business, financial condition, operating results, liquidity and prospects.

Internet and Other Media Operator Regulations.

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We anticipate that several jurisdictions may, over time, attempt to impose additional financial and regulatory obligations on us.

If we are required to comply with new regulations or legislation or new interpretations of existing regulations or legislation, this compliance could cause us to incur additional expenses or alter our business model.

Additionally, as we grow our STARZ direct-to-consumer business, we may be subject to additional consumer legal claims and state and local consumer protection regulation.

Other changes in laws relating to the internet or other areas of our business and the interpretations thereof could cause us to incur additional expenses or otherwise negatively affect our business.

Additionally, as we grow our STARZ and LIONSGATE+ direct-to-consumer business, we may be subject to additional consumer legal claims and state and local consumer protection regulation.

We rely upon the ability of consumers to access our service through the internet.

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We currently have a substantial amount of indebtedness.

As of March 31, 2022, we and our subsidiaries have corporate debt of approximately $2,482.7 million, production and related loan obligations of approximately $1,286.7 million, and $123.5 million outstanding under our senior secured amortizing term credit facility (the "IP Credit Facility") based on the collateral consisting solely of certain of the Company’s rights in certain library titles, including the Spyglass and other recently acquired libraries, and our Revolving Credit Facility together with Term Loan A and Term Loan B (the "Senior Credit Facilities") provide for unused commitments of $1.25 billion.

On the same basis, approximately $1,482.7 million of such indebtedness is secured (excluding all of our production and related loan obligations and IP Credit Facility borrowings).

As of March 31, 2023, we and our subsidiaries have corporate debt of approximately $2,059.9 million, and film related obligations of approximately $2,035.1 million, and our revolving credit facility provides for unused commitments of $1.25 billion.

On the same basis, approximately $1,259.9 million of such indebtedness is secured (excluding all of our film related obligations).

Our high level of debt could have adverse consequences on our business, such as:

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requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

increasing our vulnerability to the COVID-19 global pandemic and its effects, economic downturns and adverse developments in our business;

exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Senior Credit Facilities, production and related loans and advances under the IP Credit Facility, are at variable rates of interest;

increasing our vulnerability to global pandemics, economic downturns and adverse developments in our business;

exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the revolving credit facility, Term Loan A and Term Loan B (the "Senior Credit Facilities"), and borrowings under our film related obligations, are at variable rates of interest;

limiting our flexibility in planning for, and reducing our flexibility in reacting to, changes in the conditions of the financial markets and our industry;

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A significant portion of our cash flows from operations is expected to be dedicated to the payments of principal and interest obligations under the Senior Credit Facilities and our 5.500% Senior Notes (the "Senior Notes").

Our ability to make scheduled payments on or refinance our debt obligations will depend on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control, including the COVID-19 global pandemic and its effects.

If our cash flow from operations declines significantly, including any decline related to the impact of the COVID-19 global pandemic, it could result in the inability to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flow from operations declines significantly, it could result in the inability to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness.

In addition, during times of economic instability, including disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the COVID-19 global pandemic and Russia's invasion of Ukraine, it has been difficult for many companies to obtain financing in the public markets or to obtain debt financing.

In addition, during times of economic instability, including disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from global pandemics, wars, or recessions, it has been difficult for many companies to obtain financing in the public markets or to obtain debt financing.

We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.

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pay dividends or distributions or redeem or repurchase capital stock;

prepay, redeem or repurchase debt that is junior in right of payment to the debt under the Senior Credit Facilities and Senior Notes;

prepay, redeem or repurchase debt that is junior in right of payment to the debt under the Senior Credit Facilities and the Senior Notes;

make loans or investments;

restrict dividends, loans or asset transfers from our restricted subsidiaries;

sell or otherwise dispose of assets, including

capital stock of subsidiaries and sale/leaseback transactions;

sell or otherwise dispose of assets,

including capital stock of subsidiaries and sale/leaseback transactions;

consolidate or merge with or into, or sell substantially all of our assets to, another person;

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In addition, the Senior Credit Facilities require us to maintain specified financial ratios, tested quarterly.

Our ability to meet those financial ratios can be affected by events beyond our control, including the effects on our business from the COVID-19 global pandemic and related government actions and consumer behavior;

Our ability to meet those financial ratios can be affected by events beyond our control, including the effects on our business from global pandemics and related government actions and consumer behavior;

as such, we may be unable to meet such financial ratios.

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Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Senior Credit Facilities and advances under our production and related loans and IP Credit Facility are at variable rates of interest and expose us to interest rate risk, including in connection with the COVID-19 global pandemic and its effects, which could increase the cost of capital.

If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.

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Rachesky, M.D.

and his affiliates, who collectively currently hold over 23% of our voting stock and 11% of our non-voting common stock are “Permitted Holders” for purposes of the Senior Credit Facilities and the indentures that govern the Senior Notes.

and his affiliates, who collectively currently hold over 24% of our voting stock and over 10% of our non-voting common stock are “Permitted Holders” for purposes of the Senior Credit Facilities and the indentures that govern the Senior Notes.

Accordingly, certain increases of ownership or other transactions involving Dr.

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federal tax purposes.

Section 7874 ownership percentage of the STARZ stockholders in Lions Gate after the merger was less than 80% but at least 60% (the “60% ownership test”), and the substantial business activities test was not met, STARZ and its U.S.

affiliates (including the U.S.

If the Section 7874 ownership percentage of the STARZ stockholders in Lions Gate after the merger was less than 80% but at least 60% (the “60% ownership test”), and the substantial business activities test was not met, STARZ and its U.S.

(including the U.S.

affiliates historically owned by us) may, in some circumstances, be subject to certain adverse U.S.

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Congress, the Organisation for Economic Co-operation and Development (“OECD”) and other government agencies in jurisdictions where we and our affiliates will conduct business have had an extended focus on issues related to the taxation of multinational corporations.

For the past several years, the primary focus has been in the area of “base erosion and profit shifting,” including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates.

For the past several years, the primary focus has been in the area of “base erosion and profit

shifting,” including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates.

As part of its so-called Base Erosion and Profit Shifting (“BEPS”) project, OECD and the G-20 developed changes to numerous long-standing international tax principles.

More recently, countries are increasingly seeking ways to tax what is sometimes referred to as the digitalized economy.

F or example, in response to the increasing globalization and digitalization of trade and business operations, OECD is working on a proposal as an extension of its BEPS project to establish a global minimum corporate taxation rate.

For example, in response to the increasing globalization and digitalization of trade and business operations, OECD is working on a proposal as an extension of its BEPS project to establish a global minimum corporate taxation rate.

The rules are designed to ensure that large multinational groups pay corporate income taxes at the minimum rate of 15% in the countries where they operate.

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For example, the U.K.

has announced plans to increase its corporate tax rate from 19% to 25%, starting in April 2023.

has enacted legislation to increase its corporate tax rate from 19% to 25%, starting in April 2023.

or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

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Our tax rate is uncertain and may vary from expectations.

There is no assurance that we will be able to maintain any particular worldwide effective corporate tax rate because of uncertainty regarding the tax policies jurisdictions in which we and our affiliates operate.

There is no assurance that we will be able to maintain any particular worldwide effective corporate tax rate because of uncertainty regarding the tax policies of jurisdictions in which we and our affiliates operate.

Our actual effective tax rate may vary from our expectations, and such variance may be material.

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Although uniform transfer pricing standards are emerging in many of the countries in which we operate, there is still a relatively high degree of uncertainty and inherent subjectivity in complying with these rules.

In addition, due to

economic and political conditions, tax rates in various jurisdictions may be subject to significant change.

Our future effective tax rates could be affected by changes in tax laws or regulations or the interpretation thereof (including those affecting the allocation of profits and expenses to differing jurisdictions), by changes in the amount of revenue or earnings that we derive from international sources in countries with high or low statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, by changes in the expected timing and amount of the release of any tax valuation allowance, or by the tax effects of stock-based compensation.

In addition, due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.

from international sources in countries with high or low statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, by changes in the expected timing and amount of the release of any tax valuation allowance, or by the tax effects of stock-based compensation.

Unanticipated changes in our effective tax rates could affect our future results of operations.

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What changed 10-K

Item 1A. Risk Factors