Item 1. Business
ITEM 1. BUSINESS.
Overview
Lionsgate (NYSE: LGF.A, LGF.B) encompasses world-class motion picture and television studio operations aligned with the STARZ premium global subscription platform to bring a unique and varied portfolio of entertainment to consumers around the world. Our film, television, subscription and location-based entertainment businesses are backed by an 18,000-title library and a valuable collection of iconic film and television franchises.
We manage and report our operating results through three reportable business segments: Motion Picture , Television Production and Media Networks . We refer to our Motion Picture and Television Production segments collectively as our Studio Business and our Media Networks segment as our Media Networks Business . Financial information for our segments is set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report.
Studio Business
Motion Picture: Our Motion Picture segment includes revenues derived from the following:
• Theatrical . The domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by us directly in the U.S. and through a sub-distributor in Canada). The revenues from Canada are reported net of distribution fees and release expenses of the Canadian sub-distributor. The financial terms that we negotiate with our theatrical exhibitors in the U.S. generally provide that we receive a percentage of the box office results.
• Home Entertainment . The sale or rental of our film productions and acquired or licensed films and certain television programs (including theatrical and direct-to-video releases) on packaged media and through digital media platforms (including pay-per-view and video-on-demand platforms, electronic sell through, and digital rental). In addition, we have revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, we share in the rental or sales revenues generated by the platform on a title-by-title basis.
• Television . The licensing of our theatrical productions and acquired films to the linear pay, basic cable and free television markets. In addition, when a license in our traditional pay television window is made to a subscription video-on-demand ("SVOD") or other digital platform, the revenues are included here.
• International. The (i) licensing of our productions, acquired films, our catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis, and (ii) the direct distribution of our productions, acquired films, and our catalog product and libraries of acquired titles in the United Kingdom.
• Other . Among others, the licensing of our film and television and related content (e.g., games, music, location-based entertainment royalties, etc.) to other ancillary markets.
Television Production: Our Television Production segment includes revenues derived from the following:
• Television. The licensing to domestic markets (linear pay, basic cable, free television and syndication) of scripted and unscripted series, television movies, mini-series and non-fiction programming. Television revenues include fixed fee arrangements as well as arrangements in which we earn advertising revenue from the exploitation of certain content on television networks. Television revenues also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform.
• International. The licensing and syndication to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming.
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• Home Entertainment. The sale or rental of television production movies or series on packaged media and through digital media platforms.
• Other . Among others, the licensing of our television programs to other ancillary markets, the sales and licensing of music from the television broadcasts of our productions, and from commissions and executive producer fees earned related to talent management.
Media Networks
Our Media Networks segment includes revenues derived from the following:
• Starz Networks. The domestic distribution of our STARZ branded premium subscription video services through over-the top ("OTT") streaming platforms and distributors, on a direct-to-consumer basis through the Starz app, and through U.S. multichannel video programming distributors (“MVPDs”) including cable operators, satellite television providers and telecommunications companies (collectively, “Distributors”) (and in the aggregate, the “Starz Domestic Platform”).
• LIONSGATE+ . The OTT distribution of the Company's STARZ branded premium subscription video services outside of the U.S.
The Starz Domestic Platform together with the LIONSGATE+ platforms are referred to as the “Starz Platforms.”
Segment Revenue
For the year ended March 31, 2023, contributions to the Company’s consolidated revenues from its reporting segments included Motion Picture 34.3%, Television Production 45.7% and Media Networks 40.1%, and intersegment revenue eliminations represented (20.1)% of consolidated revenues.
Within the Motion Picture segment, revenues were generated from the following:
• Theatrical, 9.1%;
• Home Entertainment, 45.1%;
• Television, 16.5%;
• International, 27.6%; and
• Motion Picture-Other, 1.7%.
Within the Television Production segment, revenues were generated from the following:
• Television, 65.0%;
• International, 15.8%;
• Home Entertainment, 13.9%; and
• Television Production-Other, 5.3%.
Within the Media Networks segment, revenues were generated from the following:
• Starz Networks, 90.3%;
• LIONSGATE+, 9.7%
Corporate Strategy
We manage a large and diversified portfolio of film and television content that we license to theatrical exhibitors, streaming, broadcast, pay cable and other platform partners worldwide. We maintain a disciplined, targeted and cost-effective approach to the acquisition, production, marketing and distribution of that content. Our strategic focus on content makes us a preferred supplier to third-party buyers as well as our own STARZ platform. The extension of our portfolio of brands and franchises, creation of new intellectual properties and rigorous focus on retaining key rights to our content is designed to create incremental long-term value for our shareholders through a combination of current releases and one of the most valuable film and television libraries in the world.
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STUDIO BUSINESS: MOTION PICTURE
Motion Picture - Theatrical
Production and Acquisition
We take a disciplined approach to theatrical production, with the goal of producing content that can be distributed through various domestic and international platforms. In doing so, we may mitigate the financial risk associated with production by, among other things:
• Negotiating co-financing development and co-production agreements which may provide for cost-sharing with one or more third-party companies;
• Pre-licensing international distribution rights on a selective basis, including through international output agreements (which license rights to distribute a film in one or more media generally for a limited term, and in one or more specific territories prior to completion of the film);
• Structuring agreements that provide for talent participation in the financial success of the film in exchange for reduced guaranteed “up-front payments” that would be paid regardless of the film's success; and
• Utilizing governmental incentives, programs and other structures from state and foreign countries (e.g., sales tax refunds, transferable tax credits, refundable tax credits, low interest loans, direct subsidies or cash rebates, calculated based on the amount of money spent in the particular jurisdiction in connection with the production).
Our approach to acquiring films complements our theatrical production strategy - we typically seek to limit our financial exposure while adding films with high potential for commercial box office success, critical recognition and successful monetization across a broad array of platforms.
Distribution
The economic life of a motion picture may consist of its exploitation in theaters, on packaged media and on various digital and television platforms in territories around the world. We generally distribute motion pictures directly to movie theaters in the U.S. whereby the exhibitor retains a portion of the gross box office receipts and the balance is remitted to the distributor. Concurrent with their release in the U.S., films are generally released in Canada and may also be released in one or more foreign countries. We construct release schedules taking into account moviegoer attendance patterns and competition from other studios' scheduled theatrical releases. After the initial theatrical release, distributors seek to maximize revenues by releasing films in sequential release date windows, which may be exclusive against other non-theatrical distribution platforms. In certain circumstances, our distribution strategy has and may continue to change, and certain films intended for theatrical release may be licensed to other platforms.
Producing, marketing and distributing films can involve significant risks and costs, and can cause our financial results to vary depending on the timing of a film’s release. For instance, marketing costs are generally incurred before and throughout the theatrical release of a film and, to a lesser extent, other distribution windows, and are expensed as incurred. Therefore, we typically incur losses with respect to a particular film prior to and during the film’s theatrical exhibition, and profitability for the film may not be realized until after its theatrical release window. Further, we may revise the release date of a film as the production schedule changes or in such a manner as we believe is likely to maximize revenues or for other business reasons. Additionally, there can be no assurance that any of the films scheduled for release will be completed and/or in accordance with the anticipated schedule or budget, or that the film will ever be released.
Theatrical Releases
For the fiscal year ended March 31, 2023, we released twenty (20) films theatrically in the U.S. across our labels (including our partnership with Roadside Attractions). We also made changes to release dates as well as release strategies of several of our films by releasing solely and/or earlier on streaming platforms, initially releasing on premium video-on-demand (“PVOD”), premium electronic sell-through, or by licensing directly to streaming platforms. In doing so, we capitalized on increased optionality in distribution and maintained a platform agnostic approach to distribution to take full advantage of new windowing opportunities and alternative distribution strategies (while also continuing to work closely with our theatrical exhibition partners).
For the fiscal year ended March 31, 2023, such titles and their release patterns included the following:
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Fiscal 2023
Theatrical Releases
Title
Theatrical Release Date
Release Pattern
Label
The Unbearable Weight Of Massive Talent April 22, 2022 Theatrical and Accelerated Home Entertainment Lionsgate
Fall August 12, 2022 Theatrical and Accelerated Home Entertainment Lionsgate
Clerks III September 13, 2022 Eventized Theatrical Lionsgate
Prey for the Devil October 28, 2022 Theatrical and Accelerated Home Entertainment Lionsgate
Plane January 13, 2023 Theatrical and Premium Video-on-Demand Lionsgate
Jesus Revolution February 22, 2023 Theatrical and Accelerated Home Entertainment Lionsgate
My Happy Ending February 24, 2023 Theatrical and Accelerated Home Entertainment Lionsgate
Moving On March 17, 2023 Theatrical and Accelerated Home Entertainment Lionsgate
Operation Fortune: Ruse de Guerre March 21, 2023 Theatrical and Premium Video-on-Demand Lionsgate
John Wick: Chapter 4 March 24, 2023 Theatrical and Accelerated Home Entertainment Lionsgate
Fiscal 2023
Theatrical Releases
Title
Theatrical Release Date
Release Pattern
Label
Aline
April 8, 2022
Theatrical and Accelerated Home Entertainment
Roadside Attractions
Firebird
April 29, 2022
Theatrical and Accelerated Home Entertainment
Roadside Attractions
Family Camp
May 13, 2022
Theatrical and Accelerated Home Entertainment
Roadside Attractions
Benediction
June 3, 2022
Theatrical and Accelerated Home Entertainment
Roadside Attractions
The Forgiven
July 1, 2022
Theatrical and Premium Video-on-Demand
Roadside Attractions
Emily the Criminal
August 12, 2022
Theatrical and Premium Video-on-Demand
Roadside Attractions
Gigi & Nate
September 2, 2022
Theatrical and Accelerated Home Entertainment
Roadside Attractions
The Good House
September 30, 2022
Theatrical and Premium Video-on-Demand
Roadside Attractions
Call Jane
October 28, 2022
Theatrical and Accelerated Home Entertainment
Roadside Attractions
To the End
December 9, 2022
Theatrical and Accelerated Home Entertainment
Roadside Attractions
Nominations and Awards
Lionsgate and affiliated companies (including its wholly-owned subsidiaries, Artisan Pictures, Mandate Pictures and Summit Entertainment, and Roadside Attractions, of which Lionsgate owns a 43% equity interest) have distributed films that have earned 134 Academy Award® nominations and 32 wins, as well as numerous Golden Globe Awards®, Producers Guild Awards®, Screen Actors Guild Awards®, Directors Guild Awards®, BAFTA Awards and Independent Spirit Awards nominations and wins.
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Motion Picture - Home Entertainment
Our U.S. home entertainment distribution operation exploits our film and television content library of 18,000 motion picture titles and television episodes and programs, consisting of titles from, among others, Lionsgate, our subsidiaries, affiliates and joint ventures (such as STARZ, Summit Entertainment, Anchor Bay Entertainment, Artisan Entertainment, Grindstone Entertainment Group, Roadside Attractions, Trimark and Vestron), as well as titles from third parties such as A24, A&E, AMC, Entertainment Studios, Saban Entertainment, StudioCanal, Zoetrope, Gravitas, and Tyler Perry Studios. Home entertainment revenue consists of packaged media and digital revenue.
Packaged Media
Packaged media distribution involves the marketing, promotion, sale and/or lease of DVDs/Blu-ray/4K Ultra HD discs to wholesalers and retailers in the U.S. and Canada who then sell or rent such discs to consumers for private viewing. Fulfillment of physical distribution services are substantially licensed to Sony Pictures Home Entertainment. We distribute or sell content directly to retailers such as Wal-Mart, Best Buy, Target, Amazon and others who buy large volumes of our discs to sell directly to consumers. We also directly distribute content to the rental market through Redbox, Netflix and others.
Digital Media
We consider alternative distribution strategies for our films and releases several titles solely and/ or in an accelerated post-theatrical window on various digital platforms (including multi-platform distribution). We directly distribute this and other content (including certain titles not distributed theatrically or on physical media) across a wide range of global distribution platforms and networks on an on-demand basis (whereby the viewer controls the timing of playback) through dozens of transactional (transactional video-on-demand and electronic-sell-through), subscription, ad-supported and free video-on-demand platforms. We also directly distribute content on a linear distribution basis (i.e., whereby the programmer controls the timing of playback) through various linear pay, basic cable, and free, over-the-air television platforms worldwide. SVOD services to which we license our content include, among others, Netflix, Hulu, Amazon’s Prime Video, Peacock, Paramount+ and Max; ad-supported video-on-demand services to which we license our content include, among others, The Roku Channel, Tubi TV, YouTube, Freevee, Samsung and Pluto; and linear networks to which we distribute our content include, among others, pay television networks such as STARZ, EPIX, HBO and Showtime, and basic cable network groups such as NBCUniversal Cable Entertainment, Paramount Global Domestic Media Networks, Disney Media & Entertainment Distribution Networks, Warner Media Entertainment Networks, A+E Networks and AMC Networks, as well as Bounce, Telemundo and UniMás.
Motion Picture - Television
We license our theatrical productions and acquired films to the domestic linear pay, basic cable and free television markets. For additional information regarding such distribution, see Motion Picture-Home Entertainment - Digital Media above.
Motion Picture - International
Our international sales operations are headquartered at our offices in London, England. The primary components of our international business are, on a territory-by-territory basis through third parties or directly through our international divisions:
• The licensing of rights in all media of our in-house feature film product and third party acquisitions on an output basis;
• The licensing of rights in all media of our in-house product and third party acquisitions on a sales basis for non-output territories;
• The licensing of third party feature films on an agency basis; and
• Direct distribution of theatrical and/or ancillary rights licensing.
We license rights in all media on a territory-by-territory basis (other than the territories where we self-distribute) of (i) our in-house Lionsgate and Summit Entertainment feature film product, and (ii) films produced by third parties such as Silver Reel, Buzzfeed, Ace Entertainment and other independent producers. Films licensed and/or released by us internationally in fiscal 2023 included such in-house productions as John Wick: Chapter Four, Unbearable Weight of Massive Talent , Prey For the Devil , Bagman , Dirty Dancing , Mindcage , Motherland , Alice Darling , Ballad of Songbirds and Snakes , One Ranger , Untitled Saw, Float , Puppy Love , Love in Taipei , The Blackening , Imaginary and Miller’s Girl . Third party films for which we were engaged as exclusive sales agent and/or released by us internationally in fiscal 2023 included Paradise Highwa y.
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Through our territory-by-territory sales and output arrangements, we generally cover a substantial portion of the production budget or acquisition cost of new theatrical releases which we license and distribute internationally. Our output agreements for Lionsgate and Summit feature films currently cover Scandinavia and France. These output agreements generally include all rights for all media (including home entertainment and television rights). We also distribute theatrical titles in Latin America through our partnership with International Distribution Company, as well as theatrical rights in Canada through our prior partnership with Mongrel Media and our new distribution arrangement with Cineplex.
We also self-distribute motion pictures in the United Kingdom and Ireland through Lions Gate International UK (“Lionsgate UK”). Lionsgate UK has established a reputation in the United Kingdom as a leading producer, distributor and acquirer of commercially successful and critically acclaimed product. Following the closures and gradual re-opening of theatres during fiscal years 2021 and 2022 as a result of the COVID-19 global pandemic, we were able to release more titles theatrically through Lionsgate UK in fiscal 2023 than in such previous years, including the following:
Fiscal 2023
Lionsgate UK
Title Theatrical Release Date
The Unbearable Weight of Massive Talent April 22, 2022
Good Luck To You Leo Grande June 17, 2022
Clerks III September 15, 2022
Prey For The Devil October 28, 2022
Triangle of Sadness October 28, 2022
Living November 4, 2022
Alice, Darling January 20, 2023
Plane January 27, 2023
John Wick: Chapter 4 March 24, 2023
Additionally, our office in India manages operations and growth opportunities in the South Asian/Indian sub-continent. Through our local office in Mumbai, we manage the following activities:
• License our feature films, television series, library content to local linear and digital platforms;
• Appoint and work closely with theatrical distribution partners to maximize box office for our films;
• Partner with local production companies, as well as develop in-house, Indian local language television series and feature films for distribution across other media platforms;
• Continue to expand our STARZ’s offering in the region and across emerging Asian markets (branded as Lionsgate Play), through our direct-to-consumer launch and in collaboration with telco and broadband partners, Amazon and Apple TV; and
• Explore investment opportunities throughout the South Asian and South East Asian media market.
Motion Picture - Other
Global Products and Experiences
Our Global Products and Experiences division drives incremental revenue and builds consumer engagement across our entire portfolio of properties via licensing and launching live shows and experiences, location-based entertainment destinations, games, physical and digital merchandise, and through select strategic partnerships and investment s.
Within the division, our Global Live Entertainment business focuses on licensing, developing, and producing live stage shows, concerts, and live immersive experiences and events based on our theatrical and television content. We have announced multiple live entertainment projects, including Wonder , Nashville and La La Land for Broadway, as well as a live dance show inspired by our Step Up film franchise in partnership with Channing Tatum and Free Association.
Our Interactive Entertainment business focuses on growing a slate that includes games across PC/console, mobile, virtual reality and more, both through stand-alone games based solely on our content and the integration of our properties with marquee games such as Call of Duty , Dead By Daylight and Evil Dead: The Game , as well as Web3 projects, including the SANDBOX.
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Our Location Based Entertainment business licenses and produces our Lionsgate, theatrical, and television brands for theme parks, destinations, and stand-alone attractions and experiences. In January 2022, we opened an expansion of the Lionsgate zone at Motiongate Dubai featuring new John Wick and Now You See Me attractions, and in February 2023, we opened Saw: The Experience in London.
Our Consumer Products business licenses and develops products around our leading film and television properties, including John Wick , The Hunger Games , Twilight , Saw and Mad Men . In July 2022, we signed an agreement with IMG for global consumer products representation. Our merchandise is available in the Lionsgate Store, our official ecommerce shop, and at many well- known retail outlets such as Hot Topic and Target. We are developing new offerings across a broad range of categories with best in class licensees, including American Classics, Ripple Junction, Goodie Two-Sleeves, Hot Toys, Funko and more.
Music
We manage music for our theatrical and television slates, including overseeing songs, scores and soundtracks for all of our theatrical productions, co-productions and acquisitions, as well as music staffing, scores and soundtracks for all of our television productions. Music revenues are derived from the sales and licensing of music from our films, television, and other productions, and the theatrical exhibition of our films and the broadcast and webcast of our productions.
Ancillary Revenues
Ancillary revenues are derived from the licensing of films and television content at non-theatrical venues including educational and institutional facilities, U.S. military bases, oil rigs, hospitals, hotels, prisons, and on all forms of common carrier transportation, including airlines and ships.
STUDIO BUSINESS: TELEVISION PRODUCTION
Our television business consists of the development, production, syndication and distribution of television programming. We principally generate revenue from the licensing and distribution of such programming to broadcast television networks, pay and basic cable networks, digital platforms and syndicators of first-run programming, which license programs on a station-by-station basis and pay in cash or via barter (i.e., trade of programming for airtime). Each of these platforms may acquire a mix of original and library programming.
After initial exhibition, we distribute programming to subsequent buyers, both domestically and internationally, including basic cable network, premium subscription services or digital platforms (known as “off-network syndicated programming”). Off-network syndicated programming can be sold in successive cycles of sales which may occur on an exclusive or non-exclusive basis. In addition, television programming is sold on home entertainment (packaged media and via digital delivery) and across all other applicable ancillary revenue streams including music publishing, touring and integration.
As with film production, we use tax credits, subsidies, and other incentive programs for television production in order to maximize our returns and ensure fiscally responsible production models.
Television Production - Television
Lionsgate Television
We currently produce, syndicate and distribute nearly 80 television shows on more than 35 networks (including programming produced by Pilgrim Media Group, of which we own a majority interest).
For the fiscal year ended March 31, 2023, scripted and unscripted programming produced, co-produced or distributed by us and our affiliated entities (see Starz Original Programming below for original programming that appears on our STARZ services), as well as programming syndicated by our wholly-owned subsidiary, Debmar-Mercury, included the following:
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Fiscal 2023 Fiscal 2023
Scripted - Lionsgate Unscripted - Lionsgate
Title Network Title Network
Acapulco Apple 1619 Hulu
Black Mafia Family STARZ Derbez Family Vacation Pantaya
Blindspotting STARZ Hip Hop Homicides WE TV
Dangerous Liaisons STARZ House of Ho Max
Ghosts CBS Selling Sunset Netflix
Heels STARZ Selling the OC Netflix
Hightown STARZ
Home Economics ABC
Julia Max
Love & Death Max
Minx STARZ
Mythic Quest Apple
Party Down STARZ
Paul T. Goldman Peacock
Power Book II: Ghost STARZ
Power Book III: Raising Kanan STARZ
Power Book IV: Force STARZ
P-Valley STARZ
Run the World STARZ
Serpent Queen STARZ
The First Lady Showtime
We Thought We Were Done NBC
Welcome to Flatch Fox
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Fiscal 2023 Fiscal 2023
Unscripted - Pilgrim Media Group Syndication - Debmar-Mercury
Title Network Title
Fox Nation - Jussie Smollet Fox Nation Family Feud
Ghost Hunters 3.0 Discovery Nick Cannon
Hoffman Family Gold Discovery Schitt's Creek
Horse for Dogs Animal Planet Sherri Shepherd
My Big Fat Fabulous Life TLC Wendy Williams
Renovation Impossible Discovery
Power Slap: Road to the Title TBS
Steve Austin A&E
Street Outlaws Discovery
Street Outlaws: America's List Discovery
Street Outlaws: Endgame Discovery
Street Outlaws: Farm Truck & AZN Discovery
Street Outlaws: Fastest in America Discovery
Street Outlaws: Gone Girl Discovery
Street Outlaws: No Prep Kings Grudge Night Discovery
The Ultimate Fighter ESPN+
UFO Live Discovery
Wicked Tuna Nat Geo
Wicked Tuna Outer Banks Nat Geo
Zombie Flippers A&E
Hoffman Family Gold Fox Nation
Starz Original Programming
For information regarding production of Starz original programming, see Media Networks - Starz Networks - Starz Original Programming.
Television Production- International
We continue to expand our television business through international sales and distribution of original Lionsgate television series, Starz original programming, third party television programming and format acquisitions via packaged media and various digital platforms. Lionsgate UK also continues to build a robust television business alongside its premier film brand through its various joint ventures and investments.
For the fiscal year ended March 31, 2023, Lionsgate UK television programming that was acquired, began production, continued production after delays due to the COVID-19 global pandemic, was produced or was broadcast, included the following:
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Fiscal 2023
Television - Lionsgate UK
Title Network Partner(s)
The Pact Series 2 BBC Little Door
Motherland 2022 Christmas Special BBC BBC, Merman
Northern Lights TG4 Deadpan
Son of a Critch 2 CBC Project 10
Leopard Skin Peacock Skinny Leopard
Wong & Winchester Rogers & Québecor Pixcom International
Workin’ Moms Netflix & CBC Coldsprings Media,
Wolf + Rabbit Entertainment
Dark City: The Cleaner Sky NZ Endeavour Ventures
Prosper Stan Lingo Pictures
Television Production - Home Entertainment
For information regarding television production home entertainment revenue, see Motion Picture - Home Entertainment above.
Television Production - Other
Other revenues are derived from, among others, the licensing of our television programs to other ancillary distributors, the sales and licensing of music from the television broadcasts of our productions, and from our interest in 3 Arts Entertainment, a talent management company. 3 Arts Entertainment receives commission revenue from talent representation and are producers on a number of television shows and films where they receive an executive producer fee and back-end participations.
MEDIA NETWORKS
Media Networks - Starz Networks - United States
Starz Networks is a leading provider of premium subscription video programming to consumers in the U.S. We sell our services on a direct-to-consumer basis and through various distributors, including OTT providers (such as Amazon, Apple, Google and Hulu) and MVPDs (such as Comcast, Charter, DIRECTV and DISH Network).
Our flagship premium service STARZ had 20.3 million subscribers as of March 31, 2023 (not including subscribers who receive programming free as part of a promotional offer). STARZ offers premium original series and recently released and library movies without advertisements. Our other services, STARZ ENCORE and MOVIEPLEX, offer theatrical and independent library movies as well as original and classic television series also without advertisements. Our services include a stand-alone, direct-to-consumer app, 17 linear networks, and on-demand and online viewing platforms. Our app and online viewing platforms offer thousands of monthly movies and series episodes from studio partners, including first-run content, along with a growing line-up of successful original programming. Our services are offered directly to consumers via the STARZ app and via our website at www.starz.com as well as through our retail partners (such as Apple and Google) for a recurring fee, or by our distributors to their subscribers either at a recurring price as part of a programming tier, package or bundle with other products or services, or on an a la carte basis.
The table below depicts the STARZ app and our 17 existing linear services, their respective on-demand services, and highlights some of their key attributes.
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Demographics and Strategy
Designed to complement any television offering for general audiences across both wholesale and retail OTT, as well as traditional MVPD distribution platforms, STARZ is a best-in-class subscription service delivering premium original series and hit movies with appeal to women and diverse audiences worldwide.
We are focused on developing and distributing authentic and engaging programming that resonates with women, African American, Latinx and LGBTQIA audiences, all of which have been traditionally underserved in the premium television space.
Across our digital platforms, the STARZ app provides an alternative for subscribers looking for a competitively priced option. Subscribers have access to a vast library of quality content and a top-rated user experience, along with the ability to download and watch STARZ original series, blockbuster theatricals and favorite classic TV series and movies without an internet connection.
We believe this strategy, combined with a proven management team, will ensure Starz Networks’ services remain a “must have” for subscribers and a meaningful profit center for our distributors.
Affiliation Agreements
Our services are distributed pursuant to affiliation agreements with our distributors. We earn revenue under these agreements either (i) based on amounts or rates tied to the total number of subscribers who receive our services or (ii) based on amounts or rates which are not tied solely to the total number of subscribers who receive our services. Our affiliation agreements expire at various dates into 2027.
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We work with our distributors to increase the number of subscribers to our services. To accomplish this, we may help fund the distributors’ efforts to market our services or may permit distributors to offer limited promotional periods with discounted or no payment of subscriber fees. We believe these efforts enhance our relationship with distributors, improve the awareness of our services and maximize subscribers and revenue over the term of these affiliation agreements.
Distributors report the number of subscribers to our services and pay for services, generally, on a monthly basis. The agreements are generally structured to be multi-year agreements with staggered expiration dates and certain of the agreements provide for annual contractual rate increases.
STARZ App
The STARZ app is the single destination for both direct OTT subscribers and distributor authenticated subscribers to stream or download our original series and movie content. The STARZ app:
• Is available for purchase as a standalone OTT service for a recurring monthly fee;
• Is available on a wide array of platforms and devices including Amazon Fire, iOS, Android and Roku, among others;
• Includes on-demand streaming and downloadable access for internet-free viewing;
• Offers instant access to thousands of selections each month (including STARZ original series and commercial free movies); and
• Is available as an additional benefit to paying MVPD subscribers of the Starz Networks’ linear premium services.
Starz Original Programming
STARZ is a leader in high-quality, bold premium programming developed for women and underrepresented audiences. Its slate is driven by critically-acclaimed and award-winning scripted original series with highly-engaged audiences.
STARZ Original Series like “Outlander” and “Power” have become tentpole franchises with multiple spinoff and derivative series to meet audience demand. STARZ also has brought audiences groundbreaking new series including “P-Valley,” “BMF,” and “The Serpent Queen,” among many others.
STARZ is dedicated to bringing its audiences new content throughout the year with approximately 100 new episodes on its slate each year.
Starz Networks contracts with Lionsgate’s Television Production segment and other independent studios and production companies to produce original programming that appears on our Starz services.
Starz’s fiscal 2023 STARZ Originals line-up was as follows:
Title
Gaslit Season 1
P-Valley Season 2
Becoming Elizabeth Season 1
Who Is Ghislaine Maxwell (limited series)
Power Book III: Raising Kanan Season 2
Serpent Queen Season 1
Step Up Season 3
The BMF Documentary: Blowing Money Fast
Dangerous Liaisons Season 1
BMF Season 2
Party Down Season 3
Power Book II: Ghost Season 3
Total Episodes: 99
Output and Content License Agreements
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The majority of acquired content on our services consists of movies that have been released theatrically. Starz has an exclusive multiyear output licensing agreement with Lionsgate for Lionsgate label titles theatrically released in the U.S. starting January 1, 2022, and for Summit label titles theatrically released in the U.S. starting January 1, 2023. Starz also has an exclusive multiyear post pay-one output licensing agreement with Universal for live-action films theatrically released in the U.S. starting January 1, 2022. The Universal agreement provides Starz with rights to exhibit these films immediately following their pay-one windows. In addition, we continue to exhibit films under our exclusive Sony output agreement, which covers qualifying movies released theatrically in the U.S. by certain Sony labels through December 31, 2021.
Under these agreements, Starz has valuable exclusive rights to air these new movies on linear television services, on-demand or online during two separate windows, with at least one year between the first and second windows. Generally, except on a VOD or pay-per-view basis, no other linear service, online streaming or other video service may air or stream these recent releases during Starz’s windows.
Starz also licenses first-run independent feature films acquired through U.S. and international film festivals and other sources as well as library content comprised of older, previously released theatrical movies from many of Hollywood’s major studios. In addition to theatrical movies, Starz licenses television series and other content from studios, production companies or other rights holders. The rights agreements for library content are of varying duration and generally permit Starz’s services to exhibit these movies, series and other programming during certain window periods.
A summary of significant output and library programming agreements (including a library agreement with Lionsgate) are as follows:
Significant output programming agreements Significant library programming agreements
Studio Studio
Lionsgate Paramount
Sony Warner Bros
Universal Twentieth Century Fox
MGM
Sony Pictures
Lionsgate
Universal
Our output agreements generally require us to pay for movies at rates calculated on a pricing grid that is based on each film’s domestic box office performance (subject to maximum amounts payable per movie and a cap on the number of movies that can be put to Starz each year). The amounts Starz pays for library content vary based on each specific agreement, but generally reflect an amount per movie, series or other programming commensurate with the quality (e.g., utility and perceived popularity) of the content being licensed.
Transmission
We currently uplink our programming for our linear services to non-pre-emptible, protected transponders on two satellites positioned in geo-synchronous orbit. These satellites feed our signals to various swaths of the Americas. We lease these transponders under recently renewed multi-year agreements. We currently transmit to these satellites from our uplink center in Englewood, Colorado, but will be moving our primary uplink facilities from the Englewood location and outsourcing them to a third party starting in the fall of 2023. We have made arrangements at a vendor’s facility to uplink our linear channels to these satellites in the event we are unable to do so from our primary uplink facilities.
Regulatory Matters
In the U.S., the Federal Communications Commission (the “FCC”) regulates several aspects of our and our distribution ecosystem’s operations and programming. This includes FCC oversight in connection with communications satellites and related uplink/downlink equipment and transmissions, content-specific requirements such as closed captioning, messaging during children’s programming, loudness of commercials, and program access requirements in connection with certain distributors and programmer services with shared attributable interests.
Regulation
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The regulation of programming services, cable television systems, direct broadcast satellite providers, broadcast television licensees and online services is subject to the political process and has been in constant flux historically. To the extent that our programming services are distributed through online platforms, we must comply with various federal and state laws and regulations applicable to online communications and commerce. Further material changes in the law and regulatory requirements that affect our business must be anticipated and there can be no assurance that we will not be materially adversely affected by future legislation, new regulation or deregulation.
Media Networks - LIONSGATE+ - International
Starz is available in nearly 50 countries outside the U.S. through our four (4) international branded services: LIONSGATE+ in the UK, Ireland, Latin America and Australia; STARZ in Canada; LIONSGATE PLAY in India; and through our STARZPLAY Arabia joint venture in the Middle East and North Africa. We offer our branded services on a direct-to-consumer basis and through various distributors, including OTT providers (such as Amazon and Claro) as well as local internet protocol television (“IPTV”), cable and satellite companies (such as Airtel, Izzi, DISH Mexico and Sky Brasil). Across these services, Starz had 10.0 million subscribers as of March 31, 2023 (including OTT subscribers totaling 0.6 million in the international territories still to be exited). The remainder of this section addresses the offerings operated by LIONSGATE+ in the UK, Ireland, Latin America and Australia.
International Strategy
LIONSGATE+ is quickly growing its distribution by strategically positioning itself as a complementary pure-play premium content service offered at a competitive subscription price, made available through a diverse ecosystem of wholesale and retail distribution partners. Premium content that targets all adults is the foundation of our international content strategy. We believe this allows us to operate as a complementary service, not a direct competitor, with other higher priced, broad-based video services. LIONSGATE+ provides subscribers with access to STARZ original series, often airing day-and-date with the U.S., a rich and diverse library of television series, feature films and documentaries from Lionsgate and other studios, and first-run, exclusive third-party programming, including locally produced television shows that align with the STARZ brand – LIONSGATE+ Originals. All content available on LIONSGATE+ is available with sub-titles and/or local language dubbing for each country.
Our distribution strategy is led with a wholesale model and supplemented through direct OTT retail sales. We expect to launch with additional wholesale and retail partners in the coming years.
Affiliation Agreements
Our services are distributed pursuant to affiliation agreements with our distributors under a wholesale license, where LIONSGATE+ is sold as an a la carte channel or bundled within our distributors’ platforms, including Amazon and Apple, as well as local IPTV, cable, satellite and telco partners. Our wholesale distributors manage the technology and infrastructure associated with the exhibition of LIONSGATE+ in exchange for recurring license fees. Our affiliation agreements expire at various dates through 2026.
We work with distributors to increase the number of subscribers to our services. To accomplish this, we may help fund the distributors’ efforts to market these services or may permit distributors to offer limited promotional periods with discounted or no payment of subscriber fees. We believe these efforts enhance our relationship with distributors, improve the awareness of our services and ultimately increase subscribers and revenue over the term of these affiliation agreements.
Distributors report the number of subscribers to our services and pay for services, generally, on a monthly basis. The agreements are structured on a country-by-country basis, to be multi-year agreements with staggered expiration dates across our distributors.
LIONSGATE+ App
To enhance our subscriber reach, we modified our domestic (U.S.) STARZ retail app for deployment internationally to include, among other new features, full European Union General Data Protection Regulation compliance, support for local languages, multiple audio/closed captioning options and a variety of potential carrier/billing integrations.
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The LIONSGATE+ app is the single destination for direct OTT subscribers to stream on-demand or download our original series and movie content. The LIONSGATE+ app:
• Is currently available in twenty-one (21) countries across Europe and Latin America, including the UK, Mexico, Brazil, and Argentina;
• Is offered directly via the LIONSGATE+ website or via retail storefronts such as the Apple Store, Play Store, Roku Channels, LG, Samsung and Amazon Fire;
• Includes a language toggle allowing users to select their preferred language for viewing;
• Offers instant access to approximately 1,000 selections each month (including original series and commercial free movies); and
• Is available for purchase as a standalone OTT service for a recurring monthly fee.
LIONSGATE+ Programming
LIONSGATE+ programming is driven by the slate of STARZ Original Series and is supplemented with high-quality, bold premium original series that have proven success in the U.S. on other platforms such as “Dr. Death” and “The Great.” Additionally, LIONSGATE+ delivers local language scripted original series to its audiences in Latin America including Brazil.
LIONSGATE+’s fiscal 2023 first-run original programming included:
Title
Tokyo Vice Season 1
P-Valley Season 2
The Girl from Plainville (limited series)
Power Book III: Raising Kanan Season 2
Serpent Queen Season 1
Gangs of London Season 2
BMF Season 2
Express Season 2
Power Book II: Ghost Season 3
Nacho Season 1
Significant multi-country library programming agreements include those with Paramount, Sony, Universal and Lionsgate.
Regulatory Matters
Distribution of our programming services in non-U.S. jurisdictions may be subject to the laws of the jurisdictions in which they operate. The applicability and enforcement of laws in some non-U.S. jurisdictions can be inconsistent and unpredictable. As a result, our ability to generate revenue and our expenses in non-U.S. jurisdictions could be impacted. There may be further material changes in the law and regulatory requirements in the future.
JOINT VENTURES, PARTNERSHIPS AND OWNERSHIP INTERESTS
Our joint ventures, partnerships and ownership interests support our strategy of being a multiplatform global industry leader in entertainment. (For a list of certain of our equity method investees and redeemable noncontrolling interests, See Note 5 and Note 11 to our Audited Consolidated Financial Statements). We regularly evaluate our existing properties, libraries and other assets and businesses in order to determine whether they continue to enhance our competitive position in the industry, have the potential to generate significant long-term returns, represent an optimal use of our capital, and are aligned with our goals. When appropriate, we discuss potential strategic transactions with third parties for purchase of our properties, libraries or other assets or businesses that factor into these evaluations. As a result, we may, from time to time, determine to sell individual properties, libraries or other assets or businesses or enter into additional joint ventures, strategic transactions and similar arrangements for individual properties, libraries or other assets or businesses.
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Intellectual Property
We currently use and own or license a number of trademarks, service marks, copyrights, domain names and similar intellectual property in connection with our businesses and own registrations and applications to register them both domestically and internationally. We believe that ownership of, and/or the right to use, such trademarks, service marks, copyrights, domain names and similar intellectual property is an important factor in our businesses and that our success depends, in part, on such ownership.
Motion picture and television piracy is extensive in many parts of the world, including South America, Asia and certain Eastern European countries, and is made easier by technological advances and the conversion of content into digital formats. This trend facilitates the creation, transmission and sharing of high quality unauthorized copies of content on packaged media and through digital formats. The proliferation of unauthorized copies of these products has had and will likely continue to have an adverse effect on our business, because these products may reduce the revenue we receive from our products. Our ability to protect and enforce our intellectual property rights is subject to certain risks and, from time to time, we encounter disputes over rights and obligations concerning intellectual property. We cannot provide assurance that we will prevail in any intellectual property disputes.
Competitive Conditions
Our businesses operate in highly competitive markets. We compete with companies within the entertainment and media business and from alternative forms of leisure entertainment, such as travel, sporting events, outdoor recreation and other cultural related activities. We compete with the major studios, numerous independent motion picture and television production companies, television networks, pay television services and digital media platforms for the acquisition of literary, film and television properties, the services of performing artists, directors, producers and other creative and technical personnel and production financing, all of which are essential to the success of our businesses. In addition, our motion pictures compete for audience acceptance and exhibition outlets with motion pictures produced and distributed by other companies. Likewise, our television product faces significant competition from independent distributors as well as major studios. Moreover, our networks compete with other programming networks for viewing and subscribership by each distributor’s customer base, as well as for carriage by such distributors. As a result, the success of any of our motion picture, television or media networks business is dependent not only on the quality and acceptance of a particular film or program, but also on the quality and acceptance of other competing content released into the marketplace at or near the same time as well as on the ability to license and produce content for the networks that is adequate in quantity and quality and will generate satisfactory subscriber levels.
Human Capital Management
Employees
As of May 23, 2023, we had approximately 1,500 full-time employees in our worldwide operations. We also utilize many consultants in the ordinary course of our business and hire additional employees on a project-by-project basis in connection with the production of our motion pictures and television programming.
Diversity, Equity and Inclusion
We believe that embracing diversity, promoting a culture of inclusivity and accelerating the representation of women and historically excluded groups in our workforce is crucial to our success. Our Chief Diversity Officer partners with our leadership team across all of our businesses to effect changes in recruitment, hiring, promotions, policies and culture, and to orchestrate our Company-wide response to issues of inequality and workforce disparity.
We also maintain the following recruitment and hiring initiatives:
• Internship Programs: We maintain an internship program designed to increase inclusion across the entertainment industry.
• Targeted Recruitment: We maintain recruitment efforts that include collaborating with diverse partner organizations, college campus diversity organizations for underrepresented groups, as well as historically black colleges in our search for new employees and interns.
• Inclusive Hiring Process: We implement inclusive hiring practices to ensure that we are attracting the best talent in the industry through an equitable, inclusive, and accessible approach. Key components of the framework
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include bias free job descriptions, inclusive hiring training, external diversity partners, diverse candidate slates, and diverse, cross-functional interview panels.
• Supplier Diversity and Inclusion Program: The mission of our Supplier Diversity and Inclusion Program is to actively establish relationships with diverse businesses and to continuously strive to increase spend with diverse suppliers, while delivering more competitive pricing, quality, service, innovation and creativity in procurement of services. We believe that this initiative increases the breadth of our vendor pool, while creating greater economic opportunity for diverse suppliers. Where applicable, our Code of Business Conduct and Ethics, governs conduct with, and applies to, our suppliers, vendors, contractors and agents.
Employee Resource Groups
We provide our employees with an array of Employee Resource Groups (“ERGs”) which offer them the chance to establish a greater presence at Lionsgate and an opportunity to enhance cross-cultural awareness, develop leadership skills and network across the Company’s various business units and levels. The ERGs are voluntary, employee-led groups that foster a diverse, engaging, and inclusive workplace.
• Lionsgate Early Career Group aims to inspire curiosity and networking to foster growth for professionals in early stages of their careers.
• Lionsgate Multicultural Employee Resource Group advocates for a more inclusive workplace and entertainment landscape through programs that educate, activate and celebrate multicultural diversity and its global impact. This consists of resource groups for the Asian American Pacific Islander community, the Black community and the Latine community.
• Lionsgate Parents and Caregivers Group aims to bring together parents, expecting parents, caregivers, and allies to ensure our community fosters an environment that supports all families.
• Lionsgate Pride supports, develops and inspires future LGBTQIA leaders within the Company and the industry.
• Lionsgate Vets creates a community of veterans and their supporters working together to enhance veteran presence and engage the industry from the unique perspective of a military background.
• Lionsgate Women’s Empowerment Group creates a community that improves the prominence of female leaders and empowers women at all levels within the Company and the industry.
Community Involvement
We are committed to acting responsibly and making a positive difference in the local and global community through Lionshares , our volunteer program that seeks to provide opportunities for employees to partner with a diverse range of charitable organizations. We maintain a Corporate Sponsorship Committee that prioritizes corporate philanthropic initiatives throughout Lionsgate, focusing particularly on organizations and activities related to diversity and poverty in order to increase our impact and to develop meaningful relationships with a core group of organizations and events.
Other Employee Benefits and Programs
We offer a comprehensive benefits package which includes health, dental and vision insurance, family forming benefits, mental health support, resources for caregiving (children and adult family), online fitness and meditation classes, and new parent coaching. We offer programs to develop and enrich the employee experience with offerings such as tuition reimbursement, leadership development programs, mentorship, and additional programs to help support specific populations (e.g., minorities, women, parents, LGBTQIA). We conduct annual employee training on anti-harassment, information technology security, the Foreign Corrupt Practices Act, as well as manager, diversity, equity and inclusion trainings. We also provide training and development to all employees, focusing on career development, professional development and industry knowledge.
Corporate, Environmental and Social Responsibility
We protect our social, financial, informational, environmental, and reputational assets and make it a priority to operate our business in a responsible and sustainable manner. Engaging in such responsibility not only helps us manage risks and maximize opportunities, but also helps us understand and manage our social, environmental, and economic impact that enables us to contribute to society’s wider goal of sustainable development. This includes, but is not limited to, conducting business in a socially responsible and ethical manner, supporting human rights, and committing to environmental sustainability.
In all our offices, we prioritize efforts to prevent pollution, and to conserve, recover, and recycle materials, water and energy wherever possible. Our productions distribute documents electronically to minimize paper consumption and waste and
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limit the use of single-use plastics. Our productions follow best practices featured in the Producers Guild of America and Sustainable Production Alliance’s Green Production Guide, which are designed to reduce the film, television, and streaming industry’s carbon footprint and environmental impact. Our U.S. productions encourage the employment of green vendors that provide sustainable goods and services for film, television and streaming productions.
We also prioritize vendors whose dedication to operating business in a responsible and sustainable manner directly aligns with those of Lionsgate. Vantiva, our U.S. and Canadian vendor for manufacturing and assembly of DVDs/Blu-rays: ensures that all of its products comply with all consumer safety regulations in each country where marketed, including compliance with use of hazardous substances within products and systems, and end-of-life handling of electrical and electronic equipment waste; supports product life cycle assessments assessing core product designs, reducing single-use plastics and packaging and decreasing carbon emissions due to transportation; and prohibits the use of child labor, forced labor, human trafficking and modern slavery in its supply chain. Wynalda, our vendor for wraps, inserts and other special home entertainment packaging: maintains a ride sharing method of delivery for all of packaging goods, significant reducing shipping carbon footprint for delivery of such goods; uses recycled or reclaimed materials for all trim from print and cut manufacturing; and conducts periodic ethical trade audits to address sustainability as well as ethical treatment of people while minimizing their environmental impact. Max Solutions, our vendor for non-standardized home entertainment packaging: sources all materials from forest stewardship certified mills; partners with companies that use plant-based, eco-friendly, compostable, and biodegradable alternative to plastic packaging; and uses carbon-neutral presses designed to the highest levels of energy efficiency to drastically reduce emissions, scrap and process waste.
Corporate History
We are a corporation organized under the laws of the Province of British Columbia, resulting from the merger of Lions Gate Entertainment Corp. and Beringer Gold Corp. on November 13, 1997. Beringer Gold Corp. was incorporated under the Business Corporation Act (British Columbia) on May 26, 1986 as IMI Computer Corp. Lions Gate Entertainment Corp. was incorporated under the Canada Business Corporations Act using the name 3369382 Canada Limited on April 28, 1997, amended its articles on July 3, 1997 to change its name to Lions Gate Entertainment Corp., and on September 24, 1997, continued under the Business Corporations Act (British Columbia).
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available, free of charge, on our website at investors.lionsgate.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). The Company's Disclosure Policy, Corporate Governance Guidelines, Standards for Director Independence, Code of Business Conduct and Ethics for Directors, Officers and Employees, Policy on Shareholder Communications, Related Person Transaction Policy, Charter of the Audit & Risk Committee, Charter of the Compensation Committee and Charter of the Nominating and Corporate Governance Committee and any amendments thereto are also available on the Company's website, as well as in print to any shareholder who requests them. The information posted on our website is not incorporated into this Annual Report on Form 10-K. We will disclose on our website waivers of, or amendments to, our Code of Business Conduct and Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or persons performing similar functions.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov .