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Motion Picture, Television Production, and Media Networks (see further discussion below).
+Added: Acquisition of eOne
+Added: On August 3, 2023, the Company and its subsidiaries, Lions Gate Entertainment Inc., a Delaware corporation (“LGEI”), and Lions Gate International Motion Pictures S.à.r.l., a Luxembourg société à responsabilité limitée (“LGIMP” and, with the Company and LGEI, collectively the “Buyers”), entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Hasbro, Inc., a Rhode Island corporation (“Hasbro”), pursuant to which (following a contemplated pre-closing reorganization), the Buyers will acquire from Hasbro, upon the closing of the transactions contemplated under the Purchase Agreement (the “Purchase”), all of the issued and outstanding equity interests of the companies constituting the Entertainment One television and film (“eOne”) business for an aggregate cash purchase price of $375.0 million, subject to certain purchase price adjustments, including for cash, debt, transaction expenses and working capital, and the assumption by the Buyers of certain production financing indebtedness.
+Added: The Purchase Agreement contains customary representations and warranties by each party with respect to itself, as well as various customary covenants and indemnification provisions and other agreements, including, among others, to run the business in the ordinary course during the period between the execution of the Purchase Agreement and closing of the Purchase (the “Closing”).
+Added: The Closing is contingent on the delivery by Hasbro to the Company of certain financial statements with respect to the eOne business and other customary closing conditions.
+Added: The Purchase Agreement contains customary termination rights permitting each party to terminate the Purchase Agreement under certain specified circumstances, including if the Closing has not occurred on or before January 31, 2024.
Proposed Spin-off of Studio Business
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Media Networks Restructuring
−Removed: In fiscal 2023, we began a plan to restructure our LIONSGATE+ business, which included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives.
+Added: In fiscal 2023, we began a plan to restructure our LIONSGATE+ business, which initially included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives.
This plan included a strategic review of content performance across Starz’s domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.
−Removed: As a result of these restructuring initiatives, we recorded content impairment charges related to the Media Networks segment in the three months ended June 30, 2023 of $28.0 million, which are included in restructuring and other in the unaudited condensed consolidated statement of operations (see Note 12 to our unaudited condensed consolidated financial statements).
−Removed: We have incurred impairment charges from the inception of the plan through June 30, 2023 amounting to $407.3 million.
−Removed: Under the current restructuring plan, the Company estimates it will incur additional charges ranging from approximately $5 million to $30 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited.
−Removed: The net future cash outlay is estimated to range from approximately $60 million to $90 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content previously written down.
−Removed: As the Company continues to evaluate the Media Networks business and its current restructuring plan in relation to the current micro and macroeconomic environment and the announced plan to separate the Company's Starz business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments), including further strategic review of content performance and its strategy on a territory-by-territory basis, the Company may decide to expand its restructuring plan and exit additional territories or remove certain content off its platform in the future.
In July 2023, in connection with a modification to shorten a long-term distribution contract, the Company decided to shut down the LIONSGATE+ service in Latin America.
While the modified contract covers the cost of the content during the shutdown period, there may be additional charges for remaining contractual commitments when the service is completely shut down in Latin America, which is expected toward the end of calendar 2023.
−Removed: The Company may incur additional content impairment and other restructuring charges beyond the estimates above.
+Added: During the quarter ended September 30, 2023, the Company continued executing its restructuring plan, including its evaluation of the programming on Starz's domestic and international platforms.
+Added: In connection with this review, the Company cancelled certain ordered programming, and identified certain other programming with limited strategic purpose which was
+Added: removed from the Starz platforms and abandoned by the Media Networks segment.
+Added: In addition, as a result of the continuing review of its international territories, in order to continue growing the profitability of STARZ and given the economic and industry challenges in the United Kingdom ("U.K."), the Company has made the strategic decision to shut down the LIONSGATE+ service in the U.K.
+Added: market, resulting in additional content impairment charges.
+Added: As a result of these restructuring initiatives, we recorded content impairment charges related to the Media Networks segment in the three and six months ended September 30, 2023 of $211.6 million and $239.5 million, respectively, which are included in restructuring and other in the unaudited condensed consolidated statement of operations (three and six months ended September 30, 2022 - $213.0 million) (see Note 14 to our unaudited condensed consolidated financial statements).
+Added: We have incurred impairment charges from the inception of the plan through September 30, 2023 amounting to $618.9 million.
+Added: Under the current restructuring plan and ongoing strategic content review, the Company estimates it will incur additional charges ranging from approximately $80 million to $160 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited and content to be removed from its services.
+Added: The net future cash outlay is estimated to range from approximately $130 million to $190 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content removed or that may be removed from its services.
+Added: The amounts above will depend on the results of its strategic content review and amounts recoverable from alternative distribution strategies, if any, on content in domestic and foreign markets.
+Added: As the Company continues to evaluate the Media Networks business and its current restructuring plan in relation to the current micro and macroeconomic environment and the announced plan to separate the Company's Starz business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments), including further strategic review of content performance and its strategy on a territory-by-territory basis, the Company may decide to expand its restructuring plan and exit additional territories or remove certain content off its platform in the future.
+Added: Accordingly, the Company may incur additional content impairment and other restructuring charges beyond the estimates above.
Industry Strikes
On May 1, 2023, the collective bargaining agreement between the Writers Guild of America (“WGA”) and the Alliance of Motion Picture and Television Producers (“AMPTP”) expired, and on May 2, 2023, the WGA commenced an industry-wide strike.
+Added: Subsequently, on September 25, 2023, WGA members voted in favor ratifying a new three-year contract, commencing September 25, 2023 and ending May 1, 2026.
On July 12, 2023, the collective bargaining agreement between the Screen Actors Guild - American Federation of Television and Radio Artists (“SAG-AFTRA”) and the AMPTP expired, and on July 14, 2023, the SAG-AFTRA commenced an industry-wide strike.
−Removed: Subsequently, we have paused and may further pause certain theatrical and television productions as a result of the WGA and SAG-AFTRA strikes.
+Added: Subsequently, on November 8, 2023, a tentative agreement was reached between SAG-AFTRA and the AMPTP to end the strike, subject to approval by SAG-AFTRA members.
+Added: We paused (and, if the tentative agreement is not approved by SAG-AFTRA members, may further pause) certain theatrical and television productions as a result of the strikes.
Consequently, the timing of certain production payments will be delayed until productions can resume and may increase the variability in payments for investment in film and television programs and licensed program rights in future periods.
In addition, the pausing and restarting of productions may result in incremental costs, delay the completion and release of some of our content (investment in films, television programs and licensed programs) and could cause an impairment of our investment in film, television programs or licensed program rights if the incremental costs are significant, or the Company is unable to efficiently complete the production of the film, television show or program or decides to abandon the production.
−Removed: The extent of these costs and delays will depend on the duration of the strikes and the ability to reschedule production in a timely and efficient manner.
−Removed: The incremental costs incurred through June 30, 2023 as a result of the WGA strike were not material.
+Added: The extent of these costs and delays will depend on whether the SAG-AFTRA strike is approved by members and the ability to reschedule production in a timely and efficient manner.
Our revenues are derived from the Motion Picture, Television Production and Media Networks segments, as described below.
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None of the non-U.S.
−Removed: countries individually comprised greater than 10% of total revenues for the three months ended June 30, 2023 and 2022.
+Added: countries individually comprised greater than 10% of total revenues for the three and six months ended September 30, 2023 and 2022.
Studio Business
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For films with multiple windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of each window which generally results in the majority of the cost allocated to the first window on newer releases.
−Removed: While not significant through June 30, 2023, certain license agreements and productions may include additional ancillary rights in addition to the rights for exploitation on the Starz Platforms.
+Added: Certain license agreements and productions may include additional ancillary rights in addition to the rights for exploitation on the Starz Platforms.
A portion of the cost of these licenses and the cost of produced content, is allocated between the programming rights for exploitation on the Starz Platforms and investment in film and television programs for exploitation outside of the Starz Platforms in ancillary markets (e.g., home video, digital platforms, television, etc.) based on the relative fair value of those markets.
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Content removed from the service and abandoned is written down to its fair value, if any, determined using a discounted cash flow approach.
−Removed: In fiscal 2023, we began a plan to restructure our LIONSGATE+ business.
−Removed: This restructuring, which included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives, which included a strategic review of content performance across Starz’s domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.
−Removed: As a result of these restructuring initiatives, we recorded content impairment charges related to the Media Networks segment in the three months ended June 30, 2023 of $28.0 million, which are included in restructuring and other in the unaudited condensed consolidated statement of operations (see Note 2 and Note 12 to our unaudited condensed consolidated financial statements).
−Removed: We have incurred impairment charges from the inception of the plan through June 30, 2023 amounting to $407.3 million.
+Added: As a result of the Media Networks restructuring initiatives discussed in "Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview", we recorded content impairment charges related to the Media Networks segment in the three and six months ended September 30, 2023 of $211.6 million and $239.5 million, respectively, which are included in restructuring and other in the unaudited condensed consolidated statement of operations (three and six months ended September 30, 2022 - $213.0 million) (see Note 3 and Note 14 to our unaudited condensed consolidated financial statements).
+Added: We have incurred impairment charges from the inception of the plan through September 30, 2023 amounting to $618.9 million.
Valuation Assumptions.
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Goodwill and Indefinite-Lived Intangibles.
−Removed: At June 30, 2023, the carrying value of goodwill and indefinite-lived intangible assets was $1.29 billion and $250.0 million, respectively.
−Removed: Our indefinite-lived intangible assets consist of trade names primarily representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016.
+Added: At September 30, 2023, the carrying value of goodwill and indefinite-lived intangible assets was $795.6 million and $80.0 million, respectively, net of impairment charges recorded and reflecting the reassessment of the estimated useful life of our indefinite-lived intangible assets, as further discussed below.
+Added: Our indefinite-lived intangible assets have consisted of trade names representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016 (see further discussion under Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment below).
Goodwill is allocated to our reporting units, which are our operating segments or one level below our operating segments (component level).
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Components are aggregated into a single reporting unit if they share similar economic characteristics.
−Removed: Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at June 30, 2023, were Motion Picture (goodwill of $394 million), Media Networks (goodwill of $493.9 million), and our Television (goodwill of $309 million) and Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.
+Added: Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at September 30, 2023, were Motion Picture (goodwill of $394 million), Media Networks (no remaining goodwill balance subsequent to the impairment discussed
+Added: below), and our Television (goodwill of $309 million) and Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.
Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value.
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Goodwill Impairment Assessments:
+Added: During the quarter ended September 30, 2023, due to the continuing difficult macro and microeconomic conditions, industry trends, and their impact on the performance and projected cash flows of the Media Networks segment, including its growth in subscribers and revenue worldwide, and the expanded restructuring activities discussed in Note 14 to our unaudited condensed consolidated financial statements, along with recent market valuation multiples, we updated our quantitative impairment assessment for the Media Networks reporting unit goodwill based on the most recent data and expected growth trends.
+Added: The DCF analysis components of the fair value estimates were determined primarily by discounting estimated future cash flows, which included a weighted average perpetual nominal growth rate of 1.5%, at a weighted average cost of capital (discount rate) of 10.5%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.
+Added: The Media Networks reporting unit goodwill was established in connection with the acquisition of Starz as of December 8, 2016.
+Added: Based on our quantitative impairment assessment, we determined that the fair value of our Media Networks reporting unit which was previously disclosed as a reporting unit "at risk" of impairment, was less than its carrying value (after the impairment write-down of its indefinite-lived intangible assets discussed below).
+Added: The analysis resulted in a goodwill impairment charge of $493.9 million, representing all of our remaining Media Networks reporting unit goodwill, which is recorded in the "goodwill and intangible asset impairment" line item in the unaudited condensed consolidated statement of operations (see Note 5 to the unaudited condensed consolidated financial statements).
+Added: During the quarter ended September 30, 2023, we performed a qualitative goodwill impairment assessment for all our other reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment).
+Added: Our qualitative assessment considered the market price of the Company’s common shares, the recent performance of these reporting units, and updated forecasts of performance and cash flows, as well as the current micro and macroeconomic environments in relation to the current and expected performance of these reporting units, and industry considerations, and determined that since the quantitative assessment performed in the quarter ended September 30, 2022 and our qualitative assessment performed for fiscal 2023, there were no events or circumstances that rise to a level that would more-likely-than-not reduce the fair value of those reporting units below their carrying values;
+Added: therefore, a quantitative goodwill impairment analysis was not required for these reporting units.
In fiscal 2023, during the second quarter ended September 30, 2022, we updated our quantitative impairment assessment for all of our reporting units based on the most recent data and expected growth trends.
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The analysis resulted in a goodwill impairment charge of $1.475 billion in the second quarter of fiscal 2023, related to our Media Networks reporting unit goodwill.
−Removed: Since the impairment charge reduced the carrying value of the Media Networks reporting unit to its fair value, at September 30, 2022 the fair value and carrying value of the Media Networks reporting unit were equal and thus it continues to be considered "at risk" of impairment.
−Removed: For our annual goodwill impairment test for fiscal 2023, we performed a qualitative goodwill impairment assessment for all our reporting units.
−Removed: Our qualitative assessment considered the increase in the market price of the Company’s common shares from September 30, 2022, the recent performance of the Company’s reporting units, and updated forecasts of performance and cash flows, as well as the continuing micro and macroeconomic environment, and industry considerations, and determined that since the quantitative assessment performed in the quarter ended September 30, 2022, there were no events or circumstances
−Removed: that rise to a level that would more-likely-than-not reduce the fair value of those reporting units below their carrying values;
−Removed: therefore, a quantitative goodwill impairment analysis was not required.
−Removed: During the three months ended June 30, 2023, we evaluated events and circumstances in the quarter that would, more-likely-than-not, reduce the fair value of our reporting units below their carrying amount.
−Removed: Our evaluation considered the decrease in the market price of the Company's common shares since March 31, 2023, the recent performance of the Company's reporting units, and updated forecasts of performance and cash flows, as well as the current micro and macroeconomic environments in relation to the current and expected performance of our reporting units.
−Removed: Based on this evaluation, we determined that since the quantitative assessment performed in the quarter ended September 30, 2022 and our qualitative assessment performed for fiscal 2023, there were no events or circumstances that rise to a level that would more-likely-than-not reduce the fair value of those reporting units below their carrying values;
−Removed: therefore, a quantitative goodwill impairment analysis was not required.
+Added: Since the impairment charge reduced the carrying value of the Media Networks reporting unit to its fair value, at September 30, 2022 the fair value and carrying value of the Media Networks reporting unit were equal and thus it continued to be considered "at risk" of impairment.
Management will continue to monitor all of its reporting units for further changes in the business environment that could impact the recoverability in future periods.
The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities.
−Removed: Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include the global economy, consumer consumption levels of our content;
−Removed: adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from Russia's invasion of Ukraine, and past and future bank failures;
+Added: Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include the global economy;
+Added: consumer consumption levels of our content;
+Added: adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from wars, terrorism and multiple international conflicts, and past and future bank failures;
volatility in the equity and debt markets which could result in higher weighted-average cost of capital;
capital market transactions;
−Removed: the duration and potential impact of strikes of unions which we rely on, such as the current strike of members of the WGA and SAG-AFTRA, on our ability to produce, acquire and distribute our content;
+Added: the duration and potential impact of strikes of unions which we rely on, on our ability to produce, acquire and distribute our content;
the commercial success of our television programming and motion pictures;
our continual contractual relationships with our customers;
−Removed: including our affiliate agreements of our Media Networks business;
−Removed: our subscriber growth rates domestically and internationally across our traditional and OTT platforms and changes in consumer behavior.
+Added: and changes in consumer behavior.
If our assumptions are not realized, it is possible that additional impairment charges may need to be recorded in the future.
Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment:
−Removed: For fiscal 2023, for our annual impairment assessment, we performed a qualitative impairment assessment of our indefinite-lived trade names.
−Removed: Based on the qualitative impairment assessment of our trade names, we concluded that it is not more-likely-than-not that the fair value of our trade names was less than its carrying amount, and therefore our trade names were not considered at risk of impairment.
−Removed: This qualitative analysis considered the relative impact of market-specific and macroeconomic factors.
−Removed: The market-specific factors considered included recent projections of revenues and growth in OTT subscribers, both domestic and internationally, associated with the STARZ brand name.
−Removed: The Company also considered the same factors as discussed above in its evaluation of potential goodwill impairment including the global macroeconomic environment, and the resulting uncertain long-term economic impact on discount rates and growth rates, as well as the impact from tax law changes inclusive of the reduction of the federal tax rate since the acquisition of Starz.
−Removed: During the quarter ended June 30, 2023, there were no events or circumstances that would indicate that it is more-likely-than-not that the fair value of our indefinite-lived trade names is less than its carrying value.
+Added: Our indefinite-lived intangible assets have consisted of trade names representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016, amounting to $250.0 million related to the Media Networks reporting unit.
+Added: During the three months ended September 30, 2023, due to the events and their impact discussed above related to our Media Networks reporting unit, we performed a quantitative impairment assessment of our indefinite-lived trade names.
+Added: The fair value of the Company's indefinite-lived trade names was estimated based on the present value of the hypothetical cost savings that could be realized by the owner of the tradenames as a result of not having to pay a stream of royalty payments to another party.
+Added: These cost savings were calculated based on a DCF analysis of the hypothetical royalty payment that a licensee would be required to pay in exchange for use of the tradenames, reduced by the tax effect realized by the licensee on the royalty payments.
+Added: Based on the quantitative impairment assessment of our trade names, we recorded an impairment charge of $170.0 million related to the Company's Starz business, which is recorded in the "goodwill and intangible asset impairment" line item in the unaudited condensed consolidated statement of operations.
+Added: After the Company performed its quantitative impairment assessment, the Company then reassessed the estimated useful life of the trade names with a remaining carrying value of $80.0 million, net of the impairment charge discussed above.
+Added: The Company concluded that based upon the most recent factors, including current macro and microeconomic conditions, market competition and historical Company and industry trends, the trade names now have a finite estimated remaining useful life of 10 years.
+Added: Accordingly, beginning in the third quarter ending December 31, 2023, the trade names will be accounted for as finite-lived intangible assets and amortized over their estimated remaining useful life.
+Added: This is expected to result in an increase in amortization expense of approximately $4.0 million for the year ending March 31, 2024.
Finite-Lived Intangible Assets.
−Removed: At June 30, 2023, the carrying value of our finite-lived intangible assets was approximately $1.02 billion.
+Added: At September 30, 2023, the carrying value of our finite-lived intangible assets was approximately $980.9 million.
Our finite-lived intangible assets primarily relate to customer relationships associated with U.S.
−Removed: MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to $1.01 billion.
+Added: MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to $956.8 million.
The amount of our customer relationship asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization recorded since the date of the Starz acquisition.
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The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each reporting period for indicators of possible impairments or a change in the useful life or method of amortization of our finite-lived intangible assets.
−Removed: For fiscal 2023, due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, we performed an impairment analysis of our amortizable intangible assets.
−Removed: The impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset.
+Added: During the quarter ended September 30, 2023, for the Company's finite-lived customer relationship intangible assets related to our Media Networks reporting unit, which represent $956.8 million as of September 30, 2023, the Company performed a comparison of undiscounted future cash flows expected to be generated over the remaining useful life of an asset to the carrying value of the asset.
Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required.
−Removed: During the quarter ended June 30, 2023, there were no events or circumstances that would indicate that the carrying amount of our finite-lived intangible assets may not be recoverable.
Determining whether an intangible asset is recoverable or impaired requires various estimates and assumptions, including whether events or circumstances indicate that the carrying amount of the asset may not be recoverable, determining estimates of future cash flows for the assets involved and, when applicable, the assumptions applied in determining fair value, including discount rates, growth rates, market risk premiums and other assumptions about the economic environment.
7 unchanged sentences
However, the assessment as to whether there will be sufficient taxable income in a jurisdiction to realize our net deferred tax assets in that jurisdiction is an estimate which could change in the future depending primarily upon the actual performance of our Company.
−Removed: We will be required to continually evaluate the more likely than not assessment that our net deferred tax assets will be realized, and if operating results deteriorate in a particular jurisdiction, we may need to record a valuation allowance for all or a portion of our deferred tax assets through a charge to our income tax provision.
+Added: We will be required to continually evaluate the more likely than not assessment that our net deferred tax assets will be realized, and if operating results deteriorate in a particular jurisdiction, we may need to record a valuation allowance for all or a portion of our deferred tax assets through a charge to our income tax benefit (provision).
As of March 31, 2023, we had a valuation allowance of $455.7 million against certain U.S.
and foreign deferred tax assets that may not be realized on a more likely than not basis.
−Removed: Our quarterly income tax provision and our corresponding annual effective tax rate are based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate.
+Added: Our quarterly income tax benefit (provision) and our corresponding annual effective tax rate are based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate.
For interim financial reporting, we estimate the annual effective tax rate based on projected taxable income for the full year and record a quarterly tax provision in accordance with the expected annual effective tax rate.
1 unchanged sentence
This continual estimation process often results in a change to our expected annual effective tax rate for the year.
−Removed: When this occurs, we adjust our income tax provision during the quarter in which the change in estimate occurs so that the year-to-date income tax provision reflects the expected annual effective tax rate.
+Added: When this occurs, we adjust our income tax benefit (provision) during the quarter in which the change in estimate occurs so that the year-to-date income tax provision reflects the expected annual effective tax rate.
Significant judgment is required in determining our expected annual effective tax rate and in evaluating our tax positions.
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RESULTS OF OPERATIONS
−Removed: Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022
+Added: Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022
Consolidated Results of Operations
−Removed: The following table sets forth our consolidated results of operations for the three months ended June 30, 2023 and 2022:
+Added: The following table sets forth our consolidated results of operations for the three months ended September 30, 2023 and 2022:
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Change
2023 2022 Amount Percent
11 unchanged sentences
Depreciation and amortization 44.6 45.2 (0.6) (1.3) %
−Removed: Restructuring and other 32.0 8.0 24.0 nm
+Added: Restructuring and other 222.1 233.2 (11.1) (4.8) %
+Added: Goodwill and intangible asset impairment 663.9 1,475.0 (811.1) (55.0) %
Total expenses 1,833.0 2,622.8 (789.8) (30.1) %
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Other expense (11.5) (5.4) (6.1) 113.0 %
−Removed: Gain (loss) on extinguishment of debt 21.2 (1.3) 22.5 nm
−Removed: Gain on investments — 1.8 (1.8) (100.0) %
−Removed: Equity interests income (loss) (0.3) 0.9 (1.2) (133.3) %
+Added: Gain on extinguishment of debt — 3.4 (3.4) (100.0) %
+Added: Loss on investments, net (1.6) (3.1) 1.5 (48.4) %
+Added: Equity interests income (loss) 1.8 (0.1) 1.9 nm
Loss before income taxes (889.9) (1,808.3) 918.4 (50.8) %
−Removed: Income tax provision (9.8) (6.0) (3.8) 63.3 %
+Added: Income tax benefit (provision) 2.0 (5.0) 7.0 (140.0) %
Net loss (887.9) (1,813.3) 925.4 (51.0) %
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nm - Percentage not meaningful.
−Removed: Consolidated revenues increased $14.7 million in the three months ended June 30, 2023 reflecting a decrease of $86.1 million from our Studio Business, offset by lower intersegment eliminations of $100.9 million.
−Removed: Intersegment eliminations relate to the licensing of product from our Studio Business (primarily our Television Production segment) to the Media Networks segment.
−Removed: Motion Picture revenue increased $127.7 million in the current quarter due to greater theatrical, digital media home entertainment, international and other revenue.
−Removed: Motion Picture revenue included $16.5 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $13.0 million from the three months ended June 30, 2022.
−Removed: Television Production revenue decreased $213.8 million due to decreased domestic television revenue from lower third-party revenue and lower intersegment revenues from the licensing of Starz original series, decreased international revenue, and decreased digital media home entertainment revenue, partially offset by increased other revenue.
−Removed: Television Production revenue included $81.0 million of revenue from licensing Television Production segment product to our Media Networks segment, representing a decrease of $113.9 million from the three months ended June 30, 2022.
−Removed: The decrease in intersegment eliminations is primarily associated with lower Television Production revenues for licenses of original series to Starz Networks and LIONSGATE+, both in the Media Networks segment as discussed above.
−Removed: Media Networks revenue was comparable, and reflected increased revenue at LIONSGATE+ of $12.1 million, offset by a decrease of $12.2 million at Starz Networks.
+Added: Consolidated revenues increased $140.3 million in the three months ended September 30, 2023 reflecting an increase of $134.9 million and $20.4 million from our Studio Business and Media Networks business, respectively, offset by increased intersegment eliminations of $15.0 million.
+Added: Intersegment eliminations relate to the licensing of product from our Studio Business (primarily our Television Production segment as discussed below) to the Media Networks segment.
+Added: Motion Picture revenue increased $171.9 million in the current quarter due primarily to higher digital home entertainment revenue, television revenue, international revenue, and theatrical revenue.
+Added: Motion Picture revenue included $60.5 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $50.3 million from the three months ended September 30, 2022.
+Added: Television Production revenue decreased $37.0 million due to decreased domestic television revenue from lower third-party revenue and lower intersegment revenues from the licensing of Starz original series, and decreased other revenue, partially offset by increased digital home entertainment revenue.
+Added: Television Production revenue included $130.3 million of revenue from licensing Television Production segment product to our Media Networks segment, representing a decrease of $35.3 million from the three months ended September 30, 2022.
+Added: The increase in intersegment eliminations of $15.0 million is primarily associated with higher Motion Picture revenues of $50.3 million reflecting the licensing of certain recent theatrical releases to Starz, partially offset by lower Television Production revenues of $35.3 million, for licenses of original series to Starz Networks and LIONSGATE+, both in the Media Networks segment as discussed above.
+Added: Media Networks revenue increased $20.4 million reflecting increased revenue at LIONSGATE+ of $38.1 million, partially offset by a decrease of $17.7 million at Starz Networks.
See further discussion in the Segment Results of Operations section below.
Direct Operating Expenses.
−Removed: Direct operating expenses by segment were as follows for the three months ended June 30, 2023 and 2022:
+Added: Direct operating expenses by segment were as follows for the three months ended September 30, 2023 and 2022:
Three Months Ended
+Added: September 30,
2023 2022 Change
7 unchanged sentences
Media Networks 212.8 51.1 225.2 56.9 (12.4) (5.5) %
−Removed: COVID-19 related charges (benefit) 0.2 nm (1.0) nm 1.2 nm
−Removed: Other 0.4 nm 0.2 nm 0.2 nm
+Added: COVID-19 related charges (benefit) (0.6) nm (6.1) nm 5.5 (90.2) %
+Added: Other 0.9 nm 8.5 nm (7.6) (89.4) %
Intersegment eliminations (166.6) nm (159.0) nm (7.6) 4.8 %
2 unchanged sentences
nm - Percentage not meaningful.
−Removed: Direct operating expenses decreased in the three months ended June 30, 2023 due to lower direct operating expenses for our Studio Business and the Media Networks segment, partially offset by lower intersegment eliminations.
−Removed: The decrease at the Studio Business reflects lower direct operating expenses of the Television Production segment due to lower revenues from Television Production, partially offset by higher direct operating expenses of the Motion Picture segment due to higher revenues.
−Removed: The decrease in Media Networks direct operating expense was driven by decreases at Starz Networks of $26.1 million and LIONSGATE+ of $14.7 million due to lower programming cost amortization, and lower foreign exchange losses at LIONSGATE+.
−Removed: The decrease in intersegment eliminations is due to decreased revenue from licenses of original series to Starz Networks and LIONSGATE+, as discussed above.
+Added: Direct operating expenses decreased in the three months ended September 30, 2023 due to lower direct operating expenses for our Media Networks segment, other direct operating expenses (as discussed below), and increased intersegement eliminations, partially offset by increased direct operating expenses for our Studio Business.
+Added: The decrease in Media Networks direct operating expense was driven by a decrease at LIONSGATE+ of $7.8 million due to lower foreign exchange losses and programming cost amortization, and a decrease at Starz Networks of $4.6 million.
+Added: The increase in intersegment eliminations is due to increased Motion Picture revenue from licenses of recent theatrical releases to Starz Networks and LIONSGATE+, as discussed above.
+Added: The increase at the Studio Business reflects higher direct operating expenses of the Motion Picture segment associated with higher Motion Picture revenues, partially offset by lower direct operating expenses of the Television Production
+Added: segment due to lower revenues from Television Production.
See further discussion in the Segment Results of Operations section below.
1 unchanged sentence
We incurred certain incremental costs associated with the COVID-19 global pandemic.
−Removed: In the three months ended June 30, 2023, direct operating expense included charges of $0.2 million, net of immaterial insurance recoveries (three months ended June 30, 2022 - benefit of $1.0 million, net of insurance recoveries of
−Removed: $1.0 million).
+Added: In the three months ended September 30, 2023, direct operating expense included a benefit of $0.6 million, representing insurance recoveries on costs incurred (three months ended September 30, 2022 - benefit of $6.1 million, net of insurance recoveries of $6.9 million).
Direct operating expenses related to the COVID-19 global pandemic have been declining and are expected to continue to decline if the severity of the COVID-19 global pandemic continues to lessen.
1 unchanged sentence
The ultimate amount of insurance recovery cannot be estimated at this time.
−Removed: Other direct operating expense includes share-based compensation.
+Added: In the three months ended September 30, 2023 and 2022, other direct operating expense includes share-based compensation.
+Added: In addition, in the three months ended September 30, 2022, other direct operating expenses includes approximately $7.2 million in development costs written off in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment, as a result of changes in strategy across its theatrical slate.
+Added: These charges are excluded from segment operating results but included in direct operating expense in the consolidated statement of operations and reflected in the "other" line item above.
+Added: Other direct operating expense in the three months ended September 30, 2022 also includes the amortization of the non-cash fair value adjustments on film and television assets associated with the application of purchase accounting related to recent acquisitions.
Distribution and Marketing Expenses.
−Removed: Distribution and marketing expenses by segment were as follows for the three months ended June 30, 2023 and 2022:
+Added: Distribution and marketing expenses by segment were as follows for the three months ended September 30, 2023 and 2022:
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Change
2023 2022 Amount Percent
7 unchanged sentences
Other 0.3 0.2 0.1 50.0 %
−Removed: Intersegment eliminations (2.2) — (2.2) n/a
+Added: Intersegment eliminations (0.4) 1.1 (1.5) (136.4) %
$ 221.7 $ 184.6 $ 37.1 20.1 %
theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 65.5 $ 23.0 $ 42.5 184.8 %
−Removed: Distribution and marketing expenses increased in the three months ended June 30, 2023, due to higher Studio Business distribution and marketing expense, partially offset by lower Media Networks distribution and marketing expense.
−Removed: The increase at the Studio Business reflects greater Motion Picture theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current quarter, and higher expense for films to be released in subsequent quarters.
−Removed: The decrease in Media Networks distribution and marketing expense was due to a decrease at Starz Networks of $16.2 million due to lower spend for our Starz Originals' premieres in the current period, and a decrease at LIONSGATE+ of $14.3 million.
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: Distribution and marketing expenses increased in the three months ended September 30, 2023, due to higher Studio Business distribution and marketing expense, partially offset by lower Media Networks distribution and marketing expense.
+Added: The increase at the Studio Business primarily reflects greater Motion Picture theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current quarter.
+Added: The decrease in Media Networks distribution and marketing expense was due to a decrease at LIONSGATE+ of $14.0 million due to a decrease in distribution and advertising expenses from the territories exited, or to be exited, partially offset by an increase at Starz Networks of $2.5 million.
See further discussion in the Segment Results of Operations section below.
General and Administrative Expenses.
−Removed: General and administrative expenses by segment were as follows for the three months ended June 30, 2023 and 2022:
+Added: General and administrative expenses by segment were as follows for the three months ended September 30, 2023 and 2022:
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Change
2023 % of Revenues 2022 % of Revenues Amount Percent
10 unchanged sentences
Total general and administrative expenses $ 123.6 12.2% $ 121.3 13.9% $ 2.3 1.9 %
−Removed: General and administrative expenses increased in the three months ended June 30, 2023, resulting from increased share-based compensation expense, corporate, Motion Picture, Television Production, and Media Networks general and administrative expenses, partially offset by lower purchase accounting and related adjustments.
+Added: General and administrative expenses increased in the three months ended September 30, 2023, resulting from increased corporate, Television Production, and Motion Picture general and administrative expenses, partially offset by lower purchase accounting and related adjustments, and a slight decrease in Media Networks general and administrative expenses and share-based compensation expense.
See further discussion in the Segment Results of Operations section below.
Corporate general and administrative expenses increased $8.0 million, or 32.3%, primarily due to an increase in incentive based compensation.
−Removed: The increase in share-based compensation expense included in general and administrative expense in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022 is primarily due to an increase in incentive based compensation and lower fair values in the prior year's quarter associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved.
The following table presents share-based compensation expense by financial statement line item:
Three Months Ended
+Added: September 30,
(Amounts in millions)
9 unchanged sentences
The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.
−Removed: Purchase accounting and related adjustments decreased $6.0 million, or 37.5%, primarily due to lower noncontrolling interest
−Removed: discount amortization of $4.9 million (see further detail in the reconciliation of operating loss to total segment profit further below).
+Added: Purchase accounting and related adjustments decreased $11.0 million, or 83.3%, primarily due to lower noncontrolling interest discount amortization of $5.0 million and lower expense of $4.1 million associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment.
Depreciation and Amortization Expense.
−Removed: Depreciation and amortization of $44.4 million for the three months ended June 30, 2023 increased $2.0 million from $42.4 million in the three months ended June 30, 2022.
+Added: Depreciation and amortization of $44.6 million in the three months ended September 30, 2023 decreased $0.6 million from $45.2 million in the three months ended September 30, 2022.
Restructuring and Other.
−Removed: Restructuring and other increased $24.0 million in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, and includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable.
−Removed: Restructuring and other costs were as follows for the three months ended June 30, 2023 and 2022 (see Note 12 to our unaudited condensed consolidated financial statements):
+Added: Restructuring and other decreased $11.1 million in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, and includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable.
+Added: Restructuring and other costs were as follows for the three months ended September 30, 2023 and 2022 (see Note 14 to our unaudited condensed consolidated financial statements):
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Increase (Decrease)
2023 2022 Amount Percent
1 unchanged sentence
Restructuring and other:
−Removed: Content impairments (1)
−Removed: $ 28.0 $ — $ 28.0 n/a
+Added: Content and other impairments (1)
+Added: $ 211.6 $ 218.8 $ (7.2) (3.3) %
Severance (2)
3 unchanged sentences
Total severance costs 5.8 9.6 (3.8) (39.6) %
−Removed: COVID-19 related charges — 0.1 (0.1) (100.0) %
−Removed: Transaction and other costs (benefits) (3)
−Removed: (0.8) 4.5 (5.3) nm
−Removed: $ 32.0 $ 8.0 $ 24.0 nm
+Added: Transaction and other costs (3)
4.7 4.8 (0.1) (2.1) %
−Removed: nm - Percentage not meaningful
+Added: $ 222.1 $ 233.2 $ (11.1) (4.8) %
+Added: _______________________
(1) Media Networks Restructuring:
−Removed: In fiscal 2023, the Company began a plan to restructure its LIONSGATE+ business, which included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives.
−Removed: This plan included a strategic review of content performance across Starz's domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.
−Removed: As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the three months ended June 30, 2023 of $28.0 million.
−Removed: The Company has incurred impairment charges from the inception of the plan through June 30, 2023 amounting to $407.3 million.
−Removed: Under the current restructuring plan, the Company estimates it will incur additional charges ranging from approximately $5 million to $30 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited.
−Removed: The net future cash outlay is estimated to range from approximately $60 million to $90 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content previously written down.
−Removed: As the Company continues to evaluate the Media Networks business and its current restructuring plan in relation to the current micro and macroeconomic environment and the announced plan to separate the Company's Starz business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments), including further strategic review of content performance and its strategy on a territory-by-territory basis, the Company may decide to expand its restructuring plan and exit additional territories or remove certain content off its platform in the future.
−Removed: In July 2023, in connection with a modification to shorten a long-term distribution contract, the Company decided to shut down the LIONSGATE+ service in Latin America.
−Removed: While the modified contract covers the cost of the content during the shut down period, there may be additional charges for remaining contractual commitments when the service is completely shut down in Latin America, which is expected toward the end of calendar 2023.
−Removed: The Company may incur additional content impairment and other restructuring charges beyond the estimates above.
+Added: As a result of the Media Networks restructuring initiatives discussed in "Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" , the Company recorded content impairment charges related to the Media Networks segment in the three months ended September 30, 2023 of $211.6 million (three months ended September 30, 2022 - $213.0 million).
+Added: See Note 14 to our unaudited condensed consolidated financial statements.
+Added: Other Impairments:
+Added: Amounts in the three months ended September 30, 2022 also include an impairment of an operating lease right-of-use asset related to the Studio business and corporate facilities amounting to $5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company.
(2) Severance costs were primarily related to restructuring activities and other cost-saving initiatives.
−Removed: (3) Transaction and other costs in the three months ended June 30, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.
−Removed: In the three months ended June 30, 2023, transaction and other costs also includes a benefit of $3.8 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the LIONSGATE+ international restructuring.
+Added: (3) Transaction and other costs in the three months ended September 30, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.
+Added: Goodwill and Intangible Asset Impairment.
+Added: Goodwill and intangible asset impairment of $663.9 million in the three months ended September 30, 2023 included goodwill impairment of $493.9 million and impairment of our indefinite-lived trade names of $170.0 million related to the Media Networks reporting unit, as compared to goodwill impairment of $1.475 billion for the three months ended September 30, 2022 related to the Media Networks reporting unit.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates", Goodwill and Indefinite-Lived Intangible Assets and Note 5 to our unaudited condensed consolidated financial statements for further information.
Interest Expense.
−Removed: Interest expense of $62.0 million in the three months ended June 30, 2023 increased $15.9 million from the three months ended June 30, 2022 due to higher average interest rates and balances on the revolving credit facility, and higher average interest rates on the term loans.
−Removed: The following table sets forth the components of interest expense for the three months ended June 30, 2023 and 2022:
+Added: Interest expense of $63.8 million for the three months ended September 30, 2023 increased $6.5 million, from $57.3 million in the three months ended September 30, 2022.
+Added: The following table sets forth the components of interest expense for the three months ended September 30, 2023 and 2022:
Three Months Ended
+Added: September 30,
(Amounts in millions)
6 unchanged sentences
_______________________
−Removed: (1) Amounts include payments and receipts associated with the Company's interest rate swaps (see Note 15 to our unaudited condensed consolidated financial statements) and interest payments associated with certain film related obligations (Production Tax Credit Facility, IP Credit Facility, Backlog Facility and other, see Note 5 to our unaudited condensed consolidated financial statements).
−Removed: (2) Amounts include the amortization of unrealized losses in accumulated other comprehensive income (loss) related to de-designated interest rate swaps which are being amortized to interest expense.
−Removed: The decrease is primarily due to the amortization of unrealized gains in accumulated other comprehensive income (loss) related to the termination of certain of our interest rate swaps on May 20, 2022 (see Note 15 to our unaudited condensed consolidated financial statements).
+Added: (1) Other interest expense includes payments associated with certain film related obligations (Production Tax Credit Facility, IP Credit Facility, Backlog Facility and other, see Note 7 to our unaudited condensed consolidated financial statements), and payments and receipts associated with the Company's interest rate swaps (see Note 17 to our unaudited condensed consolidated financial statements).
+Added: (2) Amounts include the amortization of unrealized losses in accumulated other comprehensive income (loss) related to de-designated interest rate swaps which are being amortized to interest expense (see Note 17 to our unaudited condensed consolidated financial statements).
Interest and Other Income.
−Removed: Interest and other income of $1.9 million for the three months ended June 30, 2023 compared to interest and other income of $1.3 million for the three months ended June 30, 2022.
+Added: Interest and other income of $2.7 million for the three months ended September 30, 2023 compared to interest and other income of $1.8 million for the three months ended September 30, 2022.
Other Expense.
−Removed: Other expense of $5.7 million for the three months ended June 30, 2023 compared to other expense of $5.0 million for the three months ended June 30, 2022, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 16 to our unaudited condensed consolidated financial statements).
−Removed: Gain (Loss) on Extinguishment of Debt.
−Removed: Gain on extinguishment of debt of $21.2 million for the three months ended June 30, 2023 represented a gain associated with the repurchase of $85.0 million principal amount of 5.500% Senior Notes at a discount.
−Removed: In the three months ended June 30, 2022, the loss on extinguishment of debt of $1.3 million represented a loss for the write-off of debt issuance costs associated with the voluntary prepayment of the entire outstanding amount of Term Loan A due March 22, 2023.
+Added: Other expense of $11.5 million for the three months ended September 30, 2023 compared to other expense of $5.4 million for the three months ended September 30, 2022, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 18 to our unaudited condensed consolidated financial statements).
+Added: Gain on Extinguishment of Debt.
+Added: Gain on extinguishment of debt of $3.4 million in the three months ended September 30, 2022 represented a gain associated with the repurchase of $18.7 million principal amount of 5.500% Senior Notes at a discount.
+Added: There was no comparable gain on extinguishment of debt in the three months ended September 30, 2023.
See Note 6 to our unaudited condensed consolidated financial statements.
−Removed: Gain on Investments.
−Removed: There was no gain on investments for the three months ended June 30, 2023, as compared to a gain on investments of $1.8 million for the three months ended June 30, 2022 related to equity securities sold.
+Added: Loss on Investments, net.
+Added: Loss on investments, net was $1.6 million for the three months ended September 30, 2023, as compared to $3.1 million for the three months ended September 30, 2022.
Equity Interests Income (Loss).
−Removed: Equity interests loss of $0.3 million in the three months ended June 30, 2023 compared to equity interests income of $0.9 million in the three months ended June 30, 2022.
−Removed: Income Tax Provision.
−Removed: We had an income tax provision of $9.8 million in the three months ended June 30, 2023, compared to an income tax provision of $6.0 million in the three months ended June 30, 2022.
−Removed: Our income tax provision differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and certain minimum taxes and foreign withholding taxes.
−Removed: Our income tax provision for the three months ended June 30, 2023 and 2022 was also impacted by an interest accrual on uncertain tax benefits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.
+Added: Equity interests income of $1.8 million in the three months ended September 30, 2023 compared to equity interests loss of $0.1 million in the three months ended September 30, 2022.
+Added: Income Tax Benefit (Provision).
+Added: We had an income tax benefit of $2.0 million in the three months ended September 30, 2023, compared to an income tax provision of $5.0 million in the three months ended September 30, 2022.
+Added: Our income tax benefit (provision) differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and certain minimum taxes and foreign withholding taxes.
+Added: Our income tax benefit (provision) for the three months ended September 30, 2023 and 2022 was also impacted by charges for interest on uncertain tax benefits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.
Net Loss Attributable to Lions Gate Entertainment Corp.
Shareholders.
−Removed: Net loss attributable to our shareholders for the three months ended June 30, 2023 was $70.7 million, or basic and diluted net loss per common share of $0.31 on 230.2 million weighted average common shares outstanding.
−Removed: This compares to net loss attributable to our shareholders for the three months
−Removed: ended June 30, 2022 of $119.0 million, or basic and diluted net loss per common share of $0.53 on 225.6 million weighted average common shares outstanding.
+Added: Net loss attributable to our shareholders for the three months ended September 30, 2023 was $886.2 million, or basic and diluted net loss per common share of $3.79 on 234.0 million weighted average common shares outstanding.
+Added: This compares to net loss attributable to our shareholders for the three months ended September 30, 2022 of $1,811.1 million, or basic and diluted net loss per common share of $7.95 on 227.9 million weighted average common shares outstanding.
Segment Results of Operations and Non-GAAP Measures
The Company's primary measure of segment performance is segment profit.
−Removed: Segment profit is defined as segment revenues, less segment direct operating and segment distribution and marketing expense, less segment general and administration expenses.
+Added: Segment profit is defined as segment revenues, less segment direct operating and segment distribution and marketing expense, less segment general and
+Added: administration expenses.
Total segment profit represents the sum of segment profit for our individual segments, net of eliminations for intersegment transactions.
7 unchanged sentences
Not all companies calculate segment profit or total segment profit in the same manner, and segment profit and total segment profit as defined by the Company may not be comparable to similarly titled measures presented by other companies due to differences in the methods of calculation and excluded items.
−Removed: The following table reconciles the GAAP measure, operating loss, to the non-GAAP measure, total segment profit, for the three months ended June 30, 2023 and 2022.
+Added: The following table reconciles the GAAP measure, operating loss, to the non-GAAP measure, total segment profit, for the three months ended September 30, 2023 and 2022.
In addition, each of segment direct operating expense, distribution and marketing expense and general and administrative expense is reconciled to the respective line items presented in the GAAP-based statement of operations in the preceding section of the Management's Discussion and Analysis of Financial Condition and Results of Operations which discusses consolidated results of operations.
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Change
2023 2022 Amount Percent
2 unchanged sentences
Corporate general and administrative expenses 32.8 24.8 8.0 32.3 %
+Added: Goodwill and intangible asset impairment 663.9 1,475.0 (811.1) (55.0) %
Adjusted depreciation and amortization 9.9 9.7 0.2 2.1 %
−Removed: 10.0 10.1 (0.1) (1.0) %
−Removed: Restructuring and other 32.0 8.0 24.0 nm
+Added: Restructuring and other 222.1 233.2 (11.1) (4.8) %
COVID-19 related charges (benefit) (0.6) (6.1) 5.5 (90.2) %
−Removed: 0.2 (1.0) 1.2 (120.0) %
+Added: Content charges — 7.2 (7.2) (100.0) %
Adjusted share-based compensation expense 26.0 26.6 (0.6) (2.3) %
−Removed: 15.9 7.8 8.1 103.8 %
Purchase accounting and related adjustments 36.9 49.4 (12.5) (25.3) %
−Removed: 44.4 48.3 (3.9) (8.1) %
−Removed: Total segment profit $ 116.1 $ 28.0 $ 88.1 nm
−Removed: _______________________
−Removed: nm - Percentage not meaningful.
−Removed: (1) Adjusted depreciation and amortization represents depreciation and amortization as presented on our consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:
−Removed: Three Months Ended
−Removed: (Amounts in millions)
−Removed: Depreciation and amortization $ 44.4 $ 42.4
−Removed: Amount included in purchase accounting and related adjustments (34.4) (32.3)
−Removed: Adjusted depreciation and amortization $ 10.0 $ 10.1
−Removed: (2) COVID-19 related charges (benefit) represent the incremental costs included in direct operating expense and distribution and marketing expense resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries.
−Removed: (3) The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:
−Removed: Three Months Ended
−Removed: (Amounts in millions)
−Removed: Total share-based compensation expense $ 16.4 $ 8.4
−Removed: Amount included in restructuring and other (i)
−Removed: Adjusted share-based compensation $ 15.9 $ 7.8
−Removed: (i) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.
−Removed: (4) Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions.
−Removed: The following sets forth the amounts included in each line item in the financial statements:
−Removed: Three Months Ended
−Removed: (Amounts in millions)
−Removed: Purchase accounting and related adjustments:
−Removed: General and administrative expense (i)
−Removed: $ 10.0 $ 16.0
−Removed: Depreciation and amortization 34.4 32.3
−Removed: $ 44.4 $ 48.3
−Removed: (i) These adjustments include the non-cash charge for the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge for the amortization of the recoupable portion of the purchase price and the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense, as presented in the table below.
−Removed: The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.
−Removed: Three Months Ended
−Removed: (Amounts in millions)
−Removed: Amortization of recoupable portion of the purchase price $ 1.3 $ 1.9
−Removed: Noncontrolling interest discount amortization — 4.9
−Removed: Noncontrolling equity interest in distributable earnings 8.7 9.2
−Removed: $ 10.0 $ 16.0
+Added: Total segment profit $ 173.5 $ 72.2 $ 101.3 140.3 %
+Added: See Note 15 to our unaudited condensed consolidated financial statements for further information on the reconciling line items above, and for reconciliations of depreciation and amortization and share-based compensation expense as presented on our unaudited condensed consolidated statements of operations to adjusted depreciation and amortization and adjusted share-based compensation expense, respectively, as presented in the line items above.
We refer to our Motion Picture and Television Production segments collectively as our Studio Business.
1 unchanged sentence
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Increase (Decrease)
2023 2022 Amount Percent
7 unchanged sentences
$ 1,015.5 $ 875.2 $ 140.3 16.0 %
−Removed: Segment Profit (Loss)
+Added: Segment Profit
Studio Business
3 unchanged sentences
Media Networks 66.6 21.0 45.6 217.1 %
−Removed: Intersegment eliminations (7.9) (5.1) (2.8) nm
−Removed: $ 116.1 $ 28.0 $ 88.1 314.6 %
+Added: Intersegment eliminations (23.8) (17.9) (5.9) 33.0 %
$ 173.5 $ 72.2 $ 101.3 140.3 %
−Removed: nm - Percentage not meaningful.
See the following discussion for further detail of our individual segments.
1 unchanged sentence
Motion Picture
−Removed: The table below sets forth Motion Picture gross contribution and segment profit for the three months ended June 30, 2023 and 2022:
+Added: The table below sets forth Motion Picture gross contribution and segment profit for the three months ended September 30, 2023 and 2022:
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Increase (Decrease)
2023 2022 Amount Percent
10 unchanged sentences
Gross contribution as a percentage of revenue 23.8 % 35.1 %
−Removed: The table below sets forth Motion Picture revenue by media and product category for the three months ended June 30, 2023 and 2022:
−Removed: Three Months Ended June 30,
+Added: The table below sets forth Motion Picture revenue by media and product category for the three months ended September 30, 2023 and 2022:
+Added: Three Months Ended September 30,
2023 2022 Total Increase (Decrease)
21 unchanged sentences
Includes acquired and licensed brands and libraries originally released by other parties such as third-party library product, including our titles released by acquired companies prior to our acquisition of the company (i.e., Summit Entertainment library), and titles released with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.
−Removed: Theatrical revenue increased $55.0 million in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 due to an increase of $54.9 million from Lionsgate Original Releases driven by the performance of John Wick:
−Removed: Chapter 4 in the current quarter (which was released on March 24, 2023), and to a lesser extent, a greater number of theatrical slate releases generating revenue in the quarter.
−Removed: Home entertainment revenue increased $45.7 million, or 29.6%, in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, due to higher digital media revenue of $41.9 million driven by Lionsgate Original Releases due to higher revenue from our theatrical slate titles, and in particular, the revenues generated from John Wick:
−Removed: Chapter 4 in the current quarter.
−Removed: Television revenue was comparable in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.
−Removed: International revenue increased $15.3 million, or 23.3%, in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022 due to an increase from Lionsgate Original Releases of $19.0 million due to higher revenue generated from our fiscal 2023 theatrical slate titles in the current quarter as compared to the fiscal 2022 theatrical slate titles in the prior year's quarter, partially offset by decreased revenue from direct-to-platform releases.
+Added: Theatrical revenue increased $22.2 million in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 due to an increase of $22.9 million from Lionsgate Original Releases driven by a greater number of theatrical slate releases generating revenue in the quarter.
+Added: Home entertainment revenue increased $66.0 million, or 57.0%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, due to higher digital media revenue of $63.8 million.
+Added: The increase in digital media revenue was due to an increase from Lionsgate Original Releases of $49.9 million due to revenues generated from John Wick:
+Added: Chapter 4 and Jesus Revolution in the current quarter (fiscal 2023 theatrical slate titles), and a greater number of fiscal 2024 theatrical slate titles released on home entertainment digital media in the current quarter as compared to the prior year's quarter.
+Added: The increase in digital media revenue was also due to an increase from Other Film of $13.9 million from our acquired library titles.
+Added: Television revenue increased $49.1 million, or 95.0%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, due to an increase from Lionsgate Original Releases of $50.9 million due to a greater number of television windows opening for our theatrical slate titles than in the prior year's quarter, and higher revenue recognized for those titles.
+Added: In particular, the current quarter included revenue from John Wick:
+Added: Chapter 4 and Plane (fiscal 2023 theatrical releases), as compared to revenue from Moonfall (fiscal 2022 theatrical release) in the prior year's quarter.
+Added: International revenue increased $34.2 million, or 75.2%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022 due to an increase from Lionsgate Original Releases of $37.6 million driven by higher revenue generated from our fiscal 2024 and fiscal 2023 theatrical state titles in the current quarter as compared to the fiscal 2023 and fiscal 2022 theatrical slate titles in the prior year's quarter.
Direct Operating Expense.
The increase in direct operating expenses is due to higher motion picture revenue in the current quarter.
−Removed: The decrease in direct operating expenses as a percentage of motion picture revenue is driven by the change in the mix of titles and product categories generating revenue in the current quarter as compared to the prior year's quarter, including the lower amortization rate of the fiscal 2023 theatrical slate releases generating revenue in the current quarter and lower expense related to multi-platform and direct-to-platform Lionsgate Original Releases (which require less marketing cost and generally carry less risk, and thus the film cost is higher as a percentage of revenue).
−Removed: In addition, the current quarter included a decrease in development write-offs of $8.9 million on Lionsgate Original Releases, and lower expense of $6.4 million related to foreign exchange gains in the current quarter which compared to foreign exchange losses in the prior year's quarter.
−Removed: Investment in film write-downs included in Motion Picture segment direct operating expense in the three months ended June 30, 2023 were $0.2 million, as compared to $0.5 million in the three months ended June 30, 2022.
+Added: The increase in direct operating expenses as a percentage of motion picture revenue is driven by the change in the mix of titles and product categories generating revenue in the current quarter as compared to the prior year's quarter, and higher investment in film write-downs.
+Added: Investment in film write-downs included in Motion Picture segment direct operating expense
+Added: increased to $26.8 million in the three months ended September 30, 2023, compared to insignificant amounts in the three months ended September 30, 2022.
Distribution and Marketing Expense.
−Removed: The increase in distribution and marketing expense in the three months ended June 30, 2023 is due to higher theatrical P&A and Premium VOD expense due to higher expense associated with the theatrical slate releases in the current quarter, and higher expense for films to be released in subsequent quarters.
−Removed: In the three months ended June 30, 2023 approximately $20.9 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $5.3 million in the three months ended June 30, 2022 in the Motion Picture segment.
+Added: The increase in distribution and marketing expense in the three months ended September 30, 2023 is due to higher theatrical P&A and Premium VOD expense due to higher expense associated with the theatrical slate releases in the current quarter (including expense for Saw X which was released on September 29, 2023), and to a lesser extent, higher expense for films to be released in subsequent quarters.
+Added: In the three months ended September 30, 2023, approximately $15.2 million of theatrical P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $9.6 million in the prior year's quarter in the Motion Picture segment.
Gross Contribution.
−Removed: Gross contribution of the Motion Picture segment for the three months ended June 30, 2023 increased as compared to the three months ended June 30, 2022 due to higher Motion Picture revenue, and lower direct operating expense as a percentage of Motion Picture revenue, partially offset by higher distribution and marketing expense.
+Added: Gross contribution of the Motion Picture segment for the three months ended September 30, 2023 increased as compared to the three months ended September 30, 2022, due to higher Motion Picture revenue, partially offset by higher direct operating expense and distribution and marketing expense.
General and Administrative Expense.
−Removed: General and administrative expenses of the Motion Picture segment in the three months ended June 30, 2023 increased $6.8 million, or 30.1%, primarily due to an increase in incentive based compensation.
+Added: General and administrative expenses of the Motion Picture segment increased $3.5 million, or 15.1% primarily due to an increase in incentive based compensation partially offset by a decrease in professional fees.
Television Production
−Removed: The table below sets forth Television Production gross contribution and segment profit for the three months ended June 30, 2023 and 2022:
+Added: The table below sets forth Television Production gross contribution and segment profit for the three months ended September 30, 2023 and 2022:
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Increase (Decrease)
2023 2022 Amount Percent
9 unchanged sentences
Gross contribution as a percentage of revenue 19.7 % 5.5 %
−Removed: The table below sets forth Television Production revenue and changes in revenue by media for the three months ended June 30, 2023 and 2022:
+Added: The table below sets forth Television Production revenue and changes in revenue by media for the three months ended September 30, 2023 and 2022:
Three Months Ended
−Removed: June 30, Increase (Decrease)
+Added: September 30, Increase (Decrease)
2023 2022 Amount Percent
−Removed: Television Production (Amounts in millions)
+Added: (Amounts in millions)
+Added: Television Production Revenue
Television $ 221.8 $ 294.2 $ (72.4) (24.6) %
7 unchanged sentences
The primary component of Television Production revenue is domestic television revenue.
−Removed: Domestic television revenue decreased in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, due to significant third-party revenue in the prior year's quarter from The First Lady Season 1, and a decrease of $68.4 million from intersegment revenues from the licensing of Starz original series to Starz Networks (revenue in the prior year's quarter from Power Book III:
−Removed: Raising Kanan Season 3 , The Serpent Queen Season 1 , P-Valley Season 2 , Party Down Season 3 and Power Book II:
−Removed: Ghost Season 3 compared to revenue in the current quarter from Power Book III:
−Removed: Raising Kanan Season 3 and Power Book II:
−Removed: Ghost Season 4 ).
−Removed: International revenue in the three months ended June 30, 2023 decreased $47.4 million, or 59.8% as compared to the three months ended June 30, 2022 due to a decrease of $31.5 million from intersegment revenues from the licensing of Starz original series to LIONSGATE+, and revenue in the prior year's quarter from The First Lady Season 1 and Home Economics Season 2.
−Removed: Home entertainment revenue in the three months ended June 30, 2023 decreased $20.0 million, or 62.1% as compared to the three months ended June 30, 2022 due to a decrease of $13.6 million from digital media intersegment revenues from the licensing of Starz original series to Starz Networks and digital media revenue in the prior year's quarter for The First Lady Season 1.
−Removed: Other revenue in the three months ended June 30, 2023 increased $4.9 million, or 25.1% from the three months ended June 30, 2022, and primarily includes revenue of 3 Arts Entertainment which is generated from commissions and executive producer fees earned related to talent management.
+Added: Domestic television revenue decreased in the three months ended September 30, 2023 due to lower third-party revenue from fewer television episodes delivered and in particular, lower revenue from reality television programs, and a decrease of $31.5 million from intersegment revenues from the licensing of Starz original series to Starz Networks (revenue in the prior year's quarter from Power Book II:
+Added: Ghost Season 3 , P-Valley Season 2 and BMF - Black Mafia Family Season 2, compared to revenue in the current quarter from Power Book II:
+Added: Ghost Season 4, The Venery of Samantha Bird , and BMF - Black Mafia Family Season 3, among others) .
+Added: International revenue in the three months ended September 30, 2023 decreased $0.8 million, or 1.1%, and reflected a decrease of $7.4 million from intersegment revenues from the licensing of Starz original series to LIONSGATE+, which was mostly offset by increased third-party revenue in the current quarter ( The Continental and Acapulco Season 3 in the current quarter compared to Mythic Quest Season 3 and Acapulco Season 2 in the prior year's quarter).
+Added: Home entertainment revenue in the three months ended September 30, 2023 increased $41.4 million due to digital media revenue in the current quarter for The Continental , as compared to digital media revenue in the prior year's quarter for Ghosts Season 1 and Nashville Seasons 1 to 6.
+Added: Other revenue decreased $5.2 million in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, and primarily reflects lower revenue of 3 Arts Entertainment, which is generated from commissions and executive producer fees earned related to talent management.
Direct Operating Expense.
−Removed: Direct operating expense of the Television Production segment in the three months ended June 30, 2023 decreased $218.3 million, or 55.5% due to the decrease in Television Production revenues.
−Removed: Direct operating expenses as a percentage of television production revenue decreased as compared to the prior year's quarter, primarily due to the mix of titles generating revenue in the current quarter as compared to the prior year's quarter, and in particular, the prior year's quarter included a greater number of deliveries of newer shows in which direct operating expense is typically higher as a percentage of revenue.
−Removed: In addition, the current quarter included lower write-downs to fair value of investment in film and television programs (none in the current quarter as compared to $1.2 million in the prior year's quarter).
+Added: Direct operating expense of the Television Production segment in the three months ended September 30, 2023 decreased $89.5 million, or 22.5% due to the decrease in Television Production revenues.
+Added: Direct operating expenses as a percentage of television production revenue decreased primarily due to the mix of titles generating revenue in the current quarter as compared to the prior year's quarter, and in particular, the current quarter included significant revenue from The Continental which has a lower amortization rate as compared to the prior year's quarter, which included a greater number of deliveries of newer shows in which direct operating expense is typically higher as a percentage of revenue and increased amortization from a show that was not renewed for a second season.
Gross Contribution.
−Removed: Gross contribution of the Television Production segment for the three months ended June 30, 2023 increased as compared to the three months ended June 30, 2022, as the lower television production revenue was more than offset by lower direct operating expenses as a percentage of television production revenue.
+Added: Gross contribution of the Television Production segment for the three months ended September 30, 2023 increased as compared to the three months ended September 30, 2022, as the lower television production revenue was more than offset by lower direct operating expenses as a percentage of television production revenue.
General and Administrative Expense.
1 unchanged sentence
Media Networks
−Removed: The table below sets forth Media Networks gross contribution and segment profit for the three months ended June 30, 2023 and 2022:
+Added: The table below sets forth Media Networks gross contribution and segment profit for the three months ended September 30, 2023 and 2022.
Three Months Ended
−Removed: June 30, Change
+Added: September 30, Increase (Decrease)
2023 2022 Amount Percent
4 unchanged sentences
Distribution & marketing expense 114.3 125.8 (11.5) (9.1) %
−Removed: Gross contribution 57.7 (13.5) 71.2 nm
+Added: Gross contribution 89.4 45.1 44.3 98.2 %
General and administrative expenses 22.8 24.1 (1.3) (5.4) %
4 unchanged sentences
Three Months Ended Three Months Ended
−Removed: June 30, 2023 June 30, 2022
+Added: September 30, 2023 September 30, 2022
Starz Networks LIONSGATE+ Total Media Networks Starz Networks LIONSGATE+ Total Media Networks
12 unchanged sentences
The table below sets forth, as of the dates presented, subscriptions to our Media Networks and STARZPLAY Arabia services.
−Removed: June 30, June 30,
+Added: Actual Pro Forma (1)
+Added: September 30, September 30, September 30, September 30,
+Added: 2023 2022 2023 2022
(Amounts in millions)
Starz Domestic
−Removed: Linear Subscribers 7.7 9.2
OTT Subscribers 12.02 12.25 12.02 12.25
−Removed: Total 19.5 21.4
Linear Subscribers 7.42 8.76 7.42 8.76
−Removed: OTT Subscribers (1)
Total 19.44 21.01 19.44 21.01
+Added: OTT Subscribers (1)
+Added: 5.36 12.96 3.77 2.75
Linear Subscribers 1.79 1.81 1.79 1.81
+Added: Total 7.15 14.77 5.56 4.56
OTT Subscribers (1)
+Added: 17.38 25.21 15.79 15.00
+Added: Linear Subscribers 9.21 10.57 9.21 10.57
Total Starz 26.59 35.78 25.00 25.57
STARZPLAY Arabia (2)
+Added: 3.04 2.00 3.04 2.00
Total Domestic and International Subscribers (1)
+Added: 29.63 37.78 28.04 27.57
Subscribers by Platform:
−Removed: Linear Subscribers 9.5 11.0
OTT Subscribers (1)(3)
+Added: 20.42 27.21 18.83 17.00
+Added: Linear Subscribers 9.21 10.57 9.21 10.57
Total Global Subscribers (1)
29.63 37.78 28.04 27.57
−Removed: (1) June 30, 2022 includes OTT subscribers totaling 8.0 million for the international territories exited.
+Added: ___________________
+Added: (1) Pro forma amounts exclude OTT subscribers for the international territories exited or to be exited in Australia, Continental Europe, Japan, Latin America and the U.K.
+Added: amounting to 1.59 million and 10.21 million at September 30, 2023 and 2022, respectively.
(2) Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.
(3) OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.
−Removed: Media Networks revenue was comparable and reflected increased revenue at LIONSGATE+ of $12.1 million, mostly offset by a decrease of $12.2 million at Starz Networks.
−Removed: The increase in revenue at LIONSGATE+ was due to revenue from the distribution of Starz Originals and licensed content to third-party distributors outside of the Starz Platforms in ancillary markets of approximately $14.0 million, an increase in revenue from the continuing LIONSGATE+ territories of approximately $7.5 million, all of which was offset by a decrease in revenue from the LIONSGATE+ exited territories of approximately $9.4 million.
−Removed: Starz Networks' revenue decreased $12.2 million primarily as a result of declines in revenue of $21.1 million from traditional linear services, which were offset by higher OTT revenue of $7.8 million resulting from increased subscriptions.
−Removed: During the three months ended June 30, 2023 and 2022, the following original series premiered on STARZ:
−Removed: Three Months Ended June 30, 2023 Three Months Ended June 30, 2022
+Added: Media Networks revenue increased $20.4 million and reflected increased revenue at LIONSGATE+ of $38.1 million, mostly offset by a decrease of $17.7 million at Starz Networks.
+Added: The increase in revenue at LIONSGATE+ was primarily due to an increase in revenue from the LIONSGATE+ territories exited, or to be exited of Australia, Continental Europe, Japan, Latin America and the U.K.
+Added: (the "Exiting Territories") of approximately $36.6 million, which was primarily the result of a modification to shorten a long-term distribution contract in Latin America.
+Added: Starz Networks' revenue decreased $17.7 million primarily because of declines in revenue of $24.6 million from traditional linear services, which were offset by higher OTT revenue of $6.3 million resulting primarily from a price increase implemented during the quarter.
+Added: The LIONSGATE+ revenue of $76.7 million for the three months ended September 30, 2023 includes $68.4 million from the Exiting Territories.
+Added: During the three months ended September 30, 2023 and 2022, the following original series premiered on STARZ:
+Added: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022
Title Premiere Date Title Premiere Date
+Added: Second Quarter:
+Added: Second Quarter:
+Added: Minx Season 2
+Added: July 21, 2023 Power Book III:
+Added: Raising Kanan Season 2
+Added: August 14, 2022
+Added: Heels Season 2
+Added: July 28, 2023 Serpent Queen Season 1
+Added: September 11, 2022
+Added: Men in Kilts Season 2
+Added: August 11, 2023
+Added: Power Book IV:
+Added: Force Season 2
+Added: July 28, 2023
+Added: Direct Operating and Distribution and Marketing Expenses .
+Added: Direct operating and distribution and marketing expenses primarily represent programming cost amortization and advertising and marketing costs, respectively.
+Added: The level of programming cost amortization and advertising and marketing costs and thus the gross contribution margin for the Media Networks' segment can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during the period.
+Added: Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere.
+Added: In addition, the shutdown, and planned shutdown, of the LIONSGATE+ international service in the Exiting Territories, will result in a decrease in expenses going forward.
+Added: The decrease in Media Networks direct operating expenses is due to decreases at LIONSGATE+ of $7.8 million and Starz Networks of $4.6 million in the three months ended September 30, 2023.
+Added: Direct operating expenses at LIONSGATE+ decreased in the exited, and to be exited, territories as a result of lower programming cost amortization and operating expenses of approximately $3.4 million and lower expense of approximately $5.9 million related to lower foreign exchange losses in the current quarter.
+Added: The LIONSGATE+ direct operating expense of $42.5 million for the three months ended September 30, 2023 includes $36.2 million from the Exiting Territories.
+Added: The decrease in Starz Networks direct operating expense was primarily due to lower programming cost amortization of $14.1 million related to theatrical releases under our programming output agreements and $7.4 million related to library content, partially offset by higher programming cost amortization related to our Starz Originals of $4.9 million, and a benefit in the prior year's quarter of $10.0 million associated with the modification of a content licensing arrangement.
+Added: The decrease in Media Networks distribution and marketing expense is due to a decrease of $14.0 million at LIONSGATE+ primarily due to a decrease in distribution and advertising expenses from the Exiting Territories, partially offset by an increase of $2.5 million at Starz Networks.
+Added: The LIONSGATE+ distribution and marketing expense of $11.8 million for the three months ended September 30, 2023 includes $10.7 million from the Exiting Territories.
+Added: Gross Contribution.
+Added: The increase in gross contribution compared to the three months ended September 30, 2022 was due to lower negative gross contribution at LIONSGATE+ of $59.9 million, partially offset by a decrease in gross contribution at Starz Networks of $15.6 million, driven by lower direct operating expense and distribution and marketing expense, and higher LIONSGATE+ revenue, partially offset by lower Starz Networks revenue, as described above.
+Added: The positive gross contribution related to the Exiting Territories was approximately $21.5 million for the three months ended September 30, 2023.
+Added: General and Administrative Expense.
+Added: General and administrative expenses of the Media Networks segment in the three months ended September 30, 2023 decreased from the prior year's quarter, due to a decrease of $2.4 million at LIONSGATE+, partially offset by increases of $1.1 million at Starz Networks.
+Added: Six Months Ended September 30, 2023 Compared to Six Months Ended September 30, 2022
+Added: Consolidated Results of Operations
+Added: The following table sets forth our consolidated results of operations for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Studio Business
+Added: Motion Picture $ 802.5 $ 502.8 $ 299.7 59.6 %
+Added: Television Production 612.4 863.2 (250.8) (29.1) %
+Added: Total Studio Business 1,414.9 1,366.0 48.9 3.6 %
+Added: Media Networks 797.6 777.3 20.3 2.6 %
+Added: Intersegment eliminations (288.4) (374.2) 85.8 (22.9) %
+Added: Total revenues 1,924.1 1,769.1 155.0 8.8 %
+Added: Direct operating 1,038.3 1,160.0 (121.7) (10.5) %
+Added: Distribution and marketing 466.1 396.2 69.9 17.6 %
+Added: General and administration 247.1 224.9 22.2 9.9 %
+Added: Depreciation and amortization 89.0 87.6 1.4 1.6 %
+Added: Restructuring and other 254.0 241.3 12.7 5.3 %
+Added: Goodwill and intangible asset impairment 663.9 1,475.0 (811.1) (55.0) %
+Added: Total expenses 2,758.4 3,585.0 (826.6) (23.1) %
+Added: Operating loss (834.3) (1,815.9) 981.6 (54.1) %
+Added: Interest expense (125.8) (103.4) (22.4) 21.7 %
+Added: Interest and other income 4.7 3.1 1.6 51.6 %
+Added: Other expense (17.2) (10.4) (6.8) 65.4 %
+Added: Gain on extinguishment of debt 21.2 2.1 19.1 nm
+Added: Loss on investments, net (1.7) (1.3) (0.4) 30.8 %
+Added: Equity interests income 1.5 0.8 0.7 87.5 %
+Added: Loss before income taxes (951.6) (1,925.0) 973.4 (50.6) %
+Added: Income tax provision (7.8) (11.0) 3.2 (29.1) %
+Added: Net loss (959.4) (1,936.0) 976.6 (50.4) %
+Added: Net loss attributable to noncontrolling interest 2.5 5.9 (3.4) (57.6) %
+Added: Net loss attributable to Lions Gate Entertainment Corp.
+Added: shareholders $ (956.9) $ (1,930.1) $ 973.2 (50.4) %
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: Consolidated revenues increased $155.0 million in the six months ended September 30, 2023 reflecting an increase of $48.9 million and $20.3 million from our Studio Business and Media Networks business, respectively, and lower intersegment eliminations of $85.8 million.
+Added: Intersegment eliminations relate to the licensing of product from our Studio Business (primarily our Television Production segment) to the Media Networks segment.
+Added: Motion Picture revenue increased $299.7 million in the current period due to greater digital media home entertainment, theatrical, international, television and other revenue.
+Added: Motion Picture revenue included $77.1 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $63.4 million from the six months ended September 30, 2022.
+Added: Television Production revenue decreased $250.8 million due to decreased domestic television revenue from lower third-party revenue and lower intersegment revenues from the licensing of Starz original series, decreased international and other revenue, partially offset by increased digital media home entertainment revenue.
+Added: Television Production revenue included $211.3 million of revenue from licensing Television Production segment product to our Media Networks segment, representing a decrease of $149.2 million from the six months ended September 30, 2022.
+Added: The decrease in intersegment eliminations of $85.8 million is primarily associated with lower Television Production revenues of $149.2 million for licenses of original series to Starz Networks and LIONSGATE+, both in the Media Networks segment as discussed above, partially offset by higher Motion Picture revenues of $63.4 million reflecting the licensing of certain recent theatrical releases to Starz.
+Added: Media Networks revenue increased $20.3 million, and reflected increased revenue at LIONSGATE+ of $50.2 million, offset by a decrease of $29.9 million at Starz Networks.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: Direct Operating Expenses.
+Added: Direct operating expenses by segment were as follows for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30,
+Added: 2023 2022 Change
+Added: Amount % of Segment Revenues Amount % of Segment Revenues Amount Percent
+Added: (Amounts in millions)
+Added: Direct operating expenses
+Added: Studio Business
+Added: Motion Picture $ 389.3 48.5 % $ 247.8 49.3 % $ 141.5 57.1 %
+Added: Television Production 482.8 78.8 790.6 91.6 (307.8) (38.9) %
+Added: Total Studio Business 872.1 61.6 1,038.4 76.0 (166.3) (16.0) %
+Added: Media Networks 419.2 52.6 472.4 60.8 (53.2) (11.3) %
+Added: COVID-19 related charges (benefit) (0.4) nm (7.1) nm 6.7 nm
+Added: Other 1.4 nm 8.7 nm (7.3) nm
+Added: Intersegment eliminations (254.0) nm (352.4) nm 98.4 (27.9) %
+Added: $ 1,038.3 54.0 % $ 1,160.0 65.6 % $ (121.7) (10.5) %
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: Direct operating expenses decreased in the six months ended September 30, 2023 due to lower direct operating expenses for our Studio Business and the Media Networks segment, partially offset by lower intersegment eliminations.
+Added: The decrease at the Studio Business reflects lower direct operating expenses of the Television Production segment due to lower revenues from Television Production, partially offset by higher direct operating expenses of the Motion Picture segment due to higher Motion Picture revenues.
+Added: The decrease in Media Networks direct operating expense was driven by decreases at Starz Networks of $30.8 million and LIONSGATE+ of $22.4 million due to lower programming cost amortization, and lower foreign exchange losses at LIONSGATE+.
+Added: The decrease in intersegment eliminations is due to decreased Television Production revenue from licenses of original series to Starz Networks and LIONSGATE+, as discussed above.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: COVID-19 Related Charges (Benefit).
+Added: We incurred certain incremental costs associated with the COVID-19 global pandemic.
+Added: In the six months ended September 30, 2023, direct operating expense included a benefit of $0.4 million, net of insurance recoveries of $0.6 million (six months ended September 30, 2022 - benefit of $7.1 million, net of insurance recoveries of $7.9 million).
+Added: In the six months ended September 30, 2023 and 2022, other direct operating expense includes share-based compensation.
+Added: In addition, in the six months ended September 30, 2022, other direct operating expenses includes approximately $7.2 million in development costs written off in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment, as a result of changes in strategy across its theatrical slate.
+Added: These charges are excluded from segment operating results but included in direct operating expense in the consolidated statement of operations and reflected in the "other" line item above.
+Added: Other direct operating expense in the six months ended September 30, 2022 also includes the amortization of the non-cash fair value adjustments on film and television assets associated with the application of purchase accounting related to recent acquisitions.
+Added: Distribution and Marketing Expenses.
+Added: Distribution and marketing expenses by segment were as follows for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Distribution and marketing expenses
+Added: Studio Business:
+Added: Motion Picture $ 220.3 $ 103.2 $ 117.1 113.5 %
+Added: Television Production 16.6 18.3 (1.7) (9.3) %
+Added: Total Studio Business 236.9 121.5 115.4 95.0 %
+Added: Media Networks 231.3 273.3 (42.0) (15.4) %
+Added: Other 0.4 0.4 — — %
+Added: Intersegment eliminations (2.5) 1.0 (3.5) n/a
+Added: $ 466.1 $ 396.2 $ 69.9 17.6 %
+Added: theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 149.9 $ 49.3 $ 100.6 204.1 %
+Added: Distribution and marketing expenses increased in the six months ended September 30, 2023, due to higher Studio Business distribution and marketing expense, partially offset by lower Media Networks distribution and marketing expense.
+Added: The increase at the Studio Business primarily reflects greater Motion Picture theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current period.
+Added: The decrease in Media Networks distribution and marketing expense was due to a decrease at LIONSGATE+ of $28.4 million primarily due to a decrease in distribution and advertising expenses from the territories exited, or to be exited, and a decrease at Starz Networks of $13.6 million due to lower spend for our Starz Originals' premieres in the current period.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: General and Administrative Expenses.
+Added: General and administrative expenses by segment were as follows for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 % of Revenues 2022 % of Revenues Amount Percent
+Added: (Amounts in millions)
+Added: General and administrative expenses
+Added: Studio Business
+Added: Motion Picture $ 56.1 $ 45.7 $ 10.4 22.8 %
+Added: Television Production 27.0 21.3 5.7 26.8 %
+Added: Total Studio Business 83.1 67.0 16.1 24.0 %
+Added: Media Networks 48.6 47.6 1.0 2.1 %
+Added: Corporate 63.1 47.9 15.2 31.7 %
+Added: Share-based compensation expense 40.1 33.2 6.9 20.8 %
+Added: Purchase accounting and related adjustments 12.2 29.2 (17.0) (58.2) %
+Added: Total general and administrative expenses $ 247.1 12.8% $ 224.9 12.7% $ 22.2 9.9 %
+Added: General and administrative expenses increased in the six months ended September 30, 2023, resulting from increased corporate, Motion Picture, Television Production, share-based compensation expense, and Media Networks general and administrative expenses, partially offset by lower purchase accounting and related adjustments.
+Added: See further discussion in the Segment Results of Operations section below.
+Added: Corporate general and administrative expenses increased $15.2 million, or 31.7%, primarily due to an increase in incentive based compensation.
+Added: The increase in share-based compensation expense included in general and administrative expense in the six months ended September 30, 2023, as compared to the six months ended September 30, 2022 is primarily due to lower fair values in the prior year's period associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved.
+Added: The following table presents share-based compensation expense by financial statement line item:
+Added: Six Months Ended
+Added: September 30,
+Added: (Amounts in millions)
+Added: Share-based compensation expense by expense category
+Added: General and administrative expense $ 40.1 $ 33.2
+Added: Restructuring and other (1)
+Added: Direct operating expense 1.4 0.8
+Added: Distribution and marketing expense 0.4 0.4
+Added: Total share-based compensation expense $ 43.5 $ 35.0
+Added: _______________________
+Added: (1) Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.
+Added: Purchase accounting and related adjustments include the non-cash charge for the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge for the amortization of the recoupable portion of the purchase price and the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense.
+Added: The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.
+Added: Purchase accounting and related adjustments decreased $17.0 million, or 58.2%, primarily due to lower noncontrolling interest
+Added: discount amortization of $10.0 million and lower expense of $4.5 million associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment.
+Added: Depreciation and Amortization Expense.
+Added: Depreciation and amortization of $89.0 million for the six months ended September 30, 2023 increased $1.4 million from $87.6 million in the six months ended September 30, 2022.
+Added: Restructuring and Other.
+Added: Restructuring and other increased $12.7 million in the six months ended September 30, 2023 as compared to the six months ended September 30, 2022, and includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable.
+Added: Restructuring and other costs were as follows for the six months ended September 30, 2023 and 2022 (see Note 14 to our unaudited condensed consolidated financial statements):
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Restructuring and other:
+Added: Content and other impairments (1)
+Added: $ 239.5 $ 218.8 $ 20.7 9.5 %
+Added: Severance (2)
+Added: Cash 9.0 12.4 (3.4) (27.4) %
+Added: Accelerated vesting on equity awards (see Note 12 to our unaudited condensed consolidated financial statements)
+Added: 1.6 0.6 1.0 166.7 %
+Added: Total severance costs 10.6 13.0 (2.4) (18.5) %
+Added: COVID-19 related charges — 0.1 (0.1) (100.0) %
+Added: Transaction and other costs (3)
+Added: 3.9 9.4 (5.5) (58.5) %
+Added: $ 254.0 $ 241.3 $ 12.7 5.3 %
+Added: _______________________
+Added: nm - Percentage not meaningful
+Added: (1) Media Networks Restructuring:
+Added: As a result of the Media Networks restructuring initiatives discussed in "Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" , the Company recorded content impairment charges related to the Media Networks segment in the six months ended September 30, 2023 of $239.5 million (six months ended September 30, 2022 - $213.0 million).
+Added: See Note 14 to our unaudited condensed consolidated financial statements.
+Added: Other Impairments:
+Added: Amounts in the six months ended September 30, 2022 also include an impairment of an operating lease right-of-use asset related to the Studio business and corporate facilities amounting to $5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company.
+Added: (2) Severance costs were primarily related to restructuring activities and other cost-saving initiatives.
+Added: (3) Transaction and other costs in the six months ended September 30, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters.
+Added: In the six months ended September 30, 2023, transaction and other costs also includes a benefit of $3.8 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the LIONSGATE+ international restructuring.
+Added: Goodwill and Intangible Asset Impairment.
+Added: Goodwill and intangible asset impairment of $663.9 million in the six months ended September 30, 2023 included goodwill impairment of $493.9 million and impairment of our indefinite-lived trade names of $170.0 million related to the Media Networks reporting unit, as compared to goodwill impairment of $1.475 billion for the six months ended September 30, 2022 related to the Media Networks reporting unit.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates", Goodwill and Indefinite-Lived Intangible Assets and Note 5 to our unaudited condensed consolidated financial statements for further information.
+Added: Interest Expense.
+Added: Interest expense of $125.8 million in the six months ended September 30, 2023 increased $22.4 million from the six months ended September 30, 2022 due to higher average interest rates and balances on the revolving credit facility,
+Added: and higher average interest rates on the term loans.
+Added: The following table sets forth the components of interest expense for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30,
+Added: (Amounts in millions)
+Added: Interest Expense
+Added: Revolving credit facility $ 17.8 $ 7.3
+Added: Term loans 43.9 23.4
+Added: Senior Notes 20.0 27.3
+Added: Amortization of debt issuance costs and other non-cash interest (2)
+Added: Total interest expense $ 125.8 $ 103.4
+Added: ______________________
+Added: (1) Other interest expense includes payments associated with certain film related obligations (Production Tax Credit Facility, IP Credit Facility, Backlog Facility and other, see Note 7 to our unaudited condensed consolidated financial statements), and payments and receipts associated with the Company's interest rate swaps (see Note 17 to our unaudited condensed consolidated financial statements).
+Added: (2) Amounts include the amortization of unrealized losses in accumulated other comprehensive income (loss) related to de-designated interest rate swaps which are being amortized to interest expense (see Note 17 to our unaudited condensed consolidated financial statements).
+Added: Interest and Other Income.
+Added: Interest and other income of $4.7 million for the six months ended September 30, 2023 compared to interest and other income of $3.1 million for the six months ended September 30, 2022.
+Added: Other Expense.
+Added: Other expense of $17.2 million for the six months ended September 30, 2023 compared to other expense of $10.4 million for the six months ended September 30, 2022, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 18 to our unaudited condensed consolidated financial statements).
+Added: Gain on Extinguishment of Debt.
+Added: Gain on extinguishment of debt of $21.2 million for the six months ended September 30, 2023 represented a gain associated with the repurchase of $85.0 million principal amount of 5.500% Senior Notes at a discount.
+Added: In the six months ended September 30, 2022, the gain on extinguishment of debt of $2.1 million represented a gain associated with the repurchase of $18.7 million principal amount of 5.500% Senior Notes at a discount, partially offset by the write-off of debt issuance costs associated with the voluntary prepayment of the entire outstanding amount of Term Loan A due March 22, 2023 and the repurchase of the 5.500% Senior Notes.
+Added: See Note 6 to our unaudited condensed consolidated financial statements.
+Added: Loss on Investments, net.
+Added: Loss on investments, net was $1.7 million for the six months ended September 30, 2023, as compared to $1.3 million for the six months ended September 30, 2022.
+Added: Equity Interests Income.
+Added: Equity interests income of $1.5 million in the six months ended September 30, 2023 compared to equity interests income of $0.8 million in the six months ended September 30, 2022.
+Added: Income Tax Provision.
+Added: We had an income tax provision of $7.8 million in the six months ended September 30, 2023, compared to an income tax provision of $11.0 million in the six months ended September 30, 2022.
+Added: Our income tax provision differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and certain minimum taxes and foreign withholding taxes.
+Added: Our income tax provision for the six months ended September 30, 2023 and 2022 was also impacted by charges for interest on uncertain tax benefits, and benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.
+Added: Net Loss Attributable to Lions Gate Entertainment Corp.
+Added: Shareholders.
+Added: Net loss attributable to our shareholders for the six months ended September 30, 2023 was $956.9 million, or basic and diluted net loss per common share of $4.12 on 232.1 million weighted average common shares outstanding.
+Added: This compares to net loss attributable to our shareholders for the six months ended September 30, 2022 of $1,930.1 million, or basic and diluted net loss per common share of $8.51 on 226.8 million weighted average common shares outstanding.
+Added: Segment Results of Operations and Non-GAAP Measures
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022", Segment Results of Operations and Non-GAAP measures for a definition of the non-GAAP measure, total segment profit and Studio Business segment profit, which when presented outside of the segment information and reconciliations included in Note 15 to our unaudited condensed consolidated financial statements, is considered a non-GAAP financial measure, and should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP.
+Added: We use this non-GAAP measure, among other measures, to evaluate the aggregate operating performance of our business.
+Added: The following table reconciles the GAAP measure, operating loss, to the non-GAAP measure, total segment profit, for the six months ended September 30, 2023 and 2022.
+Added: In addition, each of segment direct operating expense, distribution and marketing expense and general and administrative expense is reconciled to the respective line items presented in the GAAP-based statement of operations in the preceding section of the Management's Discussion and Analysis of Financial Condition and Results of Operations which discusses consolidated results of operations.
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Operating loss $ (834.3) $ (1,815.9) $ 981.6 (54.1) %
+Added: Corporate general and administrative expenses 63.1 47.9 15.2 31.7 %
+Added: Goodwill and intangible asset impairment 663.9 1,475.0 (811.1) (55.0) %
+Added: Adjusted depreciation and amortization 19.9 19.7 0.2 1.0 %
+Added: Restructuring and other 254.0 241.3 12.7 5.3 %
+Added: COVID-19 related charges (benefit) (0.4) (7.1) 6.7 (94.4) %
+Added: Content charges — 7.2 (7.2) (100.0) %
+Added: Adjusted share-based compensation expense 41.9 34.4 7.5 21.8 %
+Added: Purchase accounting and related adjustments 81.3 97.8 (16.5) (16.9) %
+Added: Total segment profit $ 289.4 $ 100.3 $ 189.1 188.5 %
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: See Note 15 to our unaudited condensed consolidated financial statements for further information on the reconciling line items above, and for reconciliations of depreciation and amortization and share-based compensation expense as presented on our unaudited condensed consolidated statements of operations to adjusted depreciation and amortization and adjusted share-based compensation expense, respectively, as presented in the line items above.
+Added: We refer to our Motion Picture and Television Production segments collectively as our Studio Business.
+Added: The table below sets forth the revenues and segment profit of our collective Studio Business and Media Networks segment.
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Studio Business
+Added: Motion Picture $ 802.5 $ 502.8 $ 299.7 59.6 %
+Added: Television Production 612.4 863.2 (250.8) (29.1) %
+Added: Total Studio Business $ 1,414.9 $ 1,366.0 $ 48.9 3.6 %
+Added: Media Networks 797.6 777.3 20.3 2.6 %
+Added: Intersegment eliminations (288.4) (374.2) 85.8 (22.9) %
+Added: $ 1,924.1 $ 1,769.1 $ 155.0 8.8 %
+Added: Segment Profit (Loss)
+Added: Studio Business
+Added: Motion Picture $ 136.8 $ 106.1 $ 30.7 28.9 %
+Added: Television Production 86.0 33.0 53.0 160.6 %
+Added: Total Studio Business $ 222.8 $ 139.1 $ 83.7 60.2 %
+Added: Media Networks 98.5 (16.0) 114.5 nm
+Added: Intersegment eliminations (31.9) (22.8) (9.1) 39.9 %
+Added: $ 289.4 $ 100.3 $ 189.1 188.5 %
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: See the following discussion for further detail of our individual segments.
+Added: The segment results of operations presented below do not include the elimination of intersegment transactions which are eliminated when presenting consolidated results.
+Added: Motion Picture
+Added: The table below sets forth Motion Picture gross contribution and segment profit for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Motion Picture Segment:
+Added: Revenue $ 802.5 $ 502.8 $ 299.7 59.6 %
+Added: Direct operating expense 389.3 247.8 141.5 57.1 %
+Added: Distribution & marketing expense 220.3 103.2 117.1 113.5 %
+Added: Gross contribution 192.9 151.8 41.1 27.1 %
+Added: General and administrative expenses 56.1 45.7 10.4 22.8 %
+Added: Segment profit $ 136.8 $ 106.1 $ 30.7 28.9 %
+Added: theatrical P&A and Premium VOD expense included in distribution and marketing expense $ 149.9 $ 49.3 $ 100.6 204.1 %
+Added: Direct operating expense as a percentage of revenue 48.5 % 49.3 %
+Added: Gross contribution as a percentage of revenue 24.0 % 30.2 %
+Added: The table below sets forth Motion Picture revenue by media and product category for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended September 30,
+Added: 2023 2022 Total Increase (Decrease)
+Added: Lionsgate Original Releases (1)
+Added: Other Film (2)
+Added: Total Lionsgate Original Releases (1)
+Added: Other Film (2)
+Added: (Amounts in millions)
+Added: Motion Picture Revenue
+Added: Theatrical $ 92.3 $ 1.8 $ 94.1 $ 14.5 $ 2.4 $ 16.9 $ 77.2
+Added: Home Entertainment
+Added: Digital Media 246.4 93.4 339.8 148.0 83.1 231.1 108.7
+Added: Packaged Media 32.6 9.4 42.0 19.0 17.0 36.0 6.0
+Added: Total Home Entertainment 279.0 102.8 381.8 167.0 100.1 267.1 114.7
+Added: Television 134.3 15.0 149.3 79.1 20.9 100.0 49.3
+Added: International 139.8 20.9 160.7 83.2 28.0 111.2 49.5
+Added: Other 12.2 4.4 16.6 4.6 3.0 7.6 9.0
+Added: $ 657.6 $ 144.9 $ 802.5 $ 348.4 $ 154.4 $ 502.8 $ 299.7
+Added: ____________________
+Added: (1) Lionsgate Original Releases:
+Added: Includes titles originally planned for a wide theatrical release by Lionsgate, including titles that have changed from a planned wide theatrical release to an initial direct-to-streaming release.
+Added: These releases include films developed and produced in-house, films co-developed and co-produced and films acquired or licensed from third parties.
+Added: In addition, Lionsgate Original Releases also includes multi-platform and direct-to-platform motion pictures originally released or licensed by Lionsgate, and the licensing of our original release motion picture content to other ancillary markets (location-based entertainment, games, etc.).
+Added: (2) Other Film:
+Added: Includes acquired and licensed brands and libraries originally released by other parties such as third-party library product, including our titles released by acquired companies prior to our acquisition of the company (i.e., Summit Entertainment library), and titles released with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.
+Added: Theatrical revenue increased $77.2 million in the six months ended September 30, 2023 as compared to the six months ended September 30, 2022 due to an increase of $77.8 million from Lionsgate Original Releases driven by the performance of John Wick:
+Added: Chapter 4 in the current period (which was released on March 24, 2023), and to a lesser extent, a greater number of theatrical slate releases generating revenue in the quarter.
+Added: Home entertainment revenue increased $114.7 million, or 42.9%, in the six months ended September 30, 2023, as compared to the six months ended September 30, 2022, due to higher digital media revenue of $108.7 million.
+Added: The increase in digital media revenue was due to an increase from Lionsgate Original Releases of $98.4 million due to revenues generated from John Wick:
+Added: Chapter 4 and Jesus Revolution in the current period (fiscal 2023 theatrical slate titles), and a greater number of fiscal 2024 theatrical slate titles released on home entertainment digital media in the current period as compared to the prior year's period.
+Added: The increase in digital media revenue was also due to an increase from Other Film of $10.3 million from our acquired library titles.
+Added: Television revenue increased $49.3 million, or 49.3%, in the six months ended September 30, 2023, as compared to the six months ended September 30, 2022 due to a greater number of television windows opening for our theatrical slate titles than in the prior year's period, and higher revenue recognized for those titles.
+Added: In particular, the current period included revenue from John Wick:
+Added: Chapter 4, Plane and Prey for the Devil (fiscal 2023 theatrical releases), as compared to revenue from Moonfall (fiscal 2022 theatrical release) in the prior year's period.
+Added: International revenue increased $49.5 million, or 44.5%, in the six months ended September 30, 2023, as compared to the six months ended September 30, 2022 due to an increase from Lionsgate Original Releases of $56.6 million driven by higher revenue generated from our fiscal 2024 and fiscal 2023 theatrical slate titles in the current period as compared to the fiscal 2023 and fiscal 2022 theatrical slate titles in the prior year's period, partially offset by decreased revenue from direct-to-platform releases.
+Added: Direct Operating Expense.
+Added: The increase in direct operating expenses is due to higher motion picture revenue in the current period.
+Added: The decrease in direct operating expenses as a percentage of motion picture revenue is driven by the change in the mix of titles and product categories generating revenue in the current period as compared to the prior year's period, including the amortization rate of the fiscal 2024 and 2023 theatrical slate releases generating revenue in the current period and lower expense related to multi-platform and direct-to-platform Lionsgate Original Releases (which require less marketing cost and generally carry less risk, and thus the film cost is higher as a percentage of revenue).
+Added: In addition, the current period included a decrease in development write-offs of $9.6 million on Lionsgate Original Releases, and lower expense of $9.5 million related to lower foreign exchange losses in the current period.
+Added: Investment in film write-downs included in Motion Picture segment direct operating expense increased to $27.0 million in the six months ended September 30, 2023, as compared to $0.5 million in the six months ended September 30, 2022.
+Added: Distribution and Marketing Expense.
+Added: The increase in distribution and marketing expense in the six months ended September 30, 2023 is due to higher theatrical P&A and Premium VOD expense due to higher expense associated with the theatrical slate releases in the current period (including expense for Saw X which was released on September 29, 2023), and to a lesser extent, higher expense for films to be released in subsequent quarters.
+Added: In the six months ended September 30, 2023 approximately $19.7 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $14.8 million in the six months ended September 30, 2022 in the Motion Picture segment.
+Added: Gross Contribution.
+Added: Gross contribution of the Motion Picture segment for the six months ended September 30, 2023 increased as compared to the six months ended September 30, 2022 due to higher Motion Picture revenue, and lower direct operating expense as a percentage of Motion Picture revenue, partially offset by higher distribution and marketing expense.
+Added: General and Administrative Expense.
+Added: General and administrative expenses of the Motion Picture segment in the six months ended September 30, 2023 increased $10.4 million, or 22.8%, primarily due to an increase in incentive based compensation.
+Added: Television Production
+Added: The table below sets forth Television Production gross contribution and segment profit for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Television Production Segment:
+Added: Revenue $ 612.4 $ 863.2 $ (250.8) (29.1) %
+Added: Direct operating expense 482.8 790.6 (307.8) (38.9) %
+Added: Distribution & marketing expense 16.6 18.3 (1.7) (9.3) %
+Added: Gross contribution 113.0 54.3 58.7 108.1 %
+Added: General and administrative expenses 27.0 21.3 5.7 26.8 %
+Added: Segment profit $ 86.0 $ 33.0 $ 53.0 160.6 %
+Added: Direct operating expense as a percentage of revenue 78.8 % 91.6 %
+Added: Gross contribution as a percentage of revenue 18.5 % 6.3 %
+Added: The table below sets forth Television Production revenue and changes in revenue by media for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30, Increase (Decrease)
+Added: 2023 2022 Amount Percent
+Added: Television Production (Amounts in millions)
+Added: Television $ 371.9 $ 595.6 $ (223.7) (37.6) %
+Added: International 105.6 153.7 (48.1) (31.3) %
+Added: Home Entertainment
+Added: Digital 96.0 73.9 22.1 29.9 %
+Added: Packaged Media 0.7 1.4 (0.7) (50.0) %
+Added: Total Home Entertainment 96.7 75.3 21.4 28.4 %
+Added: Other 38.2 38.6 (0.4) (1.0) %
+Added: $ 612.4 $ 863.2 $ (250.8) (29.1) %
+Added: The primary component of Television Production revenue is domestic television revenue.
+Added: Domestic television revenue decreased in the six months ended September 30, 2023 due to lower third-party revenue from fewer televisions episodes delivered (including significant revenue in the prior year's period from The First Lady Season 1, and lower revenue in the current period from reality television programs) and a decrease of $99.9 million from intersegment revenues from the licensing of Starz original series to Starz Networks (revenue in the prior year's period from Power Book II:
+Added: Ghost Season 3 , P-Valley Season 2, Power Book III:
+Added: Raising Kanan Season 2 , and The Serpent Queen Season 1, among others compared to revenue in the current period from Power Book II:
+Added: Ghost Season 4 and Power Book III:
+Added: Raising Kanan Season 3 ).
+Added: International revenue in the six months ended September 30, 2023 decreased $48.1 million, or 31.3% as compared to the six months ended September 30, 2022 due to a decrease of $38.9 million from intersegment revenues from the licensing of Starz original series to LIONSGATE+, and decreased third-party revenue in the current period ( The Continental and Acapulco Season 3 in the current period compared to Mythic Quest Season 3, The First Lady Season 1 and Acapulco Season 2 in the prior year's period).
+Added: Home entertainment revenue in the six months ended September 30, 2023 increased $21.4 million, or 28.4% as compared to the six months ended September 30, 2022 due to increased third-party digital media revenue ( The Continental in the current period, compared to Ghosts Season 1 , Nashville Seasons 1 to 6, and The First Lady Season 1 in the prior year's period), partially offset by a decrease of $10.3 million from digital media intersegment revenues from the licensing of Starz original series to Starz Networks.
+Added: Other revenue in the six months ended September 30, 2023 decreased $0.4 million, or 1.0% from the six months ended September 30, 2022, and primarily reflects lower revenue of 3 Arts Entertainment, which is generated from commissions and executive producer fees earned related to talent management.
+Added: Direct Operating Expense.
+Added: Direct operating expense of the Television Production segment in the six months ended September 30, 2023 decreased $307.8 million, or 38.9% due to the decrease in Television Production revenues.
+Added: Direct operating expenses as a percentage of television production revenue decreased as compared to the prior year's period, primarily due to the mix of titles generating revenue in the current period as compared to the prior year's period, and in particular, the current period included significant revenue from The Continental which has a lower amortization rate as compared to the prior year's period, which included a greater number of deliveries of newer shows in which direct operating expense is typically higher as a percentage of revenue.
+Added: Investment in film and television programs write-downs included in Television Production segment direct operating expense in the six months ended September 30, 2023 were $5.4 million as compared to $4.7 million in the six months ended September 30, 2022.
+Added: Gross Contribution.
+Added: Gross contribution of the Television Production segment for the six months ended September 30, 2023 increased as compared to the six months ended September 30, 2022, as the lower television production revenue was more than offset by lower direct operating expenses as a percentage of television production revenue.
+Added: General and Administrative Expense.
+Added: General and administrative expenses of the Television Production segment increased $5.7 million, or 26.8% primarily due to an increase in incentive based compensation.
+Added: Media Networks
+Added: The table below sets forth Media Networks gross contribution and segment profit for the six months ended September 30, 2023 and 2022:
+Added: Six Months Ended
+Added: September 30, Change
+Added: 2023 2022 Amount Percent
+Added: (Amounts in millions)
+Added: Media Networks Segment:
+Added: Revenue $ 797.6 $ 777.3 $ 20.3 2.6 %
+Added: Direct operating expense 419.2 472.4 (53.2) (11.3) %
+Added: Distribution & marketing expense 231.3 273.3 (42.0) (15.4) %
+Added: Gross contribution 147.1 31.6 115.5 365.5 %
+Added: General and administrative expenses 48.6 47.6 1.0 2.1 %
+Added: Segment profit $ 98.5 $ (16.0) $ 114.5 nm
+Added: Direct operating expense as a percentage of revenue 52.6 % 60.8 %
+Added: Gross contribution as a percentage of revenue 18.4 % 4.1 %
+Added: _______________________
+Added: nm - Percentage not meaningful.
+Added: The following table sets forth the Media Networks segment profit by product line:
+Added: Six Months Ended Six Months Ended
+Added: September 30, 2023 September 30, 2022
+Added: Starz Networks LIONSGATE+ Total Media Networks Starz Networks LIONSGATE+ Total Media Networks
+Added: (Amounts in millions)
+Added: Media Networks Segment:
+Added: Revenue $ 677.2 $ 120.4 $ 797.6 $ 707.1 $ 70.2 $ 777.3
+Added: Direct operating expense 345.0 74.2 419.2 375.8 96.6 472.4
+Added: Distribution & marketing expense 206.3 25.0 231.3 219.9 53.4 273.3
+Added: Gross contribution 125.9 21.2 147.1 111.4 (79.8) 31.6
+Added: General and administrative expenses 40.0 8.6 48.6 34.1 13.5 47.6
+Added: Segment profit $ 85.9 $ 12.6 $ 98.5 $ 77.3 $ (93.3) $ (16.0)
+Added: Media Networks revenue increased $20.3 million and reflected increased revenue at LIONSGATE+ of $50.2 million, partially offset by a decrease of $29.9 million at Starz Networks.
+Added: The increase in revenue at LIONSGATE+, was primarily due to an increase in revenue from the Exiting Territories of approximately $34.3 million, which was primarily the result of a modification to shorten a long-term distribution contract in Latin America.
+Added: In addition, the increase was due to revenue from the distribution of certain Starz Originals and licensed content to third-party distributors outside of the Starz Platforms in ancillary markets of approximately $15.4 million.
+Added: Starz Networks' revenue decreased $29.9 million primarily because of declines in revenue of $45.7 million from traditional linear services, which were offset by higher OTT revenue of $14.1 million resulting primarily from a price increase implemented during the quarter.
+Added: The LIONSGATE+ revenue of $120.4 million for the six months ended September 30, 2023 includes $91.3 million from the Exiting Territories.
+Added: During the six months ended September 30, 2023 and 2022, the following original series premiered on STARZ:
+Added: Six Months Ended September 30, 2023 Six Months Ended September 30, 2022
+Added: Title Premiere Date Title Premiere Date
First Quarter:
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Who is Ghislaine Maxwell June 26, 2022
+Added: Second Quarter:
+Added: Second Quarter:
+Added: Minx Season 2
+Added: July 21, 2023 Power Book III:
+Added: Raising Kanan Season 2
+Added: August 14, 2022
+Added: Heels Season 2
+Added: July 28, 2023 Serpent Queen Season 1
+Added: September 11, 2022
+Added: Men in Kilts Season 2
+Added: August 11, 2023
+Added: Power Book IV:
+Added: Force Season 2
+Added: July 28, 2023
Direct Operating and Distribution and Marketing Expenses .
2 unchanged sentences
Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere.
−Removed: In addition, the LIONSGATE+ international service, in its remaining territories, has and will continue to result in an increase in expenses as the service continues to expand.
−Removed: The decrease in Media Networks direct operating expenses is due to decreases at Starz Networks of $26.1 million and LIONSGATE+ of $14.7 million in the three months ended June 30, 2023.
−Removed: The decrease in Starz Networks direct operating expense was primarily due to lower programming cost amortization related to our Starz Originals of $6.4 million primarily related to lower cost original series premieres, lower programming cost amortization of $8.1 million related to library content, and lower programming amortization of $6.0 million related to theatrical releases under our programming output agreements.
−Removed: Direct operating expenses at LIONSGATE+ decreased as a result of lower programming cost amortization of approximately $17.3 million in connection with the exited territories and lower expense of approximately $6.9 million related to foreign exchange gains in the current quarter which compared to foreign exchange losses in the prior year's quarter, partially offset by higher amortization of investment in films and television programs of $10.5 million associated with the distribution of Starz Originals and licensed content to third-party distributors outside of the Starz Platforms in ancillary markets.
−Removed: The decrease in Media Networks distribution and marketing expense is due to a decrease of $16.2 million at Starz Networks primarily due to lower spend for our Starz Originals' premieres in the current period, and a decrease of $14.3 million at LIONSGATE+ primarily due to a decrease in direct response advertising in connection with the exited territories.
+Added: In addition, the shutdown, and planned shutdown, of the LIONSGATE+ international service in the Exiting Territories will result in a decrease in expenses going forward.
+Added: The decrease in Media Networks direct operating expenses is due to decreases at Starz Networks of $30.8 million and LIONSGATE+ of $22.4 million in the six months ended September 30, 2023.
+Added: The decrease in Starz Networks direct operating expense was due primarily to lower programming amortization of $20.0 million related to theatrical releases under our programming output agreements, and $15.5 million related to library content, partially offset by a benefit in the prior year's period of $10.0 million associated with the modification of a content licensing arrangement.
+Added: Direct operating expenses at LIONSGATE+ decreased in the Exiting Territories as a result of lower programming cost amortization and operating costs of approximately $22.3 million and lower expense of approximately $12.8 million related to lower foreign exchange losses, partially offset by higher amortization of investment in films and television programs of $11.2 million associated with the distribution of Starz Originals and licensed content to third-party distributors outside of the Starz Platforms in ancillary markets.
+Added: The LIONSGATE+ direct operating expense of $74.2 million for the six months ended September 30, 2023 includes $52.4 million from the Exiting Territories.
+Added: The decrease in Media Networks distribution and marketing expense is due to a decrease of $28.4 million at LIONSGATE+ primarily due to a decrease in distribution and advertising expenses from the Exiting Territories, and a decrease of $13.6 million at Starz Networks primarily due to lower spend for our Starz Originals' premieres in the current period.
+Added: The LIONSGATE+ distribution and marketing expense of $25.0 million for the six months ended September 30, 2023 includes $20.2 million from the Exiting Territories.
Gross Contribution.
−Removed: The increase in gross contribution compared to the three months ended June 30, 2022 was due to an increase in gross contribution at Starz Networks of $30.1 million, and lower negative gross contribution at LIONSGATE+ of $41.1 million, driven by lower direct operating expense and distribution and marketing expense, and higher LIONSGATE+ revenue, partially offset by lower Starz Networks revenue, as described above.
−Removed: The negative gross contribution related to the exited territories was approximately $17.6 million for the three months ended June 30, 2022.
+Added: The increase in gross contribution compared to the six months ended September 30, 2022 was due to lower negative gross contribution at LIONSGATE+ of $101.0 million, and an increase in gross contribution at Starz Networks of $14.5 million, driven by lower direct operating expense and distribution and marketing expense, and higher LIONSGATE+ revenue, partially offset by lower Starz Networks revenue, as described above.
+Added: The positive gross contribution related to the Exiting Territories was approximately $18.7 million for the six months ended September 30, 2023.
General and Administrative Expense.
−Removed: General and administrative expenses in the three months ended June 30, 2023 increased from the prior year's quarter, due to increases of $4.6 million at Starz Networks, partially offset by a decrease of $2.3 million at LIONSGATE+.
+Added: General and administrative expenses in the six months ended September 30, 2023 increased from the prior year's period, due to increases of $5.9 million at Starz Networks, partially offset by a decrease of $4.9 million at LIONSGATE+.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Cash
−Removed: Our liquidity and capital requirements in the three months ended June 30, 2023 were provided principally through cash generated from operations, corporate debt, our film related obligations (as further discussed below), and the monetization of trade accounts receivable.
−Removed: As of June 30, 2023, we had cash and cash equivalents of $322.7 million.
+Added: Our liquidity and capital requirements in the six months ended September 30, 2023 were provided principally through cash generated from operations, corporate debt, our film related obligations (as further discussed below), and the monetization of trade accounts receivable.
+Added: As of September 30, 2023, we had cash and cash equivalents of $223.6 million.
Corporate Debt
−Removed: Our corporate debt at June 30, 2023, excluding film related obligations discussed further below, consisted of the following:
+Added: Our corporate debt at September 30, 2023, excluding film related obligations discussed further below, consisted of the following:
• Senior Credit Facilities:
◦ Revolving Credit Facility.
−Removed: We have a $1.25 billion revolving credit facility (with no amounts outstanding at June 30, 2023) due April 2026 (the "Revolving Credit Facility").
+Added: We have a $1.25 billion revolving credit facility (with no amounts outstanding at September 30, 2023) due April 2026 (the "Revolving Credit Facility").
We maintain significant availability under our Revolving Credit Facility, which is currently used to meet our short-term liquidity requirements, and could also be used for longer term liquidity requirements.
◦ Term Loan A.
−Removed: We have a term loan A facility due April 2026 (the "Term Loan A"), with $422.6 million outstanding at June 30, 2023.
+Added: We have a term loan A facility due April 2026 (the "Term Loan A"), with $414.9 million outstanding at September 30, 2023.
The outstanding amounts under the Revolving Credit Facility and Term Loan A may become due on December 23, 2024 (i.e.
2 unchanged sentences
◦ Term Loan B.
−Removed: We have a term loan B facility due March 2025 (the "Term Loan B", and, together with the Revolving Credit Facility and the Term Loan A, the "Senior Credit Facilities"), with $828.5 million outstanding at June 30, 2023.
+Added: We have a term loan B facility due March 2025 (the "Term Loan B", and, together with the Revolving Credit Facility and the Term Loan A, the "Senior Credit Facilities"), with $825.4 million outstanding at September 30, 2023.
• Senior Notes:
−Removed: We have $715.0 million outstanding of 5.500% senior notes due 2029 (the "5.500% Senior Notes") at June 30, 2023.
+Added: We have $715.0 million outstanding of 5.500% senior notes due 2029 (the "5.500% Senior Notes") at September 30, 2023.
See Note 6 to our unaudited condensed consolidated financial statements for a discussion of our corporate debt.
1 unchanged sentence
We utilize our film related obligations to fund our film and television productions or licenses.
−Removed: Our film related obligations at June 30, 2023 include the following:
+Added: Our film related obligations at September 30, 2023 include the following:
• Production Loans:
1 unchanged sentence
The majority of the Company's production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis.
−Removed: At June 30, 2023, there was $1,374.4 million outstanding of production loans.
+Added: At September 30, 2023, there was $1,198.9 million outstanding of production loans.
• Programming Notes:
Programming notes represent individual loans for the licensing of film and television programs that we license, related to our Media Networks business.
−Removed: The Company's programming notes have contractual repayment dates in August 2023.
−Removed: At June 30, 2023, there was $62.2 million outstanding of programming notes.
+Added: The Company's programming notes have contractual repayment dates in October 2023 and November 2023.
+Added: At September 30, 2023, there was $67.9 million outstanding of programming notes.
• Production Tax Credit Facility:
1 unchanged sentence
Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility.
−Removed: At June 30, 2023, there was $235.0 million outstanding under the Production Tax Credit Facility.
+Added: At September 30, 2023, there was $234.3 million outstanding under the Production Tax Credit Facility.
• IP Credit Facility:
1 unchanged sentence
The maximum principal amount of the IP Credit Facility is $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.
−Removed: At June 30, 2023, there was $133.1 million outstanding under the IP Credit Facility.
+Added: At September 30, 2023, there was $124.8 million outstanding under the IP Credit Facility.
• Backlog Facility and Other:
4 unchanged sentences
The facility maturity date is up to two years and 90 days after the revolving period ends, currently August 14, 2027.
−Removed: As of June 30, 2023, there was $175.0 million outstanding under the Backlog Facility.
−Removed: In September 2022, the Company borrowed $43.4 million under a loan agreement which is secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements, which matures on March 28, 2026 (the "September 2022 Distribution Loan").
−Removed: In December 2022, the Company borrowed $16.2 million under a loan agreement which matures on November 1, 2025 (the "December 2022 Distribution Loan").
−Removed: In June 2023, the Company borrowed an aggregate of $158.1 million under a loan agreement (the "June 2023 Distribution Loan", and together with the September 2022 Distribution Loan and December 2022 Distribution Loan, the "Distribution Loans"), of which $110.0 million matures on June 30, 2026, and $48.1 million matures on August 6, 2025.
−Removed: Outstanding loan balances under the Distribution Loans must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees.
−Removed: As of June 30, 2023, $206.1 million remains outstanding under the Distribution Loans.
+Added: As of September 30, 2023, there was $175.0 million outstanding under the Backlog Facility.
+Added: The Company has other loans which are secured by contracted receivables which are not yet recognized as revenue under certain licensing agreements.
+Added: Outstanding loan balances under these "other" loans must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees.
+Added: As of September 30, 2023, an aggregate of $11.6 million remains outstanding under these loans.
See Note 7 to our unaudited condensed consolidated financial statements for a discussion of our film related obligations.
7 unchanged sentences
Redeemable Noncontrolling Interests.
−Removed: In addition, the Company has a redeemable noncontrolling interest balance of $347.2 million as of June 30, 2023 related to its acquisition of a controlling interest, consisting of a limited liability company interest, in each of Pilgrim Media Group and 3 Arts Entertainment, which may require the use of cash in the event the holders of the noncontrolling interests require the Company to repurchase their interests (see Note 7 to our unaudited condensed consolidated financial statements).
+Added: In addition, the Company has a redeemable noncontrolling interest balance of $410.1 million as of September 30, 2023 related to its acquisition of a controlling interest, consisting of a limited liability company interest, in each of Pilgrim Media Group and 3 Arts Entertainment, which may require the use of cash in the event the holders of the noncontrolling interests require the Company to repurchase their interests (see Note 9 to our unaudited condensed consolidated financial statements).
• 3 Arts Entertainment.
−Removed: Pursuant to an amendment dated July 31, 2023, the put rights associated with the 3 Arts Entertainment noncontrolling interest were extended, such that the noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable beginning August 15, 2023, for a 60 day period.
+Added: Pursuant to an amendment dated September 14, 2023, the put rights associated with the 3 Arts Entertainment noncontrolling interest were extended, such that the noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable beginning November 15, 2023, for a 60 day period.
Beginning 30 days after the expiration of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period.
7 unchanged sentences
The nature of our business is such that significant initial expenditures are required to produce, acquire, distribute and market films and television programs, while revenues from these films and television programs are earned over an extended period of time after their completion or acquisition.
−Removed: We expect to continue to increase our investments in film and television programs and film and programming rights acquisitions.
−Removed: In addition, the LIONSGATE+ international service, in its remaining territories, has and will require capital investment as the service continues to expand.
−Removed: Under the current Media Networks business restructuring plan previously discussed under "Item 2.
−Removed: Management's Discussion and Analysis of Results of Operations and Financial Condition - Overview", we estimate we will incur additional charges ranging from approximately $5 million to $30 million related to certain contractual content commitments or programming content impairment charges, among other items related to territories exited or to be exited.
−Removed: The net future cash outlay is estimated to range from approximately $60 million to $90 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content previously written down.
+Added: In addition to the cash requirements of any potential redemption of our noncontrolling interests as discussed above, and the payment for the acquisition of eOne as discussed under "Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview", both of which we may fund with a combination of cash on hand, borrowings under our line of credit and/or new financing arrangements, we have other anticipated cash requirements outside of our normal operations.
+Added: Under the current Media Networks business restructuring plan and ongoing strategic review previously discussed under "Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview", we estimate we will incur additional charges ranging from approximately $80 million to $160 million related to certain contractual content commitments or programming content impairment charges, among other items related to territories exited or to be exited and content to be removed from its services.
+Added: The net future cash outlay is estimated to range from approximately $130 million to $190 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content removed or that may be removed from its services.
+Added: The amounts above will depend on the results of its strategic content review and amounts recoverable from alternative distribution strategies, if any, on content in domestic and foreign markets.
As we continue to evaluate the Media Networks business and its current restructuring plan in relation to the current micro and macroeconomic environment and the announced plan to separate the Company's Starz business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments), including further strategic review of content performance and its strategy on a territory-by-territory basis, we may decide to expand our restructuring plan and exit additional territories or remove certain content off its platform in the future.
−Removed: In July 2023, in connection with a modification to shorten a long-term distribution contract, we decided to shut down the LIONSGATE+ service in Latin America.
−Removed: While the modified contract covers the cost of the content during the shut down period, there may be additional charges for remaining contractual commitments when the service is completely shut down in Latin America, which is expected toward the end of calendar 2023.
We may incur additional content impairment and other restructuring charges beyond the estimates above.
−Removed: In the short-term, we currently expect that our cash requirements for productions will be comparable and that our cash requirements for marketing spend will increase in fiscal 2024 as compared to fiscal 2023.
+Added: In the short-term, we currently expect that our cash requirements for productions will decrease and that our cash requirements for marketing spend will increase in fiscal 2024 as compared to fiscal 2023.
However, we currently believe that cash flow from operations, cash on hand, revolving credit facility availability, the monetization of trade accounts receivable, tax-efficient financing, the availability of our Production Tax Credit Facility, IP Credit Facility and Backlog Facility and other financing obligations, and available production or license financing will be adequate to meet known operational cash and debt service (i.e.
2 unchanged sentences
Our current financing strategy is to fund operations and to leverage investment in films and television programs in the short-term and long-term through our cash flow from operations, our revolving credit facility, production loans and programming notes, government incentive programs, the monetization of trade accounts receivable, our Production Tax Credit Facility, our IP Credit Facility, our Backlog Facility, and other obligations.
−Removed: In addition, we continue to invest in our LIONSGATE+ international service, in its remaining territories, and may acquire businesses or assets, including individual films or libraries that are complementary to our business.
+Added: In addition, we may acquire businesses or assets, including individual films or libraries that are complementary to our business.
Any such transaction could be financed through our cash flow from operations, credit facilities, equity or debt financing.
If additional financing beyond our existing cash flows from operations and credit facilities cannot fund such transactions, there is no assurance that such financing will be available on terms acceptable to us.
−Removed: Our ability to obtain any additional financing will depend on, among other things, our business plans, operating
−Removed: performance, the condition of the capital markets at the time we seek financing, and short and long-term debt ratings assigned by independent rating agencies.
+Added: Our ability to obtain any additional financing will depend on, among other things, our business plans, operating performance, the condition of the capital markets at the time we seek financing, and short and long-term debt ratings assigned by independent rating agencies.
Additionally, circumstances related to inflation and rising interest rates and bank failures has caused disruption in the capital markets, which could make financing more difficult and/or expensive, and we may not be able to obtain such financing.
2 unchanged sentences
Our material cash requirements from known contractual and other obligations primarily relate to our corporate debt and film related obligations.
−Removed: The following table sets forth our significant contractual and other obligations as of June 30, 2023 and the estimated timing of payment:
+Added: The following table sets forth our significant contractual and other obligations as of September 30, 2023 and the estimated timing of payment:
Total Next 12 Months Beyond 12 Months
(Amounts in millions)
−Removed: Future annual repayment of debt and other obligations recorded as of June 30, 2023 (on-balance sheet arrangements)
+Added: Future annual repayment of debt and other obligations recorded as of September 30, 2023 (on-balance sheet arrangements)
Corporate debt (1) :
23 unchanged sentences
(4) Film related obligations commitments include distribution and marketing commitments, minimum guarantee commitments, program rights commitments, and production loan commitments not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition.
−Removed: (5) Includes cash interest payments on our corporate debt and film related obligations, based on the applicable SOFR and LIBOR interest rates at June 30, 2023, net of payments and receipts from the Company's interest rate swaps, and excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.
+Added: (5) Includes cash interest payments on our corporate debt and film related obligations, based on the applicable SOFR interest rates at September 30, 2023, net of payments and receipts from the Company's interest rate swaps, and excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.
(6) Not included in the amounts above are $410.1 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments.
6 unchanged sentences
The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person.
−Removed: In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly.
−Removed: As of June 30, 2023, the Company was in compliance with all applicable covenants.
+Added: In addition, a net first lien leverage maintenance
+Added: covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly.
+Added: As of September 30, 2023, the Company was in compliance with all applicable covenants.
The 5.500% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.
−Removed: As of June 30, 2023, the Company was in compliance with all applicable covenants.
+Added: As of September 30, 2023, the Company was in compliance with all applicable covenants.
Share Repurchase Plan.
3 unchanged sentences
Such purchases will be structured as permitted by securities laws and other legal requirements.
−Removed: During the three months ended June 30, 2023, the Company did not repurchase any common shares.
+Added: During the six months ended September 30, 2023, the Company did not repurchase any common shares.
The amount of dividends, if any, that we pay to our shareholders is determined by our Board of Directors, at its discretion, and is dependent on a number of factors, including our financial position, results of operations, cash flows, capital requirements and restrictions under our credit agreements, and shall be in compliance with applicable law.
Capacity to Pay Dividends.
−Removed: At June 30, 2023, the capacity to pay dividends under the Senior Credit Facilities and the Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $71.5 million and accumulated deficit of $2,516.3 million were deemed free of restrictions from paying dividends at June 30, 2023.
+Added: At September 30, 2023, the capacity to pay dividends under the Senior Credit Facilities and the Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $959.4 million and accumulated deficit of $3,467.5 million were deemed free of restrictions from paying dividends at September 30, 2023.
Discussion of Operating, Investing, Financing Cash Flows
−Removed: Cash, cash equivalents and restricted cash increased by $79.9 million for the three months ended June 30, 2023 and increased by $24.8 million for the three months ended June 30, 2022, before foreign exchange effects on cash.
+Added: Cash, cash equivalents and restricted cash decreased by $43.1 million for the six months ended September 30, 2023 and increased by $220.5 million for the six months ended September 30, 2022, before foreign exchange effects on cash.
Components of these changes are discussed below in more detail.
Operating Activities.
−Removed: Cash flows provided by (used in) operating activities for the three months ended June 30, 2023 and 2022 were as follows:
−Removed: Three Months Ended
+Added: Cash flows provided by (used in) operating activities for the six months ended September 30, 2023 and 2022 were as follows:
+Added: Six Months Ended
+Added: September 30,
2023 2022 Net Change
1 unchanged sentence
Net Cash Flows Provided By (Used In) Operating Activities $ 330.3 $ (139.4) $ 469.7
−Removed: Cash flows provided by operating activities for the three months ended June 30, 2023 were $29.2 million compared to cash flows used in operating activities of $0.2 million for the three months ended June 30, 2022.
−Removed: The increase in cash provided by operating activities is due to lower cash used from changes in operating assets and liabilities of $83.5 million, partially offset by lower cash flows from operations before changes in operating assets and liabilities.
−Removed: The lower use of cash from changes in operating assets and liabilities was driven by lower cash used for investment in film and television programs and program rights, greater decreases in accounts receivable, net, and lower decreases in accounts payable and accrued liabilities, partially offset by proceeds in the prior year's quarter from the termination of interest rate swaps (see further discussion below for interest rate swap transactions in the prior year's quarter).
−Removed: In addition, cash flows used in operating activities for the three months ended June 30, 2023 included a net use of cash of approximately $30.9 million from the monetization of accounts receivables programs, as compared to a net benefit of approximately $13.9 million for the three months ended June 30, 2022 (see Note 16 to our unaudited condensed consolidated financial statements).
−Removed: During the three months ended June 30, 2022, we terminated certain interest rate swaps (a portion of which were considered hybrid instruments with a financing component and an embedded at-market derivative that was a designated cash flow hedge), and received approximately $56.4 million.
−Removed: The $56.4 million received was classified in the unaudited condensed consolidated statement of cash flows as cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion of the termination of swaps (and presented in the "proceeds from the termination of interest rate swaps" line item on the unaudited condensed consolidated statement of cash flows), and a use of cash in financing activities of $134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million) (see Financing Activities below).
+Added: Cash flows provided by operating activities for the six months ended September 30, 2023 were $330.3 million compared to cash flows used in operating activities of $139.4 million for the six months ended September 30, 2022.
+Added: The increase in cash provided by operating activities is due to lower cash used from changes in operating assets and liabilities of $450.1 million.
+Added: The lower use of cash from changes in operating assets and liabilities was driven by lower cash used for investment in film and television programs and program rights, greater decreases in accounts receivable, net, and greater increases in deferred revenue, partially offset by greater decreases in accounts payable and accrued liabilities.
+Added: The six months ended September 30, 2022 included proceeds in the prior year's period from the termination of interest rate swaps (see further discussion below for interest rate swap transactions in the prior year's period).
+Added: In addition, cash flows provided by operating activities for the six months ended September 30, 2023 included a net benefit of approximately $55.8 million from the monetization of accounts receivables programs, as compared to a net use of cash of approximately $10.9 million for the six months ended September 30, 2022 (see Note 18 to our unaudited condensed consolidated financial statements).
+Added: During the six months ended September 30, 2022, we terminated certain interest rate swaps (a portion of which were considered hybrid instruments with a financing component and an embedded at-market derivative that was a designated cash flow hedge), and received approximately $56.4 million.
+Added: The $56.4 million received was classified in the unaudited condensed consolidated statement of cash flows as cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion of the termination of swaps (and presented in the "proceeds from the termination of interest rate swaps" line item on the unaudited condensed consolidated statement of cash flows), and a use of cash in financing activities of $134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made
+Added: between April 1, 2022 and the termination date amounting to $3.2 million) (see Financing Activities below).
See Note 17 to our unaudited condensed consolidated financial statements.
Investing Activities.
−Removed: Cash flows used in investing activities for the three months ended June 30, 2023 and 2022 were as follows:
−Removed: Three Months Ended
+Added: Cash flows used in investing activities for the six months ended September 30, 2023 and 2022 were as follows:
+Added: Six Months Ended
+Added: September 30,
(Amounts in millions)
−Removed: Proceeds from the sale of equity method and other investments $ — $ 2.3
+Added: Proceeds from the sale of other investments $ 0.2 $ 3.0
Investment in equity method investees and other (11.3) (17.5)
2 unchanged sentences
Net Cash Flows Used In Investing Activities $ (31.5) $ (36.0)
−Removed: Cash flows used in investing activities of $9.8 million for the three months ended June 30, 2023 compared to cash flows used in investing activities of $14.8 million for the three months ended June 30, 2022, primarily due to lower cash used for investment in equity method investees and other.
+Added: Cash flows used in investing activities of $31.5 million for the six months ended September 30, 2023 compared to cash flows used in investing activities of $36.0 million for the six months ended September 30, 2022, primarily due to lower cash used for investment in equity method investees and other.
Financing Activities.
−Removed: Cash flows provided by financing activities for the three months ended June 30, 2023 and 2022 were as follows:
−Removed: Three Months Ended
+Added: Cash flows provided by (used in) financing activities for the six months ended September 30, 2023 and 2022 were as follows:
+Added: Six Months Ended
+Added: September 30,
(Amounts in millions)
4 unchanged sentences
Film related obligations - repayments (1,172.9) (372.2)
−Removed: Net proceeds from film related obligations 146.2 370.3
+Added: Net repayments of film related obligations (229.3) 765.7
Other financing activities (31.6) (149.8)
−Removed: Net Cash Flows Provided By Financing Activities $ 60.5 $ 39.8
−Removed: Cash flows provided by financing activities of $60.5 million for the three months ended June 30, 2023 compared to cash flows provided by financing activities of $39.8 million for the three months ended June 30, 2022.
−Removed: Cash flows provided by financing activities for the three months ended June 30, 2023 primarily reflects net film related obligations borrowings of $146.2 million due to net borrowings under production loans and the Production Tax Credit Facility of $3.6 million and net borrowings under the Backlog Facility, IP Credit Facility and Distribution Loans of $142.6 million, offset by net debt repayments and repurchases of $70.1 million.
−Removed: Net debt repayments and repurchases of $70.1 million in the three months ended June 30, 2023 included the below transaction, along with required repayments on our term loans:
−Removed: • During the three months ended June 30, 2023, we repurchased $85.0 million principal amount of the 5.500% Senior Notes for $61.4 million.
−Removed: Cash flows provided by financing activities of $39.8 million for the three months ended June 30, 2022 primarily reflects net film related and other obligations borrowings of $370.3 million, offset by net debt repayments of $196.7 million due to the April 2022 voluntary prepayment of the entire outstanding principal amount of $193.6 million of the Term Loan A due March 22, 2023 and required repayments on the Term Loan B.
−Removed: In addition, other financing activities in the three months ended June 30, 2022 includes $134.5 million for interest rate swap settlement payments due to a financing component on a portion of our interest rate swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million) (see discussion above in Operating Activities , and Note 15 to our unaudited condensed consolidated financial statements).
+Added: Net Cash Flows Provided By (Used In) Financing Activities $ (341.9) $ 395.9
+Added: Cash flows used in financing activities of $341.9 million for the six months ended September 30, 2023 compared to cash flows provided by financing activities of $395.9 million for the six months ended September 30, 2022.
+Added: Cash flows used in financing activities for the six months ended September 30, 2023 primarily reflects net film related obligations repayments of $229.3 million due to net repayments under production loans and the Production Tax Credit Facility of $168.9 million and net repayments under the Backlog Facility, IP Credit Facility and other of $60.4 million, and net debt repayments and repurchases of $81.0 million.
+Added: In addition, other financing activities in the six months ended September 30, 2023 includes tax withholding required on equity awards of $30.7 million.
+Added: Net debt repayments and repurchases of $81.0 million in the six months ended September 30, 2023 included the below transaction, along with required repayments on our term loans:
+Added: • During the six months ended September 30, 2023, we repurchased $85.0 million principal amount of the 5.500% Senior Notes for $61.4 million.
+Added: Cash flows provided by financing activities of $395.9 million for the six months ended September 30, 2022 primarily reflects net film related and other obligations borrowings of $765.7 million due to net borrowings under production loans and the Production Tax Credit Facility of $411.4 million and increased net borrowings under the Backlog Facility, IP Credit Facility and Distribution Loans of $354.3 million, offset by net debt repayments of $220.0 million.
+Added: Net debt repayments and repurchases of $220.0 million in the six months ended September 30, 2022 included the below transactions, along with required repayments on our term loans:
+Added: • In April 2022, we voluntarily prepaid the entire outstanding principal amount of the Term Loan A due March 22, 2023 of $193.6 million.
+Added: • During the six months ended September 30, 2022, we repurchased $18.7 million principal amount of the 5.500% Senior Notes for $14.6 million.
+Added: In addition, other financing activities in the six months ended September 30, 2022 includes $134.5 million for interest rate swap settlement payments due to a financing component on a portion of our interest rate swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million) (see discussion above in Operating Activities , and Note 17 to our unaudited condensed consolidated financial statements).
Other financing activities also includes tax withholding required on equity awards of $16.2 million.
1 unchanged sentence
Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog).
−Removed: As disclosed in Note 8 to our unaudited condensed consolidated financial statements, remaining performance obligations were $1.9 billion at June 30, 2023 (March 31, 2023 - $1.9 billion).
−Removed: The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.5 billion at June 30, 2023 (March 31, 2023 - $1.5 billion).
+Added: As disclosed in Note 10 to our unaudited condensed consolidated financial statements, remaining performance obligations were $1.8 billion at September 30, 2023 (March 31, 2023 - $1.9 billion).
+Added: The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.5 billion at September 30, 2023 (March 31, 2023 - $1.5 billion).
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.