What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-08 · 709 added, 241 removed, 677 unchanged (58% of the section changed)

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Motion Picture, Television Production, and Media Networks (see further discussion below).

Proposed Separation

In October 2024, we filed a joint proxy statement/prospectus on Form S-4 with the SEC relating to the implementation of a plan of arrangement that will result in the separation of the businesses of Lionsgate Studios Corp., of which we own approximately 87.8% and which encompasses our motion picture and television studio operations, from our other businesses, including the STARZ-branded premium subscription platform (the “Proposed Separation”).

The Proposed S eparation will be subject to the satisfaction of a number of conditions and our Board of Directors, together with the Board of Directors of Lionsgate Studios Corp., may decide not to proceed with the Proposed S eparation.

Additionally, the Proposed S eparation is complex in nature, and unanticipated developments or changes, including disruptions in general market conditions, changes in law or execution challenges may affect our ability to complete the Proposed S eparation on the terms and on the timeline we announced, or at all.

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

Business Combination

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Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the financial statements of Lionsgate Studios will represent a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing stock for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization.

Studio Business issuing stock for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization.

The historical net assets of SEAC were stated at fair value, which approximates historical cost, with no goodwill or other intangible assets recorded.

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During fiscal 2024, the Company continued executing its Media Networks restructuring plan, which included exiting all international territories except for Canada and India, and included an evaluation of the programming on Starz's domestic and international platforms.

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, 2024 and 2023 of $1.9 million and $28.0 million, respectively.

The Company has incurred impairment charges from the inception of the plan through June 30, 2024 amounting to $745.7 million.

Under the current restructuring plan and ongoing strategic content review, the net future cash outlay is estimated to range from approximately $50 million to $55 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.

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.

The Company has incurred impairment charges from the inception of the plan through September 30, 2024 amounting to $741.4 million.

During the three and six months ended September 30, 2024, the Company recorded net recoveries of content impairment charges related to the Media Networks segment of $4.3 million and $2.4 million, respectively (three and six months ended September 30, 2023 - content impairment charges of $211.6 million and $239.5 million, respectively).

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.

Accordingly, the Company may incur additional content impairment and other restructuring charges beyond the estimates above.

Accordingly, the Company may incur additional content impairment and other restructuring charges.

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.

countries individually comprised greater than 10% of total revenues for the three months ended June 30, 2024 and 2023.

countries individually comprised greater than 10% of total revenues for the three and six months ended September 30, 2024 and 2023.

Studio Business

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Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television and syndication) of scripted and unscripted series, television movies, mini-series and non-fiction programming.

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

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

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

• International.

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and Canada multichannel video programming distributors (“MVPDs”) including cable operators, satellite television providers and telecommunications companies (collectively, “Distributors”).

Other revenues are primarily derived from OTT distribution of the STARZ branded premium subscription video services outside of the U.S.

Other revenues are primarily derived from OTT distribution of the Starz subscription video services outside of the U.S.

The Starz Networks platforms together with the Other platforms are referred to as the "Starz Platforms".

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As a result of the Media Networks restructuring initiatives discussed in "Item 2.

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 months ended June 30, 2024 of $1.9 million, which are included in restructuring and other in the

unaudited condensed consolidated statement of operations (three months ended June 30, 2023 - $28.0 million) (see Note 3 and Note 14 to our unaudited condensed consolidated financial statements).

We have incurred impairment charges from the inception of the plan through June 30, 2024 amounting to $745.7 million.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview", we have incurred impairment charges from the inception of the plan through September 30, 2024 amounting to $741.4 million.

During the three and six months ended September 30, 2024, we

recorded net recoveries of content impairment charges related to the Media Networks segment of $4.3 million and $2.4 million, respectively, which are included in restructuring and other in the unaudited condensed consolidated statement of operations (three and six months ended September 30, 2023 - content impairment charges of $211.6 million and $239.5 million, respectively) (see Note 3 and Note 14 to our unaudited condensed consolidated financial statements).

Valuation Assumptions.

The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 8 to our unaudited condensed consolidated financial statements).

The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program or film group.

Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.

Revenue Recognition.

Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.

Our Media Networks segment generates revenue primarily from the distribution of our STARZ premium subscription video services.

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Digital media revenue sharing arrangements are recognized as sales or usage based royalties.

Revenue from the sale of physical discs (DVDs, Blu-ray or 4K Ultra HD), referred to as "Packaged Media", in the retail market, net of an allowance for estimated returns and other allowances, is recognized on the later of receipt by the customer or “street date” (when it is available for sale by the customer).

Revenue from commissions are recognized as such services are provided.

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Media Networks fixed fee or minimum guarantee programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor.

Subscribers through the Starz App are billed in advance of the start of their monthly or annual membership

and revenues are recognized ratably over each applicable membership period.

Subscribers through the Starz App are billed in advance of the start of their monthly or annual membership and revenues are recognized ratably over each applicable membership period.

Payments to distributors for marketing support costs for which Starz receives a discrete benefit are recorded as distribution and marketing costs, and payments to distributors for which Starz receives no discrete benefit are recorded as a reduction of revenue.

At June 30, 2024, the carrying value of goodwill was $812.1 million.

At September 30, 2024, the carrying value of goodwill was $806.5 million.

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.

Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at June 30, 2024, were Motion Picture (goodwill of $395 million), Media Networks (no remaining goodwill balance), and our Television (goodwill of $324 million) and Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.

Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at September 30, 2024, were Motion Picture (goodwill of $396 million), Media Networks (no remaining goodwill balance), and our Television (goodwill of $317 million) and Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.

Goodwill is not amortized but is 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 is less than its carrying value.

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Goodwill Impairment Assessments:

During the three and six months ended September 30, 2024, there were no events or circumstances that have changed that would indicate that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value.

For our annual goodwill impairment test for fiscal 2024, we performed qualitative goodwill impairment assessments for our reporting units with a remaining goodwill balance (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment).

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 date of the most recent quantitative assessment performed over these reporting units, 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;

Our qualitative assessments 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 date of the most recent quantitative assessment performed over these reporting units, 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;

therefore, a quantitative goodwill impairment analysis was not required for these reporting units.

During the three months ended June 30, 2024, there were no events or circumstances that have changed that would indicate that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value.

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.

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consumer consumption levels of our content;

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 future bank failures;

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 future bank failures;

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

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the duration and potential impact of strikes of unions on our ability to produce, acquire and distribute our content;

the commercial success of our television programming and motion pictures;

the commercial success of our television

programming and motion pictures;

our continual contractual relationships with our customers;

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Finite-Lived Intangible Assets.

At June 30, 2024, the carrying value of our finite-lived intangible assets was $954.0 million.

At September 30, 2024, the carrying value of our finite-lived intangible assets was $916.5 million.

Our finite-lived intangible assets primarily relate to customer relationships associated with U.S.

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Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required.

During the quarter ended June 30, 2024, there were no events or circumstances that would indicate that the carrying amount of our finite-lived intangible assets may not be recoverable.

During the three and six months ended September 30, 2024, 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.

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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, 2024, we had

a valuation allowance of $808.3 million against certain U.S.

As of March 31, 2024, we had a valuation allowance of $808.3 million against certain U.S.

and foreign deferred tax assets that may not be realized on a more likely than not basis.

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.

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.

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.

As the year progresses, we refine the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results.

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RESULTS OF OPERATIONS

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the three months ended June 30, 2024 and 2023.

Due to the acquisition of eOne, the three months ended June 30, 2024 includes the results of operations of eOne (acquired December 27, 2023), see Note 2 to our unaudited condensed consolidated financial statements for further details.

The following table sets forth our consolidated results of operations for the three months ended September 30, 2024 and 2023.

Due to the acquisition of eOne, the three months ended September 30, 2024 includes the results of operations of eOne (acquired December 27, 2023), see Note 2 to our unaudited condensed consolidated financial statements for further details.

Three Months Ended

June 30, Change

September 30, Change

2024 2023 Amount Percent

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Restructuring and other 6.1 222.1 (216.0) (97.3) %

Goodwill and intangible asset impairment — 663.9 (663.9) (100.0) %

Total expenses 1,037.2 1,833.0 (795.8) (43.4) %

Operating income (loss) 18.8 (16.8) 35.6 (211.9) %

Operating loss (88.6) (817.5) 728.9 nm

Interest expense (74.3) (63.8) (10.5) 16.5 %

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Other expense (15.7) (11.5) (4.2) 36.5 %

Gain (loss) on extinguishment of debt (5.9) 21.2 (27.1) (127.8) %

Equity interests income (loss) 0.9 (0.3) 1.2 nm

Loss before income taxes (53.0) (61.7) 8.7 (14.1) %

Income tax provision (10.1) (9.8) (0.3) 3.1 %

Net loss (63.1) (71.5) 8.4 (11.7) %

Net loss attributable to noncontrolling interest 3.7 0.8 2.9 362.5 %

Loss on extinguishment of debt (0.5) — (0.5) n/a

Loss on investments, net — (1.6) 1.6 (100.0) %

Equity interests income (loss) (0.1) 1.8 (1.9) n/a

Loss before income taxes (175.9) (889.9) 714.0 nm

Income tax benefit (provision) (1.9) 2.0 (3.9) (195.0) %

Net loss (177.8) (887.9) 710.1 nm

Net loss attributable to noncontrolling interest 14.5 1.7 12.8 nm

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ (59.4) $ (70.7) $ 11.3 (16.0) %

shareholders $ (163.3) $ (886.2) $ 722.9 nm

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Consolidated revenues decreased $73.9 million in the three months ended June 30, 2024 reflecting a decrease of $36.6 million from our Studio Business, a decrease of $31.0 million from our Media Networks business, and higher intersegment eliminations of $6.3 million.

Studio Business revenues for the three months ended June 30, 2024 included approximately $101.6 million of revenues from eOne (acquired December 27, 2023, therefore the three months ended June 30, 2023 included no comparable revenues).

Consolidated revenues decreased $66.9 million in the three months ended September 30, 2024 reflecting a decrease of $69.6 million from our Media Networks business and increased intersegment eliminations of $31.2 million, partially offset by an increase of $33.9 million from our Studio Business.

Studio Business revenues for the three months ended September 30, 2024 included approximately $126.7 million of revenues from eOne (acquired December 27, 2023, therefore the three months ended September 30, 2023 included no comparable revenues).

Intersegment eliminations relate to the licensing of product from our Studio Business to the Media Networks segment.

Motion Picture revenue decreased $59.2 million due to lower theatrical, home entertainment and international revenue, primarily due to revenue in the prior year's quarter from John Wick:

Chapter 4 , partially offset by increased television revenue.

Motion Picture revenues for the three months ended June 30, 2024 included approximately $25.1 million of revenues from eOne.

Motion Picture revenue included $64.2 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $47.7 million from the three months ended June 30, 2023.

Television Production revenue increased $22.6 million due to increased domestic television, international, and home entertainment digital revenue.

Television Production revenues for the three months ended June 30, 2024 included approximately $76.5 million of revenues from eOne.

Television Production revenue included $39.6 million of revenue from licensing Television Production segment product to our Media Networks segment, representing a decrease of $41.4 million from the three months ended June 30, 2023.

The increase in intersegment eliminations of $6.3 million is primarily associated with higher Motion Picture intersegment revenues of $47.7 million reflecting the licensing of certain recent theatrical releases to Starz, partially offset by lower Television Production intersegment revenues of $41.4 million for licenses of original series to the Starz Platforms.

Media Networks revenue decreased $31.0 million, and reflected decreases in international revenue of $34.7 million due to exiting additional international territories, partially offset by an increase of $3.7 million at Starz Networks.

Motion Picture revenue increased $11.2 million due to increased international revenue driven by Borderlands and the multi-platform release, The Killer's Game , partially offset by lower theatrical, and home entertainment revenue.

Motion Picture revenues for the three months ended September 30, 2024 included approximately $15.6 million of revenues from eOne.

Motion Picture revenue included $72.1 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $11.6 million from the three months ended September 30, 2023.

Television Production revenue increased $22.7 million due to the inclusion of revenue from eOne of approximately $111.1 million, offset by lower home entertainment digital and international revenue.

Television Production revenue included $149.9 million of revenue from licensing Television Production segment product to our Media Networks segment, representing an increase of $19.6 million from the three months ended September 30, 2023.

The increase in intersegment eliminations of $31.2 million is primarily associated with higher Television Production revenues of $19.6 million, for licenses of original series to the Starz Platforms, and higher Motion Picture revenues of $11.6 million reflecting the licensing of certain recent theatrical releases to Starz, both in the Media Networks segment as discussed above.

Media Networks revenue decreased $69.6 million and reflected decreases in international revenue of $68.6 million due to the exiting of the majority of international territories, and a decrease at Starz Networks of $1.0 million.

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

Direct Operating Expenses.

Direct operating expenses by segment were as follows for the three months ended June 30, 2024 and 2023:

Direct operating expenses by segment were as follows for the three months ended September 30, 2024 and 2023:

Three Months Ended

September 30,

2024 2023 Change

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Direct operating expenses decreased in the three months ended June 30, 2024, due to lower direct operating expenses of our Media Networks segment and Studio Business, and higher intersegment eliminations.

The decrease in Media Networks direct operating expense was driven by decreases at Starz Networks of $15.0 million due to lower programming cost amortization, and decreases of $25.2 million due to the territories exited, or to be exited.

The decrease at the Studio Business reflects lower direct operating expenses of the Motion Picture segment due to lower Motion Picture revenues, partially offset by higher direct operating expenses of the Television Production segment due to increased revenues from Television Production.

The increase in intersegment eliminations is due to higher Motion Picture revenue from licenses of original series to the Starz Platforms, as discussed above.

Direct operating expenses increased in the three months ended September 30, 2024 due to higher direct operating expenses for our Studio Business, partially offset by lower direct operating expenses for the Media Networks segment, and higher intersegment eliminations.

The increase at the Studio Business reflects higher direct operating expenses of the Television Production segment associated with higher Television Production revenues, and higher direct operating expenses as a percentage of revenue of the Motion Picture segment driven by the performance and costs of the titles released in the quarter, in particular, Borderlands, which resulted in higher direct operating cost in relation to revenue.

The decrease in Media Networks direct operating expense was driven by decreases of $36.7 million due to the territories exited, partially offset by an increase at Starz Networks of $21.2 million due to higher programming cost amortization.

The increase in intersegment eliminations is due

to increased Television Production revenue from licenses of original series to the Starz Platforms, and increased Motion Picture revenue from licenses of recent theatrical releases to the Starz Platforms, as discussed above.

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

Other direct operating expense in the three months ended June 30, 2024 includes rent cost for production facilities that were unutilized as a result of the industry strikes amounting to $5.2 million, which was not allocated to the segments, and is included in direct operating expense.

In addition, other direct operating expense in the three months ended June 30, 2024 and 2023 includes share-based compensation, and COVID related charges, if any, net of insurance recoveries.

Other direct operating expense in the three months ended September 30, 2024 includes rent cost for production facilities that were unutilized as a result of the industry strikes amounting to $5.2 million, which was not allocated to the segments, and is included in direct operating expense.

In addition, other direct operating expense in the three months ended September 30, 2024 and 2023 includes share-based compensation.

Distribution and Marketing Expenses.

Distribution and marketing expenses by segment were as follows for the three months ended June 30, 2024 and 2023:

Distribution and marketing expenses by segment were as follows for the three months ended September 30, 2024 and 2023:

Three Months Ended

June 30, Change

September 30, Change

2024 2023 Amount Percent

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Other 0.2 0.3 (0.1) (33.3) %

Intersegment eliminations (0.1) (2.2) 2.1 nm

Intersegment eliminations (0.4) (0.4) — n/a

$ 232.9 $ 221.7 $ 11.2 5.1 %

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Distribution and marketing expenses decreased in the three months ended June 30, 2024, due to lower Studio Business and Media Networks distribution and marketing expense.

The decrease at the Studio Business primarily reflects lower Motion Picture theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current quarter.

The decrease in Media Networks distribution and marketing expense was due to a decrease of $11.4 million primarily from the international territories exited, partially offset by an increase at Starz Networks of $0.3 million.

Distribution and marketing expenses increased in the three months ended September 30, 2024, due to higher Studio Business distribution and marketing expense, partially offset by lower Media Networks distribution and marketing expense.

The increase at the Studio Business primarily reflects higher Motion Picture theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current quarter.

The decrease in Media Networks distribution and marketing expense was due to a decrease of $10.9 million primarily from the international territories exited, and a decrease at Starz Networks of $4.3 million.

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

General and Administrative Expenses.

General and administrative expenses by segment were as follows for the three months ended June 30, 2024 and 2023:

General and administrative expenses by segment were as follows for the three months ended September 30, 2024 and 2023:

Three Months Ended

June 30, Change

September 30, Change

2024 % of Revenues 2023 % of Revenues Amount Percent

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Total general and administrative expenses $ 109.5 11.5% $ 123.6 12.2% $ (14.1) (11.4) %

General and administrative expenses decreased in the three months ended June 30, 2024, resulting from decreased purchase accounting and related adjustments and Media Networks general and administrative expenses, partially offset by increased Studio Business and corporate general and administrative expenses and share-based compensation expense.

Studio Business general and administrative expenses for the three months ended June 30, 2024 included approximately $7.0 million from eOne.

General and administrative expenses decreased in the three months ended September 30, 2024, resulting from decreased share-based compensation expense, corporate and Studio Business general and administrative expense, and purchase accounting and related adjustments, partially offset by increased Media Networks general and administrative expenses.

Studio Business general and administrative expenses for the three months ended September 30, 2024 included approximately $6.0 million from eOne.

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

Corporate general and administrative expenses increased $2.9 million, or 9.5%, primarily due to approximately $3.0 million of corporate general and administrative expenses from eOne.

The increase in share-based compensation expense included in general and administrative expense in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 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

Corporate general and administrative expenses decreased $4.7 million, or 14.3%, primarily due to a decrease in incentive based compensation, partially offset by an increase in professional fees and approximately $3.0 million of corporate general and administrative expenses from eOne.

The decrease in share-based compensation expense included in general and administrative expense in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 is primarily due to lower fair values in

the current 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.

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Three Months Ended

September 30,

(Amounts in millions)

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(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.

Purchase accounting and related adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, and the non-cash charges for the accretion of the noncontrolling interest discount and the amortization of the recoupable portion of the purchase price related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense.

Purchase accounting and related adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, and the non-cash charge for the amortization of the recoupable portion of the purchase price related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense.

The noncontrolling equity interests in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the unaudited condensed consolidated statement of operations due to the relationship to continued employment.

Purchase accounting and related adjustments decreased $7.9 million, or 79.0%, primarily due to lower noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment of $6.6 million associated with a lower noncontrolling interest ownership percentage as a result of our acquisition of an additional interest in 3 Arts Entertainment (see Note 9 to our unaudited condensed consolidated financial statements).

In addition, purchase accounting and related adjustments decreased due to lower amortization of the recoupable portion of the purchase price of 3 Arts Entertainment of $1.3 million, due to the amortization period ending in May 2023.

Purchase accounting and related adjustments decreased $0.5 million, or 22.7%, primarily due to lower noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment of $0.5

million associated with a lower noncontrolling interest ownership percentage as a result of our acquisition of an additional interest in 3 Arts Entertainment (see Note 9 to our unaudited condensed consolidated financial statements).

Depreciation and Amortization Expense.

Depreciation and amortization of $46.1 million for the three months ended June 30, 2024 increased $1.7 million from $44.4 million in the three months ended June 30, 2023 due to increased amortization of intangible assets.

Depreciation and amortization of $45.5 million in the three months ended September 30, 2024 increased $0.9 million from $44.6 million in the three months ended September 30, 2023 due to increased amortization of intangible assets.

Restructuring and Other.

Restructuring and other decreased $9.5 million in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, and includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable.

Restructuring and other costs were as follows for the three months ended June 30, 2024 and 2023 (see Note 14 to our unaudited condensed consolidated financial statements):

Restructuring and other decreased $216.0 million in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, and includes restructuring and severance costs and certain transaction and other costs, when applicable.

Restructuring and other costs were as follows for the three months ended September 30, 2024 and 2023 (see Note 14 to our unaudited condensed consolidated financial statements):

Three Months Ended

June 30, Change

September 30, Increase (Decrease)

2024 2023 Amount Percent

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Severance (2)

Cash 3.1 4.3 (1.2) (27.9) %

Accelerated vesting on equity awards (see Note 12 to our unaudited condensed consolidated financial statements)

1.8 5.8 (4.0) (69.0) %

Total severance costs 3.1 4.8 (1.7) (35.4) %

Transaction and other costs (3)

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(1) Media Networks Restructuring:

As a result of the Media Networks restructuring initiatives discussed in "Item 2.

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 June 30, 2024 of $1.9 million (three months ended June 30, 2023 - $28.0 million).

As discussed in "Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" , the Company recorded net recoveries of content impairment charges related to the Media Networks segment in the three months ended September 30, 2024 of $4.3 million (three months ended September 30, 2023 - content impairment charges of $211.6 million).

See Note 14 to our unaudited condensed consolidated financial statements.

Other Impairments:

Amounts in the three months ended June 30, 2024 also include impairments of certain operating lease right-of-use and leasehold improvement assets related to the Television Production segment amounting to $18.0 million associated with facility leases that will no longer be utilized by the Company primarily related to the integration of eOne.

Amounts in the three months ended September 30, 2024 also include impairments of certain operating lease right-of-use and leasehold improvement assets related to the Television Production segment associated with facility leases that will no longer be utilized by the Company.

(2) Severance costs were primarily related to restructuring, acquisition integration activities and other cost-saving initiatives.

(3) Transaction and other costs in the three months ended June 30, 2024 and 2023 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with legal and other matters.

In the three months ended June 30, 2024 and 2023, transaction and other costs also includes a benefit of $7.1 million and $3.8 million, respectively, associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the Starz international restructuring.

(3) Transaction and other costs in the three months ended September 30, 2024 and 2023 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with legal and other matters.

Goodwill and Intangible Asset Impairment.

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.

There was no comparable charge in the three months ended September 30, 2024.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates", Goodwill and Note 5 to our unaudited condensed consolidated financial statements for further information.

Interest Expense.

Interest expense of $68.8 million in the three months ended June 30, 2024 increased $6.8 million from the three months ended June 30, 2023 due to higher average interest rates and balances on variable rate corporate debt and film related obligations, partially offset by a slightly larger benefit from the interest rate swaps.

The following table sets forth the components of interest expense for the three months ended June 30, 2024 and 2023:

Interest expense of $74.3 million for the three months ended September 30, 2024 increased $10.5 million from the three months ended September 30, 2023 due to higher average interest rates and balances on variable rate corporate debt and film related obligations, partially offset by a slightly larger benefit from the interest rate swaps.

The following table sets forth the components of interest expense for the three months ended September 30, 2024 and 2023:

Three Months Ended

September 30,

(Amounts in millions)

3 unchanged sentences

Senior Notes 9.8 9.8

IP credit facilities (1)

Amortization of debt issuance costs and other non-cash interest (3)

1 unchanged sentence

_______________________

(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).

(1) IP credit facilities interest expense includes interest expense associated with the eOne IP Credit Facility and LG IP Credit Facility.

(2) Other interest expense includes payments associated with certain film related obligations (Production Tax Credit Facility, Film Library 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).

(3) 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.

Interest and other income of $5.1 million for the three months ended June 30, 2024 increased as compared to interest and other income of $1.9 million for the three months ended June 30, 2023 due to higher interest income.

Interest and other income of $3.3 million for the three months ended September 30, 2024 increased as compared to interest and other income of $2.7 million for the three months ended September 30, 2023 due to higher interest income.

Other Expense.

Other expense of $3.1 million for the three months ended June 30, 2024 decreased as compared to other expense of $5.7 million for the three months ended June 30, 2023, and primarily represented the loss recorded related to our monetization of accounts receivable programs (see Note 18 to our unaudited condensed consolidated financial statements).

Gain (Loss) on Extinguishment of Debt.

Loss on extinguishment of debt of $5.9 million for the three months ended June 30, 2024 related to the write-off of debt issuance costs associated with the voluntary prepayment of $84.9 million principal amount of the Term Loan A and $214.1 million of the Term Loan B, and the 5.5% Senior Notes exchange.

In the three months ended June 30, 2023, the gain on extinguishment of debt of $21.2 million represented a gain associated with the repurchase of $85.0 million principal amount of 5.5% Senior Notes at a discount.

Other expense of $15.7 million for the three months ended September 30, 2024 increased as compared to other expense of $11.5 million for the three months ended September 30, 2023.

The increase is primarily due to realized and unrealized foreign currency losses in the three months ended September 30, 2024, offset by a decrease in the loss recorded related to our monetization of accounts receivable programs in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 (see Note 18 to our unaudited condensed consolidated financial statements).

Loss on Extinguishment of Debt.

Loss on extinguishment of debt of $0.5 million in the three months ended September 30, 2024 related to the write-off of debt issuance costs associated with the voluntary prepayment of $355.1 million principal amount of the Term Loan B.

There was no comparable loss on extinguishment of debt in the three months ended September 30, 2023.

See Note 6 to our unaudited condensed consolidated financial statements.

Loss on Investments, net.

Loss on investments, net was nil for the three months ended September 30, 2024, as compared to $1.6 million for the three months ended September 30, 2023 related to other investments.

Equity Interests Income (Loss).

Equity interests income of $0.9 million in the three months ended June 30, 2024 compared to equity interests loss of $0.3 million in the three months ended June 30, 2023 due to higher income generated by our equity method investees.

Income Tax Provision.

We had an income tax provision of $10.1 million in the three months ended June 30, 2024, compared to an income tax provision of $9.8 million in the three months ended June 30, 2023.

Equity interests loss of $0.1 million in the three months ended September 30, 2024 compared to equity interests income of $1.8 million in the three months ended September 30, 2023 due to lower income generated by our equity method investees.

Income Tax Benefit (Provision).

We had an income tax provision of $1.9 million in the three months ended September 30, 2024, compared to an income tax benefit of $2.0 million in the three months ended September 30, 2023.

Our income tax provision differs from the U.S.

federal statutory income tax rate of 21% multiplied by income (loss) before taxes due to the mix of our earnings across the various jurisdictions in which our operations are conducted, changes in valuation allowances against our deferred tax assets, and certain minimum income and foreign withholding taxes.

Our income tax provision for the three months ended June 30, 2024 and 2023 also benefited from the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

Our income tax provision for the three months ended June 30, 2024 was also impacted by additional deferred tax expense as result of the Separation that occurred during the quarter.

Net Loss Attributable to Lions Gate Entertainment Corp.

Our income tax provision for the three months ended September 30, 2024 and 2023 was also impacted by charges for interest on uncertain tax benefits.

Net Income (Loss) Attributable to Lions Gate Entertainment Corp.

Shareholders.

Net loss attributable to our shareholders for the three months ended June 30, 2024 was $59.4 million, or basic and diluted net loss per common share of $0.25 on 235.6 million weighted average common shares outstanding.

This compares to net loss attributable to our shareholders for the three months ended June 30, 2023 of $70.7 million, or basic and diluted net loss per common share of $0.31 on 230.2 million weighted average common shares outstanding.

Net loss attributable to our shareholders for the three months ended September 30, 2024 was $163.3 million, or basic and diluted net loss per common share of $0.68 on 239.3 million weighted average common shares outstanding.

This compares to net loss attributable to our

shareholders for the three months ended September 30, 2023 of $886.2 million, or basic and diluted net loss per common share of $3.79 on 234.0 million weighted average common shares outstanding.

Segment Results of Operations and Non-GAAP Measures

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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.

The following table reconciles the GAAP measure, operating loss, to the non-GAAP measure, total segment profit, for the three months ended June 30, 2024 and 2023.

The following table reconciles the GAAP measure, operating loss, to the non-GAAP measure, total segment profit, for the three months ended September 30, 2024 and 2023.

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

June 30, Change

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Operating loss $ 18.8 $ (16.8) $ 35.6 (211.9) %

Operating loss $ (88.6) $ (817.5) $ 728.9 nm

Corporate general and administrative expenses 28.1 32.8 (4.7) (14.3) %

Goodwill and intangible asset impairment — 663.9 (663.9) (100.0) %

Adjusted depreciation and amortization 8.2 9.9 (1.7) (17.2) %

Restructuring and other 6.1 222.1 (216.0) (97.3) %

COVID-19 related charges (benefit) (3.1) 0.2 (3.3) nm

COVID-19 related charges (benefit) — (0.6) 0.6 (100.0) %

Unallocated rent cost included in direct operating expense 5.2 — 5.2 n/a

8 unchanged sentences

Three Months Ended

June 30, Change

September 30, Change

2024 2023 Amount Percent

18 unchanged sentences

Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the three months ended June 30, 2024 and 2023:

The table below sets forth Motion Picture gross contribution and segment profit for the three months ended September 30, 2024 and 2023:

Three Months Ended

June 30, Change

September 30, Change

2024 2023 Amount Percent

10 unchanged sentences

Gross contribution as a percentage of revenue 6.2 % 23.8 %

The table below sets forth Motion Picture revenue by media and product category for the three months ended June 30, 2024 and 2023.

Motion Picture revenues for the three months ended June 30, 2024 included approximately 25.1 million of revenues from eOne.

Three Months Ended June 30,

The table below sets forth Motion Picture revenue by media and product category for the three months ended September 30, 2024 and 2023.

Motion Picture revenues for the three months ended September 30, 2024 included approximately $15.6 million of revenues from eOne.

Three Months Ended September 30,

2024 2023 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.

Theatrical revenue decreased $29.9 million in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 due to a decrease of $29.8 million from Lionsgate Original Releases due to revenue in the prior year's quarter from the fiscal 2023 theatrical slate release, John Wick:

Chapter 4, partially offset by revenue from the release of The Strangers:

Chapter 1 in the current quarter.

Home entertainment revenue decreased $50.7 million, or 25.4%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, due to lower digital media revenue of $34.0 million and lower packaged media revenue of $16.7 million primarily due to decreases from Lionsgate Original Releases.

Digital media revenue and packaged media revenue from Lionsgate Original Releases declined $30.9 million and $14.2 million, respectively, due to revenue in the prior year's quarter from John Wick:

Chapter 4, partially offset by revenue in the current quarter from The Ministry of Ungentlemanly Warfare.

Television revenue increased $39.5 million, or 81.4%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 due to an increase from Lionsgate Original Releases of $40.1 million due to a greater number of television windows opening in the current quarter for our theatrical slate titles, and higher revenue recognized for those titles, and in particular, The Hunger Games:

The Ballad of Songbirds & Snakes, partially offset by a decrease from Other Film of $0.6 million.

International revenue decreased $12.7 million, or 15.7%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 due to a decrease from Lionsgate Original Releases of $25.9 million driven by revenue in the prior year's quarter for John Wick:

Chapter 4 , partially offset by an increase from Other Film of $13.2 million from our acquired library titles.

Theatrical revenue decreased $8.1 million in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due to a decrease of $9.0 million from Lionsgate Original Releases due to greater revenue generated from the fiscal 2024 theatrical slate titles in the prior year as compared to the fiscal 2025 theatrical slate titles in the current year.

Home entertainment revenue decreased $54.8 million, or 30.1%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, due to lower digital media revenue of $51.2 million primarily due to decreases from Lionsgate Original Releases.

Digital media revenue from Lionsgate Original Releases declined $43.0 million due to digital media revenue in the prior year's quarter from our fiscal 2023 and prior theatrical slate titles, and in particular, John Wick:

Chapter 4 and Jesus Revolution, which compared to lower revenue in the current quarter from our fiscal 2024 and prior theatrical slate titles.

The decrease in digital media revenue was also due to a decrease from Other Film of $8.2 million from our acquired library titles.

Television revenue increased $7.9 million, or 7.8%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, due to an increase from Lionsgate Original Releases of $6.4 million due to a greater number of television windows opening in the current quarter for our theatrical slate titles.

International revenue increased $68.3 million, or 85.7%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 due to an increase from Lionsgate Original Releases of $63.5 million driven by higher revenue generated from our fiscal 2025 theatrical slate, and in particular, Borderlands, as compared to our fiscal 2024 theatrical slate, and increased revenue from multi-platform releases, and in particular, The Killer's Game.

In addition, the increase in international revenue was also due to an increase from Other Film of $4.8 million from our acquired library titles.

Direct Operating Expense.

The decrease in direct operating expenses is due to lower motion picture revenue in the current quarter.

Direct operating expenses as a percentage of motion picture revenue decreased slightly from the prior year's quarter and 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.

Investment in film write-downs included in Motion Picture segment direct operating expense increased to $0.3 million in the three months ended June 30, 2024, as compared to $0.2 million in the three months ended June 30, 2023.

The increase in direct operating expenses is due to greater direct operating expenses as a percentage of motion picture revenue as compared to the prior year's quarter, driven by the change in the mix of titles and product categories generating revenue.

In particular, the increase was driven by the performance and cost of the titles released in the quarter, including Borderlands , which had a higher amortization rate as compared to the titles released in the prior year's quarter.

Investment in film write-downs included in Motion Picture segment direct operating expense were $18.3 million in the three months ended September 30, 2024, compared to approximately $26.8 million in the three months ended September 30, 2023.

Distribution and Marketing Expense.

The decrease in distribution and marketing expense in the three months ended June 30, 2024 is due to lower theatrical P&A and Premium VOD expense due to lower expense associated with the theatrical slate releases in the current quarter.

In the three months ended June 30, 2024 approximately $15.1 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $20.9 million in the three months ended June 30, 2023 in the Motion Picture segment.

The increase in distribution and marketing expense in the three months ended September 30, 2024 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.

In the three months ended September 30, 2024, approximately $15.4 million of theatrical P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $15.2 million in the prior year's quarter in the Motion Picture segment.

Gross Contribution.

Gross contribution of the Motion Picture segment for the three months ended June 30, 2024 increased as compared to the three months ended June 30, 2023 due to lower Motion Picture distribution and marketing expense and direct operating expense, partially offset by lower Motion Picture revenue.

Gross contribution of the Motion Picture segment for the three months ended September 30, 2024 decreased as compared to the three months ended September 30, 2023, due to the negative contribution of the theatrical slate titles released in the quarter, including Borderlands , as a result of higher direct operating expense as a percentage of revenue, and higher theatrical P&A and Premium VOD expense.

These decreases in gross contribution were partially offset by increased Motion Picture revenue.

General and Administrative Expense.

General and administrative expenses of the Motion Picture segment in the three months ended June 30, 2024 decreased $0.9 million, or 3.1%, primarily due to a decrease in professional fees.

General and administrative expenses of the Motion Picture segment decreased $3.9 million, or 14.6% primarily due to a decrease in incentive based compensation.

Television Production

The table below sets forth Television Production gross contribution and segment profit for the three months ended June 30, 2024 and 2023:

The table below sets forth Television Production gross contribution and segment profit for the three months ended September 30, 2024 and 2023:

Three Months Ended

June 30, Change

September 30, Change

2024 2023 Amount Percent

9 unchanged sentences

Gross contribution as a percentage of revenue 9.9 % 19.7 %

The table below sets forth Television Production revenue and changes in revenue by media for the three months ended June 30, 2024 and 2023.

Television Production revenues for the three months ended June 30, 2024 included approximately $76.5 million of revenues from eOne.

The table below sets forth Television Production revenue and changes in revenue by media for the three months ended September 30, 2024 and 2023.

Television Production revenues for the three months ended September 30, 2024 included approximately $111.1 million of revenues from eOne.

Three Months Ended

June 30, Increase (Decrease)

September 30, Change

2024 2023 Amount Percent

Television Production (Amounts in millions)

(Amounts in millions)

Television Production Revenue

Television $ 313.1 $ 221.8 $ 91.3 41.2 %

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

Domestic television revenue increased in the three months ended June 30, 2024 due to an increase of approximately $66.3 million for revenues from eOne in the current quarter, partially offset by a decrease of $30.0 million from intersegment revenues from the licensing of fewer Starz original series to Starz Networks and a decrease from reality television programs.

International revenue in the three months ended June 30, 2024 increased $3.6 million, or 11.3% as compared to the three months ended June 30, 2023 due to an increase of approximately $5.4 million for revenues from eOne in the current quarter.

Home entertainment revenue in the three months ended June 30, 2024 increased $7.6 million, or 62.3% as compared to the three months ended June 30, 2023 due to increased third-party digital media revenues.

Other revenue in the three months ended June 30, 2024 decreased $1.2 million, or 4.9% from the three months ended June 30, 2023, and primarily reflects revenue of 3 Arts Entertainment, which is generated from commissions and executive producer fees earned related to talent management.

Domestic television revenue increased in the three months ended September 30, 2024 due to an increase of approximately $91.3 million for revenues from eOne in the current quarter, and an increase of $27.1 million from intersegment revenues from the licensing of Starz original series to Starz Networks, partially offset by a decrease from reality television programs and other third-party domestic television revenue.

International revenue in the three months ended September 30, 2024 decreased $23.9 million, or 32.5%, as compared to the three months ended September 30, 2023 due to a decrease of $15.0 million from intersegment revenues from the licensing of Starz original series to Starz Networks, and lower third-party revenue of approximately $10.2 million.

Home entertainment revenue in the three months ended September 30, 2024 decreased $49.7 million due to decreased third-party digital media revenues, and in particular, digital media revenue in the prior year's quarter for The Continental, partially offset by increased intersegment revenues from the licensing of Starz original series to Starz Networks.

Other revenue increased $5.0 million in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, and primarily reflects revenue of 3 Arts Entertainment, which is generated from commissions and executive producer fees earned related to talent management.

Direct Operating Expense.

Direct operating expense of the Television Production segment in the three months ended June 30, 2024 increased $27.1 million, or 15.5% due to the increase in Television Production revenues.

Direct operating expenses as a percentage of television production revenue increased 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.

There were no investment in film and television programs write-downs included in Television Production segment direct operating expense in the three months ended June 30, 2024 and 2023.

Direct operating expense of the Television Production segment in the three months ended September 30, 2024 increased $59.3 million, or 19.3% due to the increase in Television Production revenues.

Direct operating expenses as a percentage of television production revenue increased primarily due to the mix of titles generating revenue in the current quarter as compared to the prior year's quarter, and in particular, the prior year's quarter included significant revenue from The Continental which has a lower amortization rate as compared to the current quarter.

Gross Contribution.

Gross contribution of the Television Production segment for the three months ended June 30, 2024 decreased as compared to the three months ended June 30, 2023, due to higher direct operating expenses as a percentage of television production revenue, partially offset by increased television production revenue.

Gross contribution of the Television Production segment for the three months ended September 30, 2024 decreased as compared to the three months ended September 30, 2023, due to lower television production revenue and higher direct operating expenses as a percentage of television production revenue.

General and Administrative Expense.

General and administrative expenses of the Television Production segment increased $2.7 million, or 18.9%.

Television Production general and administrative expenses for the three months ended June 30, 2024 included $6.0 million from eOne.

Television Production general and administrative expenses for the three months ended September 30, 2024 included $5.0 million from eOne.

Media Networks

The table below sets forth Media Networks gross contribution and segment profit for the three months ended June 30, 2024 and 2023:

The table below sets forth Media Networks gross contribution and segment profit for the three months ended September 30, 2024 and 2023.

As previously discussed in "Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview", beginning in fiscal 2023, the Company began a plan to restructure its Media Networks international business.

During fiscal 2024, the Company continued executing its restructuring plan which included exiting all international territories except Canada and India, which was completed in May 2024.

As a result, certain territories were exited beginning May 2023, with additional territories exited during fiscal 2024 and the first quarter of fiscal 2025 (the “Exited Territories”), therefore the results of operations for “Other” for the three months ended September 30, 2023 reflect amounts including the results of operations of the Exited Territories.

Three Months Ended

June 30, Change

September 30, Change

2024 2023 Amount Percent

9 unchanged sentences

Gross contribution as a percentage of revenue 14.6 % 21.5 %

_______________________

nm - Percentage not meaningful.

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

Three Months Ended Three Months Ended

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Starz Networks (North America) (1)

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(2) During the quarter ended June 30, 2024, the Company began reflecting the results of operations of Canada within Starz Networks.

Accordingly, the following amounts were reclassified from "Other" (formerly "LIONSGATE+") to Starz Networks in the three months ended June 30, 2023 to conform to the current period presentation:

Accordingly, the following amounts were reclassified from "Other" (formerly "LIONSGATE+") to Starz Networks in the three months ended September 30, 2023 to conform to the current period presentation:

(i) revenue of $4.2 million;

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Actual Pro Forma (1)

June 30, June 30, June 30, June 30,

September 30, September 30, September 30, September 30,

2024 2023 2024 2023

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(1) Starz North America represents subscribers for the U.S.

(2) Pro forma amounts exclude OTT subscribers for the international territories exited in Australia, Latin America and the U.K.

amounting to 1.59 million at June 30, 2023.

(2) Pro forma amounts exclude OTT subscribers for the Exited Territories amounting to 1.58 million at September 30, 2023.

(3) Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.

(4) OTT subscribers include subscribers of STARZPLAY Arabia, as presented above.

Media Networks revenue decreased $69.6 million and reflected lower Other revenue of $68.6 million and a decrease at Starz Networks of $1.0 million.

Starz Networks' revenue decreased $1.0 million primarily because of higher OTT revenue of $11.3 million resulting from price increases, offset by the continued decline in revenue from traditional linear services of $14.2 million.

Starz Networks initiated a price increase at the end of June 2023, which was implemented by its various partners throughout the quarter ended September 30, 2023.

An additional price increase was implemented by its partners beginning in September 2024.

The decrease in Other revenue was primarily the result of the exit from the Exited Territories of approximately $66.9 million.

During the three months ended September 30, 2024 and 2023, the following original series premiered on STARZ:

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023

Title Premiere Date Title Premiere Date

Serpent Queen Season 2

July 12, 2024 Minx Season 2

July 21, 2023

Power Book II:

Ghost Season 4 Part 2

September 6, 2024 Heels Season 2

July 28, 2023

Three Women Season 1

September 13, 2024 Men in Kilts Season 2

August 11, 2023

Power Book IV:

Force Season 2

July 28, 2023

Direct Operating and Distribution and Marketing Expenses .

Direct operating and distribution and marketing expenses primarily represent programming cost amortization and advertising and marketing costs, respectively.

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.

Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere.

In addition, the shutdown of the international service in the Exited Territories will result in a decrease in expenses going forward.

The decrease in Media Networks direct operating expenses in the three months ended September 30, 2024 is due to decreases in Other of $36.7 million primarily due to the exit from the Exited Territories, partially offset by increases at Starz Networks of $21.2 million.

The increase in Starz Networks direct operating expense was due primarily to an increase of $40.9 million related to theatrical releases under our programming output agreements, partially offset by lower programming cost amortization of $17.2 million related to our Starz Originals.

The decrease in Media Networks distribution and marketing expense is due to a decrease in Other of $10.9 million primarily from the exit from the Exited Territories, and a decrease of $4.3 million at Starz Networks.

Gross Contribution.

The decrease in gross contribution compared to the three months ended September 30, 2023 was due to lower gross contribution at Starz Networks of $17.9 million and from Other of $21.0 million, driven by higher Starz Networks direct operating expense and lower Other revenue, which was partially offset by lower Other direct operating expense and distribution and marketing expense, as described above.

General and Administrative Expense.

General and administrative expenses of the Media Networks segment in the three months ended September 30, 2024 increased from the prior year's quarter, due to increases of $4.1 million at Starz Networks, partially offset by decreases of $3.6 million from Other resulting from the exit from the Exited Territories.

Six Months Ended September 30, 2024 Compared to Six Months Ended September 30, 2023

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the six months ended September 30, 2024 and 2023.

Due to the acquisition of eOne, the six months ended September 30, 2024 includes the results of operations of eOne (acquired December 27, 2023), see Note 2 to our unaudited condensed consolidated financial statements for further details.

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Studio Business

Motion Picture $ 754.0 $ 802.5 $ (48.5) (6.0) %

Television Production 658.0 612.4 45.6 7.4 %

Total Studio Business 1,412.0 1,414.9 (2.9) (0.2) %

Media Networks 697.0 797.6 (100.6) (12.6) %

Intersegment eliminations (325.7) (288.4) (37.3) 12.9 %

Total revenues 1,783.3 1,924.1 (140.8) (7.3) %

Direct operating 1,072.4 1,038.3 34.1 3.3 %

Distribution and marketing 431.5 466.1 (34.6) (7.4) %

General and administration 229.0 247.1 (18.1) (7.3) %

Depreciation and amortization 91.6 89.0 2.6 2.9 %

Restructuring and other 28.6 254.0 (225.4) (88.7) %

Goodwill and intangible asset impairment — 663.9 (663.9) (100.0) %

Total expenses 1,853.1 2,758.4 (905.3) (32.8) %

Operating loss (69.8) (834.3) 764.5 (91.6) %

Interest expense (143.1) (125.8) (17.3) 13.8 %

Interest and other income 8.5 4.7 3.8 80.9 %

Other expense (18.9) (17.2) (1.7) 9.9 %

Gain (loss) on extinguishment of debt (6.4) 21.2 (27.6) (130.2) %

Loss on investments, net — (1.7) 1.7 (100.0) %

Equity interests income 0.8 1.5 (0.7) nm

Loss before income taxes (228.9) (951.6) 722.7 (75.9) %

Income tax provision (12.0) (7.8) (4.2) 53.8 %

Net loss (240.9) (959.4) 718.5 (74.9) %

Net loss attributable to noncontrolling interest 18.2 2.5 15.7 nm

Net loss attributable to Lions Gate Entertainment Corp.

shareholders $ (222.7) $ (956.9) $ 734.2 (76.7) %

_______________________

nm - Percentage not meaningful.

Consolidated revenues decreased $140.8 million in the six months ended September 30, 2024 reflecting a decrease of $100.6 million from our Media Networks business, higher intersegment eliminations of $37.3 million, and a decrease of $2.9 million from our Studio Business.

Studio Business revenues for the six months ended September 30, 2024 included approximately $228.3 million of revenues from eOne (acquired December 27, 2023, therefore the six months ended September 30, 2023 included no comparable revenues).

Intersegment eliminations relate to the licensing of product from our Studio Business to the Media Networks segment.

Motion Picture revenue decreased $48.5 million due to lower home entertainment and theatrical revenue, primarily due to revenue in the prior year's period from John Wick:

Chapter 4 , partially offset by increased international and television revenue.

Motion Picture revenues for the six months ended September 30, 2024 included approximately $40.4 million of revenues from eOne.

Motion Picture revenue included $136.3 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $59.2 million from the six months ended September 30, 2023.

Television Production revenue increased $45.6 million due to the inclusion of revenue from eOne of $187.9 million, offset by lower home entertainment digital and international revenue.

Television Production revenue included $189.4 million of revenue from licensing Television Production segment product to our Media Networks segment, representing a decrease of $21.9 million from the six months ended September 30, 2023.

The increase in intersegment eliminations of $37.3 million is primarily associated with higher Motion Picture intersegment revenues of $59.2 million reflecting the licensing of certain recent theatrical releases to Starz, partially offset by lower Television Production intersegment revenues of $21.9 million for licenses of original series to the Starz Platforms.

Media Networks revenue decreased $100.6 million, and reflected decreases in international revenue of $103.2 million due to the exiting of the majority of international territories, partially offset by an increase of $2.6 million at Starz Networks.

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

Direct Operating Expenses.

Direct operating expenses by segment were as follows for the six months ended September 30, 2024 and 2023:

Six Months Ended

September 30,

2024 2023 Change

Amount % of Segment Revenues Amount % of Segment Revenues Amount Percent

(Amounts in millions)

Direct operating expenses

Studio Business

Motion Picture $ 405.9 53.8 % $ 389.3 48.5 % $ 16.6 4.3 %

Television Production 569.5 86.6 482.8 78.8 86.7 18.0 %

Total Studio Business 975.4 69.1 872.1 61.6 103.3 11.8 %

Media Networks 363.5 52.2 419.2 52.6 (55.7) (13.3) %

Other 8.8 nm 1.0 nm 7.8 780.0 %

Intersegment eliminations (275.3) nm (254.0) nm (21.3) 8.4 %

$ 1,072.4 60.1 % $ 1,038.3 54.0 % $ 34.1 3.3 %

_______________________

nm - Percentage not meaningful

Direct operating expenses increased in the six months ended September 30, 2024, due to higher direct operating expenses of our Studio Business, partially offset by lower direct operating expenses of our Media Networks segment and increased intersegment eliminations.

The increase at the Studio Business reflects higher direct operating expenses of the Television Production segment due to increased revenues from Television Production, and higher direct operating expenses as a percentage of revenue of the Motion Picture segment driven by the performance and costs of the titles released in the quarter, in particular, Borderlands , which resulted in higher direct operating cost in relation to revenue.

The decrease in Media Networks direct operating expense was driven by decreases of $62.0 million due to the territories exited, partially offset by increases at Starz Networks of $6.3 million due to higher programming cost amortization.

The increase in intersegment eliminations is due to higher Motion Picture revenue from licenses of original series to the Starz Platforms, as discussed above.

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

Other direct operating expense in the six months ended September 30, 2024 includes rent cost for production facilities that were unutilized as a result of the industry strikes amounting to $10.5 million, which was not allocated to the segments, and is included in direct operating expense.

In addition, other direct operating expense in the six months ended September 30, 2024 and 2023 includes share-based compensation, and COVID related charges, if any, net of insurance recoveries.

Distribution and Marketing Expenses.

Distribution and marketing expenses by segment were as follows for the six months ended September 30, 2024 and 2023:

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Distribution and marketing expenses

Studio Business:

Motion Picture $ 208.1 $ 220.3 $ (12.2) (5.5) %

Television Production 18.5 16.6 1.9 11.4 %

Total Studio Business 226.6 236.9 (10.3) (4.3) %

Media Networks 205.0 231.3 (26.3) (11.4) %

Other 0.5 0.4 0.1 25.0 %

Intersegment eliminations (0.6) (2.5) 1.9 nm

$ 431.5 $ 466.1 $ (34.6) (7.4) %

theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 142.0 $ 149.9 $ (7.9) (5.3) %

_______________________

nm - Percentage not meaningful

Distribution and marketing expenses decreased in the six months ended September 30, 2024, due to lower Studio Business and Media Networks distribution and marketing expense.

The decrease at the Studio Business primarily reflects lower Motion Picture theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current period.

The decrease in Media Networks distribution and marketing expense was due to a decrease of $22.2 million primarily from the international territories exited, and a decrease at Starz Networks of $4.1 million.

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

General and Administrative Expenses.

General and administrative expenses by segment were as follows for the six months ended September 30, 2024 and 2023:

Six Months Ended

September 30, Change

2024 % of Revenues 2023 % of Revenues Amount Percent

(Amounts in millions)

General and administrative expenses

Studio Business

Motion Picture $ 51.3 $ 56.1 $ (4.8) (8.6) %

Television Production 34.8 27.0 7.8 28.9 %

Total Studio Business 86.1 83.1 3.0 3.6 %

Media Networks 43.8 48.6 (4.8) (9.9) %

Corporate 61.5 63.1 (1.6) (2.5) %

Share-based compensation expense 33.8 40.1 (6.3) (15.7) %

Purchase accounting and related adjustments 3.8 12.2 (8.4) (68.9) %

Total general and administrative expenses $ 229.0 12.8% $ 247.1 12.8% $ (18.1) (7.3) %

General and administrative expenses decreased in the six months ended September 30, 2024, resulting from decreased purchase accounting and related adjustments, share-based compensation expense, Media Networks and corporate general and administrative expenses, partially offset by increased Studio Business general and administrative expenses.

Studio Business general and administrative expenses for the six months ended September 30, 2024 included approximately $13.0 million from eOne.

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

Corporate general and administrative expenses decreased $1.6 million, or 2.5%, primarily due to a decrease in incentive based compensation, partially offset by an increase in professional fees and approximately $6.0 million of corporate general and administrative expenses from eOne.

The decrease in share-based compensation expense included in general and administrative expense in the six months ended September 30, 2024, as compared to the six months ended September 30, 2023 is primarily due to lower fair values in

the current 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.

The following table presents share-based compensation expense by financial statement line item:

Six Months Ended

September 30,

(Amounts in millions)

Share-based compensation expense by expense category

General and administrative expense $ 33.8 $ 40.1

Restructuring and other (1)

Direct operating expense 1.4 1.4

Distribution and marketing expense 0.5 0.4

Total share-based compensation expense $ 40.6 $ 43.5

_______________________

Purchase accounting and related adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, and the non-cash charge for the amortization of the recoupable portion of the purchase price related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense.

Purchase accounting and related adjustments decreased $8.4 million, or 68.9%, primarily due to lower noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment of $7.1 million associated with a lower noncontrolling interest ownership percentage as a result of our acquisition of an additional interest in 3 Arts Entertainment (see Note 9 to our unaudited condensed consolidated financial statements).

Depreciation and Amortization Expense.

Depreciation and amortization of $91.6 million for the six months ended September 30, 2024 increased $2.6 million from $89.0 million in the six months ended September 30, 2023 due to increased amortization of intangible assets.

Restructuring and Other.

Restructuring and other decreased $225.4 million in the six months ended September 30, 2024 as compared to the six months ended September 30, 2023, and includes restructuring and severance costs and certain transaction and other costs, when applicable.

Restructuring and other costs were as follows for the six months ended September 30, 2024 and 2023 (see Note 14 to our unaudited condensed consolidated financial statements):

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Restructuring and other:

Content and other impairments (1)

$ 16.1 $ 239.5 $ (223.4) (93.3) %

Severance (2)

5.0 10.6 (5.6) (52.8) %

Transaction and other costs (3)

7.5 3.9 3.6 92.3 %

$ 28.6 $ 254.0 $ (225.4) (88.7) %

_______________________

(1) Media Networks Restructuring:

As discussed in "Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" , the Company recorded net recoveries of content impairment charges related to the Media Networks segment in the six months ended September 30, 2024 of $2.4 million (six months ended September 30, 2023 - content impairment charges of $239.5 million).

See Note 14 to our unaudited condensed consolidated financial statements.

Other Impairments:

Amounts in the six months ended September 30, 2024 also include impairments of certain operating lease right-of-use and leasehold improvement assets related to the Television Production segment associated with facility leases that will no longer be utilized by the Company primarily related to the integration of eOne.

(2) Severance costs were primarily related to restructuring, acquisition integration activities and other cost-saving initiatives.

(3) Transaction and other costs in the six months ended September 30, 2024 and 2023 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with legal and other matters.

In the six months ended September 30, 2024 and 2023, transaction and other costs also includes a benefit of $7.1 million and $3.8 million, respectively, associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the Starz international restructuring.

Goodwill and Intangible Asset Impairment.

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.

There was no comparable charge in the six months ended September 30, 2024.

Interest Expense.

Interest expense of $143.1 million in the six months ended September 30, 2024 increased $17.3 million from the six months ended September 30, 2023 due to higher average interest rates and balances on variable rate corporate debt and film related obligations, partially offset by a slightly larger benefit from the interest rate swaps.

The following table sets forth the components of interest expense for the six months ended September 30, 2024 and 2023:

Six Months Ended

September 30,

(Amounts in millions)

Interest Expense

Revolving credit facility $ 31.5 $ 17.8

Term loans 38.7 43.9

Senior Notes 19.7 20.0

IP credit facilities (1)

Amortization of debt issuance costs and other non-cash interest (3)

Total interest expense $ 143.1 $ 125.8

______________________

(1) IP credit facility interest expense includes interest expense associated with the eOne IP Credit Facility and the LG IP Credit Facility.

Interest and Other Income.

Interest and other income of $8.5 million for the six months ended September 30, 2024 increased as compared to interest and other income of $4.7 million for the six months ended September 30, 2023 due to higher interest income.

Other Expense.

Other expense of $18.9 million for the six months ended September 30, 2024 increased as compared to other expense of $17.2 million for the six months ended September 30, 2023.

The increase is primarily due to realized and unrealized foreign currency losses in the six months ended September 30, 2024, offset by a decrease in the loss recorded related to our monetization of accounts receivable programs in the six months ended September 30, 2024 as compared to the six months ended September 30, 2023 (see Note 18 to our unaudited condensed consolidated financial statements).

Gain (Loss) on Extinguishment of Debt.

Loss on extinguishment of debt of $6.4 million for the six months ended September 30, 2024 related to the write-off of debt issuance costs associated with the September 2024 voluntary prepayment of $355.1 million principal amount of the Term Loan B, the May 2024 voluntary prepayment of $84.9 million principal amount of the Term Loan A and $214.1 million of the Term Loan B, and the 5.5% Senior Notes exchange.

In the six months ended September 30, 2023, the gain on extinguishment of debt of $21.2 million represented a gain associated with the repurchase of $85.0 million principal amount of 5.5% Senior Notes at a discount.

See Note 6 to our unaudited condensed consolidated financial statements.

Loss on Investments, net.

Loss on investments, net was nil for the six months ended September 30, 2024, as compared to $1.7 million for the six months ended September 30, 2023 related to other investments.

Equity Interests Income.

Equity interests income of $0.8 million in the six months ended September 30, 2024 compared to equity interests income of $1.5 million in the six months ended September 30, 2023 due to lower income generated by our equity method investees.

Income Tax Provision.

We had an income tax provision of $12.0 million in the six months ended September 30, 2024, compared to an income tax provision of $7.8 million in the six months ended September 30, 2023.

Our income tax provision differs from the U.S.

Our income tax provision for the six months ended September 30, 2024 and 2023 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.

Our income tax provision for the six months ended September 30, 2024 was also impacted by additional deferred tax expense as result of the Separation that occurred during the quarter ended June 30, 2024.

Net Loss Attributable to Lions Gate Entertainment Corp.

Shareholders.

Net loss attributable to our shareholders for the six months ended September 30, 2024 was $222.7 million, or basic and diluted net loss per common share of $0.94 on 237.5 million weighted average common shares outstanding.

This compares to net loss attributable to our shareholders for the six months ended September 30, 2023 of $956.9 million, or basic and diluted net loss per common share of $4.12 on 232.1 million weighted average common shares outstanding.

Segment Results of Operations and Non-GAAP Measures

Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023", 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.

We use this non-GAAP measure, among other measures, to evaluate the aggregate operating performance of our business.

The following table reconciles the GAAP measure, operating loss, to the non-GAAP measure, total segment profit, for the six months ended September 30, 2024 and 2023.

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Operating loss $ (69.8) $ (834.3) $ 764.5 (91.6) %

Corporate general and administrative expenses 61.5 63.1 (1.6) (2.5) %

Goodwill and intangible asset impairment — 663.9 (663.9) (100.0) %

Adjusted depreciation and amortization 16.7 19.9 (3.2) (16.1) %

Restructuring and other 28.6 254.0 (225.4) (88.7) %

COVID-19 related charges (benefit) (3.1) (0.4) (2.7) nm

Unallocated rent cost included in direct operating expense 10.5 — 10.5 n/a

Adjusted share-based compensation expense 35.7 41.9 (6.2) (14.8) %

Purchase accounting and related adjustments 78.7 81.3 (2.6) (3.2) %

Total segment profit $ 158.8 $ 289.4 $ (130.6) (45.1) %

_______________________

nm - Percentage not meaningful.

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.

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

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Studio Business

Motion Picture $ 754.0 $ 802.5 $ (48.5) (6.0) %

Television Production 658.0 612.4 45.6 7.4 %

Total Studio Business $ 1,412.0 $ 1,414.9 $ (2.9) (0.2) %

Media Networks 697.0 797.6 (100.6) (12.6) %

Intersegment eliminations (325.7) (288.4) (37.3) 12.9 %

$ 1,783.3 $ 1,924.1 $ (140.8) (7.3) %

Segment Profit

Studio Business

Motion Picture $ 88.7 $ 136.8 $ (48.1) (35.2) %

Television Production 35.2 86.0 (50.8) (59.1) %

Total Studio Business $ 123.9 $ 222.8 $ (98.9) (44.4) %

Media Networks 84.7 98.5 (13.8) (14.0) %

Intersegment eliminations (49.8) (31.9) (17.9) 56.1 %

$ 158.8 $ 289.4 $ (130.6) (45.1) %

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

The segment results of operations presented below do not include the elimination of intersegment transactions which are eliminated when presenting consolidated results.

Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the six months ended September 30, 2024 and 2023:

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Motion Picture Segment:

Revenue $ 754.0 $ 802.5 $ (48.5) (6.0) %

Direct operating expense 405.9 389.3 16.6 4.3 %

Distribution & marketing expense 208.1 220.3 (12.2) (5.5) %

Gross contribution 140.0 192.9 (52.9) (27.4) %

General and administrative expenses 51.3 56.1 (4.8) (8.6) %

Segment profit $ 88.7 $ 136.8 $ (48.1) (35.2) %

theatrical P&A and Premium VOD expense included in distribution and marketing expense $ 142.0 $ 149.9 $ (7.9) (5.3) %

Direct operating expense as a percentage of revenue 53.8 % 48.5 %

Gross contribution as a percentage of revenue 18.6 % 24.0 %

The table below sets forth Motion Picture revenue by media and product category for the six months ended September 30, 2024 and 2023.

Motion Picture revenues for the six months ended September 30, 2024 included approximately $40.4 million of revenues from eOne.

Six Months Ended September 30,

2024 2023 Total Increase (Decrease)

Lionsgate Original Releases (1)

Other Film (2)

Total Lionsgate Original Releases (1)

Other Film (2)

(Amounts in millions)

Motion Picture Revenue

Theatrical $ 53.5 $ 2.6 $ 56.1 $ 92.3 $ 1.8 $ 94.1 $ (38.0)

Home Entertainment

Digital Media 172.4 82.2 254.6 246.4 93.4 339.8 (85.2)

Packaged Media 12.9 8.9 21.8 32.6 9.4 42.0 (20.2)

Total Home Entertainment 185.3 91.1 276.4 279.0 102.8 381.8 (105.4)

Television 180.7 16.0 196.7 134.3 15.0 149.3 47.4

International 176.9 39.1 216.0 139.8 20.9 160.7 55.3

Other 5.1 3.7 8.8 12.2 4.4 16.6 (7.8)

$ 601.5 $ 152.5 $ 754.0 $ 657.6 $ 144.9 $ 802.5 $ (48.5)

____________________

(1) Lionsgate Original Releases:

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

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

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

(2) Other Film:

Theatrical revenue decreased $38.0 million in the six months ended September 30, 2024 as compared to the six months ended September 30, 2023 due to a decrease of $38.8 million from Lionsgate Original Releases due to revenue in the prior year's period from the fiscal 2023 theatrical slate release, John Wick:

Chapter 4, partially offset by increased revenue from multi-platform releases in the current period, and in particular, The Strangers:

Home entertainment revenue decreased $105.4 million, or 27.6%, in the six months ended September 30, 2024, as compared to the six months ended September 30, 2023, due to lower digital media revenue of $85.2 million primarily due to decreases from Lionsgate Original Releases.

Digital media revenue from Lionsgate Original Releases declined $74.0 million due to revenue in the prior year's period from our fiscal 2023 and prior theatrical slate titles, and in particular, John Wick:

Chapter 4 and Jesus Revolution, which compared to lower revenue in the current period from our fiscal 2024 and prior theatrical slate titles.

This decrease in digital media revenue was partially offset by increased digital media revenue in the current period from our fiscal 2025 theatrical slate title, The Ministry of Ungentlemanly Warfare.

In addition, the decrease in home entertainment revenue was also due to lower packaged media revenue of $20.2 million primarily due to revenue in the prior year's period for John Wick:

Television revenue increased $47.4 million, or 31.7%, in the six months ended September 30, 2024, as compared to the six months ended September 30, 2023 due to an increase from Lionsgate Original Releases of $46.4 million due to a greater number of television windows opening in the current period for our theatrical slate titles, and higher revenue recognized for those titles, and in particular, The Hunger Games:

The Ballad of Songbirds & Snakes.

International revenue increased $55.3 million, or 34.4%, in the six months ended September 30, 2024, as compared to the six months ended September 30, 2023 due to an increase from Lionsgate Original Releases of $37.1 million driven by higher revenue generated from our fiscal 2025 theatrical slate, and in particular, Borderlands , as compared to our fiscal 2024 theatrical slate, and increased revenue from multi-platform releases, and in particular, The Killer's Game, offset by revenue in the prior year's period for John Wick:

In addition, the increase in international revenue was also due to an increase from Other Film of $18.2 million from our acquired library titles.

Direct Operating Expense.

The increase in direct operating expenses is due to greater direct operating expenses as a percentage of motion picture revenue as compared to the prior year's period, driven by the change in the mix of titles and product categories generating revenue.

In particular, the increase was driven by the performance and cost of the titles released in the period, including Borderlands , which had a higher amortization rate as compared to the titles released in the prior year's period.

Investment in film write-downs included in Motion Picture segment direct operating expense were $18.5 million in the six months ended September 30, 2024, as compared to $27.0 million in the six months ended September 30, 2023.

Distribution and Marketing Expense.

The decrease in distribution and marketing expense in the six months ended September 30, 2024 is due to lower theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current period.

In the six months ended September 30, 2024 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 $19.7 million in the six months ended September 30, 2023 in the Motion Picture segment.

Gross Contribution.

Gross contribution of the Motion Picture segment for the six months ended September 30, 2024 decreased as compared to the six months ended September 30, 2023 due to the negative contribution of the theatrical slate titles released in the period, including Borderlands , as a result of higher direct operating expense as a percentage of revenue, and lower Motion Picture revenue.

These decreases in gross contribution were partially offset by lower Motion Picture distribution and marketing expense.

General and Administrative Expense.

General and administrative expenses of the Motion Picture segment in the six months ended September 30, 2024 decreased $4.8 million, or 8.6%, primarily due to a decrease in incentive based compensation.

Television Production

The table below sets forth Television Production gross contribution and segment profit for the six months ended September 30, 2024 and 2023:

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Television Production Segment:

Revenue $ 658.0 $ 612.4 $ 45.6 7.4 %

Direct operating expense 569.5 482.8 86.7 18.0 %

Distribution & marketing expense 18.5 16.6 1.9 11.4 %

Gross contribution 70.0 113.0 (43.0) (38.1) %

General and administrative expenses 34.8 27.0 7.8 28.9 %

Segment profit $ 35.2 $ 86.0 $ (50.8) (59.1) %

Direct operating expense as a percentage of revenue 86.6 % 78.8 %

Gross contribution as a percentage of revenue 10.6 % 18.5 %

The table below sets forth Television Production revenue and changes in revenue by media for the six months ended September 30, 2024 and 2023.

Television Production revenues for the six months ended September 30, 2024 included approximately $187.9 million of revenues from eOne.

Six Months Ended

September 30, Increase (Decrease)

2024 2023 Amount Percent

Television Production (Amounts in millions)

Television $ 473.2 $ 371.9 $ 101.3 27.2 %

International 85.5 105.6 (20.1) (19.0) %

Home Entertainment

Digital 53.2 96.0 (42.8) (44.6) %

Packaged Media 1.3 0.7 0.6 85.7 %

Total Home Entertainment 54.5 96.7 (42.2) (43.6) %

Other 44.8 38.2 6.6 17.3 %

$ 658.0 $ 612.4 $ 45.6 7.4 %

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

Domestic television revenue increased in the six months ended September 30, 2024 due to an increase of approximately $157.6 million for revenues from eOne in the current period, and a decrease from reality television programs and other third-party domestic television revenue.

International revenue in the six months ended September 30, 2024 decreased $20.1 million, or 19.0% as compared to the six months ended September 30, 2023 due to a decrease of $26.8 million from intersegment revenues from the licensing of Starz original series to Starz Networks, partially offset by increased third-party revenue.

Home entertainment revenue in the six months ended September 30, 2024 decreased $42.2 million, or 43.6% as compared to the six months ended September 30, 2023 due to decreased third-party digital media revenues, and in particular, digital media revenue in the prior year's period for The Continental, partially offset by increased intersegment revenues from the licensing of Starz original series to Starz Networks.

Other revenue in the six months ended September 30, 2024 increased $6.6 million, or 17.3% from the six months ended September 30, 2023, and primarily reflects revenue of 3 Arts Entertainment, which is generated from commissions and executive producer fees earned related to talent management.

Direct Operating Expense.

Direct operating expense of the Television Production segment in the six months ended September 30, 2024 increased $86.7 million, or 18.0% due to the increase in Television Production revenues.

Direct operating

expenses as a percentage of television production revenue increased primarily due to the mix of titles generating revenue in the current period as compared to the prior year's period, and in particular, the prior year's period included significant revenue from The Continental which has a lower amortization rate as compared to the current period.

There were no investment in film and television programs write-downs included in Television Production segment direct operating expense in the six months ended September 30, 2024, as compared to $5.4 million in the six months ended September 30, 2023.

Gross Contribution.

Gross contribution of the Television Production segment for the six months ended September 30, 2024 decreased as compared to the six months ended September 30, 2023, due to higher direct operating expenses as a percentage of television production revenue, partially offset by increased television production revenue.

General and Administrative Expense.

General and administrative expenses of the Television Production segment increased $7.8 million, or 28.9%.

Television Production general and administrative expenses for the six months ended September 30, 2024 included $11.0 million from eOne.

Media Networks

The table below sets forth Media Networks gross contribution and segment profit for the six months ended September 30, 2024 and 2023.

As previously discussed in "Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023", the results of operations for “Other” for the six months ended September 30, 2023 reflect amounts including the results of operations of the Exited Territories related to the Media Networks international restructuring.

Six Months Ended

September 30, Change

2024 2023 Amount Percent

(Amounts in millions)

Media Networks Segment:

Revenue $ 697.0 $ 797.6 $ (100.6) (12.6) %

Direct operating expense 363.5 419.2 (55.7) (13.3) %

Distribution & marketing expense 205.0 231.3 (26.3) (11.4) %

Gross contribution 128.5 147.1 (18.6) (12.6) %

General and administrative expenses 43.8 48.6 (4.8) (9.9) %

Segment profit $ 84.7 $ 98.5 $ (13.8) (14.0) %

Direct operating expense as a percentage of revenue 52.2 % 52.6 %

Gross contribution as a percentage of revenue 18.4 % 18.4 %

_______________________

nm - Percentage not meaningful.

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

Six Months Ended Six Months Ended

September 30, 2024 September 30, 2023

Starz Networks (North America) (1)

Total Media Networks Starz Networks (North America) (1)

Total Media Networks

(Amounts in millions)

Media Networks Segment:

Revenue $ 688.2 $ 8.8 $ 697.0 $ 685.6 $ 112.0 $ 797.6

Direct operating expense 357.4 6.1 363.5 351.1 68.1 419.2

Distribution & marketing expense 203.5 1.5 205.0 207.6 23.7 231.3

Gross contribution 127.3 1.2 128.5 126.9 20.2 147.1

General and administrative expenses 42.0 1.8 43.8 40.0 8.6 48.6

Segment profit $ 85.3 $ (0.6) $ 84.7 $ 86.9 $ 11.6 $ 98.5

_______________________

(1) Starz Networks represents the results of operations of the U.S.

and Canada, see footnote (2) below.

(2) During the quarter ended June 30, 2024, the Company began reflecting the results of operations of Canada within Starz Networks.

Accordingly, the following amounts were reclassified from "Other" (formerly "LIONSGATE+") to Starz Networks in the six months ended September 30, 2023 to conform to the current period presentation:

(i) revenue of $8.4 million;

(ii) direct operating expense of $6.1 million;

and (iii) distribution and marketing expense of $1.3 million, which resulted in gross contribution and segment profit of $1.0 million reclassified.

The amounts reflected in "Other" consist of the results of operations outside of the U.S.

Media Networks revenue decreased $100.6 million and reflected lower Other revenue of $103.2 million, partially offset by an increase of $2.6 million at Starz Networks.

Starz Networks' revenue increased $3.7 million primarily because of higher OTT revenue of $20.9 million resulting from a price increase initiated at the end of June 2023 and fully implemented during the quarter ended September 30, 2023, and growth in OTT subscribers of 0.69 million since June 30, 2023, which were offset by declines in revenue of $15.7 million from traditional linear services.

The Other revenue of $4.8 million for the three months ended June 30, 2024 includes $2.6 million from the U.K.

which was exited in May 2024.

The decrease in Other revenue was primarily due to revenue in the prior year's quarter from the international territories exited in Australia, Continental Europe, Japan, Latin America and the U.K.

(the "Exiting Territories") of approximately $36.9 million.

During the three months ended June 30, 2024 and 2023, the following original series premiered on STARZ:

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

Starz Networks' revenue increased $2.6 million primarily because of higher OTT revenue of $32.2 million resulting from price increases, offset by the continued declines in revenue from traditional linear services of $29.9 million.

Starz Networks initiated a price increase at the end of June 2023, which was implemented by its various partners throughout the period ended September 2023.

An additional price increase was implemented by its partners beginning in September 2024.

The Other revenue of $8.8 million for the six months ended September 30, 2024 includes $1.6 million from the Exited Territories.

The decrease in Other revenue was primarily the result of the exit from the Exited Territories which was approximately $89.7 million.

In addition, the decrease in Other was due to ancillary revenue earned during the six months ended September 30, 2023 from the distribution of certain Starz Originals and licensed content to third-party distributors outside of the Starz Platforms decreasing by approximately $13.0 million as compared to the corresponding period in fiscal 2024.

During the six months ended September 30, 2024 and 2023, the following original series premiered on STARZ:

Six Months Ended September 30, 2024 Six Months Ended September 30, 2023

Title Premiere Date Title Premiere Date

First Quarter:

Mary & George Season 1

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June 16, 2023

Second Quarter:

Serpent Queen Season 2

July 12, 2024 Minx Season 2

July 21, 2023

Power Book II:

Ghost Season 4 Part 2

September 6, 2024 Heels Season 2

July 28, 2023

Three Women Season 1

September 13, 2024 Men in Kilts Season 2

August 11, 2023

Power Book IV:

Force Season 2

July 28, 2023

Direct Operating and Distribution and Marketing Expenses .

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Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere.

In addition, the shutdown of the international service in the Exiting Territories will result in a decrease in expenses going forward.

The decrease in Media Networks direct operating expenses is due to decreases at Starz Networks of $15.0 million and Other of $25.2 million in the three months ended June 30, 2024.

The decrease in Starz Networks direct operating expense was due primarily to lower programming cost amortization of $45.4 million related to our Starz Originals, partially offset by an increase of $28.4 million related to theatrical releases under our programming output agreements.

Other direct operating expenses decreased $24.9 million in the Exiting Territories.

Other direct operating expense of $3.7 million for the three months ended June 30, 2024 includes $2.0 million from the Exiting Territories.

The decrease in Media Networks distribution and marketing expense is due to a decrease in Other of $11.4 million primarily due to a decrease in distribution and advertising expenses from the Exiting Territories, partially offset by an increase of $0.3 million at Starz Networks.

In addition, the shutdown of the international service in the Exited Territories will result in a decrease in expenses going forward.

The decrease in Media Networks direct operating expenses is due to decreases at Other of $62.0 million, partially offset by an increase at Starz Networks of $6.3 million in the six months ended September 30, 2024.

The increase in Starz Networks direct operating expense was due primarily to an increase of $69.3 million related to theatrical releases under our programming output agreements, partially offset by lower programming cost amortization of $62.9 million related to our Starz Originals.

Other direct operating expenses decreased $62.7 million due to the exit from the Exited Territories.

Other direct operating expense of $6.1 million for the six months ended September 30, 2024 includes $1.1 million from the Exited Territories.

The decrease in Media Networks distribution and marketing expense is due to a decrease in Other of $22.2 million primarily due to a decrease in distribution and advertising expenses resulting from the exit from the Exited Territories, and a decrease of $4.1 million at Starz Networks.

Gross Contribution.

The increase in gross contribution compared to the three months ended June 30, 2023 was due to increased gross contribution at Starz Networks of $18.4 million and from Other of $1.9 million, driven by lower direct operating expense and Other distribution and marketing expense, partially offset by lower Other revenue, as described above.

The decrease in gross contribution compared to the six months ended September 30, 2023 was due to decreased gross contribution from Other of $19.0 million, partially offset by increased gross contribution at Starz Networks of $0.4 million, driven by lower Other revenue, partially offset by lower Other direct operating expense and distribution and marketing expense, as described above.

General and Administrative Expense.

General and administrative expenses in the three months ended June 30, 2024 decreased from the prior year's quarter, due to decreases of $2.0 million at Starz Networks and $3.3 million from Other.

General and administrative expenses in the six months ended September 30, 2024 decreased from the prior year's period, due to a decrease of $6.8 million from Other resulting from the exit from the Exited Territories, partially offset by an increase of $2.0 million at Starz Networks.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash

Our liquidity and capital requirements in the three months ended June 30, 2024 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.

As of June 30, 2024, we had cash and cash equivalents of $192.5 million.

Our liquidity and capital requirements in the six months ended September 30, 2024 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.

As of September 30, 2024, we had cash and cash equivalents of $229.6 million.

Business Combination.

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The net proceeds were used to partially pay down amounts outstanding under the Term Loan A and Term Loan B pursuant to the Credit Agreement (see Note 6 to our unaudited condensed consolidated financial statements).

eOne IP Facility.

In July 2024, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "eOne IP Credit Facility") based on and secured by the Company’s intellectual property rights primarily associated with certain titles acquired as part of the eOne acquisition.

The maximum principal amount of the eOne IP Credit Facility is $340.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries.

The Company borrowed $340.0 million under the eOne IP Credit Facility.

The cash flows generated from the rights will be applied to repay the eOne IP Credit Facility subject to quarterly required principal payments of $8.5 million, beginning September 30, 2024, with the balance payable at maturity.

Advances under the eOne IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum.

The eOne IP Credit Facility matures on July 3, 2029.

See Note 19 - Subsequent Events.

Corporate Debt

Our corporate debt at June 30, 2024, excluding film related obligations discussed further below, consisted of the following:

Our corporate debt at September 30, 2024, excluding film related obligations discussed further below, consisted of the following:

• Senior Credit Facilities:

◦ Revolving Credit Facility.

We have a $1.25 billion revolving credit facility (with $585.0 million outstanding at June 30, 2024) due April 2026 (the "Revolving Credit Facility").

We have a $1.25 billion revolving credit facility (with $421.5 million outstanding at September 30, 2024) due April 2026 (the "Revolving Credit Facility").

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

◦ Term Loan A.

We have a term loan A facility due April 2026 (the "Term Loan A"), with $314.4 million outstanding at June 30, 2024.

The outstanding amounts under the Revolving Credit Facility and Term Loan A may become due on December 23, 2024 (i.e.

91 days prior to March 24, 2025) prior to its maturity on April 6, 2026 in the event that the aggregate principal amount of outstanding Term Loan B in excess of $250 million has not been repaid, refinanced or extended to have a maturity date on or after July 6, 2026.

The Company expects to repay and/or refinance and extend the maturity date of the Term Loan B prior to December 23, 2024 such that the maturity of the revolving credit facility and Term Loan A are not accelerated.

We have a term loan A facility due April 2026 (the "Term Loan A"), with $314.4 million outstanding at September 30, 2024.

◦ Term Loan B.

We have a term loan B facility due March 2025 (the "Term Loan B", and, together with the Revolving Credit Facility and the Term Loan A, the "Senior Credit Facilities"), with $605.1 million outstanding at June 30, 2024.

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 $250.0 million outstanding at September 30, 2024.

• Senior Notes:

We have $715.0 million outstanding of 5.5% senior notes due 2029 (the "5.5% Senior Notes") at June 30, 2024.

Effective upon completion of the separation of the Starz Business from the Studio Business, the interest rate will increase to 6.0% and the maturity date will extend to April 15, 2030 for a portion of the 5.5% Senior Notes (the "Exchange Notes") which amounted to $389.9 million at June 30, 2024.

We have $715.0 million outstanding of 5.5% senior notes due 2029 (the "5.5% Senior Notes") and 5.5% exchange notes due 2029 (the "Exchange Notes") in the aggregate at September 30, 2024.

Effective upon completion of the separation of the Starz Business from the Studio Business, the interest rate will increase to 6.0% and the maturity date will extend to April 15, 2030 for a portion of the 5.5% Senior Notes which amounted to $389.9 million at September 30, 2024.

On or after the Separation Closing Date, as defined in the indenture to the Exchange Notes, the Company may redeem the Exchange Notes, in whole at any time, or in part from time to time, at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

The Exchange Notes will initially be guaranteed by all existing obligors under the Existing Notes, and upon completion of the separation of the Studio Business and the Starz Business, the Exchange Notes will be guaranteed exclusively by entities which are part of the Studio Business.

• eOne IP Credit Facility:

The maximum principal amount of the eOne IP Credit Facility is $340.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries, with $340.0 million outstanding as of September 30, 2024.

The eOne IP Credit Facility matures on July 3, 2029.

• LG IP Credit Facility.

In September 2024, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the "LG IP Credit Facility") based on and secured by the Company’s intellectual property rights primarily associated with certain titles.

The maximum principal amount of the LG IP Credit Facility is $455.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries, with $455.0 million outstanding as of September 30, 2024.

The LG IP Credit Facility matures on September 30, 2029.

See Note 6 to our unaudited condensed consolidated financial statements for a discussion of our corporate debt.

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We utilize our film related obligations to fund our film and television productions or licenses.

Our film related obligations at June 30, 2024 include the following:

Our film related obligations at September 30, 2024 include the following:

• Production Loans:

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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.

At June 30, 2024, there was $1,306.4 million outstanding of production loans.

At September 30, 2024, there was $1,244.8 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.

The Company's programming notes have contractual repayment dates in August 2024.

At June 30, 2024, there was $53.8 million outstanding of programming notes.

The Company's programming notes have contractual repayment dates in November 2024.

At September 30, 2024, there was $67.9 million outstanding of programming notes.

• Production Tax Credit Facility:

We have a $260.0 million non-recourse senior secured revolving credit facility due January 2025 based on collateral consisting solely of certain of the Company’s tax credit receivables (the "Production Tax Credit Facility").

As of June 30, 2024, tax credit receivables amounting to $336.8 million represented collateral related to the Production Tax Credit Facility.

As of September 30, 2024, tax credit receivables amounting to $344.2 million represented collateral related to the Production Tax Credit Facility.

Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility.

At June 30, 2024, there was $260.0 million outstanding under the Production Tax Credit Facility.

• IP Credit Facility:

In July 2021, as amended in September 2022, certain of our subsidiaries entered into a senior secured amortizing term credit facility due July 2027 (the "IP Credit Facility") based on the collateral consisting solely of certain of our rights in certain acquired library titles, including the Spyglass and other recently acquired libraries.

The maximum principal amount of the IP Credit Facility is $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.

At June 30, 2024, there was $100.6 million outstanding under the IP Credit Facility.

At September 30, 2024, there was $260.0 million outstanding under the Production Tax Credit Facility.

• Film Library Facility:

In July 2021, as amended in September 2022, certain of our subsidiaries entered into a senior secured amortizing term credit facility due July 2027 (the "Film Library Facility") based on the collateral consisting solely of certain of our rights in certain acquired library titles, including the Spyglass and other recently acquired libraries.

The maximum principal amount of the Film Library Facility is $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries.

At September 30, 2024, there was $94.2 million outstanding under the Film Library Facility.

• Backlog Facility and Other:

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The facility maturity date is up to two years and 90 days after the revolving period ends, currently August 14, 2027.

As of June 30, 2024, there was $175.0 million outstanding under the Backlog Facility.

As of September 30, 2024, there was $160.2 million outstanding under the Backlog Facility.

The Company has other loans which are secured by accounts receivable and contracted receivables which are not yet recognized as revenue under certain licensing agreements.

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.

As of June 30, 2024, there was $138.0 million outstanding under the "other" loans, of which $67.9 million has a contractual repayment date in July 2025 and $70.1 million has a contractual repayment date in April 2027.

As of June 30, 2024, accounts receivable amounting to $84.8 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at June 30, 2024 amounting to $81.1 million represented collateral related to the "other" loans.

As of September 30, 2024, there was $113.0 million outstanding under the "other" loans, of which $55.1 million has a contractual repayment date in July 2025 and $57.9 million has a contractual repayment date in April 2027.

As of September 30, 2024, accounts receivable amounting to $72.7 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at September 30, 2024 amounting to $65.6 million represented collateral related to the "other" loans.

See Note 7 to our unaudited condensed consolidated financial statements for a discussion of our film related obligations.

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

In addition, the Company has a redeemable noncontrolling interest balance of $123.0 million as of June 30, 2024 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).

In addition, the Company has a redeemable noncontrolling interest balance of $99.7 million as of September 30, 2024 related to its acquisition of a controlling interest, consisting of a limited liability company interest, in 3 Arts Entertainment, and $93.2 million included in other liabilities-non current representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest, 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).

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

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In addition to the cash requirements of any potential future redemption of our noncontrolling interests as discussed above, 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.

Under the current Media Networks business restructuring plan and ongoing strategic review previously discussed under "Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview", the net future cash outlay is estimated to range from approximately $50 million to $55 million, which includes contractual commitments on content in territories being exited, and payments on the remaining amounts payable for content removed or that may be removed from its services.

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.

We may incur additional content impairment and other restructuring charges beyond the estimates above.

We may incur additional content impairment and other restructuring charges.

In the short-term, we currently expect that our cash requirements for productions will increase and our marketing spend will decrease in fiscal 2025 as compared to fiscal 2024.

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We monitor our cash flow liquidity, availability, fixed charge coverage, capital base, film spending and leverage ratios with the long-term goal of maintaining our credit worthiness.

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

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, eOne IP Credit Facility, LG IP Credit Facility, production loans and programming notes, government incentive programs, the monetization of trade accounts receivable, our Production Tax Credit Facility, our Film Library Facility, our Backlog Facility, and other obligations.

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.

If additional financing beyond our existing cash flows from operations and credit facilities cannot fund such transactions, there is

no assurance that such financing will be available on terms acceptable to us.

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

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

The following table sets forth our significant contractual and other obligations as of June 30, 2024 and the estimated timing of payment:

The following table sets forth our significant contractual and other obligations as of September 30, 2024 and the estimated timing of payment:

Total Next 12 Months Beyond 12 Months

(Amounts in millions)

Future annual repayment of debt and other obligations recorded as of June 30, 2024 (on-balance sheet arrangements)

Future annual repayment of debt and other obligations recorded as of September 30, 2024 (on-balance sheet arrangements)

Corporate debt (1) :

Revolving credit facility $ 421.5 $ — $ 421.5

$ 585.0 $ — $ 585.0

Term Loan A (2)

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5.5% Senior Notes 715.0 — 715.0

eOne IP Credit Facility (1)

340.0 34.0 306.0

LG IP Credit Facility (1)

455.0 34.1 420.9

Film related obligations (2)

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(1) See Note 6 to our unaudited condensed consolidated financial statements for further information on our corporate debt.

(2) The outstanding amounts under the Revolving Credit Facility and Term Loan A may become due on December 23, 2024 (i.e.

(2) See Note 7 to our unaudited condensed consolidated financial statements for further information on our film related obligations.

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(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.

(6) Includes cash interest payments on our corporate debt and film related obligations, based on the applicable SOFR interest rates at June 30, 2024, 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.

(7) Not included in the amounts above are $123.0 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 9 to our unaudited condensed consolidated financial statements).

See Note 19 to our unaudited condensed consolidated financial statements for amounts borrowed in July 2024 under the eOne IP Facility.

(5) Includes cash interest payments on our corporate debt and film related obligations, based on the applicable SOFR interest rates at September 30, 2024, 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 $93.2 million included in other liabilities-non current representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest and $99.7 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 9 to our unaudited condensed consolidated financial statements).

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

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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.

As of June 30, 2024, the Company was in compliance with all applicable covenants.

The 5.5% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.

As of June 30, 2024, the Company was in compliance with all applicable covenants.

As of September 30, 2024, the Company was in compliance with all applicable covenants.

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

As of September 30, 2024, the Company was in compliance with all applicable covenants.

Share Repurchase Plan.

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Such purchases will be structured as permitted by securities laws and other legal requirements.

During the three months ended June 30, 2024, the Company did not repurchase any common shares.

During the six months ended September 30, 2024, 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.

At June 30, 2024, 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 $63.1 million and accumulated deficit of $3,242.7 million were deemed free of restrictions from paying dividends at June 30, 2024.

At September 30, 2024, 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 $240.9 million and accumulated deficit of $3,396.4 million were deemed free of restrictions from paying dividends at September 30, 2024.

Discussion of Operating, Investing, Financing Cash Flows

Cash, cash equivalents and restricted cash decreased by $129.0 million for the three months ended June 30, 2024 and increased by $79.9 million for the three months ended June 30, 2023, before foreign exchange effects on cash.

Cash, cash equivalents and restricted cash decreased by $84.4 million for the six months ended September 30, 2024 and decreased by $43.1 million for the six months ended September 30, 2023, before foreign exchange effects on cash.

Components of these changes are discussed below in more detail.

Operating Activities.

Cash flows provided by (used in) operating activities for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended

Cash flows provided by (used in) operating activities for the six months ended September 30, 2024 and 2023 were as follows:

Six Months Ended

September 30,

2024 2023 Net Change

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Net Cash Flows Provided By (Used In) Operating Activities $ (240.9) $ 330.3 $ (571.2)

Cash flows used in operating activities for the three months ended June 30, 2024 were $158.9 million compared to cash flows provided by operating activities of $29.2 million for the three months ended June 30, 2023.

Cash flows used in operating activities for the six months ended September 30, 2024 were $240.9 million compared to cash flows provided by operating activities of $330.3 million for the six months ended September 30, 2023.

The decrease in cash provided by operating activities is due to greater cash used in changes in operating assets and liabilities of $467.8 million.

The greater cash used in changes in operating assets and liabilities was driven by increased cash used for investment in film and television programs and program rights, greater decreases in participations and residuals and accounts payable and accrued liabilities, partially offset by greater increases in deferred revenue, and greater proceeds from decreases in accounts receivable, net.

The greater cash used in changes in operating assets and liabilities was driven by increased cash used for investment in film and television programs and program rights, greater decreases in participations and residuals, content related payables and accounts payable and accrued liabilities, partially offset by greater proceeds from decreases in accounts receivable, net and greater increases in deferred revenue.

Investing Activities.

Cash flows used in investing activities for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended

Cash flows used in investing activities for the six months ended September 30, 2024 and 2023 were as follows:

Six Months Ended

September 30,

(Amounts in millions)

Net proceeds from purchase price adjustments for eOne acquisition (see Note 2) $ 12.0 $ —

Proceeds from the sale of other investments — 0.2

Investment in equity method investees and other (2.0) (11.3)

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Net Cash Flows Used In Investing Activities $ (43.2) $ (31.5)

Cash flows used in investing activities of $46.0 million for the three months ended June 30, 2024 compared to cash flows used in investing activities of $9.8 million for the three months ended June 30, 2023, primarily due to cash used for the acquisition of a film library and related assets in the current quarter.

Cash flows used in investing activities of $43.2 million for the six months ended September 30, 2024 compared to cash flows used in investing activities of $31.5 million for the six months ended September 30, 2023, primarily due to cash used for the acquisition of a film library and related assets, partially offset by proceeds from the settlement of certain working capital items pursuant to the Purchase Agreement for eOne in the current period.

Financing Activities.

Cash flows provided by financing activities for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended

Cash flows provided by (used in) financing activities for the six months ended September 30, 2024 and 2023 were as follows:

Six Months Ended

September 30,

(Amounts in millions)

9 unchanged sentences

Net Cash Flows Provided By (Used In) Financing Activities $ 199.7 $ (341.9)

Cash flows provided by financing activities of $75.9 million for the three months ended June 30, 2024 compared to cash flows provided by financing activities of $60.5 million for the three months ended June 30, 2023.

Cash flows provided by financing activities for the three months ended June 30, 2024 primarily reflects net proceeds from the sale of a noncontrolling interest in Lionsgate Studios of $294.0 million, and net film related obligations borrowings of $79.1 million due to net borrowings under production loans and the Production Tax Credit Facility of $64.8 million and net borrowings under the Backlog Facility, IP Credit Facility and other of $14.3 million.

These sources of cash were partially offset by net repayments of debt of $293.6 million, which included the prepayment of $84.9 million principal amount of the Term Loan A and $214.1 million principal amount of the Term Loan B and required repayments on our term loans, along with borrowings and repayments under our revolving credit facility for working capital purposes.

Cash used for other financing activities of $3.6 million represented primarily tax withholding required on equity awards of $3.0 million.

Cash flows provided by financing activities of $60.5 million 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 other of $142.6 million, offset by net debt repayments and repurchases of $70.1 million.

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:

• During the three months ended June 30, 2023, we repurchased $85.0 million principal amount of the 5.5% Senior Notes for $61.4 million.

Other financing activities also includes tax withholding required on equity awards of $15.1 million.

Cash flows provided by financing activities of $199.7 million for the six months ended September 30, 2024 compared to cash flows used in financing activities of $341.9 million for the six months ended September 30, 2023.

Cash flows provided by financing activities for the six months ended September 30, 2024 primarily reflects proceeds from the sale of a noncontrolling interest in Lionsgate Studios of $283.1 million, which was partially offset by net film related obligations repayments of $15.6 million, net debt repayments of $31.5 million, and cash used for other financing activities of $36.3 million representing primarily tax withholding required on equity awards of $28.6 million.

Net debt repayments of $31.5 million in the six months ended September 30, 2024 included the below transactions, along with required repayments on our term loans and borrowings and repayments under our revolving credit facility for working capital purposes:

• In May 2024, we used the proceeds from the Business Combination to prepay $84.9 million principal amount of the Term Loan A and $214.1 million of the Term Loan B.

• In July 2024 and September 2024, we borrowed $340.0 million under the eOne IP Credit Facility and $455.0 million under the LG IP Credit Facility, respectively.

• In September 2024, we used the proceeds from the LG IP Credit Facility to prepay $355.1 million principal amount of the Term Loan B.

Cash flows used in financing activities of $341.9 million 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, Film Library Facility and other of $60.4 million, and net debt repayments and repurchases of $81.0 million.

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:

• During the six months ended September 30, 2023, we repurchased $85.0 million principal amount of the 5.5% Senior Notes for $61.4 million.

Other financing activities in the six months ended September 30, 2023 also includes tax withholding required on equity awards of $30.7 million.

Remaining Performance Obligations and Backlog

Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog).

As disclosed in Note 10 to our unaudited condensed consolidated financial statements, remaining performance obligations were $1.8 billion at June 30, 2024 (March 31, 2024 - $1.8 billion).

The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.3 billion at June 30, 2024 (March 31, 2024 - $1.5 billion).

As disclosed in Note 10 to our unaudited condensed consolidated financial statements, remaining performance obligations were $1.8 billion at September 30, 2024 (March 31, 2024 - $1.8 billion).

The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.3 billion at September 30, 2024 (March 31, 2024 - $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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis