What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-10 compared with 2024-11-12 · 389 added, 375 removed, 1011 unchanged (43% of the section changed)

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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”).

In October 2024, as amended in January 2025, 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.

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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.

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.

The Company has incurred impairment charges from the inception of the plan through December 31, 2024 amounting to $735.1 million.

During the three and nine months ended December 31, 2024, the Company recorded net recoveries of content impairment charges related to the Media Networks segment of $6.4 million and $8.8 million, respectively (three and nine months ended December 31, 2023 - content impairment charges of $77.8 million and $317.4 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 Proposed Separation 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.

Subsequent to December 31, 2024, the Company removed programming on Starz's domestic platform which had a carrying value of approximately $77.4 million, which charge, measured as the excess of the carrying value over the fair value of the titles removed, will be recorded during the fourth quarter ending March 31, 2025.

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

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None of the non-U.S.

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

countries individually comprised greater than 10% of total revenues for the three and nine months ended December 31, 2024 and 2023.

Studio Business

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General and administration expenses include salaries and other overhead.

Corporate general and administrative expenses include certain corporate executive expense (such as salaries and wages for the office of the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers), investor relations costs, costs of maintaining corporate facilities, and other unallocated common administrative support functions, including corporate accounting, finance and financial

reporting, internal and external audit and tax costs, corporate and other legal support functions, and certain information technology and human resources expense.

facilities, and other unallocated common administrative support functions, including corporate accounting, finance and financial reporting, internal and external audit and tax costs, corporate and other legal support functions, and certain information technology and human resources expense.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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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 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).

Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview", we have incurred impairment charges from the inception of the restructuring plan through December 31, 2024 amounting to $735.1 million.

During the three and nine months ended December

31, 2024, we recorded net recoveries of content impairment charges related to the Media Networks segment of $6.4 million and $8.8 million, respectively, which are included in restructuring and other in the unaudited condensed consolidated statement of operations (three and nine months ended December 31, 2023 - content impairment charges of $77.8 million and $317.4 million, respectively).

See Note 3 and Note 14 to our unaudited condensed consolidated financial statements.

Valuation Assumptions.

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

At December 31, 2024, the carrying value of goodwill was $808.5 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 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.

Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at December 31, 2024, were Motion Picture (goodwill of $397 million), Media Networks (no remaining goodwill balance), and our Television (goodwill of $319 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.

During the three months ended December 31, 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).

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 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;

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 (and for the December 31, 2024 assessment, since our qualitative assessment performed for fiscal 2024), 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.

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The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities.

Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include the global economy;

reporting units may include the global economy;

consumer consumption levels of our content;

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

At December 31, 2024, the carrying value of our finite-lived intangible assets was $880.9 million.

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

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For fiscal 2024, due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, and continuing difficult macro and microeconomic conditions, we performed an impairment analysis of our amortizable intangible assets.

The impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset.

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 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.

Should the revenues from our Traditional Affiliate relationships decline more than the assumed attrition rates used in our current estimates, either as a result of decreases in subscriber rates or changes of the terms of our renewals of our Traditional Affiliate contracts, we may have indicators of impairment which could result in an impairment of our customer relationships intangible assets, or we may need to further shorten the useful life or adopt a more accelerated method of amortization, both of which would increase the amount of amortization expense we record.

The impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset or asset group to the carrying value of the asset or asset group.

Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the asset group that includes the Starz customer relationship and tradename intangible assets by over 50% and therefore no impairment charge was required.

The estimated undiscounted cash flow assumed a weighted average growth in revenue over the useful life of approximately 2.5%.

During the three and nine months ended December 31, 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 or asset group 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.

If actual revenues significantly underperform as compared to the forecasted amounts and cost cannot be sufficiently reduced, the undiscounted cash flows may not exceed the carrying value of the asset group and an impairment charge could result for the difference between the fair value and the carrying value of the asset group.

We continue to monitor the Starz business for changes that could significantly decrease the future undiscounted cash flows expected to be generated which could result in an impairment of our amortizable intangible assets, or could require us to further shorten the useful life or adopt a more accelerated method of amortization, both of which would increase the amount of amortization expense we record.

Examples of events or circumstances that could result in changes to projected cash flows include the creation and consumer consumption of our content;

adverse macroeconomic conditions related to higher inflation and interest rates, and the impact on the global economy from the geopolitical environments including wars, terrorism and multiple international conflicts;

volatility in the equity and debt markets which could result in higher weighted-average cost of capital and difficulty in funding our content requirements;

our continual contractual relationships with our customers, including

our affiliate agreements;

and our domestic subscriber growth rates across our traditional and OTT platforms and changes in consumer behavior.

Income Taxes.

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

Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023

Consolidated Results of Operations

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.

The following table sets forth our consolidated results of operations for the three months ended December 31, 2024 and 2023.

Due to the acquisition of eOne, the three months ended December 31, 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

September 30, Change

December 31, Change

2024 2023 Amount Percent

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Restructuring and other 43.3 116.9 (73.6) (63.0) %

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

Total expenses 934.7 1,018.6 (83.9) (8.2) %

Operating loss (88.6) (817.5) 728.9 nm

Operating income (loss) 35.8 (43.5) 79.3 nm

Interest expense (69.1) (67.1) (2.0) 3.0 %

Interest and other income 3.1 1.8 1.3 72.2 %

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

Other gains (losses), net 8.4 (2.5) 10.9 (436.0) %

Loss on extinguishment of debt (0.3) — (0.3) n/a

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

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

Gain on investments, net — 4.4 (4.4) (100.0) %

Equity interests income 7.6 4.2 3.4 81.0 %

Loss before income taxes (14.5) (102.7) 88.2 nm

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

Income tax provision (4.0) (4.7) 0.7 (14.9) %

Net loss (18.5) (107.4) 88.9 nm

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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).

Consolidated revenues decreased $4.6 million in the three months ended December 31, 2024 reflecting an increase of $22.2 million from our Studio Business and decreased intersegment eliminations of $45.9 million, partially offset by a decrease of $72.7 million from our Media Networks business.

Studio Business revenues for the three months ended December 31, 2024 included approximately $126.9 million of revenues from eOne (acquired December 27, 2023, therefore the three months ended December 31, 2023 included no material comparable revenues).

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

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.

Motion Picture revenue decreased $134.0 million due to lower theatrical and international revenue as compared to the prior year's quarter, which included the release of The Hunger Games:

The Ballad of Songbirds & Snakes , and lower television, home entertainment revenue and other revenue.

Motion Picture revenues for the three months ended December 31, 2024 included approximately $12.6 million of revenues from eOne.

Motion Picture revenue included $9.9 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing a decrease of $26.7 million from the three months ended December 31, 2023.

Television Production revenue increased $156.2 million due to the inclusion of revenue from eOne of approximately $114.3 million, and increases in home entertainment, international and other revenue.

Television Production revenue included $77.9 million of revenue from licensing Television Production segment product to our Media Networks segment, representing a decrease of $19.2 million from the three months ended December 31, 2023.

The decrease in intersegment eliminations of $45.9 million is due to lower Motion Picture revenues and Television Production revenues from licenses of motion pictures and original series to the Media Networks segment as discussed above.

Media Networks revenue decreased $72.7 million and reflected decreases in international revenue of $67.7 million due to the exiting of the majority of international territories, and a decrease at Starz Networks of $5.0 million.

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Direct Operating Expenses.

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

Direct operating expenses by segment were as follows for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30,

2024 2023 Change

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Media Networks 204.5 59.4 198.3 47.5 6.2 3.1 %

Other 6.0 nm 0.3 nm 5.7 1,900.0 %

Other 4.8 nm 0.8 nm 4.0 nm

Intersegment eliminations (95.0) nm (121.6) nm 26.6 (21.9) %

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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.

Direct operating expenses increased in the three months ended December 31, 2024 due to higher direct operating expenses for our Studio Business and Media Networks segment, and lower intersegment eliminations.

The increase at the Studio Business reflects higher direct operating expenses of the Television Production segment associated with increased Television Production revenues, partially offset by lower direct operating expenses of the Motion Picture segment associated with decreased Motion Picture revenue.

The increase in Media Networks direct operating expense was driven by an increase at Starz Networks of $42.8 million due to higher programming cost amortization, partially offset by a decrease of $36.6 million due to the territories exited.

The decrease in intersegment eliminations is due to lower Motion Picture and Television Production revenue from licenses of motion pictures and original series to the Media Networks segment, as discussed above.

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

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.

Other direct operating expense in the three months ended December 31, 2024 includes rent cost for production facilities that were unutilized as a result of the industry strikes amounting to $4.1 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 December 31, 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 September 30, 2024 and 2023:

Distribution and marketing expenses by segment were as follows for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percent

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Other 0.2 0.2 — — %

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

Intersegment eliminations (0.1) (0.1) — — %

$ 174.4 $ 220.0 $ (45.6) (20.7) %

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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.

Distribution and marketing expenses decreased in the three months ended December 31, 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, and lower Motion Picture home entertainment expense.

The decrease in Media Networks distribution and marketing expense was due to a decrease at Starz Networks of $10.2 million, and a decrease of $5.6 million primarily from the international territories exited.

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 September 30, 2024 and 2023:

General and administrative expenses by segment were as follows for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30, Change

December 31, Change

2024 % of Revenues 2023 % of Revenues Amount Percent

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Total general and administrative expenses $ 105.9 10.9% $ 121.0 12.4% $ (15.1) (12.5) %

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.

General and administrative expenses decreased in the three months ended December 31, 2024, resulting from decreased share-based compensation expense, Studio Business, corporate, and Media Networks general and administrative expense.

Studio Business general and administrative expenses for the three months ended December 31, 2024 included approximately $5.1 million from eOne.

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

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

Corporate general and administrative expenses decreased $2.7 million, or 8.7%, primarily due to a decrease in incentive based compensation, partially offset by 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 December 31, 2024, as compared to the three months ended December 31, 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

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Three Months Ended

September 30,

(Amounts in millions)

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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 $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).

Purchase accounting and related adjustments were comparable to the prior year's quarter (see Note 9 to our unaudited condensed consolidated financial statements).

Depreciation and Amortization Expense.

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.

Depreciation and amortization of $43.8 million in the three months ended December 31, 2024 decreased $6.1 million from $49.9 million in the three months ended December 31, 2023 due to lower depreciation expense.

Restructuring and Other.

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):

Restructuring and other decreased $73.6 million in the three months ended December 31, 2024 as compared to the three months ended December 31, 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 December 31, 2024 and 2023 (see Note 14 to our unaudited condensed consolidated financial statements):

Three Months Ended

September 30, Increase (Decrease)

December 31, Increase (Decrease)

2024 2023 Amount Percent

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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).

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 December 31, 2024 of $6.4 million (three months ended December 31, 2023 - the Company recorded content impairment charges related to the Media Networks segment of $77.8 million).

See Note 14 to our unaudited condensed consolidated financial statements.

Other Impairments:

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.

Content and Other Impairments:

Amounts in the three months ended December 31, 2024 also include content impairments of $7.3 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories.

(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 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.

During the quarter ended December 31, 2024, in connection with the Company's current restructuring plan, approximately 8% of its eligible U.S.

employees elected to take advantage of voluntary severance and early retirement packages.

A total of approximately $26.1 million in severance expense is expected to be incurred under the voluntary severance program, of which $14.6 million of severance expense was recognized in restructuring and other in the three months ended December 31, 2024, and the remaining amount is expected to be recognized in the fourth quarter ended March 31, 2025.

In the three months ended December 31, 2023, amounts were due to restructuring activities including integration of the acquisition of eOne, Media Networks international restructuring and our Motion Picture and Television Production segments.

(3) Transaction and other costs in the three months ended December 31, 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.

Interest Expense.

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:

Interest expense of $69.1 million for the three months ended December 31, 2024 increased $2.0 million from the three months ended December 31, 2023 due to higher average balances on variable rate corporate debt and film related obligations and a smaller benefit from the interest rate swaps, partially offset by lower average interest rates.

The following table sets forth the components of interest expense for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30,

(Amounts in millions)

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Interest and Other 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 $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).

Interest and other income of $3.1 million for the three months ended December 31, 2024 increased as compared to interest and other income of $1.8 million for the three months ended December 31, 2023 due to higher interest income.

Other Gains (Losses), net.

Other gains (losses), net represented a gain of $8.4 million for the three months ended December 31, 2024 as compared to a loss of $2.5 million for the three months ended December 31, 2023.

The change is primarily due to foreign currency gains in the three months ended December 31, 2024, partially offset by an increase in losses recorded related to our monetization of accounts receivable programs in the three months ended December 31, 2024 as compared to the three months ended December 31, 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.

Loss on extinguishment of debt of $0.3 million in the three months ended December 31, 2024 related to the write-off of debt issuance costs associated with the voluntary prepayment of $250.0 million principal amount of the Term Loan B.

There was no comparable loss on extinguishment of debt in the three months ended December 31, 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 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.

Gain on Investments, net.

Gain on investments, net was nil for the three months ended December 31, 2024, as compared to $4.4 million for the three months ended December 31, 2023 related to other investments.

Equity Interests Income.

Equity interests income of $7.6 million in the three months ended December 31, 2024 compared to equity interests income of $4.2 million in the three months ended December 31, 2023 due to higher equity interest income in the current quarter.

Income Tax Provision.

We had an income tax provision of $4.0 million in the three months ended December 31, 2024, compared to an income tax provision of $4.7 million in the three months ended December 31, 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 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.

Our income tax provision for the three months ended December 31, 2023 was also impacted by charges for interest on uncertain tax benefits.

Net Loss Attributable to Lions Gate Entertainment Corp.

Shareholders.

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.

Net loss attributable to our shareholders for the three months ended December 31, 2024 was $21.9 million, or basic and diluted net loss per common share of $0.09 on 240.2

million weighted average common shares outstanding.

This compares to net loss attributable to our shareholders for the three months ended December 31, 2023 of $106.6 million, or basic and diluted net loss per common share of $0.45 on 235.1 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 September 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 December 31, 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

September 30, Change

December 31, Change

2024 2023 Amount Percent

(Amounts in millions)

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

Operating income (loss) $ 35.8 $ (43.5) $ 79.3 nm

Corporate general and administrative expenses 28.4 31.1 (2.7) (8.7) %

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

Adjusted depreciation and amortization 8.4 13.5 (5.1) (37.8) %

11 unchanged sentences

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percent

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Motion Picture

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

The table below sets forth Motion Picture gross contribution and segment profit for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percent

10 unchanged sentences

Gross contribution as a percentage of revenue 34.3 % 28.8 %

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,

The table below sets forth Motion Picture revenue by media and product category for the three months ended December 31, 2024 and 2023.

Motion Picture revenues for the three months ended December 31, 2024 included approximately $12.6 million of revenues from eOne.

Three Months Ended December 31,

2024 2023 Total Increase (Decrease)

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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 $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.

Theatrical revenue decreased $65.1 million in the three months ended December 31, 2024 as compared to the three months ended December 31, 2023 due to a decrease of $64.8 million from Lionsgate Original Releases due to significant revenue in the prior year's quarter from the release of The Hunger Games:

The Ballad of Songbirds & Snakes .

Home entertainment revenue decreased $14.8 million, or 8.4%, in the three months ended December 31, 2024, as compared to the three months ended December 31, 2023, due to lower digital media revenue and packaged media revenue of $9.8 million and $5.0 million, respectively, primarily due to decreases from Lionsgate Original Releases.

Digital media revenue from Lionsgate Original Releases declined $19.3 million due to significant revenue in the prior year's period from titles in the The Hunger Games franchise, partially offset by an increase in Other Film of $9.5 million from our acquired library titles.

Television revenue decreased $27.0 million, or 41.3%, in the three months ended December 31, 2024, as compared to the three months ended December 31, 2023, due to a decrease from Lionsgate Original Releases of $29.2 million due to a greater number of television windows opening in the prior year's quarter for our theatrical slate titles.

International revenue decreased $26.4 million, or 27.9%, in the three months ended December 31, 2024, as compared to the three months ended December 31, 2023 due to a decrease from Lionsgate Original Releases of $32.4 million due to lower revenue in the current quarter from our fiscal 2025 theatrical slate, as compared to our fiscal 2024 theatrical slate in the prior year's quarter, and in particular, The Hunger Games:

The Ballad of Songbirds & Snakes.

This decrease was partially offset by an increase from Other Film of $6.0 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 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.

The decrease in direct operating expenses is due to lower Motion Picture revenue.

The decrease in direct operating expenses as a percentage of motion picture revenue as compared to the prior year's quarter was driven by the change in the mix of titles and product categories generating revenue, and in particular, the current quarter reflected a lower amortization rate and greater portion of revenue from library titles relative to the prior year's quarter.

Investment in film write-downs included in Motion Picture segment direct operating expense were approximately $0.2 million in the three months ended December 31, 2024, compared to approximately $0.5 million in the three months ended December 31, 2023.

Distribution and Marketing Expense.

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.

The decrease in distribution and marketing expense in the three months ended December 31, 2024 is due to lower theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current quarter, and lower Motion Picture home entertainment expense.

In the three months ended December 31, 2024, approximately $22.1 million of theatrical P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $10.5 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 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.

Gross contribution of the Motion Picture segment for the three months ended December 31, 2024 decreased as compared to the three months ended December 31, 2023 due to lower Motion Picture revenue, partially offset by lower direct operating expense as a percentage of Motion Picture revenue and lower distribution and marketing expense, as described above.

General and Administrative Expense.

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Television Production

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

The table below sets forth Television Production gross contribution and segment profit for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percent

9 unchanged sentences

Gross contribution as a percentage of revenue 18.6 % 8.7 %

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.

The table below sets forth Television Production revenue and changes in revenue by media for the three months ended December 31, 2024 and 2023.

Television Production revenues for the three months ended December 31, 2024 included approximately $114.3 million of revenues from eOne.

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percent

10 unchanged sentences

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

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.

Domestic television revenue increased in the three months ended December 31, 2024 due to an increase of approximately $89.3 million for revenues from eOne in the current quarter, partially offset by a decrease of approximately $13.9 million from intersegment revenues from the licensing of Starz original series to Starz Networks.

International revenue in the three months ended December 31, 2024 increased $27.2 million, or 84.7%, as compared to the three months ended December 31, 2023 due to an increase of approximately $17.7 million for revenues from eOne in the current quarter, and an increase from other third-party international revenue of approximately $13.8 million, partially offset by a decrease of $4.0 million from intersegment revenues from the licensing of Starz original series to Starz Networks.

Home entertainment revenue in the three months ended December 31, 2024 increased $39.5 million due to increased third-party digital media revenues, and in particular, digital media revenue in the current quarter for Mad Men Seasons 1 to 7 and Ghosts Season 3 .

Other revenue increased $11.9 million in the three months ended December 31, 2024 as compared to the three months ended December 31, 2023, due to increased revenue from 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 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.

Direct operating expense of the Television Production segment in the three months ended December 31, 2024 increased $101.4 million, or 46.3% due to the increase in Television Production revenues.

Direct operating expenses as a percentage of television production revenue decreased primarily due to the mix of titles generating revenue in the current quarter as compared to the prior year's quarter.

In particular, the current quarter's amortization rate reflected higher revenues on product that has lower direct operating expense as a percentage of revenue, including from older library product, such as Mad Men , from our talent management business, and from library and new content acquired with the eOne acquisition.

The amortization rate of older, more successful titles is typically lower than newer titles due to a television series incurring higher amortization expenses in relation to revenues initially, until there are a sufficient number of subsequent seasons ordered and episodes produced, such that revenue can be generated from syndication in domestic and international markets.

Gross Contribution.

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.

Gross contribution of the Television Production segment for the three months ended December 31, 2024 increased as compared to the three months ended December 31, 2023, due to higher television production revenue and lower direct operating expenses as a percentage of television production revenue.

General and Administrative Expense.

General and administrative expenses of the Television Production segment increased $1.0 million, or 7.4%.

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

Television Production general and administrative expenses for the three months ended December 31, 2024 included $4.1 million from eOne, partially offset by a decrease in incentive based compensation.

Media Networks

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

The table below sets forth Media Networks gross contribution and segment profit for the three months ended December 31, 2024 and 2023.

As previously discussed in "Item 2.

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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.

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 December 31, 2023 reflect amounts including the results of operations of the Exited Territories.

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percent

11 unchanged sentences

Three Months Ended Three Months Ended

September 30, 2024 September 30, 2023

December 31, 2024 December 31, 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 September 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 December 31, 2023 to conform to the current period presentation:

(i) revenue of $4.2 million;

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Actual Pro Forma (2)

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

December 31, December 31, December 31, December 31,

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 Exited Territories amounting to 1.58 million at September 30, 2023.

(2) Pro forma amounts exclude OTT subscribers for the Exited Territories amounting to 1.10 million at December 31, 2023.

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

1 unchanged sentence

Media Networks revenue decreased $72.7 million and reflected lower Other revenue of $67.7 million and a decrease at Starz Networks of $5.0 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.

Starz Networks' revenue decreased $5.0 million primarily because of the continued decline in revenue from traditional linear services of $14.1 million, which was partially offset by higher OTT revenue of $8.7 million resulting primarily from price increases.

Starz Networks initiated a price increase beginning in August 2024, which was implemented by its various partners throughout the quarter ended December 31, 2024.

The decrease in Other revenue was primarily the result of the exit from the Exited Territories of approximately $67.8 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

During the three months ended December 31, 2024 and 2023, the following original series premiered on STARZ:

Three Months Ended December 31, 2024 Three Months Ended December 31, 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

Fat Joe Talks Season 1

October 4, 2024 Shining Value Season 2

October 13, 2023

Sweetpea Season 1

October 10, 2024 Power Book III:

Raising Kanan Season 3

December 1, 2023

Outlander Season 7B

November 22, 2024

Direct Operating and Distribution and Marketing Expenses .

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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.

The increase in Media Networks direct operating expenses in the three months ended December 31, 2024 is due to increases at Starz Networks of $42.8 million, partially offset by decreases in Other of $36.6 million primarily due to the exit from the Exited Territories.

The increase in Starz Networks direct operating expense was due primarily to an increase of $43.4 million related to theatrical releases under our programming output agreements, and an increase of $10.2 million in development expense, partially offset by lower programming cost amortization of $7.2 million related to our Starz Originals.

The decrease in Media Networks distribution and marketing expense is due to a decrease of $10.2 million at Starz Networks primarily due to a decrease in advertising and marketing costs related to our Starz Originals, and a decrease in Other of $5.6 million primarily from the exit from the Exited Territories.

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.

The decrease in gross contribution compared to the three months ended December 31, 2023 was due to lower gross contribution at Starz Networks of $37.6 million and lower gross contribution from Other of $25.5 million.

Gross contribution at Starz Networks declined due to higher direct operating expense and slightly lower revenue, partially offset by lower distribution and marketing expense, as described above.

Gross contribution from Other declined primarily due to the exit from the Exited Territories, and reflected lower revenue which was partially offset by lower 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

General and administrative expenses of the Media Networks segment in the three months ended December 31, 2024 decreased slightly from the prior year's quarter, due to decreases of $2.5 million from Other resulting from the exit from the Exited Territories.

Nine Months Ended December 31, 2024 Compared to Nine Months Ended December 31, 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

The following table sets forth our consolidated results of operations for the nine months ended December 31, 2024 and 2023.

Due to the acquisition of eOne, the nine months ended December 31, 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.

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

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Interest and other income 11.6 6.5 5.1 78.5 %

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

Other losses, net (10.6) (19.6) 9.0 (45.9) %

Gain (loss) on extinguishment of debt (6.7) 21.2 (27.9) (131.6) %

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

Equity interests income 0.8 1.5 (0.7) nm

Gain on investments, net — 2.7 (2.7) (100.0) %

Equity interests income 8.5 5.7 2.8 49.1 %

Loss before income taxes (243.5) (1,054.3) 810.8 (76.9) %

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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).

Consolidated revenues decreased $145.3 million in the nine months ended December 31, 2024 reflecting a decrease of $173.4 million from our Media Networks business, partially offset by an increase of $19.5 million from our Studio Business and lower intersegment eliminations of $8.6 million.

Studio Business revenues for the nine months ended December 31, 2024 included approximately $355.1 million of revenues from eOne (acquired December 27, 2023, therefore the nine months ended December 31, 2023 included no material comparable revenues).

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

Motion Picture revenue decreased $182.3 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.

Chapter 4 and The Hunger Games:

The Ballad of Songbirds & Snakes , and lower other revenue which was partially offset by increased international and television revenue.

Motion Picture revenues for the nine months ended December 31, 2024 included approximately $53.0 million of revenues from eOne.

Motion Picture revenue included $146.2 million of revenue from licensing Motion Picture segment product to the Media Networks segment, representing an increase of $32.5 million from the nine months ended December 31, 2023.

Television Production revenue increased $201.8 million due to the inclusion of revenue from eOne of $302.1 million and increased other revenue, which was offset by decreases from other domestic television, home entertainment digital and international revenue.

Television Production revenue included $267.3 million of revenue from licensing Television Production segment product to our Media Networks segment, representing a decrease of $41.1 million from the nine months ended December 31, 2023.

The decrease in intersegment eliminations of $8.6 million is due to lower Television Production intersegment revenues, partially offset by higher Motion Picture intersegment revenues from licenses of original series motion pictures, respectively, to the Media Networks segment as discussed above.

Media Networks revenue decreased $173.4 million, and reflected decreases in international revenue of $170.9 million due to the exiting of the majority of international territories, and decreases of $2.5 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,

Direct operating expenses by segment were as follows for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

2024 2023 Change

7 unchanged sentences

Media Networks 568.0 54.5 617.5 50.8 (49.5) (8.0) %

Other 8.8 nm 1.0 nm 7.8 780.0 %

Other 13.6 nm 1.8 nm 11.8 nm

Intersegment eliminations (370.3) nm (375.6) nm 5.3 (1.4) %

2 unchanged sentences

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.

Direct operating expenses increased in the nine months ended December 31, 2024, due to higher direct operating expenses of our Studio Business, increased other direct operating expense and lower intersegment eliminations, partially offset by lower direct operating expenses of our Media Networks segment.

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

The decrease in Media Networks direct operating expense was driven by decreases of $98.5 million due to the territories exited, partially offset by increases at Starz Networks of $49.0 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.

The decrease in intersegment

eliminations is due to lower Television Production intersegment revenue, partially offset by higher Motion Picture intersegment revenue from licenses of original series and motion pictures, respectively, to the Media Networks segment, 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.

Other direct operating expense in the nine months ended December 31, 2024 includes rent cost for production facilities that were unutilized as a result of the industry strikes amounting to $14.6 million, which was not allocated to the segments, and is included in direct operating expense.

In addition, other direct operating expense in the nine months ended December 31, 2024 and 2023 includes share-based compensation.

These charges were offset by a benefit in the nine months ended December 31, 2024 and 2023 of $3.1 million and $0.5 million, respectively, from COVID related insurance recoveries, net of charges, if any.

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

Distribution and marketing expenses by segment were as follows for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

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Other 0.7 0.7 — — %

Intersegment eliminations (0.6) (2.5) 1.9 nm

Intersegment eliminations (0.7) (2.7) 2.0 (74.1) %

$ 606.0 $ 686.0 $ (80.0) (11.7) %

theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense $ 181.1 $ 204.0 $ (22.9) (11.2) %

_______________________

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.

Distribution and marketing expenses decreased in the nine months ended December 31, 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, and lower Motion Picture home entertainment distribution and marketing expense.

The decrease in Media Networks distribution and marketing expense was due to a decrease of $27.8 million primarily from the international territories exited, and a decrease at Starz Networks of $14.2 million.

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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

General and administrative expenses by segment were as follows for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

December 31, Change

2024 % of Revenues 2023 % of Revenues Amount Percent

10 unchanged sentences

Total general and administrative expenses $ 334.9 12.2% $ 368.1 12.7% $ (33.2) (9.0) %

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.

General and administrative expenses decreased in the nine months ended December 31, 2024, resulting from decreased share-based compensation expense, purchase accounting and related adjustments, and Media Networks, corporate and Studio Business general and administrative expenses.

Studio Business general and administrative expenses for the nine months ended December 31, 2024 included approximately $18.0 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

Corporate general and administrative expenses decreased $4.3 million, or 4.6%, primarily due to a decrease in incentive based compensation, partially offset by increases in professional fees and salaries and related expenses and approximately $9.0 million of corporate general and administrative expenses from eOne.

The decrease in share-based compensation expense included in general and administrative expense in the nine months ended December 31, 2024, as compared to the nine months ended December 31, 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

1 unchanged sentence

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

Six Months Ended

September 30,

Nine Months Ended

(Amounts in millions)

9 unchanged sentences

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).

Purchase accounting and related adjustments decreased $8.2 million, or 54.7%,

primarily due to lower noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment of $6.9 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.

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.

Depreciation and amortization of $135.4 million for the nine months ended December 31, 2024 decreased $3.5 million from $138.9 million in the nine months ended December 31, 2023 due to lower depreciation expense of $8.8 million, partially offset by 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

Restructuring and other decreased $299.1 million in the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023, and includes restructuring and severance costs and certain transaction and other costs, when applicable.

Restructuring and other costs were as follows for the nine months ended December 31, 2024 and 2023 (see Note 14 to our unaudited condensed consolidated financial statements):

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

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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).

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 nine months ended December 31, 2024 of $8.8 million (nine months ended December 31, 2023 - the Company recorded content impairment charges related to the Media Networks segment of $317.4 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.

Content and Other Impairments:

Amounts in the nine months ended December 31, 2024 also include content impairments of $7.3 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories.

Amounts in the nine months ended December 31, 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.

During the quarter ended December 31, 2024, in connection with the Company's current restructuring plan, approximately 8% of its eligible U.S.

employees elected to take advantage of voluntary severance and early retirement packages.

A total of approximately $26.1 million in severance expense is expected to be incurred under the voluntary severance program, of which $14.6 million of severance expense was recognized in restructuring and other in the nine months ended December 31, 2024, and the remaining amount is expected to be recognized in the fourth quarter ended March 31, 2025.

In the nine months ended December 31, 2023, amounts were due to restructuring activities including integration of the acquisition of eOne, Media Networks international restructuring and our Motion Picture and Television Production segments.

(3) Transaction and other costs in the nine months ended December 31, 2024 and 2023 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs associated with legal and other matters.

In the nine months ended December 31, 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.

Goodwill and intangible asset impairment of $663.9 million in the nine months ended December 31, 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 nine months ended December 31, 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,

Interest expense of $212.2 million in the nine months ended December 31, 2024 increased $19.3 million from the nine months ended December 31, 2023 due to higher average balances on variable rate corporate debt and film related obligations and a smaller benefit from the interest rate swaps, partially offset by slightly lower average interest rates.

The following table sets forth the components of interest expense for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

(Amounts in millions)

11 unchanged sentences

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).

Interest and other income of $11.6 million for the nine months ended December 31, 2024 increased as compared to interest and other income of $6.5 million for the nine months ended December 31, 2023 due to higher interest income.

Other Losses, net.

Other losses, net of $10.6 million for the nine months ended December 31, 2024 decreased as compared to other losses, net of $19.6 million for the nine months ended December 31, 2023.

The decrease is due to lower losses recorded related to our monetization of accounts receivable programs in the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023 (see Note 18 to our unaudited condensed consolidated financial statements) and foreign currency gains in the nine months ended December 31, 2024.

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.

Loss on extinguishment of debt of $6.7 million for the nine months ended December 31, 2024 related to the write-off of debt issuance costs associated with the September 2024 and November 2024 voluntary prepayment of $605.1 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 nine months ended December 31, 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.

Gain on Investments, net.

Gain on investments, net was nil for the nine months ended December 31, 2024, as compared to $2.7 million for the nine months ended December 31, 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.

Equity interests income of $8.5 million in the nine months ended December 31, 2024 compared to equity interests income of $5.7 million in the nine months ended December 31, 2023 due to higher equity interest income in the current period.

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.

We had an income tax provision of $16.0 million in the nine months ended December 31, 2024, compared to an income tax provision of $12.5 million in the nine months ended December 31, 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.

Our income tax provision for the nine months ended December 31, 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 nine months ended December 31, 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.

Net loss attributable to our shareholders for the nine months ended December 31, 2024 was $244.7 million, or basic and diluted net loss per common share of $1.03 on 238.4 million weighted average common shares outstanding.

This compares to net loss attributable to our shareholders for the nine months ended December 31, 2023 of $1,063.5 million, or basic and diluted net loss per common share of $4.56 on 233.1 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.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 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.

The following table reconciles the GAAP measure, operating loss, to the non-GAAP measure, total segment profit, for the nine months ended December 31, 2024 and 2023.

Six Months Ended

September 30, Change

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

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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

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

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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

The table below sets forth Motion Picture gross contribution and segment profit for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

10 unchanged sentences

Gross contribution as a percentage of revenue 23.1 % 25.7 %

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,

The table below sets forth Motion Picture revenue by media and product category for the nine months ended December 31, 2024 and 2023.

Motion Picture revenues for the nine months ended December 31, 2024 included approximately $53.0 million of revenues from eOne.

Nine Months Ended December 31,

2024 2023 Total Increase (Decrease)

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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.

Theatrical revenue decreased $103.1 million in the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023 due to a decrease of $103.7 million from Lionsgate Original Releases due to significant revenue in the prior year's period from The Hunger Games:

The Ballad of Songbirds & Snakes and John Wick:

Home entertainment revenue decreased $120.2 million, or 21.5%, in the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023, due to lower digital media revenue and packaged media revenue of $95.0 million and $25.2 million, respectively, primarily due to decreases from Lionsgate Original Releases.

Digital media revenue from Lionsgate Original Releases declined $93.3 million due to significant revenue in the prior year's period from John Wick:

Chapter 4, titles in the The Hunger Games franchise, and Jesus Revolution .

Packaged media revenue from Lionsgate Original Releases declined $21.1 million primarily due to revenue in the prior year's period for John Wick:

Television revenue increased $20.5 million, or 9.6%, in the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023 due to an increase from Lionsgate Original Releases of $17.3 million due to higher revenue generated from our fiscal 2025 and 2024 theatrical slate titles with television windows opening in the current period as compared to the revenue from our fiscal 2024 and fiscal 2023 theatrical slate titles with television windows opening in the prior year's period .

International revenue increased $29.0 million, or 11.4%, in the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023 due to an increase from Other Film of $23.9 million from our acquired library titles, and an increase from Lionsgate Original Releases of $5.1 million due to higher revenue from multi-platform releases which was mostly offset by lower revenue from our theatrical slate titles due to revenue in the prior year's period for The Hunger Games:

The Ballad of Songbirds & Snakes and John Wick:

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.

The decrease in direct operating expenses is due to lower Motion Picture revenue.

The increase in direct operating expenses as a percentage of motion picture revenue as compared to the prior year's period was driven by the change in the mix of titles and product categories generating revenue, and in particular, 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 $18.8 million in the nine months ended December 31, 2024, as compared to $27.5 million in the nine months ended December 31, 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.

The decrease in distribution and marketing expense in the nine months ended December 31, 2024 is due to lower theatrical P&A and Premium VOD expense associated with the theatrical slate releases in the current period, and lower home entertainment distribution and marketing expense.

In the nine months ended December 31, 2024 approximately $32.3 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $24.8 million in the nine months ended December 31, 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.

Gross contribution of the Motion Picture segment for the nine months ended December 31, 2024 decreased as compared to the nine months ended December 31, 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.

General and administrative expenses of the Motion Picture segment in the nine months ended December 31, 2024 decreased $9.6 million, or 11.5%, primarily due to a decrease in incentive based compensation, partially offset by an increase in salaries and related expenses.

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

The table below sets forth Television Production gross contribution and segment profit for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

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Gross contribution as a percentage of revenue 13.7 % 15.6 %

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)

The table below sets forth Television Production revenue and changes in revenue by media for the nine months ended December 31, 2024 and 2023.

Television Production revenues for the nine months ended December 31, 2024 included approximately $302.1 million of revenues from eOne.

Nine Months Ended

December 31, Increase (Decrease)

2024 2023 Amount Percent

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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.

Domestic television revenue increased in the nine months ended December 31, 2024 due to an increase of approximately $246.9 million for revenues from eOne in the current period, partially offset by decreases of $50.9 million from other third-party domestic television revenue and $16.8 million from intersegment revenues from the licensing of Starz original series to Starz Networks.

The decrease from other third-party domestic television revenue was due to significant revenue in the prior year's period from The Continental and lower revenue from reality television programs.

International revenue in the nine months ended December 31, 2024 increased $7.1 million, or 5.2% as compared to the nine months ended December 31, 2023 due to an increase of approximately $36.7 million for revenues from eOne in the current period, which was mostly offset by a decrease of $30.9 million from intersegment revenues from the licensing of Starz original series to Starz Networks.

Home entertainment revenue in the nine months ended December 31, 2024 decreased $2.7 million, or 2.4% as compared to the nine months ended December 31, 2023 due to lower third-party digital media revenues, which reflected significant revenue in the prior year's period for The Continental, and lower intersegment revenues of $6.2 million from the licensing of Starz original series to Starz Networks.

These decreases were offset by the inclusion of approximately $12.7 million of revenues from eOne in the current period.

Other revenue in the nine months ended December 31, 2024 increased $18.5 million, or 34.0% from the nine months ended December 31, 2023, due to increased revenue from 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.

Direct operating expense of the Television Production segment in the nine months ended December 31, 2024 increased $188.1 million, or 26.8% 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 investment in film and television programs write-downs of $0.4 million included in Television Production segment direct operating expense in the nine months ended December 31, 2024, as compared to $6.6 million in the nine months ended December 31, 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.

Gross contribution of the Television Production segment for the nine months ended December 31, 2024 increased as compared to the nine months ended December 31, 2023, due to increased television production revenue, partially offset by 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 $8.8 million, or 21.7%.

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

Television Production general and administrative expenses for the nine months ended December 31, 2024 included $15.0 million from eOne and an increase in professional fees, partially offset by a decrease in incentive based compensation.

Media Networks

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

The table below sets forth Media Networks gross contribution and segment profit for the nine months ended December 31, 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

Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023", the results of operations for “Other” for the nine months ended December 31, 2023 reflect amounts including the results of operations of the Exited Territories related to the Media Networks international restructuring.

Nine Months Ended

December 31, Change

2024 2023 Amount Percent

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Gross contribution as a percentage of revenue 16.7 % 21.0 %

_______________________

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

Nine Months Ended Nine Months Ended

December 31, 2024 December 31, 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 six months ended September 30, 2023 to conform to the current period presentation:

Accordingly, the following amounts were reclassified from "Other" (formerly "LIONSGATE+") to Starz Networks in the nine months ended December 31, 2023 to conform to the current period presentation:

(i) revenue of $12.7 million;

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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 $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.

Media Networks revenue decreased $173.4 million and reflected lower Other revenue of $170.9 million, and a decrease of $2.5 million at Starz Networks.

Starz Networks' revenue decreased $2.5 million primarily because of the continued declines in revenue from traditional linear services of $44.0 million, which were mostly offset by higher OTT revenue of $40.9 million resulting from price increases.

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

Starz Networks initiated an additional price increase beginning in August 2024, which was implemented by its various partners throughout the quarter ended December 31, 2024.

The Other revenue of $11.4 million for the nine months ended December 31, 2024 includes $4.5 million from the Exited Territories.

The decrease in Other revenue was primarily the result of the exit from the Exited Territories which was approximately $156.9 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

In addition, the decrease in Other was due to ancillary revenue earned during the nine months ended December 31, 2023 from the distribution of certain Starz Originals and licensed content to third-party distributors outside of the Starz Platforms decreasing by approximately $13.5 million as compared to the corresponding period in fiscal 2024.

During the nine months ended December 31, 2024 and 2023, the following original series premiered on STARZ:

Nine Months Ended December 31, 2024 Nine Months Ended December 31, 2023

Title Premiere Date Title Premiere Date

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July 28, 2023

Third Quarter:

Fat Joe Talks Season 1

October 4, 2024 Shining Value Season 2

October 13, 2023

Sweetpea Season 1

October 10, 2024 Power Book III:

Raising Kanan Season 3

December 1, 2023

Outlander Season 7B

November 22, 2024

Direct Operating and Distribution and Marketing Expenses .

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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 decrease in Media Networks direct operating expenses is due to decreases at Other of $98.5 million, partially offset by an increase at Starz Networks of $49.0 million in the nine months ended December 31, 2024.

The increase in Starz Networks direct operating expense was due primarily to an increase of $112.7 million related to theatrical releases under our programming output agreements, partially offset by lower programming cost amortization of $67.9 million related to our Starz Originals.

Other direct operating expenses decreased $97.2 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.

Other direct operating expense of $7.9 million for the nine months ended December 31, 2024 includes $2.8 million from the Exited Territories.

The decrease in Media Networks distribution and marketing expense is due to a decrease in Other of $27.8 million primarily due to a decrease in distribution and advertising expenses resulting from the exit from the Exited Territories, and a decrease of $14.2 million at Starz Networks primarily due to a decrease in direct response advertising and marketing costs.

Gross Contribution.

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.

The decrease in gross contribution compared to the nine months ended December 31, 2023 was due to lower gross contribution at Starz Networks of $37.3 million and lower gross contribution from Other of $44.6 million.

Gross contribution at Starz Networks declined due to higher direct operating expense and slightly lower revenue, partially offset by lower distribution and marketing expense, as described above.

General and Administrative Expense.

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.

General and administrative expenses in the nine months ended December 31, 2024 decreased from the prior year's period, due to a decrease of $9.4 million from Other resulting from the exit from the Exited Territories, partially offset by an increase of $2.1 million at Starz Networks.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash

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.

Our liquidity and capital requirements in the nine months ended December 31, 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 December 31, 2024, we had cash and cash equivalents of $200.5 million.

Business Combination.

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Corporate Debt

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

Our corporate debt at December 31, 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 $421.5 million outstanding at September 30, 2024) due April 2026 (the "Revolving Credit Facility").

We have a $1.25 billion revolving credit facility (with $390.0 million outstanding at December 31, 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 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 $250.0 million outstanding at September 30, 2024.

We have a term loan A facility due April 2026 (the "Term Loan A"), with $314.4 million outstanding at December 31, 2024.

In November 2024, the Company paid in full the 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").

• Senior Notes:

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.

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 December 31, 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.

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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, with $340.0 million outstanding as of September 30, 2024.

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

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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.

In November 2024 and December 2024, the Company closed amendments which increased the maximum principal amount of the LG IP Credit Facility to $850.0 million as of December 31, 2024 subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries.

As of December 31, 2024, $850.0 million was outstanding under the LG IP Credit Facility.

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

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

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

Our film related obligations at December 31, 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 September 30, 2024, there was $1,244.8 million outstanding of production loans.

At December 31, 2024, there was $1,346.0 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 November 2024.

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

The Company's programming notes have contractual repayment dates in January 2025.

At December 31, 2024, there was $75.8 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 September 30, 2024, tax credit receivables amounting to $344.2 million represented collateral related to the Production Tax Credit Facility.

At December 31, 2024, we had 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 December 31, 2024, tax credit receivables amounting to $353.1 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 September 30, 2024, there was $260.0 million outstanding under the Production Tax Credit Facility.

At December 31, 2024, there was $257.8 million outstanding under the Production Tax Credit Facility.

In January and February 2025, the Company entered into amendments to the Production Tax Credit Facility which extended the maturity to January 27, 2028 and increased the maximum principal amount to $280.0 million.

• Film Library Facility:

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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.

At December 31, 2024, there was $87.5 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 September 30, 2024, there was $160.2 million outstanding under the Backlog Facility.

As of December 31, 2024, there was $151.9 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 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.

As of December 31, 2024, there was $27.1 million outstanding under the "other" loans, with a contractual repayment date in July 2025.

As of December 31, 2024, accounts receivable amounting to $20.8 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at December 31, 2024 amounting to $11.0 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 $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).

In addition, the Company has a redeemable noncontrolling interest balance of $99.7 million as of December 31, 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.

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.

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 Proposed Separation of 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.

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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.

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 September 30, 2024 and the estimated timing of payment:

The following table sets forth our significant contractual and other obligations as of December 31, 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 September 30, 2024 (on-balance sheet arrangements)

Future annual repayment of debt and other obligations recorded as of December 31, 2024 (on-balance sheet arrangements)

Corporate debt (1) :

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Term Loan A 314.4 — 314.4

314.4 44.5 269.9

Term Loan B 250.0 250.0 —

5.5% Senior Notes 715.0 — 715.0

5.5% Senior Notes and Exchange Notes 715.0 — 715.0

eOne IP Credit Facility 331.5 34.0 297.5

340.0 34.0 306.0

LG IP Credit Facility 850.0 85.0 765.0

455.0 34.1 420.9

Film related obligations (2)

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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.

(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.

(5) Includes cash interest payments on our corporate debt and film related obligations, based on the applicable SOFR interest rates at December 31, 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).

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

As of December 31, 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.

As of December 31, 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 six months ended September 30, 2024, the Company did not repurchase any common shares.

During the nine months ended December 31, 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 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.

At December 31, 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 $259.5 million and accumulated deficit of $3,422.7 million were deemed free of restrictions from paying dividends at December 31, 2024.

Discussion of Operating, Investing, Financing Cash Flows

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.

Cash, cash equivalents and restricted cash decreased by $113.6 million for the nine months ended December 31, 2024 and increased by $18.5 million for the nine months ended December 31, 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 six months ended September 30, 2024 and 2023 were as follows:

Six Months Ended

September 30,

Cash flows provided by (used in) operating activities for the nine months ended December 31, 2024 and 2023 were as follows:

Nine Months Ended

2024 2023 Net Change

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Net Cash Flows Provided By (Used In) Operating Activities $ (359.7) $ 401.4 $ (761.1)

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.

Cash flows used in operating activities for the nine months ended December 31, 2024 were $359.7 million compared to cash flows provided by operating activities of $401.4 million for the nine months ended December 31, 2023.

The decrease in cash provided by operating activities is due to greater cash used in changes in operating assets and liabilities of $703.5 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, 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.

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 content related payables, participations and residuals, 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 six months ended September 30, 2024 and 2023 were as follows:

Six Months Ended

September 30,

Cash flows used in investing activities for the nine months ended December 31, 2024 and 2023 were as follows:

Nine Months Ended

(Amounts in millions)

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

Purchase of eOne, net of cash acquired (see Note 2) — (331.1)

Proceeds from the sale of other investments 1.5 5.2

1 unchanged sentence

Acquisition of assets (film library and related assets) (35.0) —

Increase in loans receivable — (2.1)

Increase in (repayment of) loans receivable 0.8 (3.6)

Capital expenditures (23.6) (24.7)

Net Cash Flows Used In Investing Activities $ (46.3) $ (365.5)

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.

Cash flows used in investing activities of $46.3 million for the nine months ended December 31, 2024 compared to cash flows used in investing activities of $365.5 million for the nine months ended December 31, 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 as compared to cash used for the purchase of eOne, net of cash acquired, in the prior year's period.

Financing Activities.

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,

Cash flows provided by (used in) financing activities for the nine months ended December 31, 2024 and 2023 were as follows:

Nine Months Ended

(Amounts in millions)

1 unchanged sentence

Debt - repurchases and repayments (3,493.0) (1,987.4)

Net proceeds from (repayments and repurchases of) debt (31.5) (81.0)

Net proceeds from debt 64.7 283.1

Film related obligations - borrowings 1,692.0 1,262.6

Film related obligations - repayments (1,703.9) (1,530.3)

Net proceeds from (repayments of) film related obligations (15.6) (229.3)

Net repayments of film related obligations (11.9) (267.7)

Sale of noncontrolling interest in Lionsgate Studios Corp.

2 unchanged sentences

Net Cash Flows Provided By (Used In) Financing Activities $ 292.4 $ (17.4)

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:

Cash flows provided by financing activities of $292.4 million for the nine months ended December 31, 2024 compared to cash flows used in financing activities of $17.4 million for the nine months ended December 31, 2023.

Cash flows provided by financing activities for the nine months ended December 31, 2024 primarily reflects proceeds from the sale of a noncontrolling interest in Lionsgate Studios of $281.7 million, and net debt borrowings of $64.7 million, which were partially offset by net film related obligations repayments of $11.9 million, and cash used for other financing activities of $42.1 million representing primarily tax withholding required on equity awards of $28.7 million.

Net debt borrowings of $64.7 million in the nine months ended December 31, 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.

1 unchanged sentence

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.

• In November 2024, we borrowed $265.0 million under the LG IP Credit Facility, and used the net proceeds to pay in full the remaining $250.0 million principal amount of the Term Loan B.

• In December 2024, we borrowed $130.0 million under the LG IP Credit Facility.

Cash flows used in financing activities of $17.4 million for the nine months ended December 31, 2023 primarily reflects net film related obligations repayments of $267.7 million due to net repayments under production loans and the Production Tax Credit Facility of $188.1 million and net repayments under the Backlog Facility, Film Library Facility and other of $79.6 million, and cash used for other financing activities of $32.8 million representing primarily tax withholding required on equity awards of $31.0 million.

These uses of cash were partially offset by net proceeds from debt of $283.1 million in the nine months ended December 31, 2023, which included net borrowings under our revolving credit facility of $375.0 million to fund the purchase of eOne, which were offset by cash paid of $61.4 million for the repurchase of $85.0 million principal amount of the 5.5% Senior Notes, and required repayments on our term loans.

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 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).

As disclosed in Note 10 to our unaudited condensed consolidated financial statements, remaining performance obligations were $1.8 billion at December 31, 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 $1.2 billion at December 31, 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