8-K: Lionsgate Studios Reports Q4 Fiscal 2024 Results, Revenue at $879.9 Million

Lionsgate Studios reported a 6.8% increase in revenue to $879.9 million for the fourth quarter of fiscal year 2024, driven by strong television production and library sales.

Summary

• Lionsgate Studios, which launched as a separate publicly-traded company on May 14, 2024, reported its fourth quarter results for the period ended March 31, 2024.
• The Studio Business, comprising Motion Picture and Television Production segments, saw a revenue increase of 6.8% to $879.9 million compared to the prior year quarter.
• Segment profit for the Studio Business increased by nearly 10% to $134.8 million.
• Motion Picture segment revenue declined by 23% to $410.6 million, with segment profit decreasing by 12% to $82.2 million, due to a tough comparison against the prior year's release of 'John Wick: Chapter Four'.
• However, the Motion Picture Group segment profit for the year was the highest in 10 years at $319.6 million.
• Television Production segment revenue increased significantly by 61% to $469.3 million, and segment profit increased by 83% to $52.6 million, driven by library sales and post-strike content deliveries.
• Lionsgate's film and television library achieved a record $339 million in revenue for the quarter, with a trailing 12-month revenue of $886 million.
• The company reported $397 million of net cash flow from operating activities and $230 million in adjusted free cash flow for the full year.
• The backlog from the Motion Picture and Television Production segments was $1.5 billion as of March 31, 2024.
• Lionsgate's Media Networks segment saw a 7.1% year-over-year revenue decrease to $361.5 million, with a 28.4% decline in segment profit to $52.5 million.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to strong performance in the Television Production segment and record library revenue, offset by declines in the Motion Picture segment and Media Networks. The separation of the studio business is also viewed positively.

Positives

• The Television Production segment experienced substantial growth in both revenue and profit.
• The film and television library achieved record quarterly revenue.
• The company generated strong net cash flow from operating activities and adjusted free cash flow for the full year.
• The Motion Picture Group segment profit for the year was the highest in 10 years.
• The company has a significant backlog of $1.5 billion in the Motion Picture and Television Production segments.

Negatives

• Motion Picture segment revenue and profit declined compared to the prior year quarter due to the strong performance of 'John Wick: Chapter Four' in the prior year.
• The Media Networks segment experienced a decrease in both revenue and profit.
• Domestic OTT subscribers were flat sequentially, and overall North American net subscribers decreased by 480K.

Risks

• The company's performance is subject to the unpredictability of the commercial success of its motion pictures and television programming.
• The company faces risks related to the substantial investment of capital required to produce and market films and television series.
• The company is exposed to risks related to technological changes and other trends affecting the entertainment industry.
• The company is subject to potential adverse reactions or changes to business or employee relationships.
• The company is exposed to the impact of global pandemics on its business.
• The company is subject to weakness in the global economy and financial markets, including a recession and past and future bank failures.
• The company is exposed to wars, terrorism and multiple international conflicts that could cause significant economic disruption and political and social instability.
• The company is subject to labor disruptions and strikes.

Future Outlook

Lionsgate anticipates a full separation of its studio and STARZ businesses by the end of the calendar year, and the company believes the launch of Lionsgate Studios as a pure play, publicly-traded company will highlight the value of its content.

Management Comments

• Lionsgate and Lionsgate Studios CEO Jon Feltheimer stated that the company had strong financial results in the fourth quarter, completed four major transactions, and moved closer to a value-defining separation of the studio and STARZ businesses.
• He also mentioned that the company grossed over a billion dollars at the global box office and grew its film and TV library to record levels.

Industry Context

The separation of Lionsgate Studios as a standalone entity reflects a broader trend in the media industry where companies are increasingly focusing on their core content production businesses. This move allows investors to better assess the value of the studio business independently from the STARZ subscription platform.

Comparison to Industry Standards

• Lionsgate's library revenue of $339 million for the quarter is a strong result, but it is important to compare this to other major studios like Disney, Warner Bros. Discovery, and Paramount, which have significantly larger libraries and often report higher library revenues.
• The 6.8% revenue growth in the Studio Business is a positive sign, but it is crucial to compare this to the growth rates of other content production companies. For example, Netflix and Amazon Studios have been experiencing rapid growth in their content businesses, although they operate under different business models.
• The 83% increase in Television Production segment profit is impressive, but it is important to assess whether this growth is sustainable and if it is in line with industry trends. Companies like NBCUniversal and Sony Pictures Television also have strong television production businesses, and their performance should be considered for comparison.
• The decline in Motion Picture segment revenue highlights the volatility of the theatrical business, which is a common challenge for all studios. Comparing Lionsgate's theatrical performance to other studios' results in the same period would provide a better understanding of its relative performance.
• The adjusted free cash flow of $230 million for the full year is a positive indicator of the company's financial health, but it is important to compare this to the free cash flow of other media companies to assess its relative strength.

Stakeholder Impact

• Shareholders will be impacted by the financial performance of the company and the separation of the studio and STARZ businesses.
• Employees may be affected by the restructuring and separation of the businesses.
• Customers will be impacted by the content produced and distributed by the company.
• Suppliers and creditors will be impacted by the financial health and operations of the company.

Next Steps

• Lionsgate and Lionsgate Studios senior management will hold an analyst and investor conference call to discuss fiscal 2024 fourth quarter results on May 23rd.
• The company will continue to prepare for the anticipated full separation of its studio and STARZ businesses by the end of the calendar year.

Key Dates

Keywords

Lionsgate Studios, Film Production, Television Production, Library Revenue, Motion Picture, Media Networks, Adjusted OIBDA, Free Cash Flow, Content, Entertainment