LION 10-K & 10-Q changes, risk factors and insider trading
Lionsgate Studios Corp. · NYSE · Services-Motion Picture & Video Tape Production · CIK 2052959 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Lionsgate’s results may be affected by the performance of a limited number of content releases in any given period.”
New heading “Lionsgate may incur significant write-offs if its projects do not perform well enough to recover costs.”
New heading “A significant portion of Lionsgate’s library revenues is derived from a small number of titles.”
New heading “Changes in consumer behavior, evolving technologies (including artificial intelligence) and shifts in distribution models may adversely affect Lionsgate’s business, financial condition or results of operations.”
New heading “Lionsgate’s success depends on its ability to attract and retain key personnel and artistic talent.”
New heading “Business interruptions resulting from circumstances or events beyond Lionsgate’s control could adversely affect its business operations.”
New heading “Changes in Lionsgate’s business strategy, growth initiatives or restructuring activities may result in increased costs or otherwise affect its profitability.”
New heading “Lionsgate is subject to risks associated with possible acquisitions, dispositions, business combinations and joint ventures.”
New heading “Global and regional economic conditions may adversely affect Lionsgate’s business.”
New heading “Lionsgate’s business involves risks of claims arising from the content it produces, distributes or licenses, which could adversely affect its business, results of operations and financial condition.”
New heading “Lionsgate may be subject to litigation, regulatory investigations and other legal proceedings that could adversely affect its business, financial condition and results of operations.”
New heading “Service disruptions, information security incidents or failures affecting Lionsgate or third-parties with whom it works could disrupt its operations, harm its reputation and adversely affect its business.”
New heading “The requirements of being a public company, including maintaining effective internal control over financial reporting and management systems, may strain Lionsgate’s resources, divert management’s attention and affect Lionsgate’s ability to attract and retain executive management and qualified board members.”
New heading “The value of the assets securing Lionsgate’s indebtedness, including its intellectual property and content library, may decline, which could adversely affect its borrowing capacity and financial flexibility.”
New heading “Lionsgate may face refinancing risk upon the maturity of its indebtedness.”
Removed heading “The requirements of being a public company, including maintaining adequate internal control over financial and management systems, may strain Lionsgate’s resources, divert management’s attention, and affect Lionsgate’s ability to attract and retain executive management and qualified board members.”
Removed heading “Lionsgate may incur significant write-offs if its projects do not perform well enough to recoup costs.”
Removed heading “Changes in Lionsgate’s business strategy, plans for growth or restructuring may increase its costs or otherwise affect its profitability.”
Removed heading “A significant portion of Lionsgate’s library revenues comes from a small number of titles.”
Removed heading “Changes in consumer behavior, as well as evolving technologies (such as artificial intelligence) and distribution models, may negatively affect Lionsgate’s business, financial condition or results of operations.”
Removed heading “Lionsgate is subject to risks associated with possible acquisitions, dispositions, business combinations, or joint ventures.”
Removed heading “Lionsgate’s success depends on attracting and retaining key personnel and artistic talent.”
Removed heading “Global economic turmoil and regional economic conditions could adversely affect Lionsgate’s business.”
Removed heading “Business interruptions from circumstances or events outside of Lionsgate’s control could adversely affect Lionsgate’s operations.”
Removed heading “Lionsgate’s business involves risks of claims and content of material, which could adversely affect Lionsgate’s business, results of operations and financial condition.”
Removed heading “Lionsgate may become subject to litigation and other legal proceedings, which could adversely impact its business, financial condition and results of operations.”
Removed heading “Service disruptions or failures, or security incidents impacting Lionsgate or its third-party service providers’ information systems, data and networks may disrupt its businesses, damage its reputation, expose it to regulatory investigations, actions, litigation, fines and penalties or have a negative impact on its results of operations including but not limited to loss of revenue or profit, loss of customers or sales and other adverse consequences.”
Largest changes
“Global economic uncertainty and volatility resulting from events such as pandemics, wars, inflationary pressures, bank failures, recessions or other financial disruptions may cause a general tightening in the credit markets, reduced liquidity, increases in the rates of default and bankruptcy, heightened government intervention, decreased consumer confidence, slower economic activity and significant volatility in credit, equity and fixed income markets. …”see in full comparison
“Global economic turmoil resulting from such events as global pandemics, wars, inflation, bank failures or a recession, may cause a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, levels of intervention from U.S. …”see in full comparison
“From time to time, Lionsgate is involved in various legal proceedings, claims, regulatory investigations and arbitration proceedings, arising in the ordinary course of business. These matters may relate to, among other matters, intellectual property rights, employment and labor issues, consumer privacy and data protection, contractual and commercial disputes, and the production, distribution, and licensing of content. The outcome of such matters is inherently uncertain and may be difficult to predict. …”see in full comparison
“Service disruptions or failures, or security incidents impacting Lionsgate or its third-party service providers’ information systems, data and networks may disrupt its businesses, damage its reputation, expose it to regulatory investigations, actions, litigation, fines and penalties or have a negative impact on its results of operations including but not limited to loss of revenue or profit, loss of customers or sales and other adverse consequences.”see in full comparison
“From time to time, Lionsgate may be subject to various legal proceedings (including class action lawsuits), claims, regulatory investigations and arbitration proceedings, including claims relating to intellectual property, employment, wage and hour, consumer privacy, contractual and commercial disputes, and the production, distribution, and licensing of its content. The outcomes of legal proceedings are inherently uncertain. …”see in full comparison
“A cybersecurity incident or systems disruption could impair Lionsgate’s ability to operate its business, disrupt the production, distribution or licensing of content, require significant expenditures to investigate and remediate, and result in regulatory investigations, reporting obligations, litigation, fines or penalties, contractual liabilities, reputational harm, loss of customers or revenue, or other adverse consequences. …”see in full comparison
Full comparison: every changed paragraph (155)
You should carefully consider each of the following risks and uncertainties associated with Lionsgate and the ownership of Lionsgate securities. In addition, for more information you should review the specific descriptions of Lionsgate’s businesses under “Item 1. Business” as well as other information included in, or incorporated by reference intointo, this FormAnnual 10-K.Report. The following list of significant risk factors is not all-inclusive or necessarily in order of importance. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may materially adversely affect us in future periods.
Lionsgate faces substantial capital requirements and significant financial risks.
The production, acquisition and distribution of motion picture and television content requiresrequire substantial capital.capital Ainvestment, and a significant amountperiod of time may elapse between the expenditure of funds and the receipt of revenues afterfollowing release or distribution of such content.distribution. Lionsgate cannot assure you that it will be able to successfully implement or continue arrangements intended to reduce theproduction-related risks including the utilization of production exposure such as tax credit,credits or participation in government or industry incentive programs. Moreover,In addition, Lionsgate may experience delaysproduction anddelays, increasedcost costsincreases dueor toother disruptions orresulting from events beyond its controlcontrol. andIf ifa production incurs substantial budget overruns, Lionsgate may have to seek additional financing or fund thesuch overrunoverruns itself. Lionsgate cannot makeassure assurancesyou regarding the availability of suchthat additional financingfinancing, if required, will be available on terms acceptable toterms, it,or at all, or that it will ultimately recoup these increased costs. Increased production costs or budget overruns incurred with respect to a particular film or television project may delay or prevent its completioncompletion, release, or release or may result in a delayedpostponed release and the postponement to a potentially less favorable date.date, Thiswhich could adversely affect box office performance and the overall financial success of suchthe film.project. Any of the foregoing could have a material adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
The requirements of being a public company, including maintaining adequate internal control over financial and management systems, may strain Lionsgate’s resources, divert management’s attention, and affect Lionsgate’s ability to attract and retain executive management and qualified board members.
As a public company, Lionsgate is subject to reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the rules subsequently implemented by the SEC, the rules and regulations of the listing standards of U.S. and Canadian exchanges, and other applicable securities rules and regulations. Compliance with these rules and regulations may strain its financial and management systems, internal controls, and employees.
The Exchange Act requires, among other things, that Lionsgate file annual, quarterly, and current reports with respect to its business and operating results. Moreover, the Sarbanes-Oxley Act requires, among other things, that Lionsgate maintain effective disclosure controls and procedures, and internal control, over financial reporting. In order to maintain and, if required, improve disclosure controls and procedures, and internal control over, financial reporting to meet this standard, significant resources and management oversight are required. If Lionsgate has material weaknesses or deficiencies in its internal control over financial reporting, Lionsgate may not detect errors on a timely basis and its consolidated financial statements may be materially misstated. Effective internal control is necessary for Lionsgate to produce reliable financial reports and is important to prevent fraud.
In addition, Lionsgate is required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. Lionsgate may incur significant expenses and devote substantial management effort toward ensuring compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, Lionsgate management’s attention may be diverted from other business concerns, which could harm Lionsgate’s business, operating results, and financial condition.
Lionsgate may incur significant write-offs if its projects do not perform well enough to recoup costs.
Lionsgate is required to amortize capitalized production costs over the expected revenue streams as it recognizes revenue from films or other projects. The amount of production costs that will be amortized each quarter depends on, among other things, how much future revenue Lionsgate expects to receive from each project. Unamortized production costs are evaluated for impairment each reporting period on a project-by-project basis when events or changes in circumstances indicate that the fair value of a film is less than its unamortized cost. These events and changes in circumstances include, among others, an adverse change in the expected performance of a film prior to its release, actual costs substantially in excess of budgeted cost for the film, delays or changes in release plans and actual performance subsequent to the film’s release being less than previously expected performance estimates. In any given quarter, if Lionsgate lowers its previous forecast with respect to total anticipated revenue from any film or other project or increases its previous forecast of cost of making or distribution of the film, Lionsgate may be required to accelerate amortization or record impairment charges with respect to the unamortized costs, even if it previously recorded impairment charges for such film or other project. Such impairment charges could adversely impact Lionsgate’s business, operating results and financial condition.
Changes in Lionsgate’s business strategy, plans for growth or restructuring may increase its costs or otherwise affect its profitability.
As changes in Lionsgate’s business environment occur, it may adjust its business strategies to meet these changes, which may include growing a particular area of business or restructuring a particular business or asset. In addition, external events including changing technology, changing consumer patterns, acceptance of theatrical and television offerings and changes in macroeconomic conditions may impair the value of Lionsgate’s assets. When these occur, Lionsgate may incur costs to adjust its business strategy and may need to write down the value of assets. Lionsgate may also invest in existing or new businesses. Some of these investments may have negative or low short-term returns and the ultimate prospects of the businesses may be uncertain or may not develop at a rate that supports its level of investment. In any of these events, Lionsgate’s costs may increase, it may have significant charges associated with the write-down of assets, or returns on new investments may be lower than prior to the change in strategy, plans for growth or restructuring.
Lionsgate’s results of operations depend significantly on the commercial success of the motion picture, television and other content that it sells, licenses or distributes, the performance of which cannot be predicted with certainty. Viewer preferences and audience acceptance are difficult to predict and may be influenced by numerous factors beyond Lionsgate’s control, including critical reception, the format in which content is released, the talent involved, genre and subject matter, audience response, the quality and volume of content released by competitors, the availability of alternative forms of entertainment (including user-generated content), general economic conditions and other tangible and intangible factors. Lionsgate may not be able to anticipate and respond effectively to shifts in consumer tastes and viewing behaviors.
Lionsgate’s results of operations may also fluctuate due to the timing, mix, number and availability of theatrical motion picture and home entertainment releases, as well as licensing windows for content. In addition, low viewership for television programming produced by Lionsgate may result in the cancellation or non-renewal of a program, which could lead to significant programming impairments in a given period, and reduced license fees or other revenues in future periods. Other than non-renewals or cancellation of television programs or series that may occur from time to time, Lionsgate is not aware of any current material cancellation of television programming releases or of content that Lionsgate sells, licenses or distributes.
In addition, the comparability of Lionsgate’s results of operations may be affected by changes in accounting guidance or changes in Lionsgate’s ownership of certain assets and businesses. As a result of the foregoing factors, Lionsgate’s results of operations may fluctuate and differ from period to period, and therefore, may not be indicative of the results for any future periods or directly comparable to prior reporting periods.
Lionsgate’s results may be affected by the performance of a limited number of content releases in any given period.
Lionsgate’s operating results in any period may depend significantly on the performance of a limited number of motion pictures or television programs released or licensed during that period. As a result, the underperformance of one or more projects, whether due to audience reception, critical response, competitive releases, marketing execution, timing, or other factors, could have an adverse effect on Lionsgate’s revenues, operating results and profitability for that period.
This concentration risk may be exacerbated by the high upfront capital investment required to produce or acquire content and the inherent unpredictability of audience preferences. Losses or lower‑than‑expected returns from projects may not be offset by the performance of other content within the same period or fiscal year, and the impact of underperformance may extend beyond the initial release window. Any of the foregoing could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
Lionsgate may incur significant write-offs if its projects do not perform well enough to recover costs.
Lionsgate is required to amortize capitalized production costs over the expected revenue streams as it recognizes revenue from films or other projects. The amount of production costs amortized in any period depends on, among other factors, Lionsgate’s estimates of total future revenues expected to be received from each project. Unamortized production costs are evaluated for impairment each reporting period on a project-by-project basis when events or changes in circumstances indicate that the fair value of a film is less than its unamortized cost. Such events and changes in circumstances may include, among others, adverse changes in the expected performance of a film prior to its release, actual costs substantially in excess of budgeted amounts, delays or changes in release plans, or actual performance following release that is less than previously expected. If, in any reporting period, Lionsgate revises downward its estimates of total anticipated revenues for a film or other project or revises upward its estimated production or distribution costs, Lionsgate may be required to accelerate amortization or record impairment charges with respect to the remaining unamortized costs, even if impairment charges were previously recorded for that project. These write‑offs or impairment charges could be significant and could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
A significant portion of Lionsgate’s library revenues is derived from a small number of titles.
In any given fiscal quarter, a limited number of titles may account for a substantial portion of the revenues generated from Lionsgate’s library. In addition, many titles in its library are not actively distributed at any given time and generate little or no revenue. The rights associated with titles in Lionsgate’s library also vary significantly and, in many cases, are subject to limitations as to media, territory or term. In certain instances, Lionsgate holds only partial rights, certain rights may be reserved by or granted to third parties, or Lionsgate’s distribution or exploitation rights may expire after a specified period. Lionsgate’s ability to maintain and grow its library revenues depends on, among other things, its ability to continue to acquire new content and rights to titles through production, distribution arrangements, acquisitions, mergers, joint ventures or other strategic relationships, and to renew or extend rights to titles that generate a significant portion of its revenues on acceptable terms. Any such failure could have a material adverse effect on its business, financial condition, operating results, liquidity and prospects.
Lionsgate has not entered into any agreements regarding material acquisitions of titles, renewals, business combinations, joint ventures or sales that have not yet closed.
Changes in consumer behavior, evolving technologies (including artificial intelligence) and shifts in distribution models may adversely affect Lionsgate’s business, financial condition or results of operations.
Lionsgate’s success depends in part on its ability to anticipate and adapt to evolving consumer preferences, content consumption patterns, technological developments and changes in industry business models. The way audiences discover, access and consume content continues to evolve, driven by new distribution platforms and increased competition from new entrants and emerging technologies. These developments have made revenue more difficult to predict and have increased pressure on pricing, release strategies and monetization models. Advances in content delivery technologies and the proliferation of new platforms and services have significantly increased the volume of available video content and altered consumer expectations regarding content availability, pricing and convenience. These changes include continued cord‑cutting, the growth of advertising‑based video‑on‑demand services and free ad‑supported streaming television (FAST) channels, and other evolving distribution models.
In addition, evolving technologies such as artificial intelligence (“AI”) may be used in ways that increase access to publicly available free or relatively inexpensive content that may reduce demand for Lionsgate’s products and services. Regulatory frameworks governing AI and other emerging technologies remain unsettled and affect aspects of Lionsgate’s existing business model, including how it creates, uses, protects and monetizes its intellectual property and how it produces, distributes and markets content.
In particular, AI technologies, including generative AI, machine learning and large language models, are rapidly evolving and becoming more widely adopted across the entertainment industry. Lionsgate has begun incorporating certain AI‑enabled tools into its operations, and competitors may gain advantages by adopting such technologies more quickly or more effectively.
The use of AI technologies is relatively new and may give rise to operational, legal, regulatory, ethical and reputational risks that are difficult to predict, particularly as their use becomes more integral to Lionsgate’s business. If Lionsgate is unable to successfully leverage emerging technologies or adapt to changing consumer behavior, competitive dynamics, distribution platforms or business models, any of the foregoing could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
Lionsgate operates as an independent producer and distributor. Most of the major U.S. studios are part of large diversified corporate groups that can have significantly greater financial resources, established relationships, broader portfolios and alternative revenue streams that may allow them to better withstand fluctuations in the performance of their motion picture and television operations. If Lionsgate is unable to compete successfully and profitably with existing or new competitors, its business could be adversely affected, which could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
A small number of retailers and distributors account for a material percentage of the revenues in home entertainment for the Motion Picture segment. Lionsgate does not have long-term agreements with retailers. In fiscal 2026, 2025 and 2024, Lionsgate generated approximately 18%, 16% and 14%, respectively, of its revenue from Amazon.com, Inc. and its subsidiaries. Lionsgate cannot assure you that it will maintain favorable relationships with its retailers and distributors (including with Starz) or that they will not be adversely affected by economic conditions, including as a result of global pandemics, wars, such as Russia’s invasion of Ukraine (including sanctions therefrom, though Lionsgate and, to the knowledge of Lionsgate, its directors and executive officers have not been, and are not expected to be, subject to any sanctions related to Russia’s invasion of Ukraine), bank failures, ongoing disruptions in financial markets and in commercial activity generally related to changes in monetary and fiscal policy, United States political developments, geopolitical events and other sources of instability, inflation or a recession. For additional information, see Note 17 to the consolidated financial statements.
Lionsgate’s results of operations depend significantly upon the commercial success of the motion picture, television and other content that it sells, licenses or distributes, which cannot be predicted with certainty. Viewer preferences and audience acceptance are difficult to predict and may be subject to influences beyond Lionsgate’s control, such as the critical acclaim of its content, the format in which content is released, the talent involved, the genre and specific subject matter of its content, audience reaction to its content, the quality and acceptance of content that its competitors release into the marketplace, and the availability of alternative forms of entertainment (including user-generated content) and leisure activities, general economic conditions and other tangible and intangible factors. Lionsgate may not be able to anticipate and react effectively to shifts in tastes and interests. In particular, if one or more motion pictures underperforms at the box office in any given period, Lionsgate’s revenue and earnings results for that period (and potentially, subsequent periods) may be less than anticipated. Lionsgate’s results of operations may also fluctuate due to the timing, mix, number and availability of theatrical motion picture and home entertainment releases, as well as license periods for content. Moreover, low ratings for television programming produced by Lionsgate may lead to the cancellation of a program which may result in significant programming impairments in a given period, and can negatively affect license fees for the cancelled program in future periods. Other than non-renewals or cancellation of television programs or series that may occur from time to time, Lionsgate is not aware of any current material cancellation of television programming releases or of content that Lionsgate sells, licenses or distributes. In addition, the comparability of results may be affected by changes in accounting guidance or changes in Lionsgate’s ownership of certain assets and businesses. As a result of the factors above, Lionsgate’s results of operations may fluctuate and differ from period to period, and therefore, may not be indicative of the results for any future periods or directly comparable to prior reporting periods.
Lionsgate generates revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international marketplaces. Certain of such content licensing arrangements, primarily those relating to the distribution of films by third parties in foreign territories, may include a minimum guarantee. Revenue from these minimum guarantee arrangements amounted to approximately $110.5$174.6 million, $151.0$110.5 million and $101.3$151.0 million for the years ended March 31, 2025,2026, 20242025 and 20232024, respectively. To the extent that receipts generated by such foreign distributor from distribution of the film in the territory exceed a formula-based threshold, the distributor will pay Lionsgate an amount in addition to the minimum guarantee (the “overage”). Absent these arrangements, the revenues derived by Lionsgate may be determined as a function of a revenue-sharing formulation that calculates the licensee fee payable to Lionsgate solely based on the actual performance of the film in the territory. In these situations, content that is not favorably received or underperforms may not achieve the level of revenuesrevenue that Lionsgate would have received from a minimum guarantee arrangement, which could adversely impact Lionsgate’s business, operating results and financial condition.
Lionsgate typically does not enter into long-term production contractsor overall arrangements with the creative producers of motion picture and television content that it produces, acquires or distributes. Moreover,As a result, Lionsgate generallymay hasnot certainhave ongoing rights or guaranteed access to future projects from such producers or co‑financing partners. In addition, while Lionsgate often seeks to obtain derivative rights, such as rights to produce or distribute prequels, sequels, remakes or other related content, there can be no assurance that providesuch itrights will be available, retained or exercised with distributionrespect rightsto to,any forparticular example, prequels, sequels and remakes of certain content it produces, acquires or distributes.property. There is no guarantee that Lionsgate will continue to produce, acquire or distribute future content byfrom any creative producer or co-financingco‑financing partner, andor that it will be able to exploit or extend the value of existing content through derivative works. The loss of relationships with key producers or partners, or the inability to obtain or maintain derivative rights could have a failurematerially toadverse doeffect soon could adversely affect itsLionsgate’s business, financial condition, operating results, liquidity and prospects.
Lionsgate’s success depends on its ability to attract and retain key personnel and artistic talent.
Lionsgate’s success depends upon the continued efforts, abilities and expertise of its executive teams and other key employees, including production, creative and technical personnel, as well as its ability to identify, attract, hire, train and retain such personnel. Although Lionsgate has employment agreements with certain senior executive officers and production executives, it does not maintain significant “key person” life insurance policies for any employee and such agreements cannot assure continued services of such employees. In addition, Lionsgate relies on the availability of a number of actors, writers, directors, producers and other creative talent, many of whom are engaged through third-party production companies who create its original programming. Competition for experienced executives and sought‑after creative talent is intense, and Lionsgate may be unable to attract or retain key personnel or artistic talent on acceptable terms, or at all. The loss of, or inability to attract or retain, key personnel or creative talent could disrupt operations, delay or impair content development and production, and could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
Lionsgate is directly or indirectly dependent on the availability of highly specialized union members who are essential to the development and production of motion pictures and television content including writers, directors, actors and other creative talent, as well as technical and trade employees who are subject to collective bargaining agreements. A labor dispute, work stoppage, slowdown, strike involving one or more unions that provide such essential personnel could disrupt or delay Lionsgate’s ongoing development or production activities, increase costs, or delay or interrupt the release of motion picture or television content. Labor disputes have occurred in the past, such as the industry-wide strike by the Writers Guild of America in May 2023 and Screen Actors Guild in July 2023, and similar actions may occur in the future. Such disputes may restrict access to creative talent, result in work stoppages, disrupt production schedules, reduce the availability of content and may result in increased costs and decreased revenue. Any of the foregoing could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
Business interruptions resulting from circumstances or events beyond Lionsgate’s control could adversely affect its business operations.
Lionsgate’s operations may be vulnerable to service disruptions, outages and other interruptions caused by events or circumstances beyond its control, including fires, floods, earthquakes, power outages, telecommunications failures, software or hardware failures, loss of data, security breaches, cyberattacks, personnel misconduct or error, war or acts of terrorism, global pandemics, labor disruptions or other unforeseen events. Lionsgate’s headquarters are located in Southern California, a region that is subject to seismic activity, wildfires, flooding and other natural disasters. Although Lionsgate has implemented business continuity and disaster recovery plans to respond to certain disruptions, there can be no assurance that such plans will be effective in the event of a specific disaster. Extended disruptions, such as a prolonged power outage, data interruption or loss of key facilities, could materially impair Lionsgate’s ability to operate its business.
In addition, while Lionsgate maintains business interruption insurance for certain potential losses, including losses related to natural disasters, such insurance may not be sufficient to cover all losses or damages, and may not be available on acceptable terms in the future. Any unrecovered losses, extended interruptions or failures to resume normal operations could have a material adverse effect on its business, financial condition, operating results, liquidity and prospects.
Changes in Lionsgate’s business strategy, growth initiatives or restructuring activities may result in increased costs or otherwise affect its profitability.
In response to changes in its business environment, Lionsgate may from time to time adjust its business strategies, including expanding or emphasizing certain lines of business, investing in new or existing operations, or restructuring particular businesses, assets or operations. External factors such as technological developments, changing consumer patterns, changes in the acceptance of theatrical and television offerings, and broader macroeconomic conditions may also adversely affect the value of Lionsgate’s assets or the performance of its businesses. As a result of these strategic changes or external developments, Lionsgate may incur significant costs to implement changes to its business strategy, including restructuring charges, integration costs or other expenses, and may be required to record write‑downs or impairments of assets. In addition, investments in new or existing businesses may generate lower‑than‑expected or negative returns in the short term, and the ultimate prospects of such businesses may be uncertain. Any of these developments could increase Lionsgate’s costs, reduce anticipated returns or result in significant charges, and could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
Lionsgate is subject to risks associated with possible acquisitions, dispositions, business combinations and joint ventures.
From time to time, Lionsgate may evaluate or pursue acquisitions, disposition of assets, business combinations, joint ventures or other strategic transactions intended to complement or expand its business. Such transactions involve significant risks and uncertainties, and Lionsgate may not realize the anticipated benefits of any transaction it undertakes. Risks associated with these transactions include the assumption of liabilities that are greater than expected or not identified during due diligence, significant transaction and integration cost, diversion of management’s time and resources, difficulties integrating operations, personnel, information technology and accounting systems, and challenges in managing the combined business, particularly if key personnel are lost during or following the integration process. In addition, acquisitions or business combinations may result in impairment charges related to goodwill and other intangible assets, development write‑offs or other transaction‑related expenses, which could adversely affect Lionsgate’s financial results. There can be no assurance that any acquisition, business combination or joint venture will be completed on acceptable terms, on a timely basis, or at all, or that Lionsgate will achieve anticipated operating efficiencies, cost savings, revenue growth, synergies or other expected benefits. Lionsgate may also decide to sell individual properties, libraries or other assets or businesses. While such dispositions may generate net proceeds, they may also reduce future revenues and earnings as a result of the loss of income‑producing assets, particularly if the disposed assets contributed meaningfully to Lionsgate’s business diversification. In addition, adverse market conditions or poor timing may result in unrealized asset value. These factors could diminish Lionsgate’s ability to service its indebtedness or repay its notes or other obligations at maturity. Any of the foregoing could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
Global and regional economic conditions may adversely affect Lionsgate’s business.
Global economic uncertainty and volatility resulting from events such as pandemics, wars, inflationary pressures, bank failures, recessions or other financial disruptions may cause a general tightening in the credit markets, reduced liquidity, increases in the rates of default and bankruptcy, heightened government intervention, decreased consumer confidence, slower economic activity and significant volatility in credit, equity and fixed income markets. Ongoing disruptions may also result from changes in monetary and fiscal policy, political developments in the United States, geopolitical events and other sources of instability. A decrease in economic activity in the U.S. or in other regions of the world in which Lionsgate operates could adversely affect demand for its content, thus reducing its revenues and earnings. Weak economic conditions may negatively impact the performance of theatrical, television and home entertainment releases. In addition, sustained inflation or rising price levels could shift consumer demand away from discretionary entertainment while simultaneously increasing Lionsgate’s operating and production costs. Further, instability or failures within the financial services sector could limit access to capital, increase borrowing costs or make it more difficult for Lionsgate to finance acquisitions or engage in other financing activities. Any of the foregoing could have a materially adverse effect on Lionsgate’s business, financial condition, operating results, liquidity and prospects.
A small number of retailers and distributors account for a material percentage of the revenues in home entertainment for the Motion Picture segment. Lionsgate does not have long-term agreements with retailers. In addition, in fiscal 2025, 2024 and 2023, Lionsgate generated approximately 19%, 18% and 25%, respectively, of its revenue from the Starz Business and in fiscal 2025, 2024 and 2023, Lionsgate generated approximately 16%, 14% and 11% respectively, of its revenue from Amazon.com, Inc. and its subsidiaries. Lionsgate cannot assure you that it will maintain favorable relationships with its retailers and distributors (including with Starz) or that it or they will not be adversely affected by economic conditions, including as a result of global pandemics, wars, such as Russia’s invasion of Ukraine (including sanctions therefrom, though Lionsgate and, to the knowledge of Lionsgate, its directors and executive officers have not been, and are not expected to be, subject to any sanctions related to Russia’s invasion of Ukraine), bank failures, ongoing disruptions in financial markets and in commercial activity generally related to changes in monetary and fiscal policy, United States political developments, geopolitical events and other sources of instability, inflation or a recession. For additional information, see Note 17 to the consolidated financial statements.
A significant portion of Lionsgate’s library revenues comes from a small number of titles.
Lionsgate depends on a limited number of titles in any given fiscal quarter for the majority of the revenues generated by its library. In addition, many of the titles in its library are not presently distributed and generate substantially no revenue. Moreover, the rights to the titles in its library vary; in some cases, Lionsgate only holds the right to distribute titles in certain media and territories for a limited term; in other cases, certain rights may be reserved and/or granted to third parties or otherwise only granted to it for a limited period. If Lionsgate cannot acquire new product and the rights to popular titles through production, distribution agreements, acquisitions, mergers, joint ventures or other strategic alliances, or renew expiring rights to titles generating a significant portion of its revenue on acceptable terms, any such failure could have a material adverse effect on its business, financial condition, operating results, liquidity and prospects. Lionsgate has not entered into any agreements regarding material acquisitions of titles, renewals, business combinations, joint ventures or sales that have not yet closed.
Changes in consumer behavior, as well as evolving technologies (such as artificial intelligence) and distribution models, may negatively affect Lionsgate’s business, financial condition or results of operations.
Lionsgate’s success, in part, depends on its ability to anticipate and adapt to shifting content consumption patterns and technological development. The ways in which viewers consume content, and technology and business models in its industry, continue to evolve, and new distribution platforms, as well as increased competition from new entrants and emerging technologies, have added to the complexity of maintaining predictable revenues. Developments in technology and new content delivery products and services have also led to an increased amount of video content, as well as changes in consumers’ expectations regarding the availability of video content and their willingness to pay for access to such content. These changes include the increase in the number of advertising-based video on demand services or free, ad-supported streaming linear channels (also known as FAST channels) or increased cord-cutting.
Evolving technology, such as artificial intelligence (“AI”), may be used in ways that increase access to publicly available free or relatively inexpensive content that may reduce demand for Lionsgate’s products and services. Regulations governing new technological developments, such as developments in AI, remain unsettled, and these developments may affect aspects of Lionsgate’s existing business model, including revenue streams for the use of Lionsgate’s intellectual property and how it creates and distributes its content. If Lionsgate fails to successfully leverage emerging technologies and effectively anticipate or adapt to emerging competitors, content distribution platforms, changes in consumer behavior and shifting business models, this could have a material adverse effect on its competitive position, business, financial condition and results of operations In particular, the use of AI, including generative AI, machine learning, and large language models (collectively, “AI/ML technologies”), is evolving rapidly and becoming more prevalent in business operations, and Lionsgate’s ability to compete could be adversely affected if its competitors gain an advantage by using such technologies. We have begun adopting certain AI/ML technologies into our daily operations. The use of AI/ML technologies is relatively new, and may lead to challenges, concerns and risks that are significant or that we may not be able to predict, especially if our use of these technologies in our operations becomes more important over time.
Lionsgate is an independent distributor and producer. Most of the major U.S. studios are part of large diversified corporate groups with a variety of other operations that can provide both the means of distributing their products and stable sources of earnings that may allow them to better offset fluctuations in the financial performance of their motion picture operations and television production operations. If Lionsgate is unable to successfully or profitably compete with current and new competitors, its business will be adversely affected.
Lionsgate faces economic, political, regulatory, and other risks fromassociated with doing business internationally.
Lionsgate has operations and distributes content outside the U.S. and derives a portion of its revenue from international sources. As a result, its business is subject to certain risks inherent in international business, many of which are beyond its control. These risks include:
•difficulties in understanding and complying with local laws, regulations and customsbusiness practices in foreign jurisdictions;
•laws and policies adversely affecting trade, investmentinvestment, and taxes, including laws and policies relating to thetaxation, repatriation of funds and withholding taxes, and changes in these lawstaxes;
•sanctions imposedand onother restrictions applicable to certain countries, entities and individuals with whom it conducts business (such as those imposed duein toconnection with Russia’s invasion of Ukraine);
•the impact of trade disputes;
•compliance with anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act that impose strict requirements on how Lionsgate may conduct its foreign operations and changes in these laws and regulations;
•differing degrees of consumer protection laws, data privacy and cybersecurity laws, and changes in these laws;
•differing degrees of employee or labor laws and changes in these laws that may impact our ability to hire and retain foreign employees;
Management's Discussion & Analysis (MD&A)
New heading “Starz Separation”
Removed heading “Basis of Presentation”
Removed heading “Accounting for Films and Television Programs”
Largest changes
“Management will continue to monitor all of its reporting units for further changes in the business environment that could impact the recoverability in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities. …”see in full comparison
“(1)Content and other impairments primarily reflect $13.2 million in development cost write-offs recorded during the year ended March 31, 2026 for write-downs in connection with the restructuring of the Motion Picture and Television Production businesses. In addition, the amounts in the year ended March 31, 2026 and 2025 include impairment charges related to certain operating lease right-of-use assets and leasehold improvements within the Television Production segment. …”see in full comparison
“Covenants. The Credit Agreement contains customary affirmative and negative covenants that, subject to certain significant exceptions, limit the ability of the Company and its restricted subsidiaries to incur additional indebtedness or liens, make investments, engage in mergers, consolidations, asset sales or acquisitions, pay dividends or other restricted payments and enter into certain affiliate transactions. In addition, the Credit Agreement requires us to maintain a Liquidity Ratio (as defined in the Credit Agreement) of no less than 1.10 to 1.00 as of the last day of each fiscal quarter. …”see in full comparison
“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. We perform our annual impairment test as of January 1 in each fiscal year. A goodwill impairment loss would be recognized for the amount that the carrying amount of a reporting unit exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill impairment. …”see in full comparison
“In performing a quantitative assessment of goodwill, we determine the fair value of our reporting units by using a combination of discounted cash flow (“DCF”) analyses and market-based valuation methodologies. …”see in full comparison
“For our annual goodwill impairment test for fiscal 2025, given the length of time since our last quantitative assessment and considering the separation of the Studio Business from the Starz Business, we performed quantitative goodwill impairment assessments for all of our reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment), based on the most recent data and expected growth trends, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company's …”see in full comparison
Full comparison: every changed paragraph (217)
This section of our Annual Reportthis Form 10-K includes a discussion and analysis of our financial condition and results of operationoperations for the fiscal years ended March 31, 2026 and 2025 and 2024,year-to-year comparisons between fiscal 2026 and 2025. Discussions of 2025 items and year-to-year comparisons between fiscal 2025 and fiscal 2024. A discussion and analysis of our financial condition and results of operation for the fiscal year ended March 31, 2023 and year-to-year comparisons between fiscal 2024 andthat fiscalare 2023not included in this Form 10-K can be found in “Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of theexhibit Studio Business of Lions Gate Entertainment Corp.” included as Exhibit 99.2 to Amendment No. 199.1 to the FormCompany’s 8-KAnnual filed by Lionsgate Studios Holding Corp.Report on MayForm 30,10-K 2024.for andthe isfiscal hereinyear incorporatedended byMarch reference.31, 2025.
Lionsgate Studios Corp. (NYSE: LION) (the “Company,” “Lionsgate,” “New Lionsgate,” “we,” “us” or “our”) is one of the world’s leading standalone, pure play content companies. It brings together diversified motion picture and television production and distribution businesses, a world-class portfolio of valuable brands and franchises, a talent management and production powerhouse and a more than 20,000-title film and television library, all driven by Lionsgate’s bold and entrepreneurial culture.
Prior to the Starz Separation, as further discussed below, Lions Gate Entertainment Corp. (formerly listed on the New York Stock Exchange (“NYSE”): LGF.A, LGF.B) (“Old Lionsgate”) encompassed the motion picture and television studio operations (formerly referred to as the “Studio Business”) and the STARZ premium global subscription platform. Following the Studio Separation, as discussed in Note 3 to our consolidated financial statements, Lionsgate Studios Corp. (formerly listed on the NASDAQ Global Select Market (“NASDAQ”): LION) (“Legacy Lionsgate Studios”) comprised the Studio Business and the STARZ business remained with Lions Gate Entertainment Corp.
We classify our continuing operations through two reportable segments: Motion Picture and Television Production (see further discussion below).
Starz Separation
On May 6, 2025, through a series of transactions contemplated by a certain arrangement agreement, dated as of January 29, 2025, as amended by an amending agreement, dated as of March 12, 2025 (collectively, the “Arrangement Agreement”), the separation of the businesses of Legacy Lionsgate Studios, of which Old Lionsgate owned approximately 87.8%, and the Starz Business (the “Starz Separation”) was completed. As a result of the Arrangement Agreement, the pre-transaction shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate (see Note 2 to our consolidated financial statements).
Notwithstanding the legal form of the Starz Separation, for accounting and financial reporting purposes, in accordance with United States generally accepted accounting principles (“U.S. GAAP”), due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Old Lionsgate’s senior management with the Company following the completion of the Starz Separation, Old Lionsgate is considered the accounting spinnor or divesting entity and Starz is considered the accounting spinnee or divested entity. As a result, Old Lionsgate is the accounting predecessor to the Company, and the pro rata distribution of the Starz Business has been recorded through equity with no gain or loss recorded. Accordingly, the historical financial statements reflect the financial position and results of operations of Old Lionsgate with the Starz Business presented as discontinued operations in the financial statements. See Note 2 to our consolidated financial statements for further information.
Prior to the Starz Separation, as further discussed below, Lionsgate Studios Corp. (the “Company,” “Legacy Lionsgate Studios,” “we,” “us,” or “our”) was a subsidiary of Lions Gate Entertainment Corp (“Old Lionsgate” or “Parent”) which encompasses the motion picture and television studio operations (collectively referred to as the “Studio Business”) of Old Lionsgate.
The Studio Business consists of the Motion Picture and Television Production reportable segments, together with substantially all of Old Lionsgate’s corporate general and administrative costs. The Motion Picture segment consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired. The Television Production segment consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and non-fiction programming. The Motion Picture segment includes the licensing of motion pictures and the Television Production segment includes the licensing of Starz original productions to the STARZ-branded premium global subscription platforms (the “Starz Business”). The Television Production segment also includes the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment, a talent management company.
Studio Separation and Business Combination
On May 13, 2024, Old Lionsgate consummated the transactions contemplated by that certain business combination agreement (the “Business Combination Agreement”), with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Old Lionsgate (“Studio HoldCo”), LG Orion Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Old Lionsgate (“StudioCo”), and other affiliates of SEAC.SEAC (the “Closing”). Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business was combined with SEAC through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”). In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “Legacy Lionsgate Studios”) and continuescontinued the existing business operations of StudioCo, which consisted of the Studio Business of Old Lionsgate. TheLegacy CompanyLionsgate Studios became a separate publiclypublicly-traded traded companycompany, and its common shares, without par value (“Legacy LG Studios Common Shares”),shares commenced trading on NasdaqNASDAQ under the symbol “LION” on May 14, 2024.
The Business Combination has been accounted for as a reverse recapitalization in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Legacy Lionsgate Studios represent a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing Legacy LG Studios Common Shares for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio Business equity. The historical net assets of SEAC were stated at fair value, which approximated historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of the Studio Business.
The Studio Business has been determined to be the accounting acquirer in the Business Combination because Old Lionsgate held a controlling financial interest.
AsImmediately a result offollowing the Business Combination andthrough additionalimmediately privateprior investmentsto inthe publicStarz equitiesSeparation, (“PIPE”)approximately financing87.8% discussedof inthe Notetotal 2,shares of Legacy Lionsgate Studios were held by Old Lionsgate, while 12.2% were owned by former SEAC public shareholdersshareholders, andSEAC founders and new common equity financing investors owned approximately 12.2% of Legacy LG Studios Common Shares.investors. In addition to establishing theLegacy StudioLionsgate BusinessStudios as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to Old LionsgateLionsgate. receivedNet proceeds of $278.2 million, inclusive of transaction costs that remained accrued at closing,March including31, $254.32025 and which were paid during the year ended March 31, 2026 totaling $3.5 million inwere PIPEused financing.to partially pay down amounts outstanding under Old Lionsgate's corporate debt. See Note 2,8 to our consolidated financial statements for additionalfurther information related to the Business Combination. The net proceeds from the transaction were used by the Company to pay down the Intercompany Note, see Note 8.detail.
The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Legacy Lionsgate Studios represented a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing stock for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio Business equity. The historical net assets of SEAC were stated at fair value, which approximated historical cost, with no goodwill or other intangible assets recorded. Prior to the Starz Separation, the Studio Business was a consolidated subsidiary of Old Lionsgate.
On May 6, 2025, Old Lionsgate, through a series of transactions contemplated by a certain arrangement agreement, dated as of January 29, 2025, as amended by an amending agreement, dated as of March 12, 2025 (collectively, the “Arrangement Agreement”) completed the separation of the businesses of Legacy Lionsgate Studios, from the STARZ-branded premium subscription platform business (the “Starz Separation”). As a result of the Arrangement Agreement, the pre-transaction shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” (and herein after referred to as “Lionsgate”) and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate (see Note 22).
Notwithstanding the legal form of the Starz Separation, for accounting and financial reporting purposes, in accordance with U.S. GAAP, due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Old Lionsgate’s senior management with Lionsgate following the completion of the Starz Separation, Lionsgate (which holds the Lionsgate Studio Business) is considered the accounting spinnor or divesting entity and Starz (which holds the Starz Business) is considered the accounting spinnee or divested entity. As a result, Old Lionsgate will be the accounting predecessor to Lionsgate and the pro rata distribution of the Starz Business will be recorded through equity with no gain or loss recorded. The Starz Business will be reflected as discontinued operations in the financial statements of Lionsgate following the completion of the Starz Separation, beginning with the first quarter ending June 30, 2025. For periods following the Starz Separation, Lionsgate will reflect the historical financial position and results of operations of Old Lionsgate and as such, Old Lionsgate’s consolidated financial statements as of March 31, 2025 and 2024 and for each of the three years in the period ended March 31, 2025 as well as year-to-year comparisons between fiscal 2025 and fiscal 2024 are included as exhibit 99.1 to this Annual Report.
See also "Liquidity and Capital Resources” for discussion of the Starz Separation financing transactions.
Basis of Presentation
Upon the effective date of the Studio Separation, the Company’s financial statements are presented on a consolidated basis, as Old Lionsgate completed the contribution of the Studio Business on such date.
For periods prior to the Studio Separation, the Company operated as a segment of Old Lionsgate and not as a separate entity. The Company’s financial statements prior to the Studio Separation were prepared on a carve-out basis and were derived from Old Lionsgate’s consolidated financial statements and accounting records and reflect Studio Business’s combined historical financial position, results of operations and cash flows as they were historically managed in accordance with U.S. GAAP. Prior to the Studio Separation, a management approach was applied to determine the carve-out basis of presentation. In using the management approach, considerations over how the business operates were utilized to identify historical operations that should be presented within the carve-out financial statements.
For periods subsequent to the Studio Separation, the accompanying consolidated financial statements include the accounts of Legacy Lionsgate Studios and all of its majority-owned and controlled subsidiaries. The financial statements of the Company for all periods presented are referred to hereinafter as “consolidated financial statements”, but include the historical results of the Company prior to the Studio Separation that are presented on a carve-out basis.
All revenues and costs as well as assets and liabilities directly associated with the business activity of the Studio Business were included in the accompanying consolidated financial statements. Prior to the Studio Separation, revenues and costs associated with the Studio Business were specifically identifiable in the accounting records maintained by Old Lionsgate and primarily represent the revenue and costs used for the determination of segment profit of the Motion Picture and Television Production segments of Old Lionsgate. In addition, the Studio Business costs included an allocation of corporate general and administrative expense (inclusive of share-based compensation) which was allocated to the Studio Business as further discussed below. Other costs excluded from the Motion Picture and Television Production segment profit but relating to the Studio Business were generally specifically identifiable as costs of the Studio Business in the accounting records of Old Lionsgate and were included in the accompanying consolidated financial statements in periods prior to the Studio Separation.
In connection with the Business Combination, on May 9, 2024, Old Lionsgate and StudioCo entered into a shared services and overhead sharing agreement (the “Shared Services Agreement”) which took effect upon the closing of the Business Combination. The Shared Services Agreement facilitates the allocation to the Company of all corporate general and administrative expenses of Old Lionsgate, except for an amount of $10.0 million to be allocated annually to Old Lionsgate. The $10.0 million allocation of Old Lionsgate’s corporate general and administrative expenses to the Starz Business pursuant to the Shared Services Agreement is designed to reflect the portion of corporate expenses expended and reflective of the level of effort and costs incurred related to management oversight and services provided for the Starz Business post Studio Separation with consideration of the anticipated separation of the Starz Business.
The corporate general and administrative expenses that are allocated to the Company pursuant to the Shared Services Agreement include salaries and wages for certain executives and other corporate officers related to executive oversight, investor relations costs, costs for the maintenance of corporate facilities, and other common administrative support functions, including corporate accounting, finance and financial reporting, audit and tax costs, corporate and other legal support functions, and certain information technology and human resources. In addition, the Separation Agreement and the Shared Services Agreement provide that officers, employees and directors of the Company will continue to receive awards of equity and equity-based compensation pursuant to the existing plans of Old Lionsgate. Such awards will be treated as a capital contribution by Old Lionsgate to the Company, with the associated stock based compensation expense for such awards allocated to the Company, see Note 14.
For periods prior to the Studio Separation, the combined financial statements of the Studio Business included allocations of corporate general and administrative expenses (inclusive of share-based compensation) from Old Lionsgate related to the corporate and shared service functions historically provided by Old Lionsgate. These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of consolidated Old Lionsgate revenue, payroll expense or other measures considered to be a reasonable reflection of the historical utilization levels of these services.
Management believes the assumptions underlying these consolidated financial statements, including the assumptions regarding the allocation of general and administrative expenses from Old Lionsgate to the Studio Business prior to the Studio Separation, are reasonable. See Note 21 for further detail of the allocations included in the consolidated financial statements.
In connection with the Business Combination, the Company entered into certain intercompany note arrangements, which mirrored the terms and amounts outstanding under Old Lionsgate’s credit facilities as previously reflected in the historical financial statements of the Studio Business prior to the Studio Separation, see Note 8.
Our revenues are derived from the Motion Picture and Television Production segments, as described below. As mentioned above, we refer to our Motion Picture and Television Production segments collectively as our Studio Business. Our revenues are derived from the U.S., Canada, the United Kingdom and other foreign countries. None of the non-U.S. countries individually comprised greater than 10% of total revenues for the fiscal years ended March 31, 2025,2026, 20242025 and 2023.2024.
•Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by us directly in the U.S. and through a sub-distributor in Canada). The revenues from Canada are reported net of distribution fees and release expenses of the Canadian sub-distributor. The financial terms that we negotiate with our theatrical exhibitors in the U.S. generally provide that we receive a percentage of the box office results. Theatrical revenues also include revenues from certain licenses to direct-to-platform customers where the initial license of a motion picture is to a direct-to-platform customer.
General and administration expenses include salaries and other overhead.overhead Followingcosts. the Studio Separation, the Shared Services Agreement facilitates the allocation of substantially all corporateCorporate general and administrative expenses toinclude thecertain Company,corporate includingexecutive expenses (such as salaries and wages for certainthe executivesoffice of the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers related to executive oversight,), investor relations costs, costs forof the maintenance ofmaintaining 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.resources Priorexpense. to the Studio Separation,Corporate general and administrative expenses includedalso allocationsinclude forcosts certainthat generalwere previously incurred in support of the Media Networks segment (that is part of the Starz Business) but are not directly attributable to it and administrativethus expenseswere fromnot Oldrecorded Lionsgatein relateddiscontinued tooperations, certain corporate and shared service functions historically provided by Old Lionsgate. See “Basis of Presentation” above,see Note 1 and Note 212 to our consolidated financial statements for further details on the Shared Services Agreement and our methodology for allocating these costs for periods prior to the Studio Separation.details.
For the fiscal years ended March 31, 2025, 2024 and 2023, total Old Lionsgate corporate general and administrative expenses were $123.2 million, $136.1 million and $122.9 million, respectively, of which $120.9 million, $110.6 million, and $100.8 million, respectively, was allocated to the Company.
Revenue Recognition. Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media), television, and international marketplaces.
Our content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage-based royalties. Our fixed fee or minimum guarantee licensing arrangements in the television, digital media and international markets may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.
Sales or usage-based royalties represent amounts due to us based on the “sale” or “usage” of our content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated has been satisfied (or partially satisfied). Generally, when we license completed content (with standalone functionality, such as a movie, or television show), our performance obligation will be satisfied prior to the sale or usage. When we license intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), our performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to us under these arrangements are generally not reported to us until after the close of the reporting period. We record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from our customers, historical experience with similar titles in that market or territory, the performance of the title in other markets and/or available data in the industry. While we believe these estimates are reasonable estimates of the amounts due under these arrangements, such estimated amounts could differ from the actual amounts to be subsequently reported by the customer, which could be higher or lower than our estimates, and could result in an adjustment to revenues in future periods.
Revenue from the theatrical release of feature films is treated as sales or usage-based royalties and recognized starting at the exhibition date and based on our participation in box office receipts of the theatrical exhibitor.
Digital media revenue sharing arrangements are recognized as sales or usage-based royalties.
Revenue from commissions is recognized as such services are provided.
Accounting for Films and Television Programs
Film and Television Costs. Capitalized costs for films or television programs are predominantly monetized individually.
Amortization. Film cost amortization as well as participations and residuals expense are based on management’s estimates. Costs of acquiring and producing films and television programs and of acquired libraries that are amortized and estimated liabilities for participations and residuals costs are accrued using the individual-film-forecast method, based on the ratio of the current period’speriod's revenues to management’s estimated remaining total gross revenues to be earned (“ultimate revenue”). Management’s judgment is required in estimating ultimate revenue and the costs to be incurred throughout the life of each film or television program.
For motion pictures, ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture. The most sensitive factor affecting our estimate of ultimate revenues for a film intended for theatrical release is the film’sfilm's theatrical box office performance, as subsequent revenues from the licensing and sale in other markets have historically been highly correlated to its theatrical box office performance. After a film’sfilm release,is released, our estimates of revenue from succeeding markets are revised based on historical relationships and an analysis of current market trends.
For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. The most sensitive factors affecting our estimate of ultimate revenues for a television series is whether the series will be ordered for a subsequent season and estimates of revenue in secondary markets other than the initial license fee, which may depend on a number of factors, including, among others, the ratings or viewership the program achieves on the customers’ platforms. The initial estimate of ultimate revenue may include estimates of revenues outside of the initial license window (i.e., international, home entertainment and other distribution platforms) and are based on historical experience for similar programs (genre, duration, etc.) and the estimated number of seasons of the series. Ultimates of revenue beyond the initial license fee are generally higher for programs that have been or are expected to be ordered for multiple seasons. We regularly monitor the performance of each season, and evaluate whether impairment indicators are present (i.e., low ratings, cancellations or the seasonseries is not reordered), and based upon our review, we revise our estimates as needed and perform an impairment assessment if impairment indicators are present (see below).present.
Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some films and titles are more successful or less successful than anticipated. Management regularly reviews and revisesrevises, when necessarynecessary, its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value (see below).value.
An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically results in an impairment requiring a write-down of the film cost to the title’s fair value. These write-downs are included in amortization expense within direct operating expenses in our unaudited condensed consolidated statements of operations. See further discussion below under Impairment Assessment.Assessment below.
Impairment Assessment. An individual film or television program is evaluated for impairment when events or changes in circumstances indicate that the fair value of an individual film or television program is less than its unamortized cost. Pre-release impairment assessments require significant judgment, including estimated box office performance and downstream licensing revenues. If the result of the impairment test indicates that the carrying value exceeds the estimated fair value, an impairment charge will then be recorded for the amount of the difference.
Estimate of Fair Value. The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. For motion pictures intended for theatrical release, the discounted cash flow analysis used in the impairment evaluation prior to theatrical release is subjective and the key inputs include estimates of future anticipated revenues and estimates of box office performance, which may differ from future actual results. These estimates are based in part on the historical performance of similar films, test audience results when available, information regarding competing film releases, and critic reviews. As discussed in Note 4 to the consolidated financial statements, the unamortized balance related to completed and not released and in progress theatrical films was $680.9 million at March 31, 2025. For television programs, the discounted cash flow analysis used in the impairment evaluation includes key inputs such as estimates of future anticipated revenue, as discussed above. See further discussion of Valuation Assumptions below.
Valuation Assumptions. The discounted cash flow analysis includes cash flowsflow estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 119 to our consolidated financial statements). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.
Revenue Recognition. Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media), television, and international market places.
Our content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties. Our fixed fee or minimum guarantee licensing arrangements in the television, digital media and international markets may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.
Sales or usage based royalties represent amounts due to us based on the “sale” or “usage” of our content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated has been satisfied (or partially satisfied). Generally, when we license completed content (with standalone functionality, such as a movie, or television show), our performance obligation will be satisfied prior to the sale or usage. When we license intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), our performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to us under these arrangements are generally not reported to us until after the close of the reporting period. We record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from our customers, historical experience with similar titles in that market or territory, the performance of the title in other markets and/or available data in the industry. While we believe these estimates are reasonable estimates of the amounts due under these arrangements, such estimated amounts could differ from the actual amounts to be subsequently reported by the customer, which could be higher or lower than our estimates, and could result in an adjustment to revenues in future periods.
Revenue from the theatrical release of feature films are treated as sales or usage-based royalties and recognized starting at the exhibition date and based on our participation in box office receipts of the theatrical exhibitor.
Digital media revenue sharing arrangements are recognized as sales or usage based royalties.
Revenue from commissions are recognized as such services are provided.
Goodwill. At March 31, 2025, 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). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. 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 March 31, 2025, were Motion Picture (goodwill of $397 million), 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. We perform our annual impairment test as of January 1 in each fiscal year. A goodwill impairment loss would be recognized for the amount that the carrying amount of a reporting unit exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which impact the fair value of the reporting unit of whether or not it is more-likely-than-not that the fair value is less than the carrying value of the reporting unit. If we believe that as a result of our qualitative assessment it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company. A quantitative assessment requires determining the fair value of our reporting units. The determination of fair value requires considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates.
In performing a quantitative assessment of goodwill, we determine the fair value of our reporting units by using a combination of discounted cash flow (“DCF”) analyses and market-based valuation methodologies. The models rely on significant judgments and assumptions surrounding general market and economic conditions, short-term and long-term growth rates, discount rates, income tax rates, and detailed management forecasts of future cash flow and operating margin projections, and other assumptions, all of which are based on our internal forecasts of future performance as well as historical trends. The market-based valuation method utilizes EBITDA multiples from guideline public companies operating in similar industries and a control premium. The results of these valuation methodologies are weighted as to their relative importance and a single fair value is determined. The fair value of our reporting units is reconciled to the market value of our equity, determined based on the average prices of our common shares just prior to the period end. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment tests will prove to be an accurate prediction of the future.
Goodwill Impairment Assessments:
For our annual goodwill impairment test for fiscal 2025, given the length of time since our last quantitative assessment and considering the separation of the Studio Business from the Starz Business, we performed quantitative goodwill impairment assessments for all of our reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment), based on the most recent data and expected growth trends, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company's reporting units. The DCF analysis components of the fair value estimates were determined primarily by discounting estimated future cash flows, which included weighted average perpetual nominal growth rates ranging from 2.0% to 3.5%, at a weighted average cost of capital (discount rate) ranging from 8.5% to 10.0%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole. Based on our quantitative impairment assessment, the Company determined that the fair value of our reporting units significantly exceeded the carrying values for all of our reporting units with a remaining goodwill balance.
Management will continue to monitor all of its reporting units for further changes in the business environment that could impact the recoverability in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include the global economy; consumer consumption levels of our content; adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from wars, terrorism and multiple international conflicts, and future bank failures; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; capital market transactions; 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; our continual contractual relationships with our customers; and changes in consumer behavior. If our assumptions are not realized, it is possible that additional impairment charges may need to be recorded in the future.
What changed in the latest 10-Q
Risk Factors
New heading “Purported noteholders have instituted suit against Old Lionsgate claiming that it breached the indenture governing certain 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes.”
Largest changes
“On August 27, 2024, purported holders of former 5.500% Notes of Old Lionsgate (as defined and discussed in Note 8 to the consolidated financial statements) (now Starz Entertainment Corp. …”see in full comparison
“Purported noteholders have instituted suit against Old Lionsgate claiming that it breached the indenture governing certain 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes.”see in full comparison
“The Company’s business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 and Part II, Item 1A of the Company’s Form 10-Q for the first quarter ended June 30, 2025, in each case under the heading “Risk Factors.” Except for the risk factors disclosed in Part II, Item 1A of the Company’s Form 10-Q for the first quarter ended June 30, 2025, which is hereby incorporated by …”see in full comparison
“Other than as set forth below, there were no other material changes to the risk factors previously reported in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.”see in full comparison
Full comparison: every changed paragraph (4)
Other than as set forth below, there were no other material changes to the risk factors previously reported in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
Purported noteholders have instituted suit against Old Lionsgate claiming that it breached the indenture governing certain 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes.
On August 27, 2024, purported holders of former 5.500% Notes of Old Lionsgate (as defined and discussed in Note 8 to the consolidated financial statements) (now Starz Entertainment Corp. (“Starz”)) filed a complaint in New York State court asserting claims for breach of certain contractual provisions and breach of the implied covenant of good faith and fair dealing based on a May 2024 transaction in which Old Lionsgate exchanged approximately $390 million in aggregate principal amount of 5.500% Notes for new 5.500% exchange notes due 2029 (now, the 6.00% Notes) and entered into Supplemental Indenture No. 10 to the indenture governing the 5.500% Notes (the “LGEC Indenture”). The main basis for these claims is that Supplemental Indenture No. 10 allegedly implicated certain provisions of the LGEC Indenture that require consent of each affected holder for certain types of waivers, amendments, and supplements to the LGEC Indenture. The relief sought includes a request for a declaration that Supplemental Indenture No. 10 and the associated exchange transaction are null and void. On September 13, 2024, another purported holder sought to intervene as a plaintiff in the same suit asserting nearly identical claims, which intervention was granted on October 11, 2024. The second holder subsequently added additional theories against Old Lionsgate and brought claims against other parties. On May 23, 2025, both plaintiffs filed amended complaints in view of the completion of the Starz Separation. On June 10, 2025, Old Lionsgate filed a motion to dismiss, which, on March 17, 2026, was granted in part and denied in part. Following the partial denial of Old Lionsgate's motion to dismiss, Old Lionsgate filed a notice of appeal with respect to the claims that were permitted to proceed. Subsequently, the parties entered into a settlement agreement resolving all claims, and on July 9, 2026, the court dismissed the action with prejudice.
The Company’s business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 and Part II, Item 1A of the Company’s Form 10-Q for the first quarter ended June 30, 2025, in each case under the heading “Risk Factors.” Except for the risk factors disclosed in Part II, Item 1A of the Company’s Form 10-Q for the first quarter ended June 30, 2025, which is hereby incorporated by reference into this Part II, Item 1A of this Form 10-Q, there have been no other material changes to the Company’s risk factors previously reported in the Company’s Form 10-K for the fiscal year ended March 31, 2025.
Management's Discussion & Analysis (MD&A)
New heading “Management’s discussion and analysis of financial condition and results of operations supplement the accompanying unaudited condensed consolidated financial statements and provides information about the Company’s business, financial condition, cash flows and results of operations. It should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended March 31, 2026.”
New heading “Components of Results of Operations”
New heading “Recent Accounting Pronouncements”
Removed heading “Business Combination”
Removed heading “Television Production”
Removed heading “RESULTS OF OPERATIONS”
Removed heading “Nine Months Ended December 31, 2025 Compared to Nine Months Ended December 31, 2024”
Removed heading “Consolidated Results from Continuing Operations”
Removed heading “Segment Results of Operations and Non-GAAP Measures”
Removed heading “Television Production”
Largest changes
“Management will continue to monitor all of its reporting units for further changes in the business environment that could impact the recoverability in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities. …”see in full comparison
“Covenants. The Credit Agreement contains customary affirmative and negative covenants that, subject to certain significant exceptions, limit the ability of the Company and its restricted subsidiaries to incur additional indebtedness or liens, make investments, engage in mergers, consolidations, asset sales or acquisitions, pay dividends or other restricted payments and enter into certain affiliate transactions. …”see in full comparison
“(1)Content and other impairments primarily reflect $10.9 million in development cost write-offs recorded during the nine months ended December 31, 2025 for write-downs in connection with the restructuring of the Motion Picture and Television Production businesses. In addition, the amounts in the nine months ended December 31, 2025 and 2024 include impairment charges related to certain operating lease right-of-use assets and leasehold improvements within the Television Production segment. …”see in full comparison
“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. We perform our annual impairment test as of January 1 in each fiscal year. A goodwill impairment loss would be recognized for the amount that the carrying amount of a reporting unit exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill impairment. …”see in full comparison
“In performing a quantitative assessment of goodwill, we determine the fair value of our reporting units by using a combination of discounted cash flow (“DCF”) analyses and market-based valuation methodologies. …”see in full comparison
“Fiscal 2025. For our annual goodwill impairment test for fiscal 2025, given the length of time since our last quantitative assessment and considering the separation of the Studio Business from the Starz Business, we performed quantitative goodwill impairment assessments for all of our reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment), based on the most recent data and expected growth trends, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of …”see in full comparison
Full comparison: every changed paragraph (234)
Management’s discussion and analysis of financial condition and results of operations supplement the accompanying unaudited condensed consolidated financial statements and provides information about the Company’s business, financial condition, cash flows and results of operations. It should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended March 31, 2026.
Lionsgate Studios Corp. (NYSE: LION) (the “Company,” “Lionsgate,” “New Lionsgate,” “we,” “us” or “our”) is one of the world’s leading standalone, pure play content companies. ItWe bringsbring together diversified motion picture and television production and distribution businesses, a world-class portfolio of valuable brands and franchises, a talent management and production powerhouse and a more than 20,000-title film and television library,library with more than 20,000 titles, all driven by Lionsgate’s bold and entrepreneurial culture.
Prior to the Starz Separation, as further discussed below, Lions Gate Entertainment Corp. (formerly listed on the New York Stock Exchange (“NYSE”): LGF.A, LGF.B) (“Old Lionsgate”) encompassed the motion picture and television studio operations (formerly referred to as the “Studio Business”) and the STARZ premium global subscription platform. Following the Studio Separation, as discussed in Note 3 to our unaudited condensed consolidated financial statements, Lionsgate Studios Corp. (formerly listed on the NASDAQ Global Select Market (“NASDAQ”): LION) (“Legacy Lionsgate Studios”) comprises the Studio Business and the STARZ business remained with Lions Gate Entertainment Corp.
On May 6, 2025, the separation of the Studio Business from the Starz Business (the “Starz Separation”) was completed, resulting in Lionsgate Studios Corp. operating as an independent, publicly-traded company. As a result, our financial statements reflect only the Motion Picture and Television Production segments as continuing operations, while the historical results of the Starz Business are presented as discontinued operations for all periods prior to the separation. See Note 2 of our unaudited condensed consolidated financial statements for the presentation of discontinued operations, including the partial period through May 6, 2025, during the three months ended June 30, 2025.
Components of Results of Operations
On May 6, 2025, through a series of transactions contemplated by a certain arrangement agreement, dated as of January 29, 2025, as amended by an amending agreement, dated as of March 12, 2025 (collectively, the “Arrangement Agreement”), the separation of the businesses of Legacy Lionsgate Studios, of which Old Lionsgate owned approximately 87.8%, and the Starz Business (the “Starz Separation”) was completed. As a result of the Arrangement Agreement, the pre-transaction shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate (see Note 2 to our unaudited condensed consolidated financial statements).
Notwithstanding the legal form of the Starz Separation, for accounting and financial reporting purposes, in accordance with United States generally accepted accounting principles (“U.S. GAAP”), due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Old Lionsgate’s senior management with the Company following the completion of the Starz Separation, Old Lionsgate is considered the accounting spinnor or divesting entity and Starz is considered the accounting spinnee or divested entity. As a result, Old Lionsgate is the accounting predecessor to the Company, and the pro rata distribution of the Starz Business has been recorded through equity with no gain or loss recorded. The Starz Business is reflected as discontinued operations in the financial statements following the completion of the Starz Separation. See Note 2 to our unaudited condensed consolidated financial statements for further information.
See also “Liquidity and Capital Resources” for discussion of the Starz Separation financing transaction.
Business Combination
On May 13, 2024, Old Lionsgate consummated the business combination agreement (the “Business Combination Agreement”) with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Old Lionsgate (“Studio HoldCo”), LG Orion Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Old Lionsgate (“StudioCo”) and other affiliates of SEAC (the “Closing”). Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business was combined with SEAC through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”). In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “Legacy Lionsgate Studios”) and continued the existing business operations of StudioCo, which consisted of the Studio Business of Old Lionsgate. The “Studio Business” consists of the businesses of Old Lionsgate’s Motion Picture and Television Production segments, together with substantially all of Old Lionsgate’s corporate general and administrative functions and costs. Legacy Lionsgate Studios became a separate publicly-traded company, and its common shares commenced trading on NASDAQ under the symbol “LION” on May 14, 2024.
In connection with and prior to the Business Combination, Old Lionsgate and StudioCo entered into a separation agreement pursuant to which the assets and liabilities of the Studio Business were transferred to StudioCo such that StudioCo held, directly or indirectly, all of the assets and liabilities of the Studio Business (the “Studio Separation”).
Immediately following the Business Combination through immediately prior to the Starz Separation, approximately 87.8% of the total shares of Legacy Lionsgate Studios were held by Old Lionsgate, while 12.2% were owned by former SEAC public shareholders, SEAC founders and common equity financing investors. In addition to establishing Legacy Lionsgate Studios as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to Old Lionsgate. Net proceeds of $278.2 million, inclusive of transaction costs that remained accrued at March 31, 2025 and which were paid during the nine months ended December 31, 2025 totaling $3.5 million, were used to partially pay down amounts outstanding under Old Lionsgate's corporate debt. See Note 7 to our unaudited condensed consolidated financial statements for further detail.
The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Legacy Lionsgate Studios represented a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing stock for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio Business equity. The historical net assets of SEAC were stated at fair value, which approximated historical cost, with no goodwill or other intangible assets recorded. Prior to the Starz Separation, the Studio Business was a consolidated subsidiary of Old Lionsgate.
Revenues
Our revenues are derivedgenerated fromby the Motion Picture and Television Production segments, collectively referred to as describedour below.Studio OurBusiness. revenuesRevenues are derivedearned fromin the U.S.,United States (“U.S.”), Canada, the United Kingdom and other foreign countries. NoneNo ofindividual theforeign non-U.S.country countriesaccounted individuallyfor comprised greatermore than 10% of total revenuesrevenue forduring the three and nine months ended DecemberJune 31,30, 20252026 andor 2024.2025.
Motion Picture: Our Motion Picture segment includes revenuesrevenue derivedgenerated from the following:
•Theatrical. Theatrical revenuesrevenue areis derivedgenerated from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picturetitle-by-title basisbasis. (distributedIn bythe usU.S., directlywe distribute films directly, while in theCanada U.S.films andare distributed through a sub-distributor in Canada).sub-distributor. The revenues from Canada are reported net of distribution fees and release expensesexpenses. ofUnder the Canadian sub-distributor. The financial terms that we negotiatearrangements with our theatrical exhibitors in the U.S.we generally provide that we receive a percentage of the box office results. Theatrical revenues also include revenuesrevenue from licenses tocertain direct-to-platform customerslicenses where the initial license of a motion picture is to a direct-to-platform customer.
•Home Entertainment. Home entertainment revenuesrevenue areis derivedgenerated from the sale or rental of our film productions and acquired or licensed films and certain television programsprograms, (including theatrical and direct-to-video releases)releases, on packaged media and through digital media platformsplatforms, (includingsuch pay-per-viewas andpay-per-view, video-on-demand platforms,video-on-demand, electronic sell through,through and digital rental). Inservices. addition,Home weEntertainment haverevenue also includes amounts earned under revenue sharing arrangements with certain digital media platformsplatforms, under which we generally provideshare that,in the rental or sales proceeds generated on a title-by-title basis in exchange for a nominal or no upfront sales price, we share the rental or sales revenues generated by the platform on a title-by-title basis.price.
•Television. Television revenuesrevenue areis primarily derivedgenerated from the licensing of our theatrical productions and acquired films to the linear pay, basic cable and free television markets. InTelevision addition,revenue whenalso aincludes licenserevenue from licenses in our traditional pay television window is madegranted to a subscription video-on-demand (“SVOD”) orand other digital platform, the revenues are included here.platforms.
•International. International revenue is generated from the licensing to international distributors on a territory-by-territory basis, and the direct distribution in the United Kingdom, of our productions, acquired films, our catalog product and libraries of acquired titles.
•International. International revenues are derived from (1) licensing of our productions, acquired films, our catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis; and (2) the direct distribution of our productions, acquired films, and our catalog product and libraries of acquired titles in the United Kingdom.
•Other. Other revenuesrevenue areis derivedprimarily from,generated among others,from the licensing of our film andfilm, television and related contentcontent, (such as games, music,music and location-based entertainment royalties, etc.) to other ancillary markets.
Television Production: Our Television Production segment includes revenuesrevenue derivedgenerated from the following.following:
•Television. Television revenuesrevenue areis derivedgenerated from the licensing to domestic markets (linear pay, basic cable, free television and syndication) of scripted and unscripted series, television movies, mini-series and non-fiction programming.programming to domestic linear pay, basic cable, free television and syndication markets. Television revenuesrevenue also includeincludes revenue from licenses to SVOD platforms in whichwhen the initial license of a television series is granted to an SVOD platform. Television revenuesrevenue includeincludes both fixed fee arrangements as well asand arrangements in which we earn advertising revenue from the exploitation of certain content on television networks.
•International. International revenuesrevenue areis derivedgenerated from the licensing and syndication to international markets of scripted and unscripted series, television movies, mini-seriesminiseries and non-fiction programming.
•Home Entertainment. Home entertainment revenuesrevenue areis derivedgenerated from the sale or rental of television production movies or series on packaged media and through digital media platforms.
•Other. Other revenuesrevenue areis derivedgenerated from, among others,from the licensing of our television programs to other ancillary markets, the sales and licensing of music from the television broadcasts of our productions, and from commissions and executive producer fees earned related to talent management.
Direct operating expenses include amortization of film and television production or acquisition costs, participation and residual expenses, provision for doubtfulcredit accounts,losses, and foreign exchange gains and losses.
Participation costs represent contingent consideration payable based on the performance of the film or television program to parties associated with the film or television program, including producers, writers, directors andor actors. Residuals represent amounts payable to various unions or “guilds” such as the Screen Actors Guild - American Federation of Television and Radio Artists, Directors Guild of America, and Writers Guild of America, based on the performance of the film or television program in certain ancillary markets or based on the individual’s (i.e., actor, director, writer) salary level in the television market.
Distribution and marketing expenses primarily include the costs of theatrical prints and advertising (“P&A”) and premium video-on-demand (“Premium VOD”) expense and of DVD/Blu-ray duplication and marketing. Theatrical P&A includes the costs of the theatrical prints delivered to theatrical exhibitors and the advertising and marketing cost associated with the theatrical release of the picture. Premium VOD expense represents the advertising and marketing cost associated with the Premium VOD release of the picture. DVD/Blu-ray duplication represents the cost of the DVD/Blu-ray product and the manufacturing costs associated with creating the physical products. DVD/Blu-ray marketing costs represent the cost of advertising the product at or near the time of its release or special promotional advertising.
General and administration expenses include salaries and other overhead costs. Corporate general and administrative expenses include certain corporate executive expenses (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. Corporate general and administrative expenses also include overhead costs previously allocated to the Starz Business that were previouslynot incurredincluded in supportdiscontinued ofoperations thebecause Mediathey Networks segment but arewere not directly attributable to itthe andMedia thusNetworks weresegment. not recorded in discontinued operations, seeSee Note 2 to ourthe unaudited condensed consolidated financial statements for further information.
The preparation of our financial statements in conformity with accounting principles generally accepted in the U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The application of the following accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management. As described more fully below, these estimates bear the risk of change due to the inherent uncertainty of the estimate. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management'smanagement’s most difficult, subjective and complex judgments. For a summary of all of our accounting policies, including the accounting policies discussed below, see Note 1 to the audited consolidated financial statements and related notes included as Exhibit 99.1 toin the Legacy Lionsgate StudiosCompany’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025,2026, filed with the Securities and Exchange Commission (the “SEC”) on May 30,27, 2025 (the “Form 10-K”).2026.
Amortization. Film cost amortization as well as participations and residuals expense are based on management’s estimates. Costs of acquiring and producing films and television programs and of acquired libraries that are amortized and estimated liabilities for participations and residuals costs are accrued using the individual-film-forecast method, based on the ratio of the current period's revenues to management’s estimated remaining total gross revenues to be earned (“ultimate revenue”). Management’s judgment is required in estimating ultimate revenue and the costs to be incurred throughout the life of each film or television program.
Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some films and titles are more successful or less successful than anticipated. Management regularly reviews and revises when necessary, its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value.
Impairment Assessment. An individual film or television program is evaluated for impairment when events or changes in circumstances indicate that the fair value of an individual film or television program is less than its unamortized cost. If the result of the impairment test indicates that the carrying value exceeds the estimated fair value, an impairment charge will then be recorded for the amount of the difference.
Valuation Assumptions. The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 9 to our unaudited condensed consolidated financial statements). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.
Amortization. Film cost amortization as well as participations and residuals expense are based on management’s estimates. Costs of acquiring and producing films and television programs and of acquired libraries that are amortized and estimated liabilities for participations and residuals costs are accrued using the individual-film-forecast method, based on the ratio of the current period's revenues to management’s estimated remaining total gross revenues to be earned (“ultimate revenue”).
Management’s judgment is required in estimating ultimate revenue and the costs to be incurred throughout the life of each film or television program.
Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some films and titles are more successful or less successful than anticipated. Management regularly reviews and revises, when necessary, its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value.
Impairment Assessment. An individual film or television program is evaluated for impairment when events or changes in circumstances indicate that the fair value of an individual film or television program is less than its unamortized cost. Pre-release impairment assessments require significant judgment, including estimated box office performance and downstream licensing revenues. If the result of the impairment test indicates that the carrying value exceeds the estimated fair value, an impairment charge will then be recorded for the amount of the difference.
Valuation Assumptions. The discounted cash flow analysis includes cash flow estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a result of changes in management’s future revenue estimates.
Goodwill. As of December 31, 2025, the carrying value of goodwill was $846.8 million. Goodwill is allocated to our reporting units, which are our operating segments or one level below our operating segments (component level). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. 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 as of December 31, 2025, were Motion Picture (goodwill of $396.9 million) and our Television (goodwill of $318.9 million) and Talent Management (goodwill of $131.0 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. We perform our annual impairment test as of January 1 in each fiscal year. A goodwill impairment loss would be recognized for the amount that the carrying amount of a reporting unit exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which impact the fair value of the reporting unit of whether or not it is more-likely-than-not that the fair value is less than the carrying value of the reporting unit. If we believe that as a result of our qualitative assessment it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company. A quantitative assessment requires determining the fair value of our reporting units. The determination of fair value requires considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates.
In performing a quantitative assessment of goodwill, we determine the fair value of our reporting units by using a combination of discounted cash flow (“DCF”) analyses and market-based valuation methodologies. The models rely on significant judgments and assumptions surrounding general market and economic conditions, short-term and long-term growth rates, discount rates, income tax rates, and detailed management forecasts of future cash flow and operating margin projections, and other assumptions, all of which are based on our internal forecasts of future performance as well as historical trends. The market-based valuation method utilizes EBITDA multiples from guideline public companies operating in similar industries and a control premium. The results of these valuation methodologies are weighted as to their relative importance and a single fair value is determined. The fair value of our reporting units is reconciled to the market value of our equity, determined based on the average prices of our common shares just prior to the valuation date. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment tests will prove to be an accurate prediction of the future.
Goodwill Impairment Assessments:
During the three and nine months ended December 31, 2025, no events or circumstances occurred that would indicate it is more-likely-than not that the fair value of any reporting unit is less than its carrying value. Accordingly, an impairment test was not required during the current reporting period.
Fiscal 2025. For our annual goodwill impairment test for fiscal 2025, given the length of time since our last quantitative assessment and considering the separation of the Studio Business from the Starz Business, we performed quantitative goodwill impairment assessments for all of our reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment), based on the most recent data and expected growth trends, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company’s reporting units. The DCF analysis components of the fair value estimates were determined primarily by discounting estimated future cash flows, which included weighted average perpetual nominal growth rates ranging from 2.0% to 3.5%, at a weighted average cost of capital (discount rate) ranging from 8.5% to 10.0%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole. Based on our quantitative impairment assessment, the Company determined that the fair value of our reporting units significantly exceeded the carrying values for all of our reporting units.
Management will continue to monitor all of its reporting units for further changes in the business environment that could impact the recoverability in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include the global economy; consumer consumption levels of our content; adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from wars, terrorism and multiple international conflicts, and future bank failures; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; capital market transactions; the duration and potential impact of union strikes on our ability to produce, acquire and distribute our content; the commercial success of our television programming and motion pictures; our continual contractual relationships with our customers; and changes in consumer behavior. If our assumptions are not realized, it is possible that additional impairment charges may need to be recorded in the future.
Income Taxes. We are subject to federal and state income taxes in Canada and the U.S.,United andStates, as well as in several other foreign jurisdictions. We record deferred tax assets related to net operating loss carryforwards and certain temporary differences, net of applicable reservesreserves, in these jurisdictions. We recognize a future tax benefit to the extent that realization of such benefit is more likely than notmore-likely-than-not on a jurisdiction-by-jurisdiction basis; otherwise, a valuation allowance is applied. In order to realizeRealizing the benefit of our deferred tax assets,assets werequires willthe needgeneration to generateof sufficient future taxable income in theeach futurejurisdiction in each of the jurisdictions which have thesethose deferred tax assets.assets However,exist. theOur assessment as toof whether there will be sufficient taxable income in a jurisdiction will be sufficient to realize our net deferred tax assets in that jurisdiction is an estimate whichthat could change in the futurefuture, depending primarily uponon the actual operating performance of our Company. We will be required to continually evaluate theour more likely than notmore-likely-than-not assessment that our net deferred tax assets will be realized, andand, if operating results deteriorate in a particular jurisdiction, we may need to record a valuation allowance foragainst all or a portion of our deferred tax assets in that jurisdiction through a charge to our income tax benefit (provision).provision. As of DecemberJune 31,30, 2025,2026, we had a valuation allowance of $1,545.3$1,489.5 million against certain Canadian, U.S. and other foreign deferred tax assets that may not be realized on a more likely than notmore-likely-than-not basis.
Our quarterly income tax provision and our corresponding annual effective tax rate are based on expected income,income (loss), statutory tax ratesrates, 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 (loss) for the full year and record a quarterly income tax provision in accordance with thethat expectedestimated annual effective tax rate. As the year progresses, we refine theour estimates of the year’syear's taxable income (loss) as new information becomes available, including year-to-date financial results. This continual estimation process oftenmay resultsresult in a changechanges to our expected annual effective tax raterate, forin thewhich year. When this occurs,case we adjust our income tax provision duringin the quarter in which the change in estimate occursoccurs, so that the year-to-date income tax provision reflects the expected annual effective tax rate. Significant judgment is required in determining our expected annual effective tax rate and in evaluating our tax positions.
Our effectiveincome tax ratesprovision differdiffers from the U.S.amount that would result from applying the Canadian federal statutory income tax rate andto income (loss) before income taxes. This difference is affected by many factors, including the overall level of income (loss) before income taxes and its mix across the jurisdictions in which we conductoperate, operations,the changeseffect in tax laws and regulations, changes inof valuation allowances against our deferred tax assets,assets in jurisdictions where we do not recognize a tax benefit on losses, changes in tax laws and regulations, changes in unrecognized tax benefits, tax planning strategies available to us, and other discrete items.
Recent Accounting Pronouncements
See Note 1 to the accompanying unaudited condensed consolidated financial statements for a discussion of recent accounting guidance.
Three Months Ended DecemberJune 31,30, 20252026 Compared to Three Months Ended DecemberJune 31,30, 20242025
Consolidated Results of Operations from Continuing Operations
The following table sets forthpresents our unaudited condensed consolidated results from continuing operations for the three months ended DecemberJune 31,30, 20252026 and 20242025:
Revenues. Consolidated revenues increased $250.7 million in the three months ended June 30, 2026 primarily reflecting an increase of $320.0 million from Motion Picture revenue, offset by a decrease of $99.2 million from Television Production.
(1) During the first quarter of fiscal 2026, the Company began reflecting the results of operations of its streaming platform in India within the Motion Picture segment as such operations are not a part of the disposal group of the Starz Business. Accordingly, the following amounts were reclassified from the former Media Networks segment to the Motion Picture segment in the three months ended December 31, 2024 to conform to the current period presentation: (i) revenue of $2.2 million; (ii) direct operating expense of $1.6 million; (iii) distribution and marketing expense of $0.8 million; and (iv) general and administration expense of $0.7 million, which resulted in gross contribution loss of $0.2 million and segment loss of $0.9 million. Additionally, the Company sold its streaming platform in India in December 2025, see Note 15 to our unaudited condensed consolidated financial statements.
Revenues. Consolidated revenues increased $96.1 million in the three months ended December 31, 2025 reflecting an increase of $109.8 million from Motion Picture revenue and no intersegment eliminations recorded in the current quarter compared to the prior year quarter of $87.8 million, offset by a decrease of $101.5 million from Television Production. Intersegment eliminations relate to the licensing of products from our Studio Business to the former Media Networks segment prior to the Starz Separation. Following the Starz Separation, revenue from licenses to Starz were not eliminated from our consolidated results from continuing operations. See further discussion in the Segment Results of Operations section below.
Television Production revenue decreased $101.5$99.2 million, primarily due to a decrease in domestic televisiontelevision, revenue,digital partiallyhome offsetentertainment by an increase inand international revenue.
LION insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 42,600,497 shares, about $0) and open-market sales in 1 filing (1 insider, 1 trade date, 42,600,497 shares, about $0). Net open-market shares: 0 (purchases minus sales); net value about $0.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-15 | Sloan Harry |
Grant/award | 5,362 | $11.19 | $60.0K |
| 2026-09-15 | Sloan Harry |
Grant/award | 13,405 | — | — |
| 2026-09-15 | Rosenblatt M Richard |
Grant/award | 4,468 | $11.19 | $50.0K |
| 2026-09-15 | Rosenblatt M Richard |
Grant/award | 13,405 | — | — |
| 2026-09-15 | Ostolaza Yvette |
Grant/award | 13,405 | — | — |
| 2026-09-15 | Ostolaza Yvette |
Grant/award | 5,362 | $11.19 | $60.0K |
| 2026-09-15 | Mccaw Susan |
Grant/award | 13,405 | — | — |
| 2026-09-15 | Harkey John D Jr |
Grant/award | 13,405 | — | — |
| 2026-09-15 | Harkey John D Jr |
Grant/award | 5,809 | $11.19 | $65.0K |
| 2026-09-15 | Crawford Gordon |
Grant/award | 13,405 | — | — |
| 2026-09-15 | Crawford Gordon |
Grant/award | 4,468 | $11.19 | $50.0K |
| 2026-09-15 | Rachesky Mark H Md |
Grant/award | 13,405 | $11.19 | $150.0K |
| 2026-09-15 | Rachesky Mark H Md |
Grant/award | 6,792 | $11.19 | $76.0K |
| 2026-09-15 | Fine Emily |
Grant/award | 4,468 | $11.19 | $50.0K |
| 2026-09-15 | Fine Emily |
Grant/award | 13,405 | $11.19 | $150.0K |
| 2026-07-08 | Rachesky Mark H Md |
Open-market purchase | 499,765 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market purchase | 15,804,919 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market sale | 11,755,412 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market purchase | 11,755,412 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market sale | 3,701,988 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market sale | 1,469,450 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market sale | 499,765 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market purchase | 671,924 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market purchase | 11,154,680 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market purchase | 1,916,271 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market sale | 25,173,882 | — | — |
| 2026-07-08 | Rachesky Mark H Md |
Open-market purchase | 797,526 | — | — |
| 2026-07-03 | Feltheimer Jon |
Grant/award | 196,902 | — | — |
| 2026-07-03 | Feltheimer Jon |
Shares withheld for tax | 103,669 | $14.66 | $1.5M |
| 2026-07-03 | Feltheimer Jon |
Shares withheld for tax | 103,669 | $14.66 | $1.5M |
| 2026-07-03 | Barge James W |
Grant/award | 63,993 | — | — |
| 2026-07-03 | Barge James W |
Shares withheld for tax | 32,560 | $14.66 | $477.3K |
| 2026-07-03 | Barge James W |
Shares withheld for tax | 32,560 | $14.66 | $477.3K |
| 2026-07-03 | Tobey Bruce |
Shares withheld for tax | 10,018 | $14.66 | $146.9K |
| 2026-07-03 | Tobey Bruce |
Grant/award | 19,690 | — | — |
| 2026-07-03 | Tobey Bruce |
Shares withheld for tax | 10,018 | $14.66 | $146.9K |
| 2026-07-03 | Goldsmith Brian |
Shares withheld for tax | 35,064 | $14.66 | $514.0K |
| 2026-07-03 | Goldsmith Brian |
Grant/award | 68,916 | — | — |
| 2026-07-03 | Goldsmith Brian |
Shares withheld for tax | 35,064 | $14.66 | $514.0K |
| 2026-07-03 | Burns Michael Raymond |
Shares withheld for tax | 35,064 | $14.66 | $514.0K |
| 2026-07-03 | Burns Michael Raymond |
Grant/award | 68,926 | — | — |
| 2026-07-03 | Burns Michael Raymond |
Shares withheld for tax | 35,064 | $14.66 | $514.0K |
| 2026-07-03 | Feltheimer Jon |
Shares withheld for tax | 103,669 | $14.66 | $1.5M |
| 2026-07-03 | Feltheimer Jon |
Grant/award | 196,902 | — | — |
| 2026-07-03 | Feltheimer Jon |
Shares withheld for tax | 196,902 | $14.66 | $2.9M |
| 2026-07-01 | Barge James W |
Grant/award | 237,026 | — | — |
| 2026-07-01 | Barge James W |
Shares withheld for tax | 33,542 | $15.31 | $513.5K |
| 2026-07-01 | Barge James W |
Grant/award | 65,924 | — | — |
| 2026-07-01 | Barge James W |
Shares withheld for tax | 46,524 | $15.31 | $712.3K |
| 2026-07-01 | Barge James W |
Grant/award | 91,438 | — | — |
| 2026-07-01 | Barge James W |
Shares withheld for tax | 46,524 | $15.03 | $699.3K |
| 2026-07-01 | Barge James W |
Shares withheld for tax | 33,542 | $15.03 | $504.1K |
| 2026-07-01 | Tobey Bruce |
Grant/award | 22,854 | — | — |
| 2026-07-01 | Tobey Bruce |
Shares withheld for tax | 11,628 | $15.03 | $174.8K |
| 2026-07-01 | Tobey Bruce |
Shares withheld for tax | 14,887 | $15.31 | $227.9K |
| 2026-07-01 | Tobey Bruce |
Grant/award | 29,260 | — | — |
| 2026-07-01 | Tobey Bruce |
Shares withheld for tax | 11,628 | $15.31 | $178.0K |
| 2026-07-01 | Tobey Bruce |
Grant/award | 75,848 | — | — |
| 2026-07-01 | Tobey Bruce |
Shares withheld for tax | 14,887 | $15.03 | $223.8K |
| 2026-07-01 | Goldsmith Brian |
Shares withheld for tax | 43,422 | $15.03 | $652.6K |
Well-known investors holding LION (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 506,198 | $7.7M | 0.01% | Reduced 21% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 324,689 | $5.0M | 0.0% | Added 66% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 136,622 | $2.1M | 0.0% | Reduced 9% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 108,163 | $1.7M | 0.0% | Reduced 98% |
| Bridgewater Associates | 2026-06-30 | 94,638 | $1.4M | 0.01% | New position |
| D. E. Shaw & Co. | 2026-06-30 | 58,126 | $557.4K | — | Sold out |
| Renaissance Technologies | 2026-06-30 | 22,400 | $342.9K | 0.0% | Reduced 56% |