Q3 2020 Earnings Call
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Ladies and gentlemen, thank you for standing by.
Hello, and welcome to the Lionsgate third quarter fiscal 20 earnings call. At this time all participants are in a listen only mode. Later, we'll conduct a question and answer session instructions will be given at that time. If you should require assistance during the call. Please press Star then zero as a reminder.
This conference is being recorded I'd now like to turn the conference over to our host Mr. James Marsh head of Investor Relations. Please go ahead.
Good afternoon.
Thank you for joining us for the Lionsgate fiscal 23rd quarter Conference call.
Well begin with opening remarks from our CEO John sell climber, followed by remarks from our CFO Jimmy barge after their remarks, we'll open the call for questions.
Also joining us on the call today, our Vice Chairman, Michael Burns COO, Brian Goldsmith.
Chairman of the TV group, Kevin Beggs, and chairman of the motion picture group jokes.
Greg.
Starz, we have president and CEO, Jeff Hirsch, CFO, Scott Mcdonald and GDP of international soprano Kelly.
The matters discussed on this call today includes forward looking statements, including those regarding the performance of future fiscal years, such statements are subject to a number of risks and.
Certainties actual results could differ materially and adversely from those described in the forward looking statements as a result to various factors. This includes the risk factors set forth in lines Gates. Most recent annual report on form 10-K as amended our most recent quarterly report on form 10-Q filed with the SEC.
The company undertakes no obligation to publicly release the result of any revisions to these forward looking statements that may be made to reflect any future events or circumstances I'll now turn the call over to John.
Thank you James and good afternoon, everyone.
We're pleased to report a quarter with strong performances by.
Our feature film and home Entertainment slate.
Multiple new production commitments in television and robust over the top subscriber growth that's stars here the highlights.
An outsized performance from knives out one of the biggest original box office hits of the year.
And a new Lionsgate franchise.
Strong awards season for Bombshell latest addition to our catalog critically acclaimed brands defining films.
The continued growth of one of the world's Premier action franchises as John with Chapter three recorded the best home Entertainment performance of any Lionsgate title in over five years.
Strong momentum in our television group with 17 scripted series in production.
And eight new scripted series in pilots picked up.
And finally strong subscriber gains we continue to make significant progress in the quarter building out our streaming business with 8.6 million global.
Over the top paid subscribers across stores Starz play Arabia, and then tire accounting for 30% of our 28.5 million total global subscribers.
Now, let's drill them in each of our businesses.
Stars beginning on the domestic front we continued.
Our transition in the quarter to an on demand environment that will ultimately result in higher ARPU linear subscribers and higher value over the top subscribers.
We reached a multifaceted long term agreement with Comcast that provide the revenue glide path into a new distribution arrangement.
Just to build an hour cart.
Revenue sharing business together and includes a content licensing deal with pecan.
I'd like to remind everyone that starz has been successfully sold Allah car on the platforms of cable and satellite operators and telcos as well as streaming platforms for years.
Facts will end the fiscal year with a projected 61% of stars revenues already coming from our our card business.
On the programming front, we've put together a diverse slate the delivers a premium programming year round to our core female African American and Latin mix.
Audiences.
We approach the seasons six finale of power. This weekend with this show drawing over 10 million multi platform views and for power inspired series lined up to continue building out the power universe.
The first of these power book to Ghost featuring marriage, a glide and.
Method man along with a number of returning cast arrives this summer.
Other new original stars theories or being green lit and produced at an accelerated pace with the crime drama high town from producer Jerry Bruckheimer set to debut with South by Southwest ahead of its Premier This spring.
Valley from playwright Dettori Hall, debuting the summer.
And run the world from Dear White people show runner eventually Bowzer and writer lead Davenport, arriving in the fall.
The resolutely drama heels with an all star cast led by Steven Amelle, SARM Arrow, and Alexander Ludwig Sorry Vikings.
Along with the provocative dangerous liaison continues the expansion of our slate next year.
He joined the returning hit series outlandish, which will launch its fifth season next week season, two of the Spanish Princess.
A girlfriend experience that this year in London, and the third season the critically.
We have claimed veeder, all targeted to our valuable and scalable cord demos.
Internationally the strategy for our Starz play streaming service.
Delivering world class premium content and leveraging strategic partnerships at an attractive price point continues to drive strong results.
I'm pleased to report that we're executing fully on the strategy, having launched on 49 platforms in 30 countries and we remain on track to hit our financial and subscriber targets.
The portfolio the claims Starz play programming, featuring the Spanish Princess Dublin murders empower along.
And with such award winning acquisitions as the act Rami and killing Eve.
There is resonating with global audiences and fueling our growth in key markets, including the UK, Spain, Germany and Mexico.
And we have begun to complement this original programming with local language co productions and.
The lineup of hit movies and key territories.
As we announced this afternoon, we will be splitting the first pay window for our theatrical releases in the UK with Amazon.
Critical distribution partner in that territory in India, where our service is called Lionsgate play, we're supplying our first run movies.
Exclusively to our platform and have already answered strategic partnerships with market leaders Vodafone and air tell.
As we continue to expand internationally our experience with the Starz play Arabia adventure serves as a perfect blueprint for our new territories.
In 2015, we saw an opportunity in the Middle East North Africa region with consumer behavior, just beginning to pivot to digital consumption and growing demand for subscription video on demand service that could partner with the regions cable telco in satellite operators.
Five years later start.
Play Arabia has achieved 1.7 million subscribers and as one of the top two escalade services in the 90 Mena markets.
Current opportunity and the characteristics of the 30 additional territories in which we've launched service play are similar to what we saw with Starz play Arabia in the Mena markets.
So in an environment that is more disruptive than ever our own identity and focus our clear to again take advantage of our early mover position as an expertly curated well differentiated premium service that sits on top of global and local platforms alike as we.
To convert our strains into reaching our target of 15 to 25 million paid international subscribers over the next five years.
As we continue to hit our financial numbers and accelerate our trajectory to reach our subscriber goals.
We're confident that the value weve already created and we'll continue to.
It will be recognized.
Turning to the motion picture group, we continue to demonstrate our diversity has repositioned in released three films in the quarter that brought us access in areas that might not seem obvious that are very intentional.
The domestic box office performance of Midway started the ball rolling.
And reaffirmed our strength in the action zone, a key pillar of our content strategy.
Then we shifted gears for that Thanksgiving holiday with knives out, which will soon break $300 million. If the worldwide box office has earned multiple award nomination answers as further proof that.
Dan sizes can emerge from any of our content verticals.
And finally, we released Bombshell in December a film that earn multiple said Golden Globe and the Oscar nominations and rounded at a calendar 19 slate that solidified our position as the dominant player in the mid budget space.
Looking ahead the value of our strategic partnerships with best in class creators is evident both in our release slate and production pipeline.
Next up in March is I still believe kicking off our faith based collaboration with the Irwin Brothers Kingdom studio as we released the follow up to last year's.
Roadside attractions hit I can only imagine.
We begin production later this year onto more kingdom titles American under Doug The inspiring story of Super Bowl, winning quarterback Kurt Warner slated for release this Christmas and Jesus Revolution.
Just as the Kingdom partnerships.
Cements our position in the faith based vertical our collaboration with death, Rogan and Evan Goldberg point Grey Pictures continues to solidify our position in comedy.
We are in early preproduction on two broad appeal concept comedies from point Grey. In addition to the growing late they're putting together for our television group.
We also continued to build our leadership in the action category, where we achieved success this year not only with midway, but with John with three Angel, it's fallen and Rambo last blood.
And we recently announced a strategic partnership with Chad the healthy the co creator and director of the John Wick franchise.
We will be a key driver of our actions slate.
Our slate continues to be a strong and proper balance of exciting new original properties and extensions of our existing brands.
In May we will launch spiral reimagine soft film with Chris Rock and Samuel L. Jackson.
We'll see the return of hit man's bodyguard in August with an even bigger cast and more of what audiences love about the property and will continue the stories of two other successful franchises as we planned production starts for both John Wick for and the next knives out film.
In addition to John Wick.
Five that we will be announcing an upcoming weeks a number of new film packages and production starts involving world class talent and premium intellectual properties.
And I expect that our fiscal 22 slate will be one of our most exciting ever.
Turning to television we had a very.
Active quarter in terms of series launches, a new series and pilot commitments, taking advantage of robust demand for premium property from our screaming broadcast and cable partners.
Mr request Ravens banquet from Rob Mcelhaney, Charlie day, and our partners at three Arts has been picked up for a second.
Second season habits ahead of its first season debut in the Apple platform Tomorrow.
The musical dramedy, though is extraordinary playlist is already giving us something to think about as NBC made the pilot available across digital and linear platforms ahead of its February 16th network debut.
And it became the widest online launch and the networks history.
The romantic comedy loved life, starring Anna Kendrick arrives in the first wave of high profile programming for Hbr Max This summer.
And we've recently announced two more premium series run the world that stars and.
The drama first ladies at Showtime Sighing, Oscar and May and Tony Award winner Viola Davis as former first Lady Michelle Obama.
Finally earlier this week, we secured pilot orders for this country at Fox and goes at CBS.
Part of an extensive.
Programming slate that we're putting together with our partners at BBC Studios.
An important catalyst for our television groups momentum has been our collaboration with three Arts Entertainment.
Which has emerged as a powerhouse studio in its own right.
Since joining forces with US two years ago, we have.
Cured three network production commitments together with another 10 projects in development.
And we continue to explore ways to further expand our relationship on a global basis with an asset that has already making strong financial contributions.
I'm also very pleased with the level of collaboration now taking.
Place between the Lionsgate and Starz creative teams.
Bringing our combined expertise to bear on creating hits were stars is our highest priority.
With seven Lionsgate shows picked up this series or being ready for production and another 16 projects in development.
In closing our plan is simple.
Continue to either most prolific independent producer a film television and digital content.
And use all of our content creation capability and distribution strength.
To support stars transformation into an immensely valuable global subscription.
Form.
As we move forward, we're maintaining a careful and appropriate balance between short term profits and investment in longer term value creation.
And we bring to this task a clear sense of who we are.
A firm grasp of our place in the ecosystem.
And a focus strategy.
For continuing to grow and evolve our business.
Now I'd like to turn things over to Jimmy.
Thanks, John and good afternoon, everyone I'll briefly discuss our fiscal third quarter financial results and update you on our fiscal 2001 outlook.
Fiscal third quarter adjusted OIBDA was 120.
$4 million, while revenue was up 7% to nearly $1 billion reported fully diluted earnings per share was a loss of 42 cents and fully diluted adjusted earnings per share came in at 14 cents.
Adjusted free cash flow for the quarter was $88 million.
Now, let me briefly discuss the fiscal third quarter performance of the underlying segments compared to the prior year quarter. You can follow along in our newly re format and trending schedule that has been posted to our website and shows greater detail around our global media networks subscribers.
Media networks.
Quarterly revenue of $382 million was up 4% from last year and segment profit came in at $102 million.
Globally. The company added 2.1 million subscribers year over year up 8%, reaching 28.5 million global subscribers.
At the end of the quarter.
Domestically total subs were 24.1 million, which was down 1.2 million from the prior year.
The decline in domestic MPPD subscribers was more than offset by domestic OATI and international growth.
Now looking at sequential performance for the fiscal third quarter total global subs were flat and international gains offset domestic losses. However, global over the top gained almost 1 million subs to 8.6 million.
This 12.
Sequential gain was driven by improvements at Starz play International and Pentair, while domestic LTT stars subs were inline with the prior quarter, reflecting a strong hold post power.
Turning to our motion picture group revenue.
31% in the quarter to $474 million and segment profit came in at $49 million.
The strong performance in our film group was largely due to the theatrical performance of our slate, which included knives out as well as the continued ancillary performance of.
Our releases, including John Wick three.
And finally.
Television production revenue came in at $189 million, while segment profit was impacted by difficult comp to the prior year quarter, which included season seven deliveries for Orange is the new black.
Now I'd like turn to our fiscal 21 outlook.
Starting with TV, we continue to invest and develop a strong pipeline of programming and see strong fiscal 21 growth, partially driven by Mad men syndication.
In media networks, we expect double.
Deliver fiscal 21 performance in line with fiscal 20, even after fully investing in the future growth of our international platform as well as content and marketing spend to support the transition of our domestic business to an hour car revenue sharing model.
Motion picture group, our profit is expected to reflect the timing of a tough comp against the early fiscal 20 release and strong performance of John Wick three relative to a backend loaded fiscal 21 slate with four wide releases and associated PNM spend in the fiscal fourth quarter.
So in fiscal 21.
We plan to continue to fully invested in our future growth, while still delivering consolidated adjusted OIBDA in line with fiscal 2000.
We believe this will position us for substantial growth in fiscal 2002, as we continue to explore the strong TV development.
Hi, substantially complete the international rollout transition to more profitable network distribution models and benefit from a fiscal 2002 film slate is expected to have a number of strong franchise releases.
We expect to fully fund our investment in future growth from.
Cash flow without tapping our 1.5 billion dollar undrawn revolver.
Also I would note that we have plenty of room under our bank covenant and no debt maturing for another three years.
With regards to leverage we will continue to reduce net debt and leverage as we move.
During the fiscal year end 20.
While leverage in fiscal 2001 will depend on the timing of trailing 12 months adjusted OIBDA and any potential capital raise now I'd like turn the call over to James for QNX.
Great. Thanks for you can open up for Q and at this stage.
And ladies and gentlemen, if you wish to ask a question. Please press one of them zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command. If you are using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question.
You May press, one then zero at this time and one moment. Please for your first question.
And our first question from the line of Alexia Quadrani with Jpmorgan. Please go ahead.
Hi, Thank you so much just a couple of questions first on Starz, just if you could update us if you have any.
Major renewals coming up but just.
Jupiter is among the calendar 2020.
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The I'm just curious because it sounds like you've got some great.
TV content the pipeline going into some of the major Adam.
Yes that marks and such Adam I'm, just curious how you evaluate what the process is entirely evaluating the allocation.
No content to third parties first is you know selling it jars directly.
Good luck it at I'd appreciate it thank you.
I'd like to its Jeff.
We don't disclose the renewals that we have each year, but I think it's safe to say that we always have wanted to renewals up every year on ongoing basis.
Hey, Alexia Kevin Thanks.
On the on the question about product that goes out to their larger market versus what we're collaborating on with Sars.
Yes, it really good news is that Jeff and his team built out a very clear brand filter about premium.
And now.
It doesn't really over serving that.
Audience away. So we look at our whole portfolio.
I'm thinking about what things might be right and typically the kind of things that we would like to broadcast and where we are quite excited about the broadcast pilots and John touched on.
Aren't going to make sense and premium stars environment. So those decisions there are pretty easy generally because.
Just the nature.
So the tone kind of what they are premium listen it's how we these special lane, we feel like we know a lot about premium.
And when we get to the other other buyers out there might have more shades of gray.
It really is just about what what makes sense for the entire ecosystem, whether its stars domestic and it's right for them.
Or for another buyer and taking it to Starz play international which a lot of Optionality.
And always looking to build shareholder value.
Okay, Kevin just a follow up on that on that in general I know Youve I think you mentioned on the opening comments of unmentioned.
The earlier broader distribution is always extraordinary playlist any sense of how that is performing.
General versus your expectations.
Yes, well I can only share anecdotally the enthusiasm that's been building over at MDC that you. There. They are loving the early results was put on.
On a 10 o'clock Tuesday forever I onetime broadcast area and then a six week digital.
Culminating on February 16 from the efforts of the pilot and the second episode will will go into its regular Sunday night time slot and I think they've been knocked out by the results side. They opened it up to Facebook and Youtube. In addition to when we ended up and then DC Dot com.
And they're just thrilled the traction and the sampling.
It's been massive and they're very hopeful about that translating into.
As when when the shell returns to install time slot.
Perfect. Thank you.
Thank you. Our next question from the line of Ben Swinburn with Morgan Stanley. Please go ahead.
Thanks, Good afternoon guys.
Jeff can you talk a little bit about the content strategy at Starz, both domestically and globally as you look out into fiscal 2001, you guys have had.
Actually had some margin expansion in the us this year, despite a pretty flat topline. So just trying to understand how you're thinking about overall hours and investment level as we move forward, particularly.
Finally, given you guys just give us some nice guidance for two for fiscal 21.
And then I think connected to that for Jimmy on the free cash flow from year to date I think the free cash flow is the conversions down a bit from last year.
His help us think about free cash flow for the year answer the drivers of.
Some of that's working capital Thats leaning in on the content side and how you think about that trending into next year. Thanks, both of you.
Hey, guys Jeff.
Good question I think when you look at the ecosystem I think John alluded to and his remarks.
There's a lot of services coming out there will be called basic streaming.
I'm trying to be all things the all people and replace that first product in the home.
We have always been sold as you know on top of broad based television with a very focused in bespoke and premium kind of programming strategy, both domestically and abroad and asked for and I'll talk about it brought a minute and so we believe.
Dave that this focus on women and African American audiences connect audiences and a hyper focused on that.
And can use to drive our transition to the digital world and we'll continue to lean into that the goal is to fill out every week all year with some piece of content, whether it's something from the power universe district that audience.
Our run the World show there with Lions gate that we just announced a comedy for the first time, putting comedy back on the network, but we're really really focused on being that premiums specifics here on top of broad based television and we think we can partner with everybody.
And we can bundle with everybody we feel really good about our place in the ecosystem.
I want to buy international internationally, we're really lucky in that we have all the place. It comes out of the stars domestic including great shows like Spanish Princess in Vienna, and Dublin murders. We also couple that with shows like Manhattan, Lionsgate television alongside our acquisitions or some other ones.
I said earlier, but.
A lot coming this year that we're very excited about city Council rock and the great.
Additionally to all of that we're starting to invest more and more in local content leveraging Oliver Lionsgate resources.
For multi platform and windows sharing across the world.
And thanks, Ben relative to your question on free cash flow.
And conversion.
We don't provide specific free cash flow guidance as you know, but certainly in the quarter.
Thanks for noticing we came in at very strong conversion of 71% $88 million and free cash flow.
We would what I would say going forward as we expect.
Continue to generate.
Positive free cash flow.
Thats after fully investing in our core businesses for content marketing as well as.
Our international opportunity in stores play international So we can do that and we'd expect to continue to modestly reduced debt as we go.
Ill remind you we have significant in our wells with regards to taxes, and so were minimal cash tax payer, which also helps to conversion.
As you might yes.
Got it thank you very much.
Thanks.
And we'll go next to David Miller with Imperial Capital. Please go ahead.
Hey, guys I have two for Jimmy and one for Joe Drake, Jimmy the programming write down $74 million programming write downs was that on the stars level or film level or what was the nature of that and then.
Looks like you guys have generated I've got 324 million in free cash flow.
TTM.
That's pretty darn good.
How if you had to couch I know you don't I know you don't really reported this way, but if you had to ballpark. It how much of that 324 million came from the library or the library as you define it and then I've a follow up for Joe Greg. Thank you.
Okay David.
David.
Well first with regards to the trailing 12 months free cash flow.
That is.
We don't break that out relative to library libraries are constant.
Generator of free cash flow.
So as we are closely managing our working capital as we.
Throughout the year. So we are squeezing more out of our balance sheet. As we go we're using that to reduce debt and we'll continue to do the same going forward.
With regards to the programming write down primarily relates to the stars network as you will see that in our 10-Q. This is part of the ongoing.
And evaluation of content and really reflects changes in programming strategies and recent management changes.
Okay, Great and then Joe could you just give us a quick update on what's going on with chaos walking I know that when you came back into the company for your sort of second tore.
Some of the daily than weren't particularly satisfied with.
What had been shot at the time.
Since then there's according to trades are spending some reshoots on.
Additional script treatment and so on and so forth and you just want to update us on where that project stands up we'd appreciate it. Thanks, Yes sure. We've we finished all of the target beyond it.
We will be will.
The the movie will be completely posted in done by mid April you'll see that we will announce the release state of the movie either tomorrow or Monday.
Are you go you will see where it's out we've got we're very happy with where we ended up and we've got two of the biggest stars on the planet.
Today.
Leading that.
So.
We're at a place where we can finally now we got our work done.
We're in a good spot and you will see very soon when we're going to be releasing it.
Hey, Thank you.
Thank you and we'll go next to Steven Cahall with Wells Fargo. Please go ahead.
Thanks.
First a couple on the guidance. So I think Mad men is currently on life. This is for like a million dollars that episode any sense as to how much that could go up in the future transaction.
And then I think you mentioned that media networks is going to look similar on adjusted OIBDA in fiscal 2001 of the did in 20 would you contemplate there that the drag.
International is going to get a little better and then maybe that offsets a little bit of the.
Challenge that you're going to have as you reset at add Comcast am I thinking about that correctly that I've got a quick follow up.
With regards to Madman, we're not going to provide specifics.
Thats too.
Our expectations per episode, but its strong and Thats great great programming I know Kevin's excited and Jim Packard to take that out so rather looking forward to that also remind we have weeds next year as well so were nicely positioned as I said in my remarks.
For a very strong.
Television year commensurate with the strong pipeline that.
Kevin and his team has developed.
I missed a question on the international drag.
Scars overalls flattish.
Hi, guys first.
Yes.
On a media.
Networks side, you know were absorbing the transition if you will too.
On the domestic side.
From kind of a fixed model more to a revenue sharing our current model and we factored that in as well as you noted the ongoing.
Investment in Starz play International.
Our platform. So we expect to be all of that is still bring media networks and inline with where they were in fiscal 2000.
And.
And feel good about where we are.
Great. Thanks.
Thanks, David.
Our next question from the line of Alan Gould with loop capital.
Please go ahead.
Yes.
I know, it's a little bit early can you, but you could could you comment is how well the international stars is doing on the back of the Apple and Amazon, particularly Apple rollout internationally and secondly.
Although competition.
Business.
Feel about how much you have to spends content lies on scars going forward. Thanks.
Hi, this apparent.
In terms of how we're doing internationally.
Absolutely on plan and.
Despite some of the early.
And that we're having with with Apple they are new to this and so we're growing as they grow and we're very confident.
And as Apple continues to invest in the platform and invest in educating consumers et cetera, we're going to be right on track that we set the stage really nicely. This year was 49 distribution deals and launches.
Throughout our footprint.
30 countries. So we're looking really we're looking forward to a lot of growth coming here.
In terms of the domestic that spend I think as we continue to say.
We're not trying to be brought that broad base kind of basic streaming service like you see on these announcements everyday we think that were.
Entry to all these services, we've got a very focused programming strategy our goal it as a sad, but something on the air every week 52 weeks a year that serve the female audience. The African American on into the Latino audience.
As a complimentary service to the folks trying to replace basic television. So we feel like we've got a great programming.
Strategy, the 21 slate I think as our strongest slate yet I think high time will be one of the best shows on TV next year, we've got the power universe coming online in a much bigger way, we'll have almost three quarters full with the power universe will put comedy back on the network is run the world and Shining Vale and so we feel really strong about the slate, but again.
We're not trying to be offerings the off before so we're very focused and we think we have the right spend to complete our strategy.
Thanks, Jeff.
Thank you and ladies and gentlemen, just as a reminder, if you do have additional questions you can get into the queue by pressing.
One.
Then zero again to get into the queue for your question you May press one than zero. We'll go next to Jim Goss with Barrington Research. Your line is open.
Thank you.
Conventional wisdom seems to imply that it's tough to create midsize pictures and a profitable.
Basis, especially with compression in physical media market.
But you're pointing out of a strong position in this mid budget area I Wonder if you could talk to whether you are found a whole you're able to exploit.
What the distribution and splits and demand for those products might be and what is the situation.
And aftermarket home video options as to the this market shrinks and how you pointed out.
John Wick as having particular strength, but can you talk about those issues.
Sure.
First say that I think that fares I love the narrative because I don't think it's true, but everybody else's listening to it which is that if you actually.
At the box office and take pictures, the top fixed fee pictures and and look at.
Cost versus.
Consumer appetite there is an enormous amount of appetite that isn't tied in any way to cost and so.
It's really has to do with understanding your verticals understanding your audience.
On being able to speak to your audience at a different way and a lot of focus and so weve. What we have gone as we've talked a lot of over the last year's about our content strategy in the various verticals. We're very focused on action live action family comedy Whore, We've we've talked a lot about our faith business.
And we still have a focus on those.
Most brands that can be franchises for us and we've just worked a lot of focus in those areas and this year. We've had a ton of success doing that we've hit $77 million. The box office almost doubled our box office doubled our market share from last year.
And have a pipeline to continue to do that so.
Whether it is.
In the action space, you talked about how you talked about the downstream.
Revenue streams take home Entertainment for example.
John John talked about how action is over converted if you look at our slate of Rambo Angel has.
And John Wick, both at the box office.
And the values that those are creating out of home entertainment still incredibly strong on packaged media, but those action fans are really transact.
On.
On on digital as well on consumer spend so.
What I would say to you is it say, it's not only a really strong strategy. It's one that is fairly unique to us and we're winning at it and we're going to continue to do that.
Okay, maybe just a corollary the.
2020 is a year when it seems there are fewer apparent blockbuster.
Sanchez's does this.
Enhance your opportunity that much more and and the in terms of franchise is what qualifies for franchise in your regard just built in audience that is repeatable or is there something more.
Well I think that ultimately you'd have to have more story to tell in a reason for a movie to exist.
Beyond.
Its original story, but one of the one of the things that Lionsgate is continued to show is that franchise can come from any one of our verticals. A perfect example, this year is knives out which.
Two years ago, you'd probably hear a lot of studio, saying, all the who Don it's a dusty streaming movie.
And yet Brian Johnson created an absolutely brilliant movie with a brilliant character and Ben while block that has established itself as the over $300 million globally, but more than that if theres a lot of story left to tell for abattoir and film and a film maker, who loves that theatrical experience that.
Core audience and that feedback and so we've been able to.
As part of our content strategy every year, you'll find that.
Story is what could that we put we put movies in there and and intentionally.
That have the potential could be stories told over again or have.
More story to tell.
When they perform at a level.
We've got a franchise on our hands.
Okay I appreciate your thoughts.
And our next question from the line of drew Borst.
With Goldman Sachs. Your line is open.
Great. Thanks for taking my question.
Jim in your prepared remarks, you mentioned, the leverage ratio and and that will be impacted.
By your decision to potential capital raise so I was wondering if you could give us kind of an update of what's going on with that process.
Sure drew.
That's helpful. As we've mentioned to conclude the recent renewal discussions on domestic distribution, which is great.
We are as you know exploring parallel paths to help us de lever and unlock value of same time. So our preference is to raise capital at right price point.
Which allow us to both highlight the valuation within our businesses as well as de lever more quickly.
We're not planning an equity raise parent company.
And I would also point out as I did on the last earnings call.
We can be patient, we have plenty of free cash flow to fully fund our content marketing spend.
As well as our stores play international rollout and we have no debt maturities for another three years.
Okay, and if I could follow.
A follow up on the TV.
Growth for fiscal 2001, if I remember correctly on the last call you guys talked about the potential of 50.
Percent growth.
Is that still sort of good guidance in a sense for for fiscal 21.
No we don't want to put a particular number on it but we definitely have strong growth in TV and the timing of that throughout 21 will depend on ultimately the timing of avails in any particular quarter.
Yes strong growth.
Segment profit as well as margin improvement as we move into 21 were TV.
And if you'll indulge me with one more on the international business I think you talked about $150 million of losses EBITDA losses, this year being kind of peak.
I guess trough better said.
Is that still kind of your view of the business going forward.
That's right, yes, the the guidance that we laid out previously on international and including moving to profitability in 2315 to 25 million subs in 2025.
It's all course, we like what we see we love the opportunity we.
Thank the 150 is should we laid out previously the high watermark for this year is in fact, the case and we look forward to executing our plan.
Okay, great. Thank you very much.
And I'll turn it back to our presenters for any closing comments.
Great I have a closing statement here James Marsh. Please refer to our press release it events tab under the Investor Relations section of our company's website for discussion of certain non-GAAP forward looking measures. After this call. Thank you very much.
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