Q4 2021 Lions Gate Entertainment Corp Earnings Call
And the year with a 42% increase and motion picture group profitability.
And other motion picture business continues to evolve and ways that we've already seen and ways that are still emerging we continue to believe and its vitality.
We went into production on 13 films during the pandemic year as we prepare both for the continued reopening of theaters and the exciting opportunity to deliver a robust slate to start next year.
With the latest installment of our blockbuster action franchise, John Wick 4.
The hunger games prequel, the ballad of songbirds, and snakes adapted from Suzanne Collins Runaway best seller.
And the star studded borderlands.
White bird the follow up to a global hit Wonder.
And install just re imagining of our classic intellectual property Dirty dancing.
Are you there God its main Margaret based on Judy Blume iconic novel.
Franchise property monopoly and shotgun weddings, starring Jennifer Lopez, our slate will be a compelling value proposition across every platform as our spectrum of buyers continued to expand to include new players like Roku, and Imdb and we capitalized on and opportunity to return to the network series business are.
Television group is coming off 1 of its best years ever with 13, New series orders all 8 of our pilots picked up to series and all 7 of last year's freshman series renewed for their second seasons. We've also been busy aligning our content businesses behind the growth of stars and and fiscal 2021, we hit our full stride with <unk>.
<unk> Lionsgate television series launched preparing to launch our and production for Starz.
And for 20 years, we've been investing billions of dollars and creating premium evergreen content and the proof of concept is the record performance of our library.
And our library revenues continue to grow year over year and reached an all time high and $780 million and fiscal 'twenty, 1 driven by the steady March of new Escalade and Eva platforms around the world with an enormous appetite for content.
And when we look at the success of our recent library packages. It's interesting to note that instead of 2 or 3 big drivers contributions are spread across hundreds of different profitable titles all of them growing and value over time.
Ours is a big young and vibrant library with over 80% of library revenue coming from titles produced since 2000 and with many monetization cycles ahead.
Turning to stars we grew subscribers by 23% year over year with $29.5 million global subscribers at year and excluding the nearly 1 million subs from Penn tire and.
<unk> $16.7 million of our global subs are streaming well exceeding our fiscal year and target of 13% to $15 million and taking us past the digital inflection point of more over the top than linear subscribers.
Our domestic and international businesses, both made significant contributions to this growth and.
And the United States, we reached the 10 million streaming subscriber milestone and thanks to our focused content strategy and our slate loaded with exciting new series adult edgy premium content who's demographic focus gives us a point of view and is making US a must have platform for certain affinity groups go.
And P value recorded the number 1 and number 2 ranked starz premieres ever with Outlander sits season, marking a multi platform viewing series high.
Hi town establish itself as a critical favorite with a dedicated fan base and produced the story of the Nexium text call was a great success and the unscripted space.
Internationally. It was a year highlighted by the 70% increase of our Starz play subscriber base to $8.6 million and expanding global distribution footprint are successful and best of global <unk> content strategy that continues to set us apart and new bundled deals driving our penetration in key territories.
So on place combination of premium programming.
Pizza market and operational flexibility attracted more than 20, new partners and 15 countries as we have grown our footprint to a total of 58 countries within 3 years of our global launch.
This head start allows us to continue to access best in class acquisitions, such as normal people the great <unk>.
<unk> of London, and the upcoming Doctor death to complement Starz original series and Lionsgate films and library content.
We're taking the same approach to growing Starz play internationally that is driving the success of our domestic platform emphasizing value over scale and rolling out a targeted premium service not a broad general entertainment platform..1 that can sit on top of other platforms and 1 that is defined by its exceptionally curate.
And it competitively price premium grown up content.
To paraphrase former first Lady Michelle Obama when they go abroad.
No premium.
Turning to the outlook for fiscal 'twenty 2.
And we'll execute a targeted focused but substantial ramp and content across our businesses.
This will include and expanded and strategically focused slated stars as we increase our number of scripted series by 70%.
Kicking off with the debut of run the world to rave reviews, 2 weeks ago and continuing with the next 2 installments of the power universe. The return of Outlander Ghost and high town and the New series Blind spawning heels, DMF and shining Vale among others.
Our strongest slate ever.
Please take a look at the sizzle reel posted on our IR website after the call.
With our acceleration and content spend this upcoming fiscal year, we're forecasting even better net adds domestically and internationally and fiscal 'twenty 2 than in fiscal 'twenty 1.
While some of our peers are seeing a slowdown as we lap the pandemic impact on streaming our highly targeted original strategy enables us to project a year over year net add improvement that accelerates and the second quarter of a year with a back loaded programming schedule.
And and reassessing, our historical target of 50 to 60 million subscribers by fiscal 'twenty..5 we are now tracking at the high end of the range.
Approximately 80% of those 60 million subscribers will be streaming subs.
Our television group will also deliver 1 of its biggest slates growing from 10 premium scripted series to 'twenty 6 nearly all of them walked and importantly half of them for Starz.
While their profitability is concentrated later in their life cycles as they reached indication and enter our library they have immediate value for starz.
And as the films, we green lit and started shooting during the pandemic begin to arrive and theatres later this year.
We expect strong growth and theatrical revenues in fiscal 'twenty, 2 that will continue to build into fiscal 'twenty..3 when we will have an exciting and impressive slate to deliver to our exhibition partners and to Starz.
In closing.
As we begin to emerge from the pandemic I would like to share a few learnings from the past year.
We amplified our internal communications and the form of weekly letters from management, and Friday meetings, and which I had the opportunity to talk with nearly every 1 of our employees across the company initiatives that we will continue going forward.
We've all learned new ways of doing business mastered new technologies and develop new skills operating and a virtual environment and many of these will form the cornerstone of our workplace of the future.
Finally, though we were tested by the pandemic, we rose to the challenges as a family by pivoting adjusting adapting and showing the resilience and resourcefulness that we will continue to bring to bear on and industry undergoing the greatest disruption and its history.
Now I'll turn things over to Jimmy.
Thanks, John and good afternoon, everyone I'll briefly discuss our fiscal fourth quarter financial results and update you on our balance sheet.
Fiscal fourth quarter, adjusted OIBDA was $77 million with total revenue coming in at $876 million driven by strong revenue growth at Starz and continued demand for library content.
Reported fully diluted earnings per share was a loss of <unk> 17, a share and fully diluted adjusted earnings per share came in at zero cents a share.
And with adjusted free cash flow for the quarter coming in at $3.1 million.
Now, let me briefly discuss the fiscal fourth quarter performance and the underlying segments compared to the prior year quarter, you can follow along and our trending schedules that have been posted to our website and show greater detail around our global media network subscribers adjusted from the sale of <unk>.
Media Networks' quarterly revenue was $401 million and segment profit came in at $43 million driven largely by domestic and international.
Over the top subscriber growth.
Globally, and including Starz play Arabia, the company grew over the top subscribers $3 million sequentially or 22% as you can see and our trending schedules.
Starz domestic over the top subscribers increased 5% sequentially, while Starz play international over the top subscribers grew 104% as we continue to rollout and new markets and platforms.
We ended the quarter with $29.5 million total global subscribers.
Linear subs declined to $12.8 million, while total global media network over the top subs reached $16.7 million Rep.
Representing 69% year over year growth.
Recall this exceeds the top end of the $13 million to $15 million global over the top subscriber range to which we previously guided and again this is without the benefit of Penn tire.
We have now reached 10 million over the top domestic subscribers representing growth of 47% year over year.
Currently nearly 80% of all domestic subscribers around either over the top or Ala Carte plans.
Now turning to motion pictures revenue declined on a limited theatrical releases for $292 million, while segment profit of $62 million reflects a tough comp against the prior year quarter, which included the theatrical release of knives out as well as ancillary sales of John Wick 3.
Hi.
This was partially offset by continued strength and library and platform releases.
And finally television revenue for the quarter came in at $211 million and segment profit was $9 million.
And the results of our television group reflect a tough comp against the prior year quarter, which included licensing of library titles Spartacus and meet the Browns.
Now turning to the balance sheet.
We ended the quarter with leverage at 4.0 times trailing 12 months adjusted OIBDA or 3.1 times, excluding our investment and Starz play International.
We continue to retain significant liquidity.
With $529 million of cash on hand and.
And $1.5 billion of Undrawn revolver.
Just after the quarter ended we opportunistically refinanced $445 million of term loan a and all of our unsecured notes, both reducing our average annual interest cost and extending the tenor.
By 5 and 8 years to calendar year, 2026, and 2029, respectively.
We also extended 125 billion of our $1.5 billion Undrawn revolver to calendar year 2026 with no increase in rate.
We remain committed to strengthening our balance sheet and paying down debt.
Now I'd like to turn the call over to <unk> for Q&A.
Okay.
Thanks, Jami operator can you open the call for questions.
I'd be glad to ladies and gentlemen, if you'd like to ask a question. Please press..1 then zero on your Touchtone keypad and operator will go up and your name and further assist you you may withdraw your question and at any time by repeating the same command.
And if youre using a speaker phone we ask that you. Please pick up the handset before pressing the number and.
Once again, if you have a question. Please press 1 followed by zero at this time.
And our first question will come from the line of Thomas Your line is open.
Hi, Thanks for taking my questions. This is Thomas yet and Morgan Stanley.
My first 1 and in light of some of the industry consolidation that's been happening I would love to hear more about how you framed the Tam for premium relative to broad for stars and the impact also that it might have on content production side of the house and then a second 1 for Jeff on stars can you give us a little bit color on the guidance for net.
Ads to accelerate in 2022, and what are you seeing on the churn front and the cadence of original programming that gives you the confidence for even higher U S penetration as we head into that and at the second half of next year.
Yes, Jeff Thanks, Thomas Jeff will take that and for climate.
And I think if you if you take a step back and think and how those streaming industry is kind of unfolding right now, we really see it and kind of 3 groups of services that are kind of basic and broad based streamers that are really these big scale AD supported kind of all things to all people on the homes and we think.
In order to be profitable and to get the scale they've got to be somewhere between 250 to 300 million sales globally.
And the second tiers, where we say it which is that premium service, that's a very edgy and non AD supported.
Really tailored service, we think again, if you look at the linear domestic world is there any kind of guide for the world that we need to be somewhere between 20 and 30% to be profitable there as John said in his prepared remarks, we see ourselves coming in by 2025 at the high end of the range around 60 million subscribers.
And really.
And that's here and our model is a little different and you see and that broad based tier where we're more wholesale than they are retail and then and.
On the third box is a very talented net niche type services. So we think we need to get to somewhere in the $50 million to $60 million range and as John said won't come in at the high end of that range by 2025.
The second question. If you look at domestic we're coming into our biggest and broadest slate and the history of the business. We're going from 7 original this year to 12 original next year and.
And the way those original is lay out its really stack more and the second third and fourth quarter and so when we look at how we kind of forecast the business, which is really a data driven approach each piece of content has given us subscriber acquisition target and goal and so when you start to layer in multiple shows on every week to week over 52 weeks you start to see those.
And kind of accelerate and again I'll remind everybody as we talked about on a few of these calls and we're really playing more of a retention game by bringing subscribers on the 2 core demos that we have and filling those gaps I want and power comes on the Air goes comes on the air and we bring raising cane and on and then we bring a P value back and we bring a high pound back we're moving.
Fiber is from 1 showed on the next the next this quarter, we saw churn at all time low and we think as we get into this robust slate it will come down in the single digits.
Great and maybe if I can squeeze on last 1 and there was a bit of a sequential decline and the blended USR proof. Our stars can you talk a little bit about the dynamic there and whether you think that settles out are we lapping some noise from the fixed to variable transition, where comcast or anything else related to the mix shift.
Thank you and you know really in the quarter you saw a lot of discounting and promotional activity from not only on our own app, but from our partners like on Amazon and Hulu and so there is some discounting noise and the number we still think debt on.
On our total domestic basis <unk> will be around $5.76.
$6 and remember that all 80% of all of our subscribers domestically or in some kind of Ala carte or revenue share deal and so that's why you see that kind of blend that average handling around that number.
Very helpful. Thank you so much.
Thanks, Thomas Operator next question.
Tim Nolan your line is open.
Great. Thanks.
1 number that jumped out to me on the on the.
Training schedules was the international OTT and number of $4.9 million and I Wonder if you could talk a little bit about how you basically double debt sequentially. I think you mentioned new markets, but any more commentary on that.
And then a follow on could you talk about profitability of the OTT business I think you've.
And the past talked about it being.
Close to the same profitability as linear.
Any further discussion you might be able to offer us in terms of profitability given these much larger sub targets now by 2025.
Yes, so and the quarter, we saw the Ala Carte international business accelerate and then.
And there was a.
<unk> large volume deal that we did and a market that we thought it was great to extend the brand and really build the business and the quarter and so both sides of the business really accelerated and we feel really great about that long term projections. Obviously, we continue to look at the business and think on a long term basis by 2025, our Ala Carte ARPA will be somewhere.
On the $3 range as we've talked about and if you look out from 'twenty 5 a little further we think globally the business will help us on the 20% margin.
Thanks.
Thanks, Tim operator can we get the next question. Please.
Got it on morale and your line is open.
Great. Thanks for taking the questions 2 if I could first on M&A.
Obviously, there is a few changes across the ecosystem over the last few weeks. It's somewhat of an open ended question, but I'd love your perspective on the shifting landscape and your views on what role Lions gate might play have changed and and maybe second and you've entered fiscal 'twenty 2 with encouraging momentum there I assume this year.
Isn't true representative up your full earnings potential, especially given the ramp up of programming and I'm not sure how granular you'd be willing to get and I'm not expecting specific guidance, but as we think about a world post COVID-19.
Can you think about can you help us think about some of your financial expectations beyond this year, whether that's specific to fiscal 'twenty 3 or further out or just any high level commentary on the puts and takes that would be very helpful. Thanks.
And Jimmy its going to flip those answers and Jimmy is going to go first on the financials.
As you noted.
And we're really excited about fiscal 'twenty, 2, particularly our investment opportunities right. There is some.
Great opportunities to lean in and our content across all of our businesses really and it's supported by hard data proven track record and it's going to drive is going to drive revenues, both short term and certainly long term as well so we'll be able to shoulder that increase spend.
And content and marketing with pretty much a modest fairly modest impact on the earnings and cash flows during the year and and Thats No surprise when you look at analyst expectations for 'twenty..2 is an investment year and then obviously.
So well positioned moving on beyond that into 'twenty, 3 and beyond with regards to the ramp up and content and what that does for the out years.
So.
I'll take the debt Emma.
M&A question.
And over both of the big deals that have happened within the last 2 or 3 weeks I think are pretty simple there a resounding affirmation and I'd say about the value of content and the value of Ips and.
And the value of.
Brand I think sort of our approach.
And where we fit and is pretty simple at this point and time, which is.
And with all of this disruption I think we've got a benefit.
In terms of lack of disruption here at the company and of Cohesiveness and I think the key thing that we're going to do is keep our head down.
And just keep executing on our plan I think the thing that we don't want to get distracted by frankly is this concept of scale because we think our job is actually just to create for our shareholders outside value. That's what we think we are doing with with stars when people refer to us like this morning, and 1 of them.
Those M&A articles as having a niche service, we don't think 30 million subs and as a niche service. If we wanted to be a niche services, obviously, we wouldn't have sold and tire so.
We think 30 going to 60 is that's a big business, we want to be the market leader and premium.
And Thats, how we will build our value. So obviously, we talked to everyone, we listen to everything but our main job right now as I say is to create outsized value on the way we're going to do it is by keeping our head down having all of our business is talk to each of the 10 times a day, which is what they do.
So that again as Michael and I have said before 1 plus 1 plus 1 is way more than the 3.
Thank you Bob.
Thanks, Kirk and.
Operator could we get the next question please.
Alexia could Ronnie your line is open.
Hi, Thank you and 2 questions from May.
And.
The first 1 is on <unk>.
You saw some nice acceleration of growth.
And the quarter.
Paired with many of your peers kind of some moderation of growth and I'm curious and.
Do you think it just really entirely content driven and with other factors driving.
Driving that success and then my second question really is now on.
On the theatrical releases on the windowing.
And any everybody. So we're taking a different approach here, though I think most are most studios are sort of settling around kind of a 45 day window.
And I'm sure you've had your own conversations with debt with Dx exhibitors and I'm curious what your thoughts are about.
Windowing and general distribution of ear on product.
Okay, Great and we'll have we'll have Jeff go first and then Joe Hey, its share.
Yes.
Obviously and the pandemic, we saw a lot of discovery of stars and a lot of consumers for the first time, which we continue to see.
And the engagement on the service and on the over the last 3 years, we continue to see the monthly hours increase and we obviously saw that and the pandemic, but that was starting 2 or 3 years ago. I think the subscriber additions that John talked about and his prepared remarks on 'twenty 2 tours versus 'twenty..1 again is really driven by the size of the slate that.
We are coming and the scheduling of a slight debt.
Coming as I talked about earlier churn is at an all time low. So we think this consumers. It found the service Brent and pandemic are still with us watching our service.
And we think that will continue and we've got 3 power series coming this year and outlander coming back this year, so for big Tentpole events and freshman shows like.
Black Mafia family and heal is behind that and so we couldnt be more and excited about the subscriber growth that we've got planned based on the content that's coming on line right now.
Hi, Alexia on the theatrical business. There certainly is a lot happening and windows and we have really taken the approach for ourselves to really look at each film as its own piece of business and and how that is best served youll see in the case of you'll see on the case of spiral.
Our metrics actually are improving on that film and the metrics and this new model are very strong and that'll be and will have had 3 weeks of the theatrical window exclusive and then we'll stay and theater as wallet Kosta premium video on demand and we got hit man's body guard coming up next and a slightly different windows and that will settle out just around 45 days within a couple of.
Days of that.
Based on when we want to go to a different secondary window exploitation and so I think what youre going to see and certainly what we've experienced is that we love the theatrical business, we're working very close with exhibitors exhibitors.
Have been great partners, and working with us and with with our competitors on finding the right way for us to collaborate helps support that market, but maximize the value of our titles.
I don't I think thats going to continue for a bit and we'll see where it settles out but.
We're kind of book, we're very and I would say the last thing I would say is we are very bullish on the theatrical market I think youre going to see a really big weekend this weekend and yet.
The real news here is there's a lot of ways, we can exploit and monetize our titles now and have great partners to do it with.
Thank you.
Thanks, Alexia operator can we get the next question. Please.
Matthew Thornton your line is open.
Hey, good afternoon, everybody I think thanks for talking the question.
And maybe a couple of quick ones, if I could I guess first.
Let's play Arabia.
You guys almost doubled your international OTT business Starz play Arabia, However, it doesn't seem to be moving much quarter to quarter. So my question is is that 1 that you are still considering us as a strategic acquisition at some point or is that 1 perhaps you could monetize similar to what you did with Pan Pan tie and just go it alone given the momentum you already had.
Elsewhere.
Internationally I guess, that's the first question.
Second question International and I apologize if I missed this but international breakeven I remember a couple of years back we talked about fiscal 'twenty 3 but that was before you guys kind of upsized.
Subscriber guidance out to fiscal 'twenty 5 any update on how youre thinking about international breakeven and again I apologize if I, if I missed that 1 and thanks guys.
And at Starz play Arabia, we really like Mars is built there. We think there again there continue to be the market leader I think is 19 countries they have experienced.
Some obviously economic issues and some of the markets that we've seen but ultimately we really feel good about the business and we'll continue to watch it and watch it continue to comp returned to growth and then we will make it and the decision on whether we continue to take a controlling interest and that continue to stay as a viable strategic partner and monetize that some other way.
But we feel really good about what positive building and we hope those countries and we will see those countries returned back to growth and the next couple of quarters and on a run rate basis.
And we still expect to be.
Positive and calendar 'twenty, 3 and that would be without SBA.
Yes, that's correct me, if I could slip 1 more and quickly coming back to some of the recent deals and specifically the MGM.
Multiples it looks to me like they reported library cash flow numbers similar to you Guy and I think there was theres was $4.20, so it puts there and.
Apprise value of about 20 times that number I'm just curious if theres any.
You had the epics business.
Comps against Starz pretty pretty pretty well, but on the library side is there any difference between the way you guys think about Robert and library cash flow versus what they kind of report I'm. Just curious if you have any any thoughts there. Thanks again guys.
Great observation look.
And proves the value of content content content right and our library is incredibly valuable was 17000 titles and what are how you look at it so.
Really when you look at the scarcity value.
And I guess, our enterprise value.
However, whatever multiple you put on it right with a 50% cash margin and 700 million plus revenues.
You can.
See that clearly the library was substantiate a significant portion of our current enterprise value.
Thanks, Matt operator can we get the next question. Please.
Steven Kay Hall your line is open.
Thanks, maybe first for me just wondering if you could touch on the cadence of original is that you have this fiscal year at Starz, we can kind of think about the subscriber growth.
And maybe a original and this year versus what you had last year and then just also wondering if you have an idea of what's your P&A expense might be and fiscal 'twenty, 2 or how many films Youre planning to release since I know Thats just an expense you didn't really have last year, that's going to come back and maybe lastly, Jimmy I think a lot of the annual free cash flow this year adjusted.
And free cash flow came from the production loans and the tax credit facility. Maybe you can just help us understand that a little debt and thats kind of a funky free cash flow dynamic. Thank you.
Yes.
And content cadence perspective domestically on Starz as we said we've gone from 7 original <unk> 12, this year heavily loaded more and the second and third quarter. This year than last year, and so I think youll see.
And the subscriber kittens and followed that as well.
And on your question about the PNA P&A spend.
And you would expect to see obviously as we expand theatrically with market coming back there probably almost double our broader theatrical releases, so youre going to see an increase and the P&A spend right not to the levels that you saw in fiscal 'twenty, but maybe something along the <unk>.
60% to 70% of maybe the fiscal 'twenty pre pandemic levels are for P&A spend right and then and the context of free cash flow. As you noted we finished $300 million.
Our free cash flow and fiscal 'twenty, 1 there were certainly some some benefits there from managing our working capital but.
More than 50% of that.
For the Lions share was obviously operational so we can continue to fully fund all of our businesses and the increase in content and marketing spend as well as the fully funding Spi, which by the way our Starz play International peak cash funding, we just lapped and fiscal 'twenty, 1 and really feel good.
And about that and feel good about our ability to generate positive free cash flow and continue to reduce debt moving forward.
Thanks Keith.
Operator can we get the next question please.
Certainly and ladies and gentlemen, as a reminder, if you'd like to ask a question you May press, and London zero and <unk> <unk>.
Operator, we'll gather your name and further assist you next we'll open the line of Alan Gould. Your line is open.
Yes.
Thanks. Thank you I've got 3 questions. Please and thanks for taking the questions first Jeff what gives you the confidence now that Youll hit the high end of that $50 million to $60 million range.
<unk> about $9 million a year, if you were to smooth it out.
And I'll take that 1 and then I'll go to the other questions.
Thanks for the question and as we look at are the countries that we've launched and and our distribution deals and as we start to lap the distribution deals more content comes on and we signed more distribution deals and we look.
Look at the math and we see that as we build up this business over time, we're really going to end up at the higher end of the range.
And as we see the business continuing to accelerate and we've got great confidence that will actually continue to move to that number.
Yes, Alan and even I'd, even add again when you look at what the expectation of these basic screamers are somewhere between 300.400 million subs and we're projecting out and that same period of time.
8% of their of their.
Our breadth if you will it seems quite reasonable when you understand again that we are building a premium service that sits on top of every other serve as its not competitive that the local players that are emerging they are competitive to the base extreme and theyre not competitive to us and so we feel that we can package and bundle with virtually every other platform out there.
And who knows 60 may be a little conservative, but I mean, we're basically on that just on the current results that we have and what we're seeing and the marketplace.
And so that's very helpful. John question for Kevin Kevin I've never seen someone have all of our pilots picked up and all of their freshman shows renewed.
Can you tell us a little I mean, congratulations on that what is happening on the and the <unk>.
And television space.
Hi.
Thanks, That's a great question and we're really happy we have an amazing team.
Huge amount of this goes to the ongoing integration and relationship between Lionsgate, and Starz, and what Jeff and Allianz Parnell and Christina are all doing along with our group.
Half of those 4 of those 8 are with stars and.
And also just demand and the marketplace.
<unk> platform expansions.
Consolidations notwithstanding are just bringing about more spending more demand for high end premium scripted programming and a big volume business on unscripted and both of those areas and a really smart way.
On extraordinary creative team internally, and and amazing lineup and producers and writers and artists and directors and just hitting on all cylinders. So good timing and I think preparation and despite pandemic.
Productivity through the roof.
I think it's important to note as well because sometimes people will say well why aren't you only doing shows for Starz and the great thing about such a.
A large portion of that business being to third parties is that we're getting third parties to pay for almost a full price on those production and virtually every single 1 of them will return home to us and they'll go and our library could even end up some coin on starz.
So we like that business and we think it's pretty critical as well and that we service all of the talent that we've got and so that we want to keep on talent happening, we want to keep them busy and we want to keep them productive. So if we can keep them doing that sometimes with third parties as I say fully funded are mostly funded by those third parties and it's premium content.
And we will ultimately DNR library forever.
And so sorry from the Big broadcast network shows are not don't have huge deficits associated with them and you're saying.
We have renegotiated virtually every 1 of those deals and what's interesting again as they have more vertically integrated so with their streaming partner our companions, if you will and with their cable companion, we've actually opened up windows for them that didn't exist before so they're paying a much larger percentage of.
The license fee, but.
And theyre getting more early right and yet again.
And we're always getting some rights, which we can exploit immediately off their third party platforms and then as I say later on and those are almost always shows that are going to revert back to us and and go into our library and be evergreen properties.
Okay, and 1 quick 1 for Jimmy.
Despite the pandemic you were able to spend more $1.6 million this year investment and content, so youre able to keep producing.
Much bigger do you think thats going to increase in fiscal 'twenty 2.
Well and yes, as you noted as John's referenced and remarks and as we've answered questions. We're definitely looking at this 22 as an investment year, great opportunity to increase content marketing spend I think maybe the best way to frame and as if you go back to pre pandemic levels fiscal 'twenty, 2 and think about cash.
Marketing spend being up say, 30% plus.
Versus these.
Endemic levels and this point out to you that.
Again, while there is some moderation and free cash flow and earnings is driving short term revenues as well as long term revenues. So I expect that would be fairly modest.
And I was actually referring to on the cash flow statement and your increase in investment and film and TV programming rights.
Yes, and correct.
And that'll be up 30%, okay. Thank you.
On the cash yes, that's the cash spend comment both the current 10% is a content and marketing because without without marketing and our without without marketing and really why spend the content. So.
And in aggregate if you broke it down I would say the content spend.
Relative to that would be up probably over 50% and less so obviously on the marketing side of things because keep in mind and fiscal 'twenty, we had a pretty full level of spend on P&A.
Alright, okay. Thanks for taking the questions.
Thanks, Alan and operator could we get the next question. Please.
And our last question will come from the line of Jim Goss. Your line is open.
Okay.
Thanks, Rick.
And regarding the alternative release strategies and you were talking a little about the windows before and a couple of your newer releases.
What are the drivers are patterns and expectations for the various alternative release strategies.
Alright, Thanks, Jim that's a good question so.
We look at it a bunch of different ways first day, we bifurcated domestically and internationally and domestically as you know we self distribute here really on all media internationally, we self distribute and Latin America and the U K.
And we license otherwise and so we've really opened up as as the appetite and the ways in which you can exploit it internationally have grown at an extraordinary rate, we sort of opened up the approach to how we monetize content internationally and what I can tell you is we're seeing.
Significant increases and what we're getting and the ways in which we're distributing if you look at the last couple of titles Youll see.
The last couple of things, we put into production when they finally reach market you will see in the mix traditional theatrical.
Distributors, you'll see footprints for streaming platforms youll see some theatrical the PMO sort of and then everything in between and we're able to look at the market agnostic Lee both from what are we trying to achieve creatively and then maximize monetization and I can tell you that it's it's a really exciting time over there and theres a lot of upside there.
B to be garnered on the domestic front.
We've we've as you know just done are done on our pay TV deal with stars and so we're very focused on putting into production and kind of content, that's going to help grow that business and and feed the big theatrical appetite.
And then from a windowing perspective.
It really depends on the piece of content and so as I said and the case of spiral.
Shortly theatrical leaning than into P Board.
Moving into more traditional exploitation and then accelerating a window for stars was the best way to monetize that particular piece of content.
In the case of <unk> bodyguard, it's a little bit different.
And we sort of approach each film agnostic Lee and look at that moment in time look at release dates like a competition and.
And the best way to monetize it and so it just gives us a lot of flexibility.
Both from a data perspective honestly. It also gives us more flexibility in terms of how we look at data.
As well as how we're going to ultimately monetize.
Are you able to give them somewhat and film rent splits.
And you feel and you'd have value and.
And the greater flexibility and the windowing is a result of that.
Are you, saying are we having to change our film rent splits is that the question. Yes, I mean, if you have a less consistent per.
Pattern, then maybe once did and all the windows have changed over the past year. It seems like there could be some give you'd need to get in order to.
<unk> and <unk>.
And in order to take advantage of the shorter windows, you'd probably need to maybe accept less of the domestic box office in terms of the split with the exhibitors.
What I would tell you is that we're having all of those conversations there haven't been meaningful shifts and any 1 direction up.
Our down and any any adjustments or frankly fairly small if and when we need to do that.
Obviously, we're only making we're here to drive customers back into the theaters and be successful in that space, but anytime we're going to make a decision.
To change our splits and again, if we do that they will not be significant.
It's because there is a bigger pie overall to harvest out of our content.
Okay, and then 1 final on.
Could you discuss the pace of the return to to your ultimate.
Targeted film releases in terms of numbers of releases and the mix in terms of the release.
<unk>.
Strategies.
<unk> versus other alternatives.
Sure so.
We're moving back into the theatrical business for fiscal 'twenty, 2 we won't be.
I don't know exactly and we're probably somewhere between 50 and 60% of where we were at the peak and.
And <unk> 19 and 20.
And we hope that we plan to be returning to work, calling full form a wide release.
By 'twenty, 3 and continuing forward from there, but we look at the wide release again.
From the perspective of wide theatrical release or wide alternatives.
And so I would say 'twenty 2 were.
Up and at a little bit and by 'twenty, 3 we should be fully back to form.
Alright, Thank you very much.
Thanks, everyone. Please refer to the press releases and events tab under the Investor Relations section of the company's website for a discussion of certain non-GAAP forward looking measures discussed on this call and also as John mentioned in his prepared remarks, please check out the sizzle reel at the top of Lions Gate Investor Relations website. Thank you.
Yes.
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