Q4 2022 Lions Gate Entertainment Corp Earnings Call
Peacock complementing our paywall and theatrical output agreement with stars.
Close major licensing deals for the hit comedy Ghost with Paramount plus and chips Creek with Hulu.
We support our content creation by opening and beginning production at our Lions Gate Studios in Yonkers, then extended our studio production footprint by announcing a second studio facility in Newark, We ramped our slate of Starz original scripted series from six to 11 doubling down on our focused content investment that did its job.
By reducing over the top churn by nearly 20%.
We grew stars global subscribers by a record $6 3 million in the year to $35 8 million, including Starz play Arabia, with approximately 80% of them streaming and linear Ala carte subscribers.
And with an eye towards the economy.
We took a disciplined and conservative approach to overhead while being opportunistic in executing treasury management strategies to keep our balance sheet strong.
Not all of these accomplishments have been reflected yet in our financial results some of them like our investment in new TV series will show their full value as our shows continue to be renewed for later seasons, but these early results promise a significant return on our investment.
Instead of my usual overview of each of our businesses I want to talk about four things that contributed to our value creation across our content platform during the year.
First our strong content creation year is driving growth across all of our businesses.
Our television group is the top independent supplier of premium scripted series with five series at HBO Max three shows that Apple TV, plus five series airing or in the works with our broadcast network partners seven shows with Avon platforms, 15th series lineup at Starz and theories at Showtime.
Netflix and Amazon among others.
We've maintained our film production tempo throughout the pandemic assembling a slate that encompasses big tent Poles are strong multi platform business and a growing lineup of feature films for streamers.
As we continue to prepare our biggest brands for theatrical release, we're also releasing smaller and medium budget films that lend themselves to innovative windowing strategies and released on streamers.
In a world that rewards optionality by the end of the year, we expect to return to our annual run rate of 45 to 55 films across our wide theatrical multiplatform and director streamer businesses.
In addition to being a content distribution platform throwing off recurring subscriber revenue Starz is a pillar of our content creation strategy building, a slate of valuable intellectual property with a bold premium adult sensibility that can be a valuable complement to the programming of the general entertainment platforms.
Even after executing our strategic plan for Starz, we will continue to partner with them and the creation of great IP building, our library and achieving important synergies between stars in our studio business.
Second.
Our portfolio of franchises lies at the core of our intellectual property and we are in production or active development on spinoffs sequels, prequels re imagining and other brand extensions from nearly every one of them.
John Wick Chapter Forest, finishing production for release early next year and a dear Miss will star in ballerina, John Wick action spinoff, which begins production later this year.
Dirty dancing, starring Jennifer Grey and the re imagining of our classic Library title got a great response from distributors that came this week.
Expendables for with a world class cast of action stars has wrapped production for release next year.
And on November 17th 2023, the hunger games franchise returns and its customary place on the release calendar with the global rollout of the ballad of songbirds and snakes, starring Billy The Kids <unk> life as the young Korea line of Snow and directed by Francis Lawrence.
Third we're continuing to scale one of the most valuable film and television libraries in the world.
We continue to grow our library organically manage and window, it creatively and acquire integrate and monetize new libraries efficiently. Our recent licensing of ghosts and Shits Creek are the latest examples of the importance of retaining rights to our properties and our ability to increase their value over time.
Finally, when we acquired Starz, we saw an opportunity to build a global streaming platform to bring our content directly to consumers to enable our lionsgate television business to scale its content creation by giving it a dedicated buyer expand the opportunities we offered to our talent and create another source of value.
<unk> IP generation.
Our increased content investment at Starz is working during the year, we grew global subscribers by 21% and reduced domestic churn by nearly 20% in fact with Big series on the air for both of our core demos March was our fourth best streaming subscriber growth month ever and subscriber.
Acquisition costs declined significantly.
This investment has delivered our most robust programming slate with new content every single week for our two key cohorts women and underrepresented audiences over.
Over the last few months, we grew our power universe with the launch of our third series in the franchise Powerbook for force brought back fan favorite Outlander for successful sixth season, and launched premium star driven properties Shining Vale with Courtney Cox, and Greg Kinnear, and Gaslit with Julia Roberts and Sean Penn.
So streaming is not an end in itself. It is a very efficient way to bring content to our consumers worldwide in that regard, we built a strong and profitable streaming business at Starz a number of our international territories will soon turn run rate positive given our early global expansion and we remain on track for achieve.
Our long term financial and subscriber projections.
We are also positioning ourselves where the streaming world is heading as a premium platform with a predominantly wholesale distribution model. We believe in and are rooting for the success of the broad general entertainment platforms, because they will become our future distribution partners.
The premium adult focus of our content and the desirability of our core demos gives us confidence that starz will be bundled in packaged by a growing number of streaming platforms as the industry continues to evolve.
In closing despite all the noise in our environment our own path is clear our investment in content is working our business model is resilient and our strategy remains focused now.
Now I'd like to turn the call over to Jimmy.
Thanks, John and good afternoon, everyone I'll briefly discuss our fourth quarter financial results and update you on our balance sheet.
Fourth quarter, adjusted OIBDA was $83 million in total revenue was $930 million.
Year over year revenue and adjusted OIBDA growth was driven by strong TV performance with adjusted EBITDA further benefiting from G&A cost control.
Reported fully diluted earnings per share was a loss of <unk> 46, a share and fully diluted adjusted earnings per share came in at six a share.
Adjusted free cash flow for the quarter was $88 million.
Now, let me briefly discuss the fiscal fourth quarter performance of the underlying segments compared to the previous year quarter.
As you will see in our online trending schedules and SEC filings, our separately address our media networks and studio businesses in total while still providing a breakout of the domestic and international networks as well as our motion picture and TV Studios.
Media Networks' quarterly revenue was $380 million and segment profit was $33 million, excluding <unk> and last year's fourth quarter revenue was down two 2%.
Year over year domestic revenue declined four 2% as positive OTT revenue growth was offset by a decline in linear revenue.
Year over year International revenue was up 29%, reflecting continued subscriber growth.
The year over year media networks segment profit declined 23% and primarily reflects the reduction in domestic linear revenues as total content marketing and G&A costs were in line in relation to the prior year quarter.
We ended the quarter with $35 8 million total global subscribers, including Starz play Arabia.
Total global media networks, OTT subscribers grew $4 8 million sequentially to $24 5 million.
This represents a year over year global OTT subscriber growth of 47%.
Now I'd like to talk about the studio business in aggregate revenue of $658 million was up 31% year over year driven by the TV group.
Segment profit was $83 million up 17% year over year also driven by TV. Our total library revenue at the studio was $766 million on a trailing 12 month basis, they are less than 2% over the $780 million trailing 12 month library.
Our revenue reported in the fourth quarter last year.
As we've noted in the past last year's trailing 12 months Library revenue included significant contribution from the licensing of Mad men.
Breaking down the studio business between motion picture and TV, let's start with motion picture.
Motion picture revenue was down one 5% to $288 million, while segment profit of $50 million was down 20%.
Revenue and segment profit trends reflect continued strength of our library, partially offset by the timing of PNA prerelease spend on unbearable weight and content deliveries.
And finally, TV revenue was up 76% to $370 million driven by continued growth in post pandemic output, which included both new and returning series set.
Segment profit came in at $33 million up over 250% year over year, reflecting new and returning series episodic deliveries as well as the continuing strength of <unk> performance.
On the balance sheet, we ended the quarter with leverage at five two times or three eight times, excluding our investment in Starz play International down from five five times at the end of the prior quarter.
We continue to retain significant liquidity with $371 million of cash on hand, and $1 billion to $5 billion of an undrawn revolver.
After year end, we used some of our excess cash to prepay the $194 million of term loan a note that would've otherwise been due in the fourth quarter of fiscal 'twenty three.
Currently we have no maturities until the fourth quarter of fiscal 'twenty five.
We remain committed to strengthening our balance sheet and continuing to pay down debt, while funding our increased investment in content and marketing from adjusted free cash flow.
While we don't generally provide annual adjusted OIBDA guidance I wanted to provide some color on how to think about the quarterly cadence of earnings throughout fiscal 'twenty three.
While overall I would expect fiscal 'twenty three to look a lot like fiscal 'twenty two the cadence will be more backend loaded.
This reflects the timing of episodic deliveries and starz programming, including some continuing amortization from the fiscal 'twenty to buildup of Starz original series that we expect to put some pressure on adjusted OIBDA in the first half of the year.
Our leverage will naturally rise a bit in the near term as trailing 12 months adjusted OIBDA reflects the cadence of content marketing costs, but we expect to again de lever in the second half.
Now I'd like to turn the call over to <unk> for Q&A.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the case if at anytime your question Thats been addressing we'd like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our own.
And our first question will come from Steven Cahall with Wells Fargo. Please go ahead.
Yes.
Yes. Thanks, good afternoon, so John I, just want to make sure I heard you right with your opening remarks, I think you said you expect to have stars either spot offer otherwise separated from studios.
Probably with an announcement this summer by the end of the year. So just to be clear there will certainly be a separation I'm not asking for kind of details on what happens to stars, but it sounds like barring something really changing while we see the two separated.
In the coming months did I hear that correctly.
Certainly heard sort of what what I would indicate as a probable timeframe. Obviously anything can change we're an incredibly disruptive environment right now, but based upon the conversations we're having right now.
We think thats the appropriate timeframe.
Great and then as we just think about valuing the two different sides of the company can you update us are there any content rights that are owned and controlled at Starz or do we really think about stars as a consumer facing servicing the content comes in primarily from Lionsgate or does start is actually own and control.
Some of the content that fits with the service.
Yes, that's a great question I think.
You could talk about.
Two things one I would say start generates a lot of its own content.
And we would expect that going forward to continue currently.
Most of the.
Our underlying IP resides with.
With the studio side.
Going forward, obviously, there is a lot of devil in the detail and we'd have to see how how we want to structure that with our potential strategic partners.
Great. Thank you.
Operator can we get the next question please.
Our next question will come from Curt gotten Moreau with RBC capital markets. Please go ahead.
Great. Thanks.
So again, thanks for the update on the Starz transaction and just a follow up on.
Steve's line of questioning is there just so we're all on the same pages or any more color you can provide in terms of the structure of the transaction and whether or not you are expecting to monetize your entire stake and second it is very encouraging.
Despite the current market backdrop and value compression that we've all seen across the broader ecosystem that it sounds like there is a robust demand environment for <unk> given the discussions you are having with I think you called out a number of strategic and financial partners I guess I appreciate the urge to crystallize value for the asset but.
The question is why sell now, especially when stars profitability is being weighed down by all day.
Investments that you've made and there is perhaps such a dislocation in valuation across the market or perhaps youre not seeing that dislocation given the demand that youre seeing so any color would be appreciated.
There's a lot to unpack there.
Certainly the main impetus.
For the separation.
Is that we don't feel that the street is giving us the value for the sum of the parts.
Feel like with the company is.
Ah separated they can both.
Concentrate on their core businesses and.
And my sense is.
They will also see some opportunities, perhaps some strategic opportunity that they might not say with the companies.
That are combined.
Appreciate what Youre, saying I think it's true we got out early in the international marketplace and.
And so it is true that a number of those territories are going to be turning positive in the.
Near future.
So one could say well why aren't you more and youre waiting.
But this is the plan that we have now our centers right now that we are not selling all of it but honestly.
Anything could happen and that's why we're not giving you more details right now.
Fair enough. Thank you so much.
Operator can we get to next question. Please.
Our next question will come from Matt Portillo with <unk> Securities. Please go ahead.
Hey, good afternoon, everyone, maybe maybe two if I could.
If I'm not mistaken and correct me if I'm wrong, I think starz domestic we should be coming out the other side of a three year transition with one of your large mvpds partners I just want to make sure that that was correct and maybe you can kind of give some color on maybe what kind of pressure that might have created on the other financials kind of looking back at the quarter in the past year, just any color there would be helpful.
And then just secondly, it's been a couple years I think since you guys gave us a little color on the <unk> between Mvpds and OTT.
In domestic so again it could be willing to give us any update on kind of where the two <unk> stand on the domestic side that'd be that'd be helpful. As well, thanks again guys.
Yes, Hi, it's Jeff. Thanks for the question, Yes, we saw some pressure on linear ARPA in the quarter sequentially, we were coming out of the end of the transition from a fixed deal to an Ala carte deal on one of our largest domestic linear mvpds that's behind US now so sequentially, we will put that behind this and you'll start to see.
Hey.
Arc will normalize going forward.
There is.
There is a difference between the OTT and digital <unk> versus <unk>, but that as we have transitioned off of those fixed rate deals over the last couple of years I remind you by the end of this count this fiscal year March over 88% of our subscribers are either on our cart or some kind of revenue share. So we've really moved off of those.
Although our pool of high volume deals to be much more of a.
A service that is chosen by the consumer and so but that linear has actually then accelerated up to closer to what we see on the OTT side. So I think.
Linear wise long term will be somewhere between $5 75, and 605 incentive on ARPA on the domestic.
Domestic site.
Thanks, Matthew operator can we get the next question. Please.
Our next question will come from Barton Crockett with Rosenblatt Securities. Please go ahead.
Okay, great. Thank you.
Just a couple of things.
One I just want to make sure I understand the targets you guys have given before on subscribers.
For 50 to 60 million global subs by 2025, I think Starz international hitting breakeven. Most recently you were saying fiscal 'twenty four.
That type of stuff is that still what you are saying or is there a meaningful update there.
Yes, we still feel really good about that 50 to 60 million subscriber range by fiscal 2025.
Do think that we will come out and turn positive up to breakeven, we're coming out of calendar run rate calendar 'twenty four.
We're really excited about the progress we're making internationally.
Five or six markets, it really drive 75% to 85% of the revenue of the planned one has already turned to will turn in the next couple of quarters, three and four we have a real great line of sight. There. So we feel really good about the business that we've built and the progress that we're seeing in terms of hitting those long term subscriber goals and.
And success.
Okay.
And I guess the other question is on kind of coming at it from a slightly different angle with what I think everyone's been asking about in terms of the.
The impact of this crazy environment on your process.
It seems to me like this process might have taken longer.
Maybe than you guys expected certainly than I would've expected.
I'll follow that as well, but I'm just wondering if a crazy market situation with valuations for assets and streaming media.
Sure.
Changing so dramatically going south so much that's really slow things down.
If if that's kind of coming up the works a little bit.
Yes Barton.
I think we're right on schedule I know a couple of people have said that but to do this right to have the right partners.
Actually we think we're right on schedule in terms of the environment. I mean, obviously in terms of everybody's stock I think everyone is suffering I would say that I think that certainly the people, we're talking to and I would hope even the street, let's see this is we have a whole different business model than these big streamers and I think there they are hurt because.
All of them are competing for is as Jeff has said numerous times is huge broad.
<unk>.
Screaming dominant if you will and we're not as a matter of fact, we're rooting for each and every one of them. Because these are distributors of the future and we're clearly differentiated we are premium virtually entirely scripted entirely not AD supported and so we see sitting on top of that.
Platforms is a great add on for them and it's going to be great distribution value for us.
And so I don't think the street is certainly recognizing this I certainly hope the <unk>.
Potential partners that we're talking to do but yes in this kind of an environment, obviously, it puts a little bit of a damper on.
On virtually everything obviously.
Distressing to see our stock.
Getting hit when we're having really a fantastic year huge value creation year.
And.
Again, we funded $600 million.
Investment into content more than last year, and we've done the whole thing $2 $2 billion out of our own free cash flow and so I think we're doing what we're supposed to be doing which is building long term value between the studio and stars.
And again, it's a rough environment, but.
We think that that value will be recognized.
Okay. That's great. Thank you.
Thanks Barton.
I predict when we get to next question. Please.
Our next question will come from Thomas <unk> with Morgan Stanley . Please go ahead.
Thanks, So much for taking the question just a quick point of clarification for Jimmy you said fiscal 'twenty, three and I expect it to look a lot like fiscal 'twenty. Two are you, suggesting we should kind of be looking at that $400 million ballpark on the adjusted OIBDA that you reported for this year.
It kind of is that the right place to be I, just wanted to understand that point and then for Jeff.
Market that seems to be focusing a lot recently on just broader macro related uncertainty ahead I'm wondering if you could opine on just the impact you might see particularly in that complementary add on streaming service game, how if at all a tougher economic conditions might impact your expectations on just general consumer streaming behavior.
Power.
Yeah. Thanks, Thomas Yeah, I think you're interpreting that.
Close from a ballpark perspective, we're not giving a specific number or range relative to guidance, but that was also trying to help you with the cadence of how profits lay out over the fiscal 'twenty three.
Hey, it's Jeff <unk>.
Great question I think if you think back over the last 20, some odd years and linear Mvpds video services and inflationary periods.
You've always seen as people kind of roll back to their house and start to stay home that the video services continue to support and the.
The entertainment selection of solution of the home and we think if you look at our two core demos that we really are serving something for those two core demo every week 52 weeks of the year with a lot of pay one movies a lot of series and also library, which is at a very very compelling price point. So we think our value proposition is in a really good faith based on what.
We are seeing in the market today and we also think as John said as those broad based streamer start to really compete and consolidate and bundle that they lack the destination for our two core demo that puts us in a really unique place to do some very unique pricing with them to give again further bundled <unk>.
Opportunities in value to the consumer and drive our business.
It's Thomas operator can we get the next question. Please.
Our next question will come from Jim Goss with Barrington Research. Please go ahead.
Okay.
Hi, a couple of things first I was going to ask.
It's a little bit more about the competitive.
Environment, Youre, describing and the weather and add like version of Starz would be contemplated.
And how is the.
How is that.
The notion of being packaged with some of the other services versus competing with these broader more comprehensive services.
Where HBO is included in our broader service and Showtime is included in our broader service whether.
How that might affect the competitive situation as well.
Hey, it's Jeff currently <unk> is not part of our strategy. It is not included into our 50 to 60 million subscriber goal that we've laid out that we really feel confident that we're going to hit.
We continue to believe that being a premium adult non AD supported service that is complementary to all these broad based service is a great place for us to be just like we were in the linear business for the last couple of years and Super successful there.
We truly believe based on the conversations that we've had with all of our partners that we will be included in bundles with each of these broad based services again, we really have a unique programming strategy focusing on those two core demos and like I said, we really are the destination for those demos and so adding those two these broad based streamers and in a way that we can put economic.
Value back to the consumer with both companies I think is what youre going to see this year and next year is kind of the theme in our business.
Yes, I think I would add Jim I think I would add Jim.
<unk>.
Even as an AD free service, we think Theres a lot of running room in the domestic market I don't know, Jeff if you want to opine on that I'm happy to.
Domestically if you look at the number of households, and you back out.
Folks that just won't watch video services and the folks that won't watch adult rated content. There is probably somewhere in the neighborhood of 80 to 90 million households that we can go after domestically and as you saw in the numbers sitting around $21 million today, so lot of opportunity for us to still grow into those two core demos programming.
Programming is working our as John talked about the lining up with the content is really reducing churn.
Seeing that as we put longer term offers in the marketplace and we're getting customers for over six to 10 months on the service insurance coming down sub 5% and so we feel really good about the data informing our business, but the content strategy working in stabilizing our revenue base for long term success.
Okay.
Can I ask one if I could ask one last.
Take on what the conversation we started with.
As you look at the.
Structural opportunities are most of them assuming that you would no longer consolidate starz or would they be.
Structures that would presume that the partner.
I would not take so much that you wouldn't known a sufficient place to consolidated and are you looking more for a strategic partner or partners or financial partners.
Well gentlemen in terms of consolidation any type of spin if that were the course of action without getting into specifics you wouldn't have continuing consolidation right the separate companies.
Not going to get into the specifics but.
Any transaction would involve delevering in a tax efficient manner and without any restrictions that would impede shareholder value.
Okay.
Alright, thank you.
Thanks, Tim I predict could we get the next question. Please.
Our next question will come from Alan Gold with loop capital. Please go ahead.
Thanks for taking thanks for taking the questions.
Jamie I'm going to go back to the to the initial comments about the split as well. It was helpful that you broke up the OIBDA between the studio business and the Starz business can you give us some idea of how the free cash flow would split up between the two businesses.
No we don't break that out separately, but there'll be a time for that but.
Each one has their own unique this in the context of.
Investment in content and the timing of that and.
Again.
That's not broken out separately at this time.
So I know it was a big.
Content investment year for stores.
In the past our content investment and amortization were pretty close I think this year I think.
You spent about $650 million more in content investment in amortization for the total company more invested in the content is that mostly at the star business. This year.
Well, it's across the board, but certainly there is a lag between you have.
Cash burn in and it's followed by amortization later.
But yes, there is probably a longer lag at the starz side of the business more so than.
Some of the others.
Okay, and then one last one or is it contemplated that stars gets spun off tax free I mean decorate.
Yes, we're not going to get into the specifics on that but again any any transaction would likely involve delevering and again I think <unk>.
<unk> sides of the house are eminently financeable.
Mhm.
Okay. Thanks for taking the questions.
Sure. Thanks, Alan a particular to get the next question. Please.
Our next question will come from Matthew Harrigan with benchmark. Please go ahead.
Thank you by virtue of your focus on.
Those two demographic segments.
It just really having a cost control pretty much DNA for a very long time.
We'll navigate around some of the costs flowed over the last few years, you've had pretty ample noises coming out of the guys with Netflix.
And discovery now on the cost containment side.
Also with respect to the project.
You're even more desirable.
Estimation can you talk about that and whether I am sure youre not going to give us discrete Costco bogies for motion picture and TV, but do you feel like there is going to be some.
Favorable trajectory on the margins over time, even apart from all the noise over the last couple of years with Covid and all that.
Hi, Jimmy.
I'm, sorry could you repeat the question.
Lots of pressures on the cost side for the industry for motion picture and TV production.
Not insulate yourself on that might be focused in having a lot of disappointment, but with other guys. You know Netflix and discovery really trying to contain costs. Now do you think that that's going to have a favorable benefit for you in terms of the go to your margins up as mark discipline on obtaining talent and all of that over a period of time.
And yes.
Even more projects now that other people are getting more more constrained.
Let me.
I'll take that Matthew Thanks for the question let.
Let me say.
A couple of things one is this year, we absorbed about $158 million.
Covid costs, that's a cash that's a cash number obviously a ton of it was with amortized into our business and don't forget that.
When we have COVID-19 costs for stars show and we're supplying it from Lionsgate, we're paying 100% of those costs.
Again, I think given sort of that amortization into our business doing our $400 million in this environment was really.
Really a good year going forward I'm, certainly hoping to mitigate.
Those costs are the costs go down and we are working really hard right now on it.
Of it's dependent upon sort of union demand things like that.
But I think we're expecting that to come down and that should should help our margins in terms of our overall I. Appreciate youre, saying, what you are saying about our ability to control costs I do think we're really good at it thats why and still delivering quality, which is why.
As we said as Kevin said, we have.
So many shows that 25 different.
Different networks or platforms.
And I think we're going to continue to do that the main thing that I would say in terms of margin is two things one is that the demand for content is higher than ever and we have more and more buyers and that's not always be the first buyer for content. If you look at what we just did with <unk> Creek and with dose.
There are tremendous there is tremendous demand for the post initial run initial license fee content, especially when it is premium content scripted content that we are doing most of and frankly, a really good at.
And so the downstream revenue from from these shows is going up the demand for those windows is significant and our ability frankly of Jim Packer and Kevin Beggs.
Our production and distribution teams to window that product to create really interesting creative deals with them.
Networks.
Is is really I think going to drive those those margins and then the last thing that I would say is we are getting there.
These shows are all at both Starz and Lionsgate.
Production for other other networks. These shows are being picked up home economics go into its third season goes into its second season and so.
What we are seeing and why the contribution.
The contribution from the TV business segment profit is going to go up.
I don't want to guide, but it's going to go up.
This year and it's going to go up a lot more in 'twenty four and the reason is that we are getting mature our scripted shows.
Those margins obviously as we go into some version of what you would call syndication those shows are going to become more and more valuable.
Does that answer your question.
Absolutely Thanks, John Thanks, Jimmy cyclical or both.
Thanks, Matt.
Operator can we get the next question please.
Our next question will come from Matt Thornton with Truest. Please go ahead.
Sure.
Hey, guys a couple of just really quick ones.
Corporate expense as you think about the spin and approaches spit I'm just curious if there's any opportunity at the corporate expense line or whether that's already pretty pretty efficient.
And then just secondly, Jim you could talk a little bit about OIBDA for fiscal 'twenty. Three curious if you could give us any color on how youre thinking about free cash flow for the year at least.
At least qualitatively thanks again guys.
Sure.
First on your first question in terms of the overhead look.
With regards to spend not going to get into the specifics, but certainly under a separate company structure. Each company will be focused on their respective core businesses.
It will enable individual efficient individual company efficiencies, but perhaps more importantly.
Our singular focus by each business likewise as John alluded to earlier will provide for a wide range of opportunities.
In the marketplace for each company.
With regards to cash flow.
With regards to cash flow my sense there is that.
Clearly, we have a very resilient structure.
From a cash flow perspective, if you have seen and we will continue to be able to fund from positive free cash flow.
<unk>.
Investment increased investment in content and marketing, which is less of a steep curve than it was last year. So going from 'twenty one to 'twenty two as John noted, we're quite a step up in the content spend by the way marketing spend goes with that there is a step up going from 22 to 'twenty three but again I think we can.
Comfortably handle that out of positive free cash flow, including our continuing investment in Starz play International Yeah. Let me, let me drill down just a teeny bit more on the first question, which is obviously.
We're constantly looking at corporate expense.
And that you can assume we will be an ongoing.
Initiative of ours to I think you would assume there will be some service sharing and a spin and that will change.
The percentages if you will.
That corporate expense line.
So yes.
Can assume you can assume some of that and again I think that.
You can assume is corporate expense at either side as each side actually continues to grow their business potentially.
With strategic imperative, if you will that corporate expense will get spread out over a larger revenue base.
Thanks, Matt operator can we get the next question. Please.
Again, if you have a question. Please press Star then one our next question will come from Steven Cahall with Wells Fargo. Please go ahead.
Thank you Jimmy just just a follow up you've got a lot of cash on the balance sheet no maturities for a while I know leverage over five times as high but you have got a lot of discretion based on how you decide to invest in international and clearly you all are pretty frustrated by the stock price. So you talked about first half of the year being a.
<unk>.
Upward pressure on leverage back half kind of down but would you consider getting into the market with cash and buying back shares at this point.
Well look we certainly have authorized levels, but our focus is on delevering and taking our free cash flow and continuing to Delever and Youll also note that we took some of that excess cash.
It was on the balance sheet at the close of the year and subsequently.
Paid down the term loan a of $194 million. So to your point, we have no no additional maturities until.
The back part of fiscal 'twenty five.
Thanks.
Okay.
Operator can we give you next question please.
As there are no more questions. This concludes our question and answer session I would like to turn the conference back over to Neal Shah for any closing remarks.
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. Thank you very much.
Yes.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.