Q2 2025 Lions Gate Entertainment Corp Earnings Call
I'll now turn the call over to Jon.
Jon: Thank you, Nelay, and good afternoon, everyone. Thank you for joining us.
Jon: The continued industry disruption, the lingering effects of last year's strikes, and a disappointing theatrical box office performance impacted our financial results in the quarter.
Jon: Within our television group, our unscripted business is feeling the effects of a continuing market correction.
Jon: In our film group, the poor box office performance of Borderlands, coupled with softer-than-anticipated results from other releases in the quarter, reflected an environment with less margin for error than ever before.
Jon: On borderlands, nearly everything that could go wrong did go wrong. It sat on the shelf for too long during the pandemic, and reshoots and rising interest rates took it outside the safety zone of our usual strict financial models.
Jon: Several of our other releases in the quarter, though cushioned by financial models that worked as intended, didn't live up to either our standards or our projections.
In spite of the above, our business model still works.
Jon: Risk-mitigated film and television slates, efficient production and marketing spends, a diversified portfolio of assets, and a strong library that serves as the ballast of our business, generating nearly $900 million and trailing 12-month revenue in the quarter.
Jon: But emphasizing the success of our financial models doesn't take the place of also getting the creative right.
Jon: Under new leadership in our motion picture group, we're making good progress in preparing our return to a much stronger and more diversified film slate in fiscal 2026, driven by the tentpoles Michael, Ballerina, and Now You See Me 3.
Jon: Beyond that, Francis Lawrence will be directing our sixth Hunger Games movie after he finishes The Long Walk, the film adaptation of Stephen King's classic novel, as we focus on and take full advantage of one of the most valuable portfolios of brands and franchises in the business.
Jon: Our film slates include two to three tempos a year in order to create significant incremental value for our library, drive our film and television packages for buyers, and in success, capitalize on our biggest opportunities for outsized growth.
Jon: But we will also ensure that when we take bigger swings, we're taking measured swings. In addition to the tent poles, we will continue to focus on the films that have done so well for us before, star-driven commercial properties based in many cases on existing IP.
Jon: In recent weeks, we've announced that Paul Feig will direct Sidney Sweeney and Amanda Seyfried in the thriller Housemaid.
Jon: Challengers director Luca Guadagnino will shepherd our reimagining of the Lionsgate classic American Psycho.
Jon: Amazing Spider-Man filmmaker Mark Webb will direct Johnny Depp and Penelope Cruz in Daydrinker. An Academy Award winner Kei-Hwai Kwan will star in the action thriller Fairytale in New York from Sisu director Jalmari Hellander.
Jon: As you saw we recently announced that Dirty Dancing the musical is scheduled to head to Broadway in spring 2026. A new chapter of an amazing evergreen Lionsgate franchise.
Jon: Combined with our La La Land stage play, shepherded by Wicked producer Mark Platt, and also slated for a Broadway opening in 2026.
Jon: Our upcoming John Wick AAA game in partnership with a major video game developer. The John Wick Experience opening in Las Vegas next month. And more than a dozen additional stage plays adapted from Lionsgate films and television series in the works.
Jon: We have an opportunity to invest in the upside from a deep portfolio of projects that will create an important incremental revenue stream for our IP outside the four walls of our core businesses.
Jon: Turning to television, the market correction has impacted both the scripted and unscripted landscape with buyers continuing to order fewer shows and disrupting long-standing business models.
Jon: But we're not letting this slow us down. Lionsgate Television brings to this environment a core group of returning hit series, like Ghosts, The Rookie, Acapulco, Mythic Quest, Raising Canaan, and BMF, and major new properties, such as Spartacus, the reimagining of one of Star's biggest original hits,
Jon: The Hunting Wives, based on May Cobb's acclaimed bestseller about obsession, seduction, and murder in East Texas.
The Twilight TV adaptation Midnight Sun
Jon: The John Wick TV adaptation, John Wick Under the High Table and the show business comedy, The Studio. Starring, co-written, directed, and executive produced by Seth Rogen.
Jon: It's a deep slate of high-profile properties that create significant growth opportunities for the future while adding tremendous value to our library.
Jon: In addition, we're refilling our pipeline with more than 40 scripted projects sold to platforms since the start of the year, drawing upon our ability to create new business models, pivot to new buyers, and lean into new areas of growth.
Jon: We expect the pendulum to begin to swing back to a new normal as our platform partners grow their profitability and fine-tune their content strategies.
Jon: In the meantime, our television business is doing everything you would expect us to do. Reducing costs.
Jon: consolidating smaller labels to create greater efficiency in our unscripted business and continuing to evaluate the mix of business models on our scripted slate to mitigate risk and maximize our upside.
Jon: Turning to STARS, we like where the platform is positioned, heading into the separation. STARS remains on track for a $200 million segment profit for the fiscal year, after executing a successful rate increase to drive revenue growth in the back half of the year.
Jon: Starz programming is working. Power Book 2 Ghost broke network viewership records in the quarter, reaching 11.7 million multi-platform viewers and gaining 13% in OTT streams in the second half of its fourth season.
Jon: With five shows reaching between 9 and 12 million multi-platform viewers apiece, our core group of original hit series compares very favorably with the most successful shows on other platforms.
Jon: With upcoming hit series Outlander and Raising Canaan engaging both of our core demos, we expect a return to OTT subscriber growth in the back half of the year.
Jon: On the distribution front, Stars and YouTube TV, one of the fastest growing live TV services in the world, renewed their distribution partnership with a new multi-year agreement that also creates new bundling opportunities.
Jon: In addition, Starz announced a deal to bundle BritBox on its own platform as well as on Amazon.
Jon: Streaming bundles have taken a little longer to materialize than anticipated due to industry disruption and technology issues. However...
Jon: As they begin to gain real traction, stars will be able to capitalize on the promise of a bundled world whose benefits include lower churn, reduced marketing costs, increased engagement, and significant greater subscriber lifetime value.
Jon: In the quarter, we announced a new partnership with Applied AI Research Company Runway, under which they will have access to a group of our library titles in order to create and train a model for the use of Lionsgate and the filmmakers we designate.
Jon: The entertainment business is a creative enterprise, but its future growth will require a combination of art and science.
Jon: We believe that AI, harnessed within the appropriate guardrails, can be a valuable tool to serve our talent. And we believe that over the long term, it will have a positive transformational impact on our business.
Jon: I'm pleased to report strong progress in the quarter towards full separation of the studio and stars with the filing of our preliminary proxy.
Jon: The board's recommendation that we collapse our two classes of stock into one and continued steps to put the necessary financing in place for both companies, which Jimmy will discuss in a moment.
Jon: We continue to anticipate achieving full separation by the end of the calendar year, subject to the timing of regulatory approvals.
Jon: This is a transitional, disrupted, and difficult year for our industry.
Jon: We like what lies ahead in an industry that has always moved fast to adopt great new technologies to save money and increase efficiency.
Jon: where streamers and other platforms will return to being robust buyers of films, television shows, and libraries, as they continue to strengthen their balance sheets and regain their footing, and where consumers are slowly, but surely returning to the habit of going to the movies.
Jon: But our greatest takeaways that we have to adhere even more rigorously to our diversified and risk mitigated business model lean even more fully into the growth opportunities offered by our incredible and non replicable portfolio of IP and remain even more faithful to the entrepreneurial spirit agile posture.
Jon: Strict financial discipline that have always set us apart.
Jimmy: Now I'll turn things over to Jimmy.
Jimmy: Thanks, John and good afternoon, everyone I'll briefly discuss our second quarter financial results and provide an update on the balance sheet for the quarter landscapes consolidated revenue was $949 million adjusted OIBDA was a loss of $18 million and operating income was a loss of 89 million.
Jimmy: Reported fully diluted earnings per share was a loss of 68 cents per share and fully diluted adjusted earnings per share was a loss of 43 cents per share.
Jimmy: Net cash flows used in operating activities was $82 million, while our use of adjusted free cash flow for the quarter was $132 million.
Speaker Change: As John noted in his prepared remarks, the recent underperformance of our wide theatrical releases and borderlands in particular has necessitated a revision to landscape studios fiscal twenty-five financial outlook. We now forecast that landscape studios will generate between 300 to 320.
Speaker Change: Millions of dollars of adjusted OIBDA This fiscal year.
Speaker Change: This update outlook, primarily reflects the impact of lower segment profit within our motion picture group, along with some reassessment of the post strike recovery in our TV business.
Speaker Change: The studio should see strengthening adjusted OIBDA over the next two quarters driven by an increase in both high margin post the article revenue and scripted television series deliveries.
Speaker Change: With respect to stars we continue to anticipate that as North American business will generate $200 million or more of adjusted OIBDA in fiscal year 'twenty five now let me briefly discuss the fiscal second quarter performance of our studio and media networks businesses compared to the previous year quarter.
Speaker Change: Starting with the studio business quarterly revenue grew four 3% year over year to $824 million, while studio adjusted OIBDA was a loss of $6 million trailing 12 months library revenue of $892 million was up two 5% relative to last year's.
Speaker Change: Q2, trailing 12 months revenue.
Speaker Change: Breaking down the studio businesses, let's start with motion picture motion picture revenue for the quarter increased two 8% year over year to $407 million. While segment profit was $2.6 million revenue grew due to the increase in film releases, while segment profit was unfavorable.
Speaker Change: Verbally impacted by borderlands and higher P&A spend associated with an increase in the number of theatrical releases in the quarter versus the previous year.
Speaker Change: Borderlands contractually guaranteed international pre sales tax credits and post theatrical film output deals mitigated some of the financial losses on this film the size of its underperformance was outside the range of outcomes. We would expect given the underlying IP cast and size of the film's budget.
Speaker Change: As always we learned valuable lessons from every release and Borderlands is no exception. We are confident that our go forward processes will help reduce the likelihood of a similar outcome in the future.
We will continue to refine our wide theatrical release strategy and make adjustments as the industry evolves and we believe that our overarching motion picture release model can continue to achieve strong financial returns without outsized risk.
Speaker Change: Moving to TV quarterly TV revenue of $417 million was up five 8% year over year, driven by higher deliveries to stars while segment profit of $24 million of expectedly declined year over year due to the pace of the post strike recovery media Networks' quarterly.
Speaker Change: Revenue was $347 million and segment profit was $27 million revenue was expectedly down year over year due to the exit from substantially all of our international markets.
Quarterly North American revenue of $343 million was essentially flat year over year as OTT revenue growth was offset by linear pressure.
Speaker Change: Starz implemented a $1 price increase across its existing U S subscribers in the month in September we expect this price increase will continue to drive an increase in our pool and sequential revenue growth in the December quarter.
Speaker Change: North American segment profit of $27 million was down year over year on higher content amortization, reflecting increased pay one and pay to film output, partially offset by lower original content span. Additionally.
Speaker Change: Additionally, we continue to forecast that stars North America, we'll exit fiscal 'twenty five with OTT accounting for 70% of its revenues star.
Speaker Change: Starz ended the quarter with $12 4 million North American OTT subs down 2.6% year over year, we ended the quarter with 20.2 million total North American subscribers, representing a sequential decline of 1.15 million. This pressure was expected alongside ours.
Speaker Change: September price increase as we focus on driving <unk> and long term revenue growth. Additionally, we continue to expect a return to sequential North American OTT subscriber growth in the December quarter.
Speaker Change: Now, let's take a look at the balance sheet, we ended the quarter with $2.27 billion of net debt at the consolidated company, which reflects 1.64 billion at the studio and 622 million at Starz.
Speaker Change: The increase in studio net debt reflects the expected use of cash associated with both the timing of post strike content spend and the release of five wide theatrical films star's net debt is meaningfully down from its initial $700 million net debt allocation in may as we de lever the storage business.
Speaker Change:
Speaker Change: On a trailing 12 month basis consolidated Lionsgate leverage at the end of the quarter was six times, while standalone stores leverage for its North American business was three times.
Speaker Change: As we prepare for full separation by the end of the calendar year 'twenty four.
Speaker Change: We have made substantial progress in establishing the standalone capital structures for both Lionsgate studios and stores in the quarter. We closed two IP back facilities collateralized by a portion of our library assets. The first was the previously announced $340 million of IP.
Speaker Change: Pete facility supported primarily by the <unk> library, while the second is a $455 million of IP facility backed by a portion of the Lionsgate library. Both facilities were favorably priced sofa, plus 225 basis points, and we will travel with Lionsgate studios upon separation.
Speaker Change: Yeah.
Speaker Change: The proceeds from these capital raises were used to pay down portions of the studios revolving credit facility and term loan b as reflected in our balance sheet at quarter end and.
Speaker Change: And just this week, we closed another $265 million on the landscape IP facility and completely paid off the term loan b.
Speaker Change: This marks over $1 billion of favorably priced asset backed borrowings with an extended tenor of five years and significantly rounds out our post separation capital structure. We are also on track to complete the remaining financings that will fund upon separation and complete the capital <unk>.
Speaker Change: Truckers are both Starz and Lionsgate studios.
Speaker Change: Looking forward to the remainder of fiscal 2025, as we noted before we continue to forecast that the consolidated company's adjusted OIBDA and adjusted free cash flow will be second half weighted driven by a significant increase in TV deliveries post the actual slight cash flows starz price increase.
Speaker Change: And our return to OTT subscriber growth.
Speaker Change: As such we expect trailing 12 months leverage should end the year at approximately four and a half times and three times for Lionsgate Studios and stars respectively.
Speaker Change: And now I'd like to turn the call over to knee like for Q&A.
Speaker Change: Operator can we open the call up for Q&A.
Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session.
Speaker Change: To ask a question you May press Star and then one using a touch tone telephone.
Speaker Change: If you are using a speakerphone.
Speaker Change: Please pick up the handset prior to pressing.
It's all your questions you May press star two.
Speaker Change: Once again that is star and then one joined the question.
Speaker Change: We will pause momentarily to assemble the roster.
Speaker Change: Our first question today comes from Pharmacy, a from Morgan Stanley. Please go ahead with your question.
Speaker Change: Thanks, So much I wanted to ask about the evolving film approach John you mentioned the balance between big swings, but also a measured approach how should we think about how you're redefining euro zone of comfort are we talking about tapping deeper into existing franchises more or does it.
Speaker Change: Revolve around a process oriented approach to production as you kind of look to build new IP.
Speaker Change: Should we think about the budget consciousness on the types of films Youre willing to Green light if that changed at all.
Speaker Change: I'm going to let Adam Chairman of the motion picture group answer that thanks Thomas.
Adam: So look I think it's a combination of all the things that you talked about I think that the company has done an extraordinary job of being financially disciplined and looking at risk mitigated models, but I think that making sure that on the creative side, both on physical production on creative production on marketing.
Adam: On research I think there are ways to incorporate other elements of the company.
Adam: Thanks for your group into the decision, making process, so that both creatively and financially we're taking advantage of best in class.
Adam: Do have an extraordinary number of franchises that we are going to be leaning into because the audience is asking us for the appetite for John Wick theatrically on television in the AAA games space and live experience is extraordinary the appetite from the audience on hunger games is incredible and we're really excited about the book, that's coming out and what that mean.
Adam: <unk> for the future of the hunger games franchise. The same we saw the same with Highlander. So we're going to continue to be super financially disciplined, but there will be an extra emphasis not only on what we make but in what we develop to make sure that we're aligned with creative production with physical production with marketing with distribution and with our filmmakers to bring the right kinds of films to the market.
Speaker Change: Okay understood and then the decision to streamline the U S. Workforce can you help us think through how much of that is addressing what sounds like maybe a little bit of a greater rationalization at T E versus what anything going on at film stars.
Speaker Change: Any help with how that flows through and which areas are even business functions, particularly in youre seeing as an opportunity to run more efficiently. It would be helpful. Thank you.
Speaker Change: Yeah.
Speaker Change: Again, 8% just in RV surf I think thats part of overall right sizing our business when you have a trough in the business and the overall environment. When you have this disruption I think we want to be as aligned with our shareholders as it can be and I think this is an opportunity we have to.
Speaker Change: A little smarter about our business feel a little bit more efficient.
Speaker Change: I would say that the nonfiction business is a little structured differently than most of our business and essentially carry a fair amount of of overhead, which typically gets applied again lots of episode and in this quarter, we actually didn't get two big orders that we.
Speaker Change: We expected, but overall I think that this is an opportunity we have to as I say rightsize our business we.
Speaker Change: We think about some of the ways we are structured.
Speaker Change: And.
Speaker Change: And wait for the cycle to swing back to where we think it's going to swing back to.
Speaker Change: And any update on any one I mean, I think the trailing 12 months library of revenue and Jimmy you cited is that down year over year. If you strip that out and maybe just give us an update on the.
Speaker Change: Path towards $60 million and whether or not were.
Speaker Change: And to see that or with the broader TV pressure, you're seeing is also affecting you want as well.
Speaker Change: Thank you.
Speaker Change: Yes, let me take the trailing 12 months first remember that well <unk> certainly has been fully integrated and is definitely helping our trailing 12 months library as we would have expect expected keep in mind. The prior comp. The prior year included Shits Creek, which was a fairly outsized very nice.
Speaker Change: <unk>.
Speaker Change: The prior prior trailing 12 month comp so actually.
Speaker Change: Despite that and certainly you want helps but we're seeing very strong.
Speaker Change: Library sales impact and his team's killing that they've integrated completely.
Speaker Change: The one we like this asset it's a great asset it's a great team over there we're tracking well we successfully integrated this completely and our business both on TV side.
From the rookie to recruit yellow jackets, and then obviously I spoke to the library sales.
Speaker Change: Very happy with that asset.
Jim: This is Jim I would say one thing the rookie is really proving to be a long term asset for us that is requiring a little bit of work to renegotiate I think in our top 10 countries were redoing all the deals, but I think youll start to see some real returns were already trending above my budget and I'm feeling very optimistic.
Speaker Change: Thanks, so much.
Thomas: Thanks Thomas.
Thomas: Right.
Speaker Change: Our next question comes from Steven <unk> from Wells Fargo. Please go ahead with your question.
Speaker Change: Thank you maybe first just Jeff can you talk about how you saw churn performed in the quarter. When you took the price increase.
Speaker Change: Was it in line with your expectation and then as you look out next year.
Speaker Change: What are you planning through the way you do anything different as you enter this period of the separation.
Speaker Change: Yeah, how are you feeling about the $200 million in EBITDA and can you grow off that and and also what is cash conversion of that EBITDA look like as I think you'll look to delever.
Speaker Change: Now that's a lot in there and then on the TV side.
Maybe this is a question for Kevin with Warner Brothers talked today about a lot of momentum that they're seeing in their TV production studio.
Speaker Change: So I do wonder if maybe some of the challenges aren't necessarily industry wide do you worry that you're losing market share.
Speaker Change: And water cooler originals in particular, what do you think he can do to increase the success rate at taking production, especially at studio a separate thank you.
Speaker Change: Hi, Steven its Jeff. Thanks for the question look I think we as we talked about we put a dollar rate increase through to the business this quarter.
Speaker Change: I think the team did a phenomenal job of executing that with a lot of learning from last year's rate increase. So we came in right on actually our expectation in terms of the downward pressure on the business in terms of subscribers you can see our food does spike year over year, and so we're actually seeing that start to flow through the business that we feel very good about that coming into the second half of the year.
Speaker Change: Year bring outlander back in about 20 days and into raising kanan in with this film slate I think we feel very good about healthy OTT growth in both the third and the fourth quarter. So we feel very good about the 200 million finished this year heading into post separation I think theres a lot of opportunity for us.
Speaker Change: Back our library and start to actually put some owner economics on the business.
Speaker Change: I do feel good about that 200 billion is kind of a.
Our baseline for the business in the next couple of years.
But I do also think that youll start to see as we normalized out of the strike and the Covid period, and our cash payments start to really align again with our amortization schedule and youll start to see higher conversion of Unlevered free cash flow against the 200 million. So what I would expect that to be somewhere in the 70% range as we move forward there is a little tail at the.
Speaker Change: The end of this year for some of the international shutdowns.
Speaker Change: We're still pushing that free cash flow conversion, a little down, but we'll work through that.
Speaker Change: Two of them really could state of.
Speaker Change: Unlevered free cash flow conversion against the $200 million.
Speaker Change: And to your other question I think as the business continues to have been a very disruptive period and what we're seeing in D. C. I think it gives a lot of opportunity for us to do things that really help focus our business and help grow our business. So.
Speaker Change: Just it's Kevin speaking just to follow on the questions about the overall scripted and TV market.
Speaker Change: I was really encouraged by the comments that.
Speaker Change: That we read today from Warner Discovery, and we're we're certainly seeing lots of green shoots in the development side John touched on it in his opening remarks.
Speaker Change: Moreover, 45 projects sold.
Speaker Change: And new developments since the end of the strike and.
Speaker Change: That cadence seems to be increasing.
Speaker Change: And we're moving some of those toward conversion, which is really important to get from development into production.
Speaker Change: With two big players.
Speaker Change: <unk> stabilized.
Speaker Change: Our mountain until this guidance Youll conclude Warner who has been struggling but it looks like they are turning a corner. These are key buyers for us.
And as they resolve and move into more stability, that's great for us, but we're not waiting around for that we're finding new buyers.
Speaker Change: <unk> USA is back into scripted where their MGM plus we have a big series with Robin Hood.
Speaker Change: There we've got original through our <unk>.
Speaker Change: Canadian.
Speaker Change: Subsidiary at Hallmark, plus where we're out there, beating the bushes every day to find new buyers. Our long term partnership with Starz is stronger than ever we have three distinct franchises.
Speaker Change: The most powerful of which pardon the pun is power and the power versus but right behind it or is the BMS franchise and we're into a fantastic first season of production on Spartacus, which is moving into post production right now.
Speaker Change: We have high hopes around it and what that's going to do for the partnership for years to come and Jim touched on the rookie which was one of the key drivers behind the <unk> acquisition, they're rookie from an original perspective than our strong current department getting renewals is really important we've got a short strike shortened first season, we have a full season of season seven that were in the middle of it.
Speaker Change: Making.
Speaker Change: We're in discussions about spinning it off and we renewed.
Speaker Change: An overall deal with talented and show runner creator behind the rookie Alexia Holly, which has led to other development all around town and in addition to his.
Speaker Change: Strong work on our recruiting which will premiere sometime in early 'twenty five on Netflix. So all of those things we're leaning into and in addition to our own IP Twilight John touched on John Wick moving into TV. These are all things. We're excited about and feel that we are quite competitive in the premium space.
Speaker Change: Thank you.
Speaker Change: Thanks, Stephen operator, because we get the next question. Please.
Speaker Change: Our next question comes from Barton Crockett from Lewis and Clark. Please go ahead with your question.
Barton Crockett: Okay, great. Yeah. Thank you a couple of questions. If I can one is just on this.
Speaker Change: Market correction in TV production, so it's kind of understand a little bit better what happened and how you see this resolving.
Speaker Change: So is it going.
Speaker Change: One of the issues like a year plus ago coming out of the pandemic was really supply driven right. We're unable to make shows and that kind of depressed results for a little bit.
Speaker Change: And then but now we're talking about a demand driven kind of dynamic.
Speaker Change: That theres not enough demand for shows although maybe that's resolved now.
Speaker Change: But these networks are still operating there still need contact so how is it that theyre not buying shows, but they're still putting content on air attack.
Speaker Change: Making stuff in house, just rewriting stuff lager buying from other suppliers and then what was really behind that if you can elaborate I'd be curious.
Speaker Change: One question and then on a separate note.
Speaker Change: I know that you guys were under.
Speaker Change: As part of the separation you need to.
Speaker Change: Reis simply a financing at Starz play.
Speaker Change: Some of the tactics moved over to the studio from Sars and I'm. Just wondering if you could elaborate on what's happening with that process just given some of the volatility in markets generally and some of the concerns around stars just how you're progressing with that.
Kevin: Okay, It's Kevin I'll I'll jump into part one.
Kevin: Yes.
Kevin: The demand is there, but the financial constraints go along with it so from an original perspective, what you're finding is orders that maybe gets shortened instead of <unk> 22 in 2016 or eight instead of making those dollars go further.
Kevin: Or can you do that same show for a lot less and take it to a less expensive production location or one with generous tax subsidies every potential angle is on the table. We're shooting here in Los Angeles, we're shooting all over the world we're looking for advantages.
Kevin: This shows that we have the franchise as I touched on together with stars. We're always looking to see if we can bring the ultimate net budget price downward to give Jeff and his team more flexibility there.
Kevin: The good news is that when they move into the library world.
We have a vast library, which Jim can speak to because that often becomes an alternative to original is buying library, which is a little more predictable and less expensive than the original so.
Kevin: Neither way, we want to be a programming solution to R. R.
Kevin: Our network and platform partners.
Kevin: To the extent that we can make that as many originals as possible drive revenue earnings and build library is our first choice.
Kevin: We have to be flexible and kind of go with the market.
Kevin: And Barton with regards to part two of your question.
Kevin: With respect to our financings.
Kevin: We're in the process, we're very confident we're layering into very good capital structures here, you've seen us execute on the bonds, which are in place at both stars as well as the studio.
Kevin: Layered in a $1 billion of IP facilities that we just completed we were oversubscribed travels with the studio great pricing.
Kevin: We're in a process right now with Starz on the term loan a and having very good conversations with our banks and I'm very confident about closing that out as well and on the studio side will lay in their traditional borrowing base facility.
Kevin: And all of this will happen in the next several weeks and we will have teed up for funding at separation.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thanks, Martin operator could we get the next question. Please.
Speaker Change: Our next question comes from David Joyce from Seaport Research Partners. Please go ahead with your question.
David Joyce: Thank you.
Speaker Change: Bigger picture strategic question, if I could get your thoughts you know John and Michael on this.
Speaker Change: With Comcast looking at strategic alternatives or separating out its cable networks and I always had a there's a pending change administration in D. C. I was just wondering what your views are on <unk>.
Speaker Change: Solidago on in the industry, what could make sense going forward, especially in light of.
You soon having the studios in SAR starz as separate entities.
David Joyce: Yeah. Thank you David.
Speaker Change: Well to start with obviously.
Speaker Change: The key rationale for separating the businesses is to allow each of them to prosper and its own.
Speaker Change: In their own space and focus on their core business and give them optionality.
Speaker Change: Its obvious theres huge dislocation about to happen in the business I think certainly some people are going to start questioning whether this idea of vertical integration really works, where they're taking away the natural tension between buyer and seller is really the best way to allocate resources.
Speaker Change: But for sure there is going to be a lot of movement of pieces I believe out of these conglomerates and I think after the dislocation theres going to be a lot of relocations.
Speaker Change: And so what I would say in general after our separation is theres going to be a lot of optionality flexibility.
Speaker Change: And I would say within the conversations that I think will be going on M&A and strategic.
Speaker Change: Change I would say if you ask me will both of the size of our business be involved in those conversations and I would say I think that's extremely likely.
Speaker Change: Alright, Thank you very much.
Speaker Change: Thanks, David Operator can we get the next question. Please.
Speaker Change: And once again, if you would like to ask a question. Please press star and one.
Speaker Change: Our next question comes from Brian <unk> from Raymond James. Please go ahead with your question.
Speaker Change: Hey, everyone. Thanks for taking thanks.
Speaker Change: Thanks for taking the question I saw reports on a delay with the Michael film suggests.
Speaker Change: Curious where you are in the process on that film and it would be good to get update on the other big tent Poles for next year ballerina and now you see me.
And then any thoughts on how that delay may be affected the rest of the theatrical slate for next year.
Adam: Yeah, Hi, it's Adam Thanks for the question.
Adam: We have obviously part through all of the dailies on Michael and they are extraordinary, but we have yet to see a first cut of the film. It was always the most hyper aggressive possible targets for April but we wanted to claim the space. If in fact, we were going to be ready for it because theres been a lot of interest on the <unk>.
Adam: <unk> formats of having that movie, but we were never going to race that movie to have it come out before it's ready the truth is that our filmmaking team has had extraordinary success with Bohemian Rhapsody in that late fall corridor.
Adam: And given the quality of the movie and what everyone sees as the financial opportunity of that movie. It just made perfect sense to slot it into that corridor have the opportunity to use all of the summer for trailer play.
Adam: We just could not be more excited and what that opportunity is going to be and we expect in the next few weeks, we will start to actually see early cuts of the film ballerina had an extraordinary trailer launch.
Adam: I think the audience was incredibly excited to see what felt like a real John Wick.
Adam: Companion movie.
Adam: And getting to see Keanu Joy.
Adam: Joining honor in that movie sparked a lot of enthusiasm and the early response in terms of the number of used and in terms of early tracking on that movie are encouraging in that movie. We fully expect we will stick to the June corridor and the screenings of the movie. After we did some enhancements have been very very encouraging as well and we just wrapped <unk>.
Adam: <unk> on time and slightly under budget on now you see me ribbon Fleischer another eight plus extraordinary director did a tremendous job I was just at the American film market. That's in Las Vegas, This year and had a chance to show our foreign partners. The footage that we have crafted from that film and there was immense excitement and enthusiasm in.
Adam: That is already data for November so the slate is this latest coming together, we also David good fortune and.
Adam: In the October corridor, and I will tell you that that movie has screened absolutely extraordinarily well.
Adam: Also a very easy recruit for that movie people are really excited to see what what keanu and Aziz and sat together have done.
Adam: So we are very much looking forward to what next year has to offer.
Adam: Great and then on <unk>.
AI partnership with runway can you just talk a little bit about how that came about and have initiated it and what tangible benefits you expect.
Adam: And then what's been the feedback so far from the creative community.
Speaker Change: It started with us doing a lot of due diligence in the world.
Speaker Change: And we very much sparked to runway as they did to us and I guess, if I were going to pare paraphrase Wayne Gretzky. We think our partnership is with them is going to propel us to where the puck.
Speaker Change: Is headed as opposed to where it is.
Speaker Change: So we're excited about what we're doing together, we're not talking a lot about it but we've made some public comments about it but.
Speaker Change: We think this is very much kind of enhanced filmmaking and become an incredible.
Speaker Change: Tool for the community and this is Adam I would just add on to say that I think there were some questions. When it was first reported.
Speaker Change: But I think once we clarified for our filmmaking partners for our talent partners exactly what this was how it would be used what it is and what it isn't.
Speaker Change: We've had great support in our filmmakers are using it already.
Speaker Change: Great. Thanks, everyone.
Speaker Change: Thanks, Brent operator could we get the next question. Please.
Speaker Change: And we do have an additional question. This comes from Patrick <unk> from Barrington Research. Please go ahead with your question.
Speaker Change: Alright, thank you.
Speaker Change: On the theatrical releases.
Speaker Change: Wondering if the how the performance in the quarter.
Speaker Change: Causing maybe a reevaluation like how you pursue your marketing efforts I understand like efficiencies and that is very important I was wondering if it's more difficult to break through in the <unk>.
Speaker Change: The current environment, and just what sort of a reevaluation you guys are undertaking.
Speaker Change: Yeah. Thanks for the question I think look I think the reevaluation has more to do with what movies, we decided to make and at what prices rather than rethinking marketing. The truth is when you look at the non tent poles that have succeeded over the course of the last quarter. There is no real correlation that you could identify.
Speaker Change: How much money was being spent and what the results were terrified did a ton of business with $7 million P&A spend long legs did tremendous business on a very modest spend and a bunch of movies that spend significantly more than we tend to spend in similar genres performed at a disappointing level. So.
Speaker Change: I think making movies that can be creatively, great, but that also carry with them a marketing proposition with filmmakers and talent that will force the audience to pay attention that will never force in the audience to see something they don't want to see but making sure that your green lighting movies that the audience will have to focus on and pay attention to and make a conscious choice about.
Speaker Change: I think what has happened here is to narrow the funnel that is going to ultimately determine what gets through but not radically change how we're doing our business.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks to everyone. Please refer to the press releases and events tab under the Investor Relations section of our company's website for a discussion of certain non-GAAP forward looking measures discussed on this call. Thank you.
Speaker Change: Ladies and gentlemen, the conference has now concluded we do thank you for attending today's presentation.
Speaker Change: You may now disconnect your lines.
Speaker Change: Yeah.
Speaker Change: [music].