Q4 2025 Lionsgate Studios Corp Earnings Call
Operator: Good afternoon, and welcome to the Lionsgate Studios 4th Quarter 2025 Earnings Conference Call.
Good afternoon, and welcome to the Lionsgate Studios fourth quarter 'twenty 25 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
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Neelay Shah: I would now like to turn the conference over to Neelay Shah, Executive Vice President and Head of Investor Relations. Please go ahead. Good afternoon.
Speaker Change: I would now like to turn the conference over to Neal Shah Executive Vice President and head of Investor Relations. Please go ahead.
Neelay Shah: Thank you for joining us for the Lionsgate Studio Corp's Fiscal 2025 Fourth Quarter Conference Call.
Speaker Change: Good afternoon, and thank you for joining us for the Lionsgate Studio Corp fiscal 2025 fourth quarter conference call will begin with opening remarks from our CEO, Jon Feltheimer, followed by remarks from our CFO Jimmy barge. After their remarks, we'll open the call for questions also joining on the call today are Vice Chairman, Michael Burns COO, Brian Goldsmith chairman of the.
Neelay Shah: We'll begin with opening remarks from our CEO, John Feltheimer, followed by remarks from our CFO, Jimmy Barge. After their remarks, we'll open the call for questions.
Neelay Shah: Also joining on the call today are Vice Chairman Michael Burns, COO Brian Goldsmith, Chairman of the TV Group, Kevin Beggs, Chairman of the Motion Picture Group, Adam Fogelson, President of Worldwide TV and Digital Distribution, Jim Packer, and Senior Advisor to the Office of the CEO at Lionsgate and Co-CEO of 3Arts, Brian Weinstein. The matters discussed on the call also include forward-looking statements, including those regarding the performance of future fiscal years. Such statements are subject to a number of risks and uncertainties. Actual results could differ materially and adversely from those described in the forward-looking statements as a result of various factors.
Speaker Change: Television group, Kevin Beggs Chairman of the motion Picture Group, Adam Fogelson, President of worldwide television and digital distribution, Jim Packer and senior adviser to the office of the CEO at Lionsgate and co CEO of three Arts, Brian Weinstein. The matters discussed on the call also include forward looking statements, including those regarding the performance of future fiscal years.
Speaker Change: Such statements are subject to a number of risks and uncertainties actual results could differ materially and adversely from those described in the forward looking statements as a result of various factors. This includes the risk factors set forth in our public filings for Lionsgate Studio Corp. The company undertakes no obligation to publicly release. The result of any revisions to these forward looking.
Neelay Shah: This includes the risk factors set forth in our public filings for Lionsgate Studios Corp.
Neelay Shah: The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.
Speaker Change: Statements that may be made to reflect any future events or circumstances, I will now turn the call over to John.
John Feltheimer: I'll now turn the call over to John. Thank you, Nealey. Good afternoon, everyone, and thank you for joining us. On May 7th, we completed the separation of Lionsgate and S.T.A.R.S. and we began trading on the New York Stock Exchange under the ticker symbol LION. I want to take this opportunity to thank all of our shareholders for your overwhelming support, our Board of Directors for their patience and guidance throughout a long and complex process. and the hundreds of Lionsgate employees who work tirelessly to bring this important strategic initiative across the finish line. We're confident the separation will unlock significant value, not only for the shareholders of both companies, but for our respective business and talent partners as we position our companies for continued growth.
John: Thank you Neil good afternoon, everyone and thank you for joining us.
John: On May seven we completed the separation of Lionsgate and Starz and we began trading on the New York stock exchange under the ticker symbol Lion.
John: I want to take this opportunity to thank all of our shareholders for your overwhelming support.
John: Our board of directors for their patience and guidance throughout a long and complex process and the hundreds of Lions gate employees, who work tirelessly to bring this important strategic initiative across the finish line. We're confident the separation will unlock significant value not only for the shareholders of both companies, but for our respective bid.
John: <unk> and talent partners as we position our companies for continued growth.
John Feltheimer: The separation also simplifies our capital structure by collapsing our previous two classes of stock into one. on Monday, June 9th.
John: The separation also simplifies our capital structure by collapsing our previous two classes of stock into one.
John: On Monday June 9th we hope to see some of you at the New York Stock Exchange as we ring the opening bell to celebrate the launch.
John Feltheimer: We hope to see some of you at the New York Stock Exchange as we ring the opening bell to celebrate the launch.
John Feltheimer: Turning to the quarter's highlights, our Motion Picture Group closed the fiscal year with a strong financial quarter driven by a familiar combination, the profitable mid-budget successes of Flight Risk and Xenophys II, robust library sales, strong performances from our multi-platform and direct-to-platform business, and disciplined theatrical P&A spend.
John: Turning to the quarter's highlights our motion picture group closed the fiscal year with a strong financial quarter driven by a familiar combination the profitable mid budget successes of flight risks and denim Steve's too robust library sales strong performances from our multi platform and direct a platform business and <unk>.
John: <unk> theatrical P&A spend.
John Feltheimer: Our television group launched Seth Rogen and Evan Goldberg's critically acclaimed comedy The Studio on Apple TV+, where it has already become a major Emmy Awards contender and has been renewed for a second season. Our TV group secured a number of other key series renewals in the quarter, including Ghosts picked up for its fifth and sixth season on CBS, The Rookie renewed for an eighth season on ABC, The Sherri Shepherd Show renewed for a fourth season in syndication, and Yellowjackets picked up earlier this week for a fourth season by Showtime.
John: Our television group launched Seth Rogen, and Evan Goldberg's critically acclaimed comedy the studio on Apple TV, plus where it has already become a major Emmy awards contender and has been renewed for a second season.
John: Our television group secured a number of other key series of renewals in the quarter, including ghosts picked up for its fifth and sixth season on C. B S. The rookie renewed for an eighth season on a B C. The Sherri Shepherd show renewed for a fourth season in syndication and yellow jackets picked up earlier this week for a fourth season by Showtime.
John: Jim.
John Feltheimer: And finally, our library achieved a record performance with trailing 12-month revenue of $956 million, driven by a fourth quarter that was our best quarter ever. We've been able to maintain strong library sales in a challenging environment through a combination of organic replenishment, distribution of third-party titles, library acquisitions, and the rollout of new proprietary FAST and AVOD channels.
Jim: And finally, our library achieved a record performance with trailing 12 month revenue of $956 million driven by a fourth quarter that was our best quarter ever.
Jim: We've been able to maintain strong library sales and a challenging environment through a combination of organic replenishment distribution of third party titles library acquisitions, and the rollout of new proprietary fast and Eva channels.
John Feltheimer: Turning to our individual businesses, during the quarter our Motion Picture Group unveiled a strong slate of films for our theatrical exhibition partners at CinemaCon last month. Our lineup is notable not only for the strength of the IP, but the breadth of new and repeat talent driving it. Francis Lawrence directing his fifth Hunger Games movie, as well as the adaptation of the gripping Stephen King classic, The Long Walk. Keanu Reeves anchoring our John Wick franchise, and also starring with Seth Rogen in Aziz Ansari's comedy, Good Fortune. Reuben Fleischer directing Now You See Me 3 and beginning development of Now You See Me 4.
Jim: Turning to our individual businesses during the quarter, our motion picture group unveiled a strong slate of films for our theatrical exhibition partners at cinema Con last month.
Jim: Our lineup is notable not only for the strength of the IP, but the breadth of new and repeat talent driving at.
Jim: Francis Lawrence directing his fifth hunger games movie as well as the adaptation of the gripping Stephen King Classic the long walk.
Jim: Tiana Reeves anchoring our John Wick franchise, and also starring with Seth Rogen, and Aziz and Saris comedy good Fortune.
Jim: Reuben Fleischer directing now you see me three and beginning development of now you see me for Paul Feig, directing Sydney, Sweeney and Amanda Saif Red in the eagerly anticipated thriller the housemaid.
John Feltheimer: Paul Feig directing Sidney Sweeney and Amanda Seyfried in the eagerly anticipated thriller The Housemaid. Kingdom Story Company, partners on our Faith-Based Hits, I Can Only Imagine and Jesus Revolution, preparing I Can Only Imagine 2, and Blumhouse and James Wan's Atomic Monster, collaborating with us on the reimagining of Blair Witchcraft. Adding to our roster of repeat filmmaker relationships, we announced last week that Mel Gibson has chosen Lionsgate to be a studio partner on The Resurrection of the Christ, his long-awaited follow-up to the blockbuster The Passion of the Christ. Most of you have seen the announcements this week of the incredible talent we're putting together for the Hunger Games, Sunrise on the Reaping, with Jesse Plemons, Rafe Fiennes, Kieran Culkin and Elle Fanning joining newcomers Joseph Zaida and Whitney Peek, with more star power to come.
Jim: Kingdom story company partners on our faith based hits I can only imagine and Jesus Revolution, preparing I can only imagine too and bluhm house and James ones Atomic Monster collaborating with us on the re imagining of Blair Witch.
Jim: Adding to our roster of repeat filmmaker relationships, we announced last week that Mel Gibson has chosen lionsgate to be a studio partner on the resurrection of Christ. His long awaited follow up to the blockbuster the passion of the Christ.
Jim: Most of you have seen the announcements this week of the incredible talent, we're putting together for the hunger games Sunrise on the reaping with Jesse Plemmons Refines, Kieran coking and Elle Fanning, joining newcomers Joseph Zeta and Whitney peak with more star power to come.
John Feltheimer: The film, based on Hunger Games creator Suzanne Collins' bestseller, is one of the hottest properties at the Cannes Film Festival this week, and we are already seeing a corresponding major uptick in the sales of all of the Hunger Games library titles.
Jim: The film based on hunger games creators Suzanne Collins Best seller is one of the hottest properties at the Cannes Film Festival. This week and we are already seeing a corresponding major uptick in the sales of all of the hunger games Library titles. The film opens worldwide on November 20th 2026 in two weeks Youll see.
John Feltheimer: The film opens worldwide on November 20, 2026.
John Feltheimer: In two weeks, you'll see Ana De Armas squaring off against assassin and former mentor Keanu Reeves in Ballerina, the first major release of our fiscal 26th slate.
Speaker Change: Anna Dharmas squaring off against assassin, and former mentor Kiana reused and ballerina. The first major release of our physical twenty-six slate, we're holding the ballerina world premiere in London today, and fan response to early material and preliminary tracking indicate that it'll be a strong addition to the John Wick universe.
John Feltheimer: We're holding the Ballerina world premiere in London today, and fan response to early material and preliminary tracking indicate that it will be a strong addition to the John Wick universe.
John Feltheimer: That universe continues to expand with production scheduled to begin in September on the upcoming John Wick spin-off, Kane, directed by and starring Donnie Yen, an animated John Wick prequel in the works, and Chad Stahelski and Keanu, beginning development on John Wick Chapter 5. And if you're in Las Vegas, please check out the John Wick Experience branded attraction, which opened to strong ticket sales in March.
Speaker Change: That universe continues to expand with production scheduled to begin in September on the upcoming John Wick spinoff Kane directed by and starring Donnie Yen and animated John with prequel in the works and chance to health scheme Kiana beginning development on John Wick Chapter five and if you were in Las Vegas. Please check.
Speaker Change: The John Wick experienced branded attraction, which opened to strong ticket sales in March.
John Feltheimer: in regard to our Michael Jackson bio. We're excited about the three-and-a-half hours of amazing footage from producer Graham King and director Antoine Foucault. and we will be announcing a definitive release strategy and timing in the next few weeks.
Speaker Change: In regard to our Michael Jackson biopic, we're excited about the three and a half hours of amazing footage from producer Graham King and director Antoine Fuqua, and we will be announcing a definitive release strategy and timing in the next few weeks I would note that it is likely we will move Michael end of the fiscal year, which will impact fiscal 'twenty.
John Feltheimer: I would note that it is likely we will move Michael out of the fiscal year, which will impact Fiscal 26 financial results but will bolster an already strong Fiscal 27 strategy.
Speaker Change: <unk> financial results, but will bolster an already strong fiscal 'twenty seven slate.
John Feltheimer: Turning to television, in addition to the success of The Studio and Ghosts, we're continuing to add other premium properties, such as Spartacus House of Asher, which has wrapped its first season of production for Starz, The Rainmaker, the adaptation of John Grisham's bestseller being readied for USA Network, and a new version of the classic Robin Hood saga for MGM+. Behind them, we continue to develop the Twilight TV adaptation, Midnight Sun, for Netflix. The John Wick Under the High Table series and a TV adaptation of the hit comedy Bad Mom. In addition, the assets we acquired with our A1 deal are performing well.
Speaker Change: Turning to television in addition to the success of the studio and Ghosts, we're continuing to add other premium properties, such as Spartacus House of Asher, which is wrapped its first season of production for Starz. The rainmaker the adaptation of John Grisham's Best seller being readied for USA network and a new version of the classic.
Speaker Change: Robinhood saga for M. G M plus.
Speaker Change: Behind them, we continue to develop the Twilight TV adaptation midnight Sun for Netflix the John Wick under the high table series and a T V adaptation of the hit comedy Bad Moms.
Speaker Change: In addition, the assets we acquired with our E. One deal are performing well.
John Feltheimer: We finished integrating these content assets into our company, strengthened key properties like the Rookie and Yellowjack. reinforced existing talent partnerships, launched new series Missile Tow Murders and Private Eyes West Coast, monetized thousands of additional library titles, and reduced overhead.
Speaker Change: We finished integrating these content assets into our company strength in key properties like the rookie and yellow jackets reinforced existing talent partnerships launched new series mistletoe murders and private is west coast.
Speaker Change: Monetize thousands of additional library titles and reduced overhead.
John Feltheimer: Turning to three arts, our premier talent management and production company has always been a leader in broadcast network comedies with the Office and Parks and Recreation. Now it has expanded that leadership into streaming comedies with the second season renewals of the hit series Nobody Wants This, A Man on the Inside, Running Point, and The Four Seasons, all for Netflix. and you'll be hearing more about our initiatives to grow and diversify 3Arts into adjacent new areas of representation in the near future.
Speaker Change: Turning to three arts, our Premier talent management and production company has always been a leader in broadcast network comedies with the office and parks and recreation.
Speaker Change: Now it is expanded that leadership into streaming comedies with the second season renewals of the hit series Nobody wants this a man on the inside running point and the four seasons, all for Netflix and you'll be hearing more about our initiatives to grow and diversify three arts into adjacent new areas of representation in.
Speaker Change: In near future.
John Feltheimer: We've also launched a major initiative to become a force in the creator economy. We're creating original content for digital platforms, negotiating with two leading advertising agencies to form brand partnerships to support that content, and building digital businesses for our talent at the studio and 3Arts, initiatives that are all designed to take advantage of our critical mass of IP to unlock its full potential. And with half of YouTube viewing now taking place on traditional connected TVs, our content portfolio will have more applications in the new digital ecosystem than ever before.
Speaker Change: We've also launched a major initiative to become a force in the creator economy, we're creating original content for digital platforms negotiating with two leading advertising agencies to form brand partnerships to support that content and building digital businesses for our talent at the studio in three arts initiatives that are all designed to take advantage of our <unk>.
Speaker Change: Critical mass of IP to unlock its full potential.
Speaker Change: And with half of Youtube viewing now taking place on traditional connected Tvs, our content portfolio will have more applications and the new digital ecosystem than ever before and.
John Feltheimer: In closing, the separation of Lionsgate and STARS doesn't diminish the headwinds in our operating environment, but it does give both companies more flexibility in responding to this. and it enables us to launch an exciting new chapter in the growth of our studio, positioning ourselves in the sweet spot of the entertainment ecosystem, making and delivering great content for our buyers, expanding opportunities for our talent in old and new businesses, and translating our unique portfolio of assets into incremental value for our shareholders, partners, and audiences.
Speaker Change: In closing the separation of Lionsgate and Starz doesn't diminish the headwinds in our operating environment, but it does give both companies more flexibility in responding to them and it enables us to launch an exciting new chapter in the growth of our studio positioning ourselves in the sweet spot of the entertainment ecosystem make.
Speaker Change: <unk> and delivering great content for our buyers expanding opportunities for our talent in old and new businesses and translating our unique portfolio of assets into incremental value for our shareholders partners and audiences in a moment Jimmy will take you through the component parts of a very strong quarter, whose drivers and.
John Feltheimer: In a moment, Jimmy will take you through the component parts of the very strong quarter whose drivers, another outsized library performance, our motion picture group's diversified model, and a strong post-strike uptick in deliveries of key television series demonstrate what we can do when all the pieces of our business are working as they should.
Speaker Change: Another outsized library performance, our motion picture group diversified model and a strong post strike uptick in deliveries of key television series demonstrate what we can do when all the pieces of our business are working as they should.
John Feltheimer: and it affirms our confidence in a content investment strategy that enables us to refill our content pipelines in fiscal 2016. while positioning us for a strong growth year in Fiscal 2016.
Speaker Change: And it affirms our confidence and our content investment strategy that enables us to refill our content pipeline in fiscal 'twenty six while positioning us for a strong growth year in fiscal 'twenty seven.
Speaker Change: Jimmy Thanks, John and good afternoon, everyone I'll briefly discuss our fiscal fourth quarter and annual studio financial results and provide an update on the balance sheet.
Jimmy Barge: Thanks, John, and good afternoon, everyone. I'll briefly discuss our fiscal fourth quarter and annual studio financial results and provide an update on the balance. For the quarter, Lionsgate Studios revenue was up 22% year-over-year to $1.1 billion. Adjusted OEBDA reached a 10-year high and was up 49% to $138 million. and operating income was up significantly to $94 million. reported fully diluted earnings per share was $0.10 per share and fully diluted adjusted earnings per share was $0.21. Net cash flow from operating activities was $256 million, while adjusted free cash flow for the quarter was a positive $395 million.
Jimmy Barge: For the quarter Lionsgate Studios' revenue was up 22% year over year to $1.1 billion. Adjusted OIBDA reached a 10 year high and was up 49% to $138 million and operating income was up significantly to $94 million reported fully diluted earnings.
Speaker Change: Earnings per share was 10 cents per share and fully diluted adjusted earnings per share was 21 cents per share.
Speaker Change: Net cash flow from operating activities was $256 million, while adjusted free cash flow for the quarter was a positive $395 million.
Jimmy Barge: Quarterly library revenue was a record $340 million. For the year, the studio's revenue was up 7% year-over-year to $3.2 billion. Adjusted OEBDA was down 8% to $302 million, and operating income was down 11% to $125 million. reported fully diluted earnings per share was a loss of $0.43 per share and fully diluted adjusted earnings per share was a positive $0.10 per share. Net cash flow used in operating activities was $107 million, while adjusted free cash flow for the year was a positive $89 million.
Jimmy Barge: Quarterly library revenue was a record $340 million.
Jimmy Barge: For the year, the studios' revenue was up 7% year over year to $3.2 billion adjusted OIBDA was down 8% to $302 million and operating income was down 11% to $125 million.
Jimmy Barge: Reported fully diluted earnings per share was a loss of 43 cents per share and fully diluted adjusted earnings per share was a positive 10 cents per share.
Speaker Change: Net cash flow used in operating activities was 107 million, while adjusted free cash flow for the year was a positive $89 million and finally as John mentioned, our trailing 12 month library revenue of $956 million reached another record and grew 8% year over year.
Jimmy Barge: And finally, as John mentioned, our trailing 12-month library revenue of $956 million reached another record and grew 8% year-over-year.
Jimmy Barge: Breaking down the studio performance in the quarter, let's start with motion. Motion picture revenue was up 28% year-over-year to $526 million, and segment profit reached a 10-year high of $135 million, up 65% year-over-year. Revenue and segment profit growth were driven by strength across the group's various lines of business. On the wide theatrical side, we had successful releases of Den of Thieves 2 and Flight. We also benefited from strong performances on our direct-to-platform releases of Another Simple Favor, Reagan, and Jingle Bell Heist, as well as robust library demand for key franchise titles like The Hunger Games.
Speaker Change: Breaking down the studio performance in the quarter, let's start with motion picture motion picture revenue was up 28% year over year to $526 million and segment profit reached a 10 year high of $135 million up 65% year over year.
Speaker Change: Revenue and segment profit growth were driven by strength across the group's various lines of business.
Speaker Change: On the wide theatrical side, we had successful releases of denim needs to in flight risk. We also benefited from strong performances on our direct platform releases of another simple favor Reagan and jingle Bell hoist as well as robust library demand for key franchise titles like the 100 day.
Jimmy Barge: Moving to TV, quarterly television revenue of $543 million was up 16% year-over-year, while segment profit of $41 million was down 23%. TV continues to rebound from the strike with revenue strength driven by continued growth and episodic delivery. Segment Profit faced a tough comparison with last year's Q4, which included a library sale of content to MGM+.
Speaker Change: Moving to TV quarterly television revenue of $543 million was up 16% year over year, while segment profit of $41 million was down 23% year over year TV continues to rebound from the strike with revenue strength driven by continued growth in episodic deliveries.
Speaker Change: Liveries segment profit faced a tough comparison with last year's Q4, which included a library sale of content to M. G. M plus now let's take a look at the balance sheet. We ended the quarter with $1.5 billion of net debt at the studio, which compares to $1.8 billion at the end of Q3.
Jimmy Barge: Now let's take a look at the balance. We ended the quarter with $1.5 billion of net debt at the studio, which compares to $1.8 billion at the end of Q3. The quarter-over-quarter decrease in net debt reflects the anticipated strength in Q4 free cash flow as we closed out the year.
Speaker Change: The quarter over quarter decrease in net debt reflects the anticipated strength in Q4 free cash flow as we closed out the year.
Jimmy Barge: On a trailing 12-month basis, studio leverage at the end of the quarter declined to 4.9 times as we benefited from both free cash flow and an increase in trailing 12 months adjusted to WebEx.
Speaker Change: On a trailing 12 month basis studio leverage at the end of the quarter declined 4.9 times as we benefited from both free cash flow and an increase in trailing 12 months adjusted OIBDA.
Jimmy Barge: Subsequent to the end of the quarter, we fully separated our Studio and Starz business. At the date of separation, the Term Loan A was paid off, we assumed $390 million of 2030 unsecured bonds from our previously announced debt exchange, and established a new $800 million revolve. Net debt at separation was just under the $1,650,000,000 we noted on our last call.
Speaker Change: Subsequent to the end of the quarter, we fully separated our studio and storage businesses.
Speaker Change: At the date of separation the term loan a was paid off we assumed $390 million of 2030 unsecured bonds from our previously announced debt exchange and established a new $800 million revolver.
Speaker Change: Net debt at separation was just under the 1 billion $6 50, we noted on our last call.
Jimmy Barge: Looking forward, a strong film and TV slate in Fiscal 26 will help replenish the pipeline, providing the financial underpinning to go into Fiscal 27 with operating and financial momentum. We expect this momentum, coupled with an exciting Fiscal 27 slate, will result in solid two-year adjusted OEBDI growth from Fiscal 25 through Fiscal 26.
Speaker Change: Looking forward, our strong film and television slate in fiscal 'twenty six will help replenish the pipeline, providing the financial underpinning that go into fiscal 'twenty, seven with operating and financial momentum.
Speaker Change: We expect this momentum coupled with an exciting fiscal 'twenty seven slate will result in solid two year adjusted OIBDA growth from fiscal 'twenty five through fiscal 'twenty seven.
Neelay Shah: Now I'd like to turn the call over to Neelay for Q&A. Operator, can we open up the line for analyst Q&A? We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To draw your question, please press star then 2.
Speaker Change: Now I'd like to turn the call over to <unk> for Q&A.
Speaker Change: Thanks, Jami operator can we open up the line for our analyst Q&A.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you're using a speakerphone please pick up your handset before pressing the case.
Speaker Change: To withdraw your question. Please press Star then two.
David Joyce: Our first question today comes from David Joyce with Seaport Research Partners. Please go ahead. Thank you.
Speaker Change: Our first question today comes from David Joyce with Seaport Research Partners. Please go ahead.
David Joyce: Thank you Jimmy if we can just follow along more and more detail your outlook for the next two years granted with the microfilm, giving delayed.
Jimmy Barge: Jimmy, if we could just follow along in more detail your outlook for the next two years. Granted, with Michael Film getting delayed, but you also took on a lot more production-related borrowing. There's clearly a big revival in production activity. So what should we think about the cadence over the next two years, and what gives you confidence in further library sales to help out the cash flows while you're producing new content?
Speaker Change: You also took on a lot more production related borrowing there there's clearly a big the.
Speaker Change: Big Revival in production activity. So what should we think about the cadence over the next two years and what gives you confidence in further library cells to help out the cash flows while you're producing new content.
Jimmy Barge: Great. Thanks, David. I appreciate the question. Obviously, a very solid fourth quarter, and as we move into 26, we're super excited about our slate. We're looking at strong growth, as I mentioned, over the two years into 27. So 26 is, you know, we're refreshing the pipeline.
David Joyce: Oh, great. Thanks, David.
Speaker Change: I appreciate the question, obviously, a very solid fourth quarter and as we move into 'twenty six we're super excited about about R. R.
Speaker Change: Our slate.
Speaker Change: We're looking at strong growth as I mentioned over the two years into 2007. So 26 is we're refreshing the pipeline as John noted the new referenced michel's likely to move out of fiscal 'twenty six so that.
Jimmy Barge: As John noted and you referenced, Michael's likely to move out of fiscal 26, so that likely will take place. I think the cadence overall in 26 is going to be back in loaded, very similar to what we saw in fiscal 25. So, you know, similar territory. We'll refresh the pipelines. This will drive carryover into 27, refreshing the pipelines in both TV and motion picture. When you see the tent poles on the film side, both Ballerina and Q1, now you see me in Q3, there'll be some P&A spend, of course, to support that. That'll affect the cadence throughout 26.
Speaker Change: Likely will take place I think the cadence overall and 26 is going to be backend loaded very similar to what we saw in fiscal 'twenty five so.
Speaker Change: Similar territory, we'll refresh the pipeline this will drive carry over into 'twenty seven.
Speaker Change: Fresh into pipelines in both TV and motion picture when you see the tent Poles and on the film side. Both ballerina in Q1 now you see me in Q3 to be some P&A spend of course to support that that will affect the cadence throughout 'twenty six.
Jimmy Barge: And then we've got a number of mid-budget films we're very excited about, Housemaids, Long Walk, Good Fortune.
Speaker Change: And then we've got a number of mid budget films were very excited about <unk> longwall good fortune.
Jimmy Barge: On the TV side, a lot of returning in new series and growth at three yards and really feel good about rebuilding that pipeline as we go into 27. So all of this really provides improved carryover into 27, where we've got an incredibly strong slate, likely including Michael Jackson, Hunger Games, Resurrection, as well as, you know, our paid TV deal will be in full swing. So really feel good about 27, both strong numbers and sustainable numbers in 27.
Speaker Change: <unk> side, a lot of returning and new series and growth at three arts and really feel good about rebuilding that pipeline as we go into 'twenty seven so all of this really provides improved carryover.
Speaker Change: 27, where we got an incredibly strong slate likely including Michael Jackson Hunger games Resurrection as well as you know are our pay TV deal will be in full swing. So really feel good about 'twenty seven both strong numbers and sustainable numbers in 'twenty seven.
Jimmy Barge: Tegan, if I could just ask back on the fourth quarter, there was Elevated Direct OpEx. Was that related to content immunization from the strong library cells? Is it the PNA spent for the couple of wide releases? Is there anything specifically you would call out on the Elevated Direct OpEx there? Thanks. No, I think you have it. It's just the cycle of the revenue cycle and the specific films and TV project and episodic deliveries because you're amortizing on a revenue curve.
Speaker Change: Okay got it if I could just ask back on the fourth quarter, there was elevated direct opex.
Speaker Change: Was that related to content amortization from the.
Speaker Change: The the strong library sales.
Speaker Change: The P&A spend for a couple of wide releases.
Speaker Change: There anything anything specifically you would call out on the elevated direct opex there. Thanks.
Speaker Change: I think you have it it's just a cycle of the revenue cycle and the specific films and TV project, an episodic deliveries because you're amortizing when our revenue curve.
Jimmy Barge: Okay, great. Thank you.
Speaker Change: Okay, great. Thank you.
Stephen Cahill: The next one... Excuse me, the next question is from Stephen Cahill with Wells Fargo, please go ahead. Thank you.
Speaker Change: Okay.
Speaker Change: Excuse me. The next question is from Steven Kay Hall with Wells Fargo. Please go ahead go ahead.
Michael Burns: Maybe first, this might be for Michael or John. So now that you have the separation complete, just wondering how you think about opportunities to unlock value. You know, is there anything that you do differently now that Lion is standalone versus part of the larger Lion entity before? So just curious on strategy.
Speaker Change: Thank you maybe first this might be for Michael or John So now that you have the separation complete just wondering how you think about opportunities to unlock value. You know is there anything that you do differently now that lion is standalone versus as part of the larger line entity before so just curious on on strategy.
Jimmy Barge: And then Jimmy, maybe just on free cash flow conversion for the year. So you kind of gave us a sense as to where EBITDA may land as we think about either cash taxes or content working capital, maybe including the production loans.
Jimmy Barge: And then Jimmy maybe just on free cash flow conversion for the year. So you've got to give us a sense as to where EBITDA may land as we think about either cash taxes or content working capital, including the production loans any way to think about how that EBITDA will convert to free cash flow for deleveraging in <unk> and 'twenty six thanks.
Jimmy Barge: Any way to think about how that EBITDA will convert to free cash flow for deleveraging in 26? Thanks. I appreciate it.
Jimmy Barge: I appreciate it.
John Feltheimer: Let me just take the conversation about... deals. Obviously, we're not in a hurry to give away our equity at these levels.
Jimmy Barge: Just take the.
Jimmy Barge: The conversation about.
Jimmy Barge: Deals obviously were not made already give away our equity at these levels.
John Feltheimer: The major reason, one of the major reasons we did the separation is obviously to create liquidity in the Lion's Gate stock with 286 million shares now trading one class of stock, trying to keep it very simple. And so we're not going to do deals with giving away equity at these levels. But we have a lot of capacity. As Jimmy mentioned, we have an credit facility. We have the ability to do that, but only to do deals where we think it's going to be incredibly accretive. Like, for example, our results so far, we're very happy with, for example, the E1 transaction that we did.
Jimmy Barge: The major reason one of the major reasons, we did the separation is obviously to create liquidity.
Jimmy Barge: And the lion's head stock with 286 million shares now trading.
Speaker Change: One class of stock trying to keep it very simple.
Speaker Change: And so.
Jimmy Barge: Youre not going to do deals with given where equity at these levels.
Jimmy Barge: But we have a lot of capacity as Jimmy mentioned, we have an undrawn credit facility.
Jimmy Barge: We have the ability to do that but only to do deals where we think it can be incredibly accretive like for example, our results. So far we're very happy with for example, the one transaction that we did.
Jimmy Barge: And Steven, on your question on free cash flow and the cadence, I would expect the free cash flow, similarly, to be back end loaded throughout the year. I think the content spend will generally be in the same area as our prior year spend. So call it $1.6 billion, probably spread pretty evenly between motion picture and TV.
Jimmy Barge: And Stephen on your question on on free cash flow and the cadence I would expect the free cash flow similarly to be backend loaded throughout the year I think the content spend will generally be in the same area as our prior year span. So call. It 1 billion six probably spread pretty evenly between motion picture.
Jimmy Barge: T V.
Jimmy Barge: On the cadence, we came in very strong in Q4. So $395 billion of free cash flow. There was some timing in that context related to lower content spend. Some of that content spend, actually, payments will flow over into the first quarter of fiscal 26. So you'll see some of that. So you'll see some timing reduce to cash flow in Q1 in the cadence. What I would say is we have very good free cash flow conversion. I mean, taxes are just near zero, not quite zero, but you can call it $10 or $15 million. We don't really have any capex to speak of, as you know.
Jimmy Barge: On the cadence you know we came in very strong in Q4.
Jimmy Barge: So 395 billion of free cash flow there was some timing in that context related to lower content spend some of that content and.
Jimmy Barge: Spanned actually payments will flow over into the first quarter of.
Jimmy Barge: Fiscal 'twenty six so youll see some of that so you'll see some timing reduced the cash flow in Q1, and the cadence what I would say is.
Jimmy Barge: We have very good free cash flow conversion I mean taxes are just near zero not not quite zero, but you can call it 10 or $15 million.
Jimmy Barge: Don't really have any capex to speak of as you know, we do have cash interest, but we manage that very well so youre going to generally have a good conversion there, but I would look at the overall positive cash flow that we delivered in fiscal 'twenty five and then look out to 'twenty six and 27 in say over that two year period I would expect pause.
Jimmy Barge: We do have cash interest, but we manage that very well. So you're going to generally have a good conversion there.
Jimmy Barge: But I would look at the overall positive cash flow that we delivered in fiscal 25, and then look out to 26 and 27 and say, over that two-year period, I would expect positive free cash flow. The cadence is going to be more back end loaded.
Jimmy Barge: Free cash flow the cadence is going to be more backend loaded.
Jimmy Barge: Yeah.
Jimmy Barge: Great, thank you.
Jimmy Barge: Great. Thank you.
Operator: Operator, can we get the next question please?
Speaker Change: Operator can we get the next question. Please. The next question is from Thomas <unk> with Morgan Stanley. Please go ahead.
Thomas Yeh: The next question is from Thomas Yeh with Morgan Stanley. Please go ahead. Thanks so much.
Thomas: Thanks, So much I had a quick question just on some of the news that's been coming out about potential tariffs impacting movie production I know, it's preliminary and pretty hard to speculate but anything you're seeing about the direction of travel there and you're positioning as a studio that can obviously it kind of runs production and take advantage of tax credits and around the world.
Thomas Yeh: I had a quick question just on some of the news that's been coming out about potential tariffs impacting movie production. I know it's preliminary and pretty hard to speculate, but anything you're seeing about the direction of travel there and your positioning as a studio that obviously kind of runs production and takes advantage of tax credits around the world, maybe give us a sense of how you might approach it.
Thomas: Getting that maybe.
Thomas: Maybe give us a sense of how you might approach it and then on the TV side I think.
Kevin Beggs: And then on the TV side, I think it sounded there was a healthy pipeline of renewals that you mentioned for some of these more anchored shows that have long dated seasons. Is there an update on the broader industry rationalization and any expectations for how you think about navigating the continued focus for some of your buyers on controlling spending?
Thomas: It sounded like there was a healthy pipeline of renewals that you mentioned for some of these more.
Thomas: Anchored chose that have long dated seasons is there an update on the broader industry rationalization and any expectations for how you think about navigating the continued focus for suddenly your buyers on controlling spending thanks.
Kevin Beggs: Yeah, Thomas, I'll let Kevin answer the question about the TV business and off cover tariffs in effect. Okay. Um, yeah, I think in general, you're still seeing a lot of pressure on the key platforms to control spending. Um, reduce budgets and be very disciplined about how they meet out their programming dollars as they try to balance earnings and profitability with customer and subscriber acquisition. So we kind of are continuing to rely not only on digging deep into the renewals that John went through and he touched on and you mentioned, as well as finding new models, lower budgets, different locations, different buyers, new buyers and programming solutions that fit this moment.
Thomas: Jonathan I'll, let Kevin answer the question about the TV business and I'll cover tariffs in effect okay.
Speaker Change: Yes, I think in general you are still seeing a lot of pressure on key platforms to <unk>.
Speaker Change: Controlled spending.
Speaker Change: Reduced budgets.
Speaker Change: And be very disciplined about how they meet out their programming dollars and they are trying to balance.
Speaker Change: Earnings and profitability with customer and subscriber acquisition.
Speaker Change: So we kind of are continuing to rely not only on the deepening of the renewals that you John went through and he touched on and you mentioned as well as finding new models lower budgets different locations different buyers, new buyers and programming solutions that fit this moment.
Kevin Beggs: With the regulatory pieces still coming together with something like Skydance and Paramount, and Versant spinning off from Comcast and Warner discussing spinning off cable assets, there's still a lot of uncertainty in the market, which typically dampens buying. I feel like toward year end, that's going to start to bounce back a little bit and get to a new run rate. And we're hopeful that that'll trigger more buying. But even without that, we're trying to definitely navigate in a disciplined way, getting our shows renewed and getting new ones on the board.
Speaker Change: With the regulatory pieces still coming together with something like Sky dancing Paramount.
Speaker Change: <unk> spending off from Comcast and Warner discussing spinning off cable assets, there's still a lot of uncertainty in the market, which typically dampens buying I feel like Jordan ear and that's goodness.
Speaker Change: Start to bounce back a little bit and get to a new run rate.
Speaker Change: And we're hopeful.
Speaker Change: Then that will trigger more buying but even without that we're trying to definitely navigate in a disciplined way getting our shows renewed and getting new ones on the board.
Kevin Beggs: And in terms of tariffs, I think we're taking a wait-and-see approach. We are giving our feedback into the process, but, you know, I think we think certainly that some version of a federal tax credit is better for the business.
Speaker Change: And in terms of tariffs I think we're taking a wait and see approach we are giving our feedback.
Speaker Change: Into the process, but I think.
Speaker Change: I think we think certainly that are some version of a federal tax credit is better for the business I think that film and TV productions complicated in terms of a tariff the component parts are sourced from many different places and so.
Kevin Beggs: I think that film and television production is complicated in terms of a tariff. The component parts are sourced from many different places, and so, you know, we think there's a better way to protect what is already a surplus in terms of balance of trade in our industry. But for us, we also have a lot of flexibility in where we produce. We've got a Stages in New York and in Georgia. We've got a very special deal in working on Stages in New Jersey.
Speaker Change: We think there is a better way to protect what is already a surplus in terms of balance of trade in our industry.
Speaker Change: But for US we also have a lot of flexibility in where we produce we've got our stages in New York and Georgia, and we've got a very special deal and working on stages and in New Jersey. So we have a lot of flexibility in terms of where we produce but I think theres, probably some smarter ways other than tariffs.
Kevin Beggs: So we have a lot of flexibility in terms of where we produce, but I think there's probably some smarter ways, other than tariffs, to support our business and support the overall U.S. economy.
Speaker Change: To support our business and support the overall U S economy.
Speaker Change: Thank you.
Operator: Hey Thomas, operator, could we get the next question please? And the next question is from Brent Penter with Raymond James. Please go ahead.
Speaker Change: Operator could we get the next question. Please and the next question is from Brent <unk> with Raymond James. Please go ahead.
Brent Penter: Hey, everyone, thanks for taking the questions. First one for me, you talked about leverage a bit. And now that the split is done, appreciate the comments on not doing deals with your equity value where it is. But where do you all think standalone leverage needs to be? And what's the roadmap to get there? Obviously, EBITDA growth helps bring leverage down. But is there anything else you can do in terms of asset monetizations there?
Speaker Change: Hey, everyone. Thanks for taking the question.
Speaker Change: First one for me you talked about leverage a bit and.
Speaker Change: Now that the split is done I appreciate the comments on not doing deals with your equity value, where it is but where do you all think standalone leverage needs to be and what's the roadmap to get there obviously EBITDA growth helps bring leverage down but is there anything else you can do in terms of asset monetization there.
Speaker Change: Sure.
Jimmy Barge: Yeah, thanks for the question, Brent. Look, we're finishing. Finishing the year 4.9 times, okay, at separation on May 6th, we brought net debt in right in the range we talked about before, a little under $1.6 billion, so that would be right around, on a pro forma basis, five and a half times.
Speaker Change: Yeah. Thanks for the question Brett look we're finishing.
Speaker Change: Finishing the year at four nine times.
Speaker Change: At separation on May six we bought net debt and right in the range, we talked about $4 billion little under $1 650, So that'd be right around on a pro forma basis five five times. So we're the Kate it's back end loaded for trailing 12 months and free cash flow, you'll see the leverage ratio or move up a bit before it starts coming back down.
Jimmy Barge: So with a cadence back end loaded for trailing 12 months and free cash flow, you'll see the leverage ratio move up a bit before it starts coming back down. And then what I would think is when we move into the back end of fiscal 27, that, you know, we're in between a three and a half to four times range, and our long range target would be three to three and a half times. got it.
Speaker Change: And then what I would think is when we move into the back end of fiscal 'twenty seven that were in between a three and a half to four times range and our long range target would be three to three five times.
Speaker Change: Got it.
Jimmy Barge: And then the other question for me, you know, stars has talked quite a bit about expanding margins. And one way I think they plan on doing that is focusing more on on new and owned IP. Obviously, this has been planned for a while.
Speaker Change: And then other question for me.
Speaker Change: Starz has talked quite a bit about expanding margins in one way I think they plan on doing that is focusing more on new and owned IP. Obviously this has been planned for a while so how do you all think about maybe the risks.
Jimmy Barge: So how do you all think about maybe the risk of stars kind of shifting towards some of its own IP and, and what's embedded in your expectations in terms of stars spending with your TV production business?
Speaker Change: Starz kind of shifting towards some of its own IP and what's embedded in your expectations in terms of stars.
Speaker Change: Stars spending with your TV production business.
Kevin: Yeah. This is Kevin speaking.
Jimmy Barge: From the get-go, the way John and Michael set up the Starz relationship with Jeff was for us to be an arm's-length supplier, just like any supplier out there, with some advantages of knowing much more about what their programming needs are and hammering out a license fee arrangement that we didn't have to renegotiate every time we sold them a new show. We have some very important key franchises together, assets that we own, the Power Universe, BMF, Spartacus, P-Valley, which we're delivering right now in its third season. Those are the ones we're quite focused on and have the potential for, we think, many more iterations.
Speaker Change: From the get go the way John and Michael set up this starz relationship with with Jeff was for us to be an arms length supplier just like any supplier out there with some advantages of knowing much more about what their program and needs are and and hammering out.
Speaker Change: Our license and license fee arrangement that we didn't have to renegotiate every time, we sell them a new show.
Speaker Change: We have some very important key franchises together assets that we own the power the power Universe Vms Spartacus P Valley with Julie and we're delivering right now in its third season and those are the ones who are quite focused on and have the potential for we think many more iterations around the fourth iteration of our and more in the pipeline.
Jimmy Barge: We're on the fourth iteration of Power and more are in the pipeline. We've just sold them something last week in a competitive situation, so we expect it will continue to do business.
Speaker Change: We've just told them something last week in a competitive situation. So we expect it will continue to do business and that aspiration to own their some of their own properties and their franchises is no different than anybody ever we've ever sold to over the years.
Jimmy Barge: And that aspiration to own some of their own properties and their franchises is no different than any buyer we've ever sold to over the years. We know our product has to be great. It has to be something they must have. The good news is we've got a template in place for how we work together for years to come on licensee distribution and other ways, so it's very turnkey. You know, I would say I'd add to that, sometimes sort of a more arm's length relationship actually leads to a better allocation of resources. We've got, as Kevin's saying, we've got the three, three of their four biggest franchises at this point in time.
Speaker Change: So we know our product has to be great. It has to be something they they must have the good news is we've got a template in place for how we work together for.
Speaker Change: For years to come on licensee distribution in other ways. So it's very turnkey.
Speaker Change: Yeah, I would say I would add to that some times.
Speaker Change: Sort of a more arm's length relationship actually leads to a better allocation of resources, we've got if Kevin saying, we've got the three three are therefore, our biggest franchises at this point in time, we've got.
Jimmy Barge: We've got, you know, the bulk of their, the core part of their movie lineup. So there's, there's significant, if you will, appropriate creative tension between both parties.
Speaker Change: The bulk of their their core part of their movie lineup. So theres there are significant.
Speaker Change: If you will appropriate a creative tension between both parties and I think we.
John Feltheimer: And I think, you know, we have a great relationship and by the way, we're all and I am a big shareholder of Starz right now. So we're going to figure out a smart way for us to work together to win, win.
Speaker Change: We have a great relationship and by the way, we're all and I am a big shareholder of stores right. Now so we're going to figure out a smart way for us to work together, it's a win win.
Brent Penter: Got it.
Operator: Thanks, everyone.
Speaker Change: Got it thanks, everyone.
Operator: Thanks, Brent.
Matthew Harrigan: Operator, could we get the next question, please? And the next question is from Matthew Harrigan with Benchmark.
Speaker Change: Thanks, Brent operator could we get the next question. Please and your next question is from Matthew Harrigan with benchmark. Please go ahead.
Matthew Harrigan: Please go ahead. Well, thank you.
Matthew Harrigan: Well. Thank you maybe your first ever eternal balance sheet at a question. When you mentioned the resurrection of Christ I actually googled, it and I found the Catholic Harold and the interview, Joe Rogan did with Gibson and it sounds like it almost sounds like a Marvel type feel too I mean, social survey also truck at all.
Matthew Harrigan: This may be your first ever Eternal Balance Sheet question. When you mentioned the Resurrection of the Christ, I actually Googled it, and I found the Catholic Herald and the interview Joe Rogan did with Gibson. And it sounds like it almost has like a marble-type feel to it. I mean, he says it's an acid trip. You tell the story properly.
Adam Fogelson: You have to start with the fall of the angels. You need to go to hell. And then he talks about the de-aging of Jim Caviezel. I hope I'm not mangling his name. So this just sounds like a really premium project. And clearly, there's a lot of interest in religion, both in the U.S. and Europe with the new pope and all that. So this sounds like a real upside.
Speaker Change: The story properly you have to start off the fall the Angels you need to go to Hell and then he talks about the D aging of Jim Caviezel I Hope I'm not mangling. His name. So this just sounds like a really premium projected here and clearly there's a lot of interest in religion and both in the U S and Europe with the new Pope and all that so this sounds like.
Speaker Change: A real upside, but I'm curious what was the financial exposure B I mean, it just sounds like this was going to be a really expensive movie from if you've got.
Adam Fogelson: But I'm curious, what would the financial exposure be? I mean, it just sounds like this is going to be a really expensive movie, even if you've got a lot of upside on the possible commercial reception. I'm well aware it's kind of a funky question, but it certainly seems like an interesting project, to say the least.
Speaker Change: A lot of upside on the possible commercial reception I'm, well aware I was kind of a funky question, but it certainly seems like an interesting project to say the least thank you.
Adam Fogelson: Thank you.
Adam Fogelson: Hey, Matthew, it's Adam. Thanks for the question. And a funky question that includes rabid enthusiasm for something we're doing is okay by me. Look, I would say that the international marketplace is every bit as enthusiastic as you just were, if not more. And there are tons of people, both in the international marketplace and elsewhere, who are really excited about finding a way to participate in this. I can tell you that an incredibly conservative model relative to not only what the first movie did, but the size and scale and theatricality of what Mel and Bruce are planning on putting together does not make it a remotely frightening proposition for us.
Adam: Hey, Matthew it's Adam Thanks for the question in a funky question that includes rabbit enthusiasm for something we're doing is okay by me.
Speaker Change: Look I would say that the.
Speaker Change: The international marketplace.
Speaker Change: Is every bit as enthusiastic as you just were if not more and there are tons of people both in the international marketplace and elsewhere, who are really excited about finding a way to participate in this.
Speaker Change: I can tell you that a an incredibly conservative model.
Speaker Change: Relative to not only what the first movie did but the size and scale and theatricality of what Mel and Bruce are planning on putting together.
Speaker Change: <unk> does not make it a remotely frightening proposition for US. Obviously every movie comes with a certain degree of risk, but I would not put this as anything other than an incredibly exciting opportunity both creatively and financially.
Adam Fogelson: Obviously, every movie comes with a certain degree of risk, but I would not put this as anything other than an incredibly exciting opportunity, both creatively and financially.
Adam Fogelson: Great, thank you. Thanks Matt.
Speaker Change: Great. Thank you.
Speaker Change: Thanks, Matt operator can we get the next question. Please.
Barton Crockett: Operator, could we get the next question please? The next question is from Barton Crockett with Rosenblatt. Please go ahead. Okay, thanks for taking the question.
Operator: Next question is from Barton Crockett with Rosenblatt. Please go ahead.
Speaker Change: Okay.
Speaker Change: For taking the question.
Barton Crockett: I was kind of curious for kind of a temperature check or check in on the core of one of the core thesis for the whole split, which part of it was that it would, you know, create opportunities for. studio business to be acquired in what has been an industry that has historically been consolidating at premium multiples. And, you know, to that point, I'm just wondering what would be the process to get there? Is this, you know, given that you've just completed the split, obviously, you know, it'd be kind of quick to think about, you know, looking at the other side of it.
Speaker Change: I was kind of curious for kind of a temperature check or check in on.
Speaker Change: The core of one of the core thesis for the whole split which part of it was that it was.
Speaker Change: You know create opportunities for.
Speaker Change: The studio business to be acquired and what has been an industry that has historically been consolidating at premium multiples.
Speaker Change: And to that point I'm, just wondering what would be the process to get there or is this you know given that you've just completed the split obviously you know it would be kind of what to think about you know looking at the other side of it but.
Barton Crockett: But is this something where, you know, if you were to pursue M&A, you have to wait for a period of time for offers or interest to come in? Could there potentially be a process where you hang a for sale sign and ask people to come in and make offers? And if you were to do that, do you feel like, you know, or whether you do that or not, do you feel like this is a time that is optimal or maybe suboptimal for consolidation, given that I think the consensus view is that we've kind of come off a peak TV environment, maybe I've kind of evaluation bubble in content.
Speaker Change: Is this something where if you were to pursue M&A, you'll have to wait for a period of time for offers or interest to come in.
Speaker Change: Could there potentially be a process, where you hang a for sale sign and asked people to come in and make offers.
Speaker Change: And if you were to do that do you feel like you know or what do you do that or not do you feel like this is a time that is the optimal or maybe suboptimal for consolidation given.
Speaker Change: But I think the consensus view is that we've kind of come off.
Speaker Change: A a peak TV environment.
Speaker Change: Maybe I was kind of a valuation bubble.
Barton Crockett: And, you know, maybe it'd be better to wait for a better period. So how do you feel about that?
Speaker Change: And content.
Speaker Change: And.
Speaker Change: Maybe it'd be better to wait for a better period. Some how do you feel about that.
John Feltheimer: That's a mouthful, Bart, and I would say I'm not going to comment on most of your speculation, including that the reason we did it was to sell the company. I think that the reason we did it was multi-purpose, was to allow both companies to go forward with a path that is specific to their core business, and I think you're going to see that happening very early in the process. I getting liquidity in our stock and combining the A and B shares, which we've done, and I think you're seeing just from a liquidity perspective, that seems to be working.
Speaker Change: Well, that's a mouthful, Bart and I would say I'm not going to comment on most of your speculation including that the reason we did it was to sell the company that I think that that the reason we did it was multi purpose was to allow both companies to.
Speaker Change: Go forward with a a path that is specific to their core business.
Speaker Change: I think youre going to see that happening.
Speaker Change: Very early in the process I think part of this was getting liquidity in our stock and combining the a and b shares.
Speaker Change: And which we've done and I think youre seeing just from a liquidity perspective.
Speaker Change: It seems to be working.
John Feltheimer: I would say that listening to Jimmy's cadence on the financials and looking at the time frame of this incredible portfolio of films, and we haven't even finished announcing some of them, most of the carryover that we would expect in a really strong year goes from really 26 to 27, as opposed to 25 to 26, as well as a backload. So both of our businesses are backloaded this year and lead very strongly into 27. So from a perspective of stock price, from a perspective of earnings, whether it's our currency in terms of doing things like the E1 transaction, a very, very accretive transaction, one that we're really doing, I think, a pretty good job of integrating quickly and renegotiating certain deals like the Rookie and Yellow Jackets.
Jimmy Barge: I would say that listening to jimmy's cadence on the financials and sort of looking at the timeframe of this incredible portfolio of films and we haven't even finished announcing some of them most of the carryover that we would expect in a really strong year. It goes from really two.
Speaker Change: <unk>.
Speaker Change: 26% to 27 as opposed to 25% to 26.
Speaker Change: Well as a back loaded up both of our businesses are back loaded this year.
Speaker Change: And lead very strongly into 2007, so from our perspective, our stock price from the perspective of earnings.
Speaker Change: Whether it's using our currency in terms of doing things like the one transaction very very a very very accretive transaction when that we're really doing I think a pretty good job of integrating quickly and.
Speaker Change: Ah renegotiating certainly certain deals like the rookie and yellow jackets.
John Feltheimer: So we think we have a lot of work to do to start getting people to do what really was the point of the whole thing, which is to recognize the value, the unique value, the non-replicable value of the studio.
Speaker Change: We think we have a lot of work to do to start getting people to do it really was the point of the whole thing which is to recognize the value of the unique value of the non replicable value of the studio and so I'm not going to answer the speculation on how we would sell it what a process would be.
John Feltheimer: And so I'm not going to answer the speculation on how we would sell it, what a process would be. I'm focused, we're focused right now for the next year on getting the stock where we think it should be in terms of looking at the sum of the parts and realizing the value of these projects that we've got in the pipeline, Michael, and Resurrection and Hunger Games and the series Twilight and John Wick. So we've got a lot coming out. I think once we get it there, I think the value will start getting to a place where we'd be comfortable to see what happens.
Speaker Change: Im focused we're focused right now for the next year on getting the stock where we think it should be in terms of looking at the sum of the parts.
Speaker Change: And realizing the value of these projects that we've got in the pipeline Michael.
Speaker Change: And resurrection and hunger games.
Speaker Change: The series Twilight and John Wick, So we've got a lot coming out I think once we get it there I think the value will start getting to a place where.
Speaker Change: We'd be comfortable to see what happens, but at this point in time, that's our job.
Operator: But at this point in time, that's our job. I believe the bottom line is when the businesses perform, you'll see the stock perform as well. Okay. All right. I appreciate that. That was a great response. Thank you. Again, if you have a question, please press star, then 1.
Speaker Change: I believe the bottom line is when the businesses perform youll see the stock performed as well.
Speaker Change: Okay, Alright, I appreciate that that was great.
Speaker Change: Great response, thank you.
Speaker Change: Again, if you have a question. Please press Star then one.
Patrick Scholl: The next question is from Patrick Scholl with Barrington Research. Please go ahead. Hi, thanks for taking the question. I was just kind of curious on how you are approaching like just the environment for theatrical content and if you think like the maybe reduction in the screen size in the U.S. has maybe created any additional challenges on like franchise development and getting getting traction on some of the smaller, higher upside potential films that you tend to focus on?
Speaker Change: The next question is from Patrick show with Barrington Research. Please go ahead.
Patrick: Hi, Thanks for taking the question.
Patrick: I was just kind of curious on how you are approaching like just the environment for theatrical content and if you think like the maybe a reduction in the screen size in the U S is maybe create any additional challenges on like franchise development and getting getting traction on some of the smaller.
Patrick: Higher upside potential from so you tend to focus on.
John Feltheimer: I think the entire theatrical environment, the conversation we're all having today is pretty radically different from the one we were having three months ago. There were lots of questions about the viability of theatrical in general, and three months later, literally every weekend, we're seeing massive over-performance, and not only from giant films like A Minecraft, but also films like Final Destination last weekend. The reality is, while it may not be headline grabbing, as you saw from the numbers, movies like Den of Thieves and Flight Risk are really genuinely meaningful to the contribution that we're able to deliver to the company.
Adam: Hey, Patrick it's Adam Thanks.
Speaker Change: Look I think the entire theatrical environment conversation, we're all having today is pretty radically different from the one we were having three months ago. There were lots of questions about the viability of theatrical and general and three months later literally every weekend, we're seeing massive over performance and not only from giant films like Minecraft.
Adam: But also films like final destination last weekend and the reality is while.
Adam: While it may not be headline grabbing as you saw from the numbers movies like Dennis Steve.
Adam: And flight risks are really genuinely meaningful to the contribution that we're able to deliver to the company. So.
John Feltheimer: We absolutely think there will be room not only to maximize what we're delivering on our franchise films, on our tentpoles, and we have many more of them in the next chunk of time, certainly than we had over the last year, but also that we're going to be able to grow and build new franchises on low and mid-budget films, and we think the overall health of the theatrical environment speaks volumes to what's possible for us going forward.
Adam: We absolutely think there will be room, not only to maximize what we're delivering on our franchise films on our tent pole and we have many more of them in the next chunk of time certainly than we had over the last year, but also that we're going to be able to grow and build new franchises on low and mid budget films and we think the overall health of the theatrical environment.
Adam: It speaks volumes to what's possible for us going forward.
Adam: Alright, thank you.
Jason Basing: Operator, could we get the next question, please? And the next question is from Jason Basing with Citi. Please go ahead. I just had a question about potential consolidation among VTC apps. I guess my question is, on the one hand, it seems like it could be a positive for you because you'd have healthier potential customers, but on the other hand, it seems like a potential negative just because there's fewer buyers. So, can you just talk about how you see the shape of your production business changing, if at all? fewer DTC apps in the marketplace two or three years from now.
Speaker Change: Operator could we then can we get the next question. Please and our next question is from Jason <unk> with Citi. Please go ahead.
Jason: I just had a question.
Speaker Change: <unk>.
Adam: And so consolidation.
Adam: Yes.
Adam: I guess my question is on the one hand, it seems like you are positive.
Adam: Potential customers.
Speaker Change: On the other hand, it seems like.
Speaker Change: Thank you Dave.
Speaker Change: Buyers.
Speaker Change: Can you just talk about how you see ashish.
Speaker Change: The shape of your production business changing if at all if we ended up seeing fewer dcs in the marketplace two or three years from now.
Jason Basing: Jason, I'm afraid it was really hard to hear that question. I don't want to answer it wrongly, but you're kind of breaking up on it. Can you repeat it, Jason? I think I kind of heard, but can you repeat it one more time? I'm gonna, I'm gonna try.
Speaker Change: Jason I'm afraid it was really hard to hear that question I don't want to answer it wrongly, but youre kind of breaking up on it.
Speaker Change: Can you repeat it Jason I think I kind of hurt but can you repeat it one more time.
Speaker Change: I'm going to I'm going to try so if we start DTC apps consolidate.
John Feltheimer: So if we thought DTC apps consolidate Is that good or bad? Yeah, that's a great question. I think we could see it both ways. What we want, what we're hoping for, is for all of our streamer buyers to be really profitable and do very well. It looks to us like that's happening right now, whether they consolidate or not. Certain of the consolidation probably would be very good. I'm doubting that it could be bad for us. It's not going to end up all in one place, but I think at the end of the day it's really important that our buyers be profitable, be strong, and again, there's going to be new buyers that pop up every day.
Speaker Change: Is that good or bad for your business.
Speaker Change: Oh, yes, yes.
Speaker Change: Yes.
Speaker Change: That's a great question.
Speaker Change: And I think we could see it both ways.
Speaker Change: That.
Speaker Change: What we want what we're hoping for is for all of our <unk>.
Speaker Change: <unk> stream, our buyers to be really profitable and do very well it looks to us like that's happening right now whether they consolidate or not.
Speaker Change: Certain of the consolidation probably would be very good I'm doubting that it could be bad for us.
Speaker Change: It's not going to end up all in one place, but I think at the end of its really important that our buyers be profitable will be strong.
Speaker Change: And again, there's going to be new buyers that pop up every day and we're starting to spend a lot of time working on new buyers and really the bottom line is to find that like where the audience is.
John Feltheimer: We're starting to spend a lot of time working on new buyers, and really the bottom line is to find out where the audience is. Right now with YouTube having such a large share of viewership and advertising, you're not calling that an app or a streamer, but we are. We're looking to find where that audience is as opposed to waiting for that audience to come to us, and we're going to figure out how to serve them properly and make money with newer, if you will, apps or newer sources of monetization. I think we're fine in that, and we're fine, again, if there has to be consolidation as the end of the day, those companies are more profitable, that'll be good.
Speaker Change: Right now with with.
Speaker Change: With Youtube, having such a large share of viewership and advertising.
Speaker Change: You are not calling that an app or streamer, but we are in and so.
Speaker Change: We are looking to find where that audience is as opposed to waiting for that audience to come to us.
Speaker Change: And we're going to figure out how to.
Speaker Change: To serve them properly and make money with.
Speaker Change: <unk>, if you will apps are newer.
Speaker Change: Newer sources of monetization and so I think we're fine in that and we're fine again, if there has to be consolidation as long as at the end of the day of those companies are more profitable that'll be good for us.
Operator: Thank you. Thanks, Jason.
Speaker Change: Thank you.
Alan Gould: Operator, could we get the next question, please? And the final question today is from Alan Gould with Loop Capital. Please go ahead. Hi, thanks for taking the question. I've got two, please.
Speaker Change: Thanks, Jason operator can we get to next question. Please and the final question today is from Alan Gould with loop capital. Please go ahead.
Alan Gould: Hi, Thanks for taking the question.
Alan Gould: I've got two please first on the Michael Jackson film, a three and a half hours of film sounds more like two films. One film for me are we talking about two films in 2007, and what gives you confidence given that the films.
Alan Gould: First, on the Michael Jackson film, three and a half hours of film sounds more like two films than one film to me. Are we talking about two films in 27? And what gives you confidence given that the film's pushed back? Normally, pushing back isn't a great thing, but this situation could be different.
Alan Gould: Pushed back normally pushing back isn't a great thing, but this is situation can be different and my second question is for Michael I guess about six months ago that you did a deal with a runway for AI for just a tiny portion of your library, you've got a big library.
Michael Burns: And my second question is for Michael. I guess it's about six months ago that you did a deal with Runway for AI for just a tiny portion of your library. You've got a big library. Any update as to what opportunities you see licensing your library or using your library internally for AI, with AI? Let me start with that one. We're really, really excited about the collaboration. It's helping both of our teams in both pre- and post-production leverage, using AI to optimize the workflows for new movies and television products, so that's very exciting and that's a long way to say we think we can save money.
Alan Gould: Any update as to what opportunities you see licensing your library or using your library internally for AI with AI.
Alan Gould: Let me just start with that one yeah, let me start with that one we're really really excited about the collaboration itself.
Alan Gould: It is helping both of our teams in both pre and post production.
Alan Gould: Average using AI to optimize the workflows for new movies and TV product. So that's very exciting.
Alan Gould: That's a long way to say that we think we can save money.
Michael Burns: And the customized AI models are helping streamline many of the use cases for visual effects, so it's an exciting opportunity and we love that company.
Alan Gould: And customize AI models are helping streamline.
Alan Gould: Many of the use cases for visual effects. So it's exciting.
Speaker Change: <unk> had an opportunity and we love that company.
Adam: Adam Thanks.
Adam Fogelson: I would say a couple of things. On one hand, any number of the biggest motion pictures over the last 10 or 20 years have had first cuts of movies that were well in excess of three and a half hours, and when John mentioned footage, it wasn't a cut, it was an accumulation of scenes that we've seen. The reasons for the delay are kind of out there and they're twofold, but at the end of the day, when you look at the music library, when you look at what Michael Jackson was able to deliver in terms of music and contributions to art, whether or not that can be fit into one movie comfortably or not is a question that we are absolutely asking, and your hypothetical is not inappropriate, but we'll be ready to answer more specifically in the coming weeks.
Alan Gould: Thanks Alan.
Alan Gould: So look I would say a couple of things on one hand any number of the biggest motion pictures over the last 10 or 20 years have had cuts first cuts of movies that were well in excess of three and a half hours and when John mentioned footage. It wasn't a cut it was an accumulation of scenes that we've seen.
Alan Gould: The reasons for the delay are kind of out there and there are two fold, but at the end of the day when you look at the when.
Alan Gould: When you look at the music Library, when you look at what Michael Jackson was able to deliver in terms of music and contributions to art, whether or not that can be fit into one movie comfortably or not is a question that we are absolutely asking and your hypothetical is not inappropriate, but we'll be ready to answer more specifically in the coming weeks.
Alan Gould: Okay. Thank you.
Neelay Shah: This concludes our question-and-answer session.
Alan Gould: This concludes our question and answer session I would like to turn the conference back over to Neal Shah for any closing remarks.
Neelay Shah: I would like to turn the conference back over to Neelay Shah for any closing remarks. Thanks everyone.
Alan Gould: Thanks to everyone. Please refer to the press releases and events tab under the Investor Relations section of our website for a discussion of certain non-GAAP forward looking measures discussed on this call. Thank you.
Neelay Shah: Please refer to the Press Releases and Events tab under the Investor Relations section of our website for discussion of certain non-GAAP forward-looking measures discussed on this call. Thank you.
Operator: The conference is now concluded.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: Thank you for attending today's presentation.
Operator: You may now disconnect. Subs by www.zeoranger.co.uk
Speaker Change: [music].