Lionsgate total global subscribers rose to 37.8 million for the fiscal second quarter ended in September, driven by international and domestic streaming, where subs were up 52% year-on-year to 27.3 million. Rebranded Lionsgate+ subscribers grew 97% to 14.8 million.
The company reported a few one-time charges, including a $1.48 billion non-cash hit related to goodwill from its $4.4 billion acquisition of Starz in 2016 that reflects changes to future free cash flow projections and underlying valuations of streaming assets faced with tough competition and a slowing economy.
It also posted $219 million in restructuring charges from exiting seven Lionsgate+ (formerly called Starzplay International) territories — France, Germany, Italy, Spain, Benelux, the Nordics and Japan as it to streamlines that business. These were content impairment write-downs in the territories.
The release didn’t discuss upcoming strategic plans for either the studio or Starz but on a call later execs were still committed to a deal even though an initial self-imposed deadline of late summer has come and gone. Lionsgate is looking to spin out the studio, and also planning a possible de-leveraging transaction separately or in tandem with that. A lot of work has been done prepping for both. The challenged macro environment and state of Lionsgate stock “obviously” haven’t helped speed the process along, Feltheimer said.
It also release more detailed financial information and guidance on the sectors with cash flow estimates for 2023 and 2024, ahead of a potential separation of the businesses or other transaction. It said in an SEC filing it prepared the numbers “in connection with strategic and financial discussions.”
Media Networks segment revenue of $396 million was up from $385 million as lower domestic linear revenue was offset by growth in streaming. Profit jumped to $21 million from $5.5 million on lower marketing costs.
The film and TV studio biz saw sales of $655 million compared with $667. Profit dropped to $69 million from $130 million. Motion pictures revenue fell, television rose. Profits fell at both.
Revenue from Lionsgate’s 17,000-title film and television library was $747 million for the trailing 12 months and $210 million in the quarter.
“We reported another strong library performance and continued growth in Lionsgate Television series deliveries as our studio businesses continued to perform in line with expectations in the quarter,” said CEO Jon Feltheimer.
Then he addressed Starz: “Economic and industry headwinds are having the greatest impact at Starz, where we are exiting seven international territories. This will allow us to streamline Starz’s international business and return it to profitability more quickly while continuing to build on the opportunities created by a strong Starz original series slate and focused content strategy domestically.”
Total revenue of $875 million beat Wall Street forecasts, as did adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $47.4 million, and an adjusted loss per share of 12 cents. Shares firmed in late trading, up 1.2%, after falling nearly 6% during the session.