Lionsgate Studios Corp.

Good afternoon, everyone, and welcome to the Lionsgate second quarter 2025 earnings conference call. All participants will be in a listen-only mode. If you need assistance, please email a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one in your touch-tone telephones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Neelay Shah from Investor Relations. Please go ahead.

Good afternoon. Thank you for joining us for the Lionsgate Studios Corporation and Lionsgate Entertainment Corporation Fiscal 2025 Second Quarter Conference Call. We'll begin with opening remarks from our CEO, John Feldheimer, followed by remarks from our CFO, Jimmy Barge. After their remarks, we'll open the call for questions. Also joining us on the call today are Vice Chairman Michael Burns, COO Brian Goldsmith, Chairman of the Television Group Kevin Beggs, Chairman of the Motion Picture Group Adam Fogelson, and President of Worldwide TV and Digital Distribution Jim Packer. And from STARS, we have President and CEO Jeffrey Hirsch, CFO Scott McDonald, and President of Domestic Networks Allison Hoffman. 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. This includes the risk factors set forth in our public filings for Lionsgate Studios Corporation and Lionsgate Entertainment Corporation. The companies undertake 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. I'll now turn the call over to John.

Thank you, Nealey, and good afternoon everyone. Thank you for joining us. 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. Within our television group, our unscripted business is feeling the effects of a continuing market correction. 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. 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. 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. 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. But emphasizing the success of our financial models doesn't take the place of also getting the creative right. 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. 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. Our film slates include two to three temples 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. But we will also ensure that when we take bigger swings, we're taking measured swings. In addition to the tentpoles, 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. In recent weeks, we've announced that Paul Feig will direct Sidney Sweeney and Amanda Seyfried, in the thriller Housemaid. Challengers director Luca Guadagnino will shepherd our reimagining of the Lionsgate classic American Psycho. Amazing Spider-Man filmmaker Mark Webb will direct Johnny Depp and Penelope Cruz in Daydrinker. And Academy Award winner K.Y. Kwan will star in the action thriller Fairytale in New York from Sisu director Jalmare Hellander. 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. Combined with our La La Land stage play, shepherded by Wicked producer Mark Platt, and also slated for a Broadway opening in 2026, 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. 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. 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. 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, The Hunting Wives, based on May Cobb's acclaimed bestseller about obsession, seduction, and murder in East Texas, the Twilight TV adaptation, Midnight Sun, 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. It's a deep slate of high-profile properties that create significant growth opportunities for the future while adding tremendous value to our library. 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. 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. In the meantime, our television business is doing everything you would expect us to do reducing costs, consolidating smaller labels to create greater efficiencies in our unscripted business, and continuing to evaluate the mix of business models on our scripted slate to mitigate risk and maximize our upside. 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. Star's programming is working. PowerBook 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. 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. 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. On the distribution front, Starz 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. In addition, Starz announced a deal to bundle BritBox on its own platform as well as on Amazon. Streaming bundles have taken a little longer to materialize than anticipated due to industry disruption and technology issues. However, as they begin to gain real traction, Starz 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. 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. The entertainment business is a creative enterprise. but its future growth will require a combination of art and science. 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. 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. 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. We continue to anticipate achieving full separation by the end of the calendar year, subject to the timing of regulatory approvals. This is a transitional, disrupted, and difficult year for our industry. We like what lies ahead in an industry that has always moved fast to adopt great new technologies to save money and increase efficiency, where streamers and other platforms will return to being robust buyers of films, television shows, and library 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. But in the meantime, we have to control the things we can. establish the financial and creative models that make sense for a company our size, be sure-handed in our execution, and streamline our business by adjusting to the economic realities of the marketplace. Last month, we offered voluntary severance and early retirement packages to Lionsgate's U.S. employees, and approximately 8% of eligible employees have elected to take advantage of these offers. I can assure you, that we are aligning ourselves with our shareholders in every way, and we'll continue to do whatever it takes to drive shareholder value. In closing, we're continuing to make adjustments to our business based on changes in our environment. But our greatest takeaway is 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, and strict financial discipline that have always set us apart. Now I'll turn things over to Jimmy.