Lions Gate Entertainment Corporation

Good day, and welcome to the Lionsgate first quarter 2023 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Neal A. Shaw with Investor Relations. Please go ahead.

Good afternoon. Thank you for joining us for the Lionsgate Fiscal 2023 First 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 TV Group Kevin Beggs, and Chairman of the Motion Picture Group Joe Drake. And from STARS, we have President and CEO Jeffrey Hirsch, CFO Scott McDonald, President of Domestic Networks Allison Hoffman, and President of International Networks Suparna Kale. The matters discussed on this call 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 Lionsgate's most recent annual report on Form 10-K, as amended in our most recent quarterly report on Form 10-Q filed with the SEC. 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. I'll now turn the call over to John.

Thank you, Neelay, and good afternoon, everyone. Thank you for joining us. We're pleased to report a quarter of strong global subscriber growth at Starz, continued growth of our film and television pipelines, and key financial metrics in line with expectations. As I go through my remarks, you'll hear us focus on the operating environment, dealing with issues of economic uncertainty, recession fears, court cutting, and the pandemic like everyone else. But as I lay out how each of our businesses is addressing this environment, you'll also hear how our business model insulates us fairly well from some of the existing and potential headwinds. Starting with our motion picture business, with the box office making a strong comeback, our motion picture group is in great shape to capitalize on its return with a strong lineup of exciting movies. Let me lead with our tentpoles. We began shooting the eagerly anticipated Hunger Games prequel, The Ballad of Songbirds and Snakes, in Poland two weeks ago, and the early footage looks great. The film rolls out globally in a prime holiday slot on November 17th next year. The other anchor of next year's slate is John Wick, which has grown into a cultural phenomenon. We will release John Wick Chapter 4 on March 24, 2023, to our huge and engaged fan base around the world. As we expand the John Wick universe across multiple businesses, production is just wrapped on the John Wick prequel event series for television, The Continental. And in that same regard, we're in advance pre-production on the John Wick action spinoff, Ballerina, with Knives Out and No Time to Die star Anna de Armas in the title role. Behind these tent poles, Expendables 4 will bring back a world-class cast of action stars next year. Dirty Dancing, starring Jennifer Grey in our reimagining of the romantic classic, arrives in theaters in time for Valentine's Day 2024. We expect to have a major announcement in the coming weeks on Now You See Me 3, and with titles including Naruto, Highlander, and the Michael Jackson event film lined up as well, we're growing a pipeline that can compete at any level theatrically. Our tentpole business is complemented financially and strategically by a consistently profitable, low-risk, multi-platform business for the 30 to 40 smaller and mid-sized films we release each year. Especially in this current environment, our proficiency at delivering targeted films for a wide range of platforms is a profitable and repeatable strategy. This includes a direct-to-streaming component that continues to gain traction as it transitions from a largely opportunistic response to the pandemic to a planned, strategically focused business with production deals in place with a growing number of platforms. Turning to television, our status as one of the few independent suppliers of premium series at scale is our best defense against economic uncertainty and other headwinds. We have strong relationships across more than two dozen platforms with multiple hit series at the broadcast networks, streamers, and a growing roster of AVOD platforms, along with a strong slate to drive the growth of sister company, Starz. This diverse group of buyers helps mitigate a pullback in content spending by any one platform and has been our consistent strategy in both up and down markets. We're also coming off one of the most active periods of content creation in our television group's history. With more than 30 new shows picked up to series in the past three years, 90% of them renewed for additional seasons, and valuable new properties, Ghosts, Home Economics, Minx, Julia, P-Valley, and a host of others, we will begin to generate increasing returns as they move into later seasons and create value in our library. For the past two years, our growth in television revenues hasn't been matched by growth in contribution and margin due to the investment in new series. This year, the television group Segment Profit is on track to increase by over 50% on improving margins with even stronger gains next year as our series continue to mature. At Starz, we had a strong subscriber growth quarter, adding 1.8 million global streaming subscribers, including 700,000 domestic subscribers. We're able to continue delivering these gains despite industry headwinds, given our differentiated offering of focused original programming, coupled with a robust slate of pay-one output and library titles, all at a complimentary price that provides great value to the consumer. The fiscal 23 slate has a consistent cadence of juggernaut performers, including Outlander, P-Valley, BMF, and the Power Universe, combined with tentpole movies like Spider-Man No Way Home. With the majority of the slate underpinned by series returning for second and third seasons, we're confident in our ability to continue our subscriber momentum acquiring new customers and extending the lifetime value of our existing subscriber base. In the quarter, we continue to execute our commitment to engage both of our major cohorts with a new show every week. With the successful debut of Power Book 4, Force, all three of our Power spinoffs have become hits. The drama, P-Valley, achieved record ratings in its breakout second season, becoming one of Star's most widely viewed series ever. Fan favorite Outlander returned for its sixth hit season, and earlier today, we announced the highly anticipated Outlander prequel, Blood of My Blood, to be written and executive produced by Outlander showrunner Matthew B. Roberts. The Watergate series Gaslit, starring Julia Roberts and Sean Penn, debuted strongly in the quarter, strengthening the star's brand and showcasing our ability to offer high-end programming comparable to anything on premium paid television. We continue to expand Star's distribution successfully around the world. We announced a bundling deal with Disney and LATAM in the quarter, following on the heels of recent partnerships with Canal Plus in France and Viaplay in the Nordic territories. This afternoon, I'm pleased to report that we've launched a deal with Vizio in the U.S., making Starz available to millions of Vizio smart TV users. As we've been saying, this is just the tip of the iceberg in terms of where the industry is heading, and Starz will be a critical and desirable part of bundles and packages with a growing number of platforms and devices. Again, we're cognizant of the headwinds in today's business environment. The economic uncertainty does make it harder to forecast our business. The pandemic has gone on longer than expected and continues to add cost. There are growing pains in the streaming world and aging pains in the linear legacy businesses. In response, we're taking steps to conserve capital, keep our balance sheet strong, streamline operations, and mitigate risk while we continue to do what we do best, create great content and franchises that build our most important long-term asset, our world-class library. In closing, in terms of our strategic initiatives, we are proceeding nicely. In spite of the turbulent economy and the complexity of ensuring that we retain and expand all of our strategic and operational benefits, we continue to advance conversations with potential sponsors and strategic partners, and we remain on track to conclude a transaction as early as the end of the fiscal year. Now I'll turn things over to Jimmy.