Lions Gate Entertainment Corporation

Good day and welcome to the Lionsgate second quarter 2024 earnings conference call. All participants will be in a listen only mode. If 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, this event is being recorded. I would now like to turn the conference over to Miele Shaw, Investor Relations. Please go ahead.

Good afternoon. Thank you for joining us for the Lionsgate Fiscal 2024 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 TV Group Kevin Beggs, Chairman of the Motion Picture Group Joe Drake, 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 this call include four 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 and as also amended in our most recent quarterly report on Form 10-Q filed with the SEC. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. The matters discussed on this call also include the proposed separation of our television and movie production business for our media networks business. We urge you to read the relevant materials that we and our subsidiary, LG Orion Holdings, have and will file with the SEC, including a registration statement on Form 10, which was filed on July 12, 2023, that includes a preliminary joint information proxy statement. The information in the joint information proxy statement will not be complete and may be changed. Thank you for having me. Information about participants and their direct and indirect interests will be included in the joint information proxy statement and other relevant documents filed with the SEC as available. I'll now turn the call over to John.

Thank you, Nealey. Good afternoon, everyone. Thank you for joining us. Since this is the first earnings call since yesterday's announcement, I want to start by saying that we're very pleased that the strikes are over with a fair and equitable resolution for all parties. And we can now all get back to work making great content for our global audiences. We had a strong quarter, and we're reaffirming our guidance for the full year. This is despite the negative financial impact of the strike, which is expected to be approximately $30 million, a little less than we originally forecast. Our success in the quarter came from doing the things we do best, taking advantage of the diversification of our film and television businesses, utilizing new business models to monetize the FAST and AVOD space, creating efficiencies in our infrastructure, and remaining profitable at STARS while using our agility to keep our content pipelines filled despite the strike. In that regard, our motion picture group reported strong financial results. The Saw franchise is back, with the return of Jigsaw and an innovative marketing campaign driving Saw X to more than $100 million at the worldwide box office. Our multi-platform releases, together with our library, complemented the success of our slate with strong contributions in the quarter, and they continue to serve as the ballast that takes the volatility out of our film business. We continue to grow our franchises with prequels, sequels, spin-offs, and franchise extensions. We're preparing the first of the John Wick theatrical spin-offs, Ballerina, for release next year. The prequel event series, The Continental, launched successfully on Peacock and Amazon Prime in the quarter, and we signed a deal with a leading video game developer for a John Wick AAA game. We're launching the first ever Hunger Games stage play in London next fall. And next week, we will open the first new Hunger Games film in eight years, the Hunger Games prequel, The Ballad of Songbirds and Snakes, for a whole new generation of fans. Digital revenues for the previous four Hunger Games are up approximately 500% over the last eight weeks. Looking ahead, our planning, agility and ability to secure interim agreements for a number of films has helped us lock our fiscal 25 theatrical slate with a full pipeline of 14 movies. Releases like Ballerina, Borderlands, Flight Risk starring Mark Wahlberg, Ordinary Angels starring Hilary Swank, Imaginary from Blumhouse, Shadow Force starring Omar Sy and Kerry Washington, Rupert Sanders' reimagining of The Crow, and a new film from Sherlock Holmes director Guy Ritchie are already in the can or currently shooting. And now that the strike is over, we will finish teeing up production for several of our biggest fiscal 26 tentpoles, including Highlander, Now You See Me 3, and the Michael Jackson biopic. In terms of our television division, we've been busy keeping our pipeline full as well. Three weeks ago stars Greenlit, The Hunting Wives, a thriller from Lionsgate and Three Arts. And today, I'm pleased to announce that Starz has greenlit Spartacus, the reimagining of one of the network's biggest early hits from Spartacus creator, writer, and executive producer Stephen S. DeKnight, who will serve as showrunner. Beyond these two shows, we're ready to resume or begin production on over a dozen series, including exciting new properties like Extended Family for NBC and the Seth Rogen comedy for Apple TV+. In terms of three arts, we're in final discussions to extend our partnership with our industry-leading talent management and production company, which serves as a source of financial stability and growth for our television business segment. At Starz, the renewed availability and performance of first-run studio movies from the Lionsgate Pay One and Universal Pay Two output deals has reminded us of the importance of movies to a premium subscription platform. Movies like Plane, Operation Fortune, and John Wick Chapter 4, which achieved the network's most first title streams ever for a movie, coupled with a second season of the original series Force, helped to drive stars' return to domestic OTT subscriber growth in the quarter. That, coupled with the recent rate increase, drove sequential growth in revenue as well, and we expect that subscriber and revenue growth will continue through the rest of the year. And as we wind down our Starz international business with our exit from the UK, reorganize our domestic operations, and continue our successful transition towards a more digital future, we have significantly reduced Starz overhead and continue to find creative ways to take cost out of our production slate. We expect the combination of these efforts to create solid margin improvement over the next few years as we focus on preparing Starz to thrive as a profitable and successful standalone company. In that regard, Jimmy will discuss the restructuring charges in the quarter. Turning to E1, we anticipate closing the transaction by the end of December. We like what we're seeing as we refine our integration plans, and we expect meaningful revenue and cost synergies, along with the addition of significant rights and value to our library. On the strategic front, we're actively engaged in steps towards highlighting the value of our two separate businesses and expect to update you by the next call. In closing, We're operating in a difficult environment, but the quarter speaks to who we are, staying resilient and using every one of the tools at our disposal to keep our pipelines full, maximizing our assets, concentrating our resources in places where we know we can win, and positioning the company for future growth. Now I'll turn things over to Jimmy.