2023 Annual Report

LIONS GATE ENTERTAINMENT CORP.

2023

ANNUAL REPORT

To Our Shareholders:

In fiscal 2023, we successfully executed the key elements of our strategy: growing our content pipelines; extending our

portfolio of brands and franchises; carrying out strategic initiatives to increase the value of our businesses; creating new

efficiencies in our operations; and strengthening our collaborative and entrepreneurial culture.

We finished the year with strong financial results, growing our revenue to $3.85 billion and reporting $358.1 million in

adjusted OIBDA. We continued to grow our film and television library, reporting a record $884 million in trailing 12-month

revenue. We also opportunistically paid down debt, buying back $285 million of our bonds for $196 million, a net savings of

nearly $90 million, ending the fiscal year with $272 million in available cash and an untapped revolving credit facility of

$1.25 billion. We continued to generate positive adjusted free cash flow during the year, while investing $2.7 billion in

content and marketing, and we enter fiscal 2024 with strong momentum and projected double-digit adjusted OIBDA growth.

We’re also continuing to create incremental value through our strategic initiatives. After the fiscal year ended, on August 3,

2023, we entered into a definitive agreement to acquire the global entertainment platform eOne from Hasbro for

approximately $375 million in cash, a transaction that will add thousands of titles to our library, deepen our content pipelines

with new television and film brands, strengthen our scripted and unscripted television business, and expand our presence in

Canada and the UK. We expect the transaction to be immediately and highly accretive. During the year, we also continued to

monetize non-core assets with the sale of a portion of our minority stake in STARZPLAY ARABIA for approximately

$45 million.

On July 12, 2023, we filed our public Form 10 with the SEC as the next step in our plan to separate Lionsgate and STARZ. The

integration of Lionsgate and STARZ helped transition STARZ into a profitable premium streaming platform, and now we

believe that the operation of our studio and STARZ as independent, standalone, pure play companies will unlock greater

value and allow both companies to scale their respective businesses.

Renewing Current Franchises While Creating New Ones

Fiscal 2023 was a year in which we extended many of our biggest franchises, cultivated new ones and added important third-

party properties for global distribution. John Wick: Chapter Four grossed a franchise-best $440 million at the global box office

as it grows its performance from one installment to the next. We completed principal photography on the action

spin-off Ballerina, starring Ana de Armas, and in September 2023, we successfully launched the prequel event series The

Continental on Peacock and Amazon Prime, one of our most lucrative television properties in years. We also finalized an

agreement to produce a John Wick AAA game with a major video game developer and publisher.

After the close of the fiscal year, Saw X returned to the franchise’s roots with a strong performance at the box office and the

best reviews in franchise history. Excitement continues to build for the November 17, 2023 release of The Hunger Games:

Ballad of Songbirds & Snakes, the first Hunger Games movie in eight years. Beyond that, we’re preparing to begin production

on Now You See Me 3, to be directed by Ruben Fleischer, and continuing the fast-track development of Naruto, based on one

of the world’s biggest manga franchises, and Highlander, with John Wick filmmaker Chad Stahelski set to direct. We also

greenlit the production of Michael, the Michael Jackson biopic chronicling the untold story of the King of Pop, from producer

Graham King and director Antoine Fuqua.

The acquisition of eOne will add the television franchises The Rookie, Yellowjackets and Naked & Afraid along with film

development rights to the coveted Monopoly brand. Our Worldwide Television Distribution Group continues to secure

distribution rights to leading third-party properties like Quentin Tarantino’s Kill Bill Volumes I & II and Jackie Brown, the

historical drama The Chosen, with more than 110 million viewers worldwide, and the television series The Conners, currently

in its sixth season on ABC.

Adapting Our Motion Picture Business to a Changing World

During the year, we continued to re-imagine our Motion Picture Group in order to capitalize on strengths which help us

adapt to a fast-changing landscape. We are surrounding our tentpoles with a thriving multiplatform and direct-to-streaming

slate of over 50 films annually that reflects alternative distribution strategies and innovative business models. Lower-budget

successes like Sisu, Fall, Clerks III and Alice, Darling led a multiplatform and limited release slate that generated record profit

contribution during fiscal 2023.

We are also growing our leadership in the faith-based vertical. Building on the success of the breakout hit I Can Only Imagine,

we reteamed with Kingdom Story Company on fiscal 2023’s box office hit Jesus Revolution. Upcoming titles from our

Kingdom partnership include Ordinary Angels, starring two-time Academy Award winner Hillary Swank, and Unsung Hero,

slated for release for Easter weekend 2024.

Maturing Series Driving Growth in Profitability

Our Television Group posted record revenue in fiscal 2023 with profitability also expected to grow as current hit series

continue to mature. Eight Lionsgate Television series, led by Ghosts on CBS, one of the top-rated half-hour comedies on

television, Mythic Quest and Acapulco on Apple TV+, and P-Valley, BMF and two of the Power Universe installments on

STARZ, are in their third or fourth seasons with their recent renewals driving growing profitability and long-term library

value.

The world’s leading independent supplier of premium scripted series at scale, Lionsgate Television also continues to generate

major new properties. The Continental was one of the most highly-anticipated streaming events of the year on Peacock and

Amazon Prime, Love & Death became the most watched limited series in the history of Max, and the comedy Extended

Family starring Jon Cryer for NBC, the Seth Rogen comedy for Apple TV+, and the thriller The Hunting Wives (in collaboration

with 3 Arts Entertainment) for STARZ lead the next wave of properties green-lit for production or preparing to launch.

During the year, the Television Group also expanded into lower-cost international co-productions with the CBC (Son of a

Critch, Wong & Winchester) and Bell Media in Canada, Channel 4 (Queenie) in the UK, and Stan (Prosper, Population 11)in

Australia. Lionsgate has also been a first mover in capitalizing on the boom in FAST Channels, launching Moviesphere,

Hersphere, Outersphere and nearly two dozen other services that continue to grow the value of our library IP.

With more than 100 shows spanning our premium scripted series business, our partnership with 3 Arts Entertainment, our

minority investment in U.K.-based talent management company 42, unscripted programming powerhouse Pilgrim Media,

leading syndication company Debmar-Mercury and soon eOne, our diversification helps us weather cyclicality in any one

part of the business.

Another Record Library Revenue Performance

This has been another year of record growth for our crown jewel library. Revenues have increased from approximately

$500 million to nearly $900 million in the past 10 years, adding an incremental annual run rate of nearly $200 million in cash

contribution. Growth in contribution has been driven in large part by the library’s changing composition: 10 years ago, more

than 60% of library revenue came from acquired and managed third-party catalogs. Today, 75% of our library revenue comes

from feature films, television series and STARZ original programming that we created. The long tail of our library is also

growing, with 16% of fiscal 2023 library revenue generated by titles outside the top 500.

STARZ Reports Another Profitable Year

STARZ has continued to be one of the few profitable subscription services with a focused content strategy, a successful

transition to digital with more than 60% of revenue and subscribers coming from streaming, and the repositioning of its

business to concentrate on English-speaking territories where our content is resonating. After the end of the fiscal year, the

service also implemented a subscriber rate increase as part of its margin growth strategy.

STARZ’s content strategy has produced five hit series with more than eight million multiplatform viewers apiece, added

three new hit series to the Power Universe and grown Outlander into a major brand with the prequel Blood of My Blood set to

debut next year. The service has also begun a significant ramp in movies from its theatrical output deals, with 27 movies

expected in fiscal 2024 compared to 14 in fiscal 2023. John Wick: Chapter Four had a strong launch on STARZ in September

2023, while the success of smaller movies such as Plane, Operation Fortune and Fall affirmed the importance of

complementing original series with a robust slate of films to drive subscriber growth and retention. As part of its movie

strategy, STARZ recently extended its Pay One theatrical output deal with Lionsgate into 2027.

STARZ also continues to be a bundling and packaging partner of choice, announcing bundling deals with MGM+ and AMC+

domestically and Hayu and YouTube in the U.K. As the industry continues to evolve, STARZ’s clearly defined premium

programming strategy and the appeal of its valuable and scalable core demos will keep it at the forefront of new bundling

and packaging initiatives as well as aggregation and consolidation opportunities expected to emerge after the separation.

Continuing to Strengthen Our Entrepreneurial Culture

Our greatest resource is our people. During the year, we continued to take steps to further strengthen a culture that has met

the COVID pandemic and the industry’s first double strike in more than 60 years with great resilience. We made our

workforce more diverse and inclusive, with women making up nearly 60% of new hires and employees of color nearly 30%

during the year. We doubled employee participation in our Employee Resource Groups and continued to increase the

number of minority vendors with whom we do business. Widely recognized for its #TakeTheLead initiative, STARZ took part

in White House ceremonies to celebrate the Juneteenth holiday and was hailed by Fast Company as “one of the brands that

matters.” During the fiscal year, we also returned employees to the office in order to take full advantage of our collaborative,

no silos, “Lionsgate 360” culture.

In closing, our industry is evolving at an unprecedented rate, creating significant challenges but also opening up a wide range

of opportunities. We bring to these challenges and opportunities a resilient business model, a vibrant culture and great IP

along with a not-easily-replicable portfolio of assets anchored by one of the most valuable content libraries in the world. As

we continue to execute our strategic agenda, we are confident that our unique place in the media ecosystem will enable us to

create incremental value for our partners, audiences, employees and shareholders.

Sincerely.

Jon Feltheimer Michael Burns

CEO Vice Chairman

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2023

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 1-14880

LIONS GATE ENTERTAINMENT CORP.

(Exact name of registrant as specified in its charter)

British Columbia, Canada N/A

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

250 Howe Street, 20th Floor 2700 Colorado Avenue

Vancouver, British Columbia V6C 3R8 Santa Monica, California 90404

(877) 848-3866 (310) 449-9200

(Address of Principal Executive Offices, Zip Code)

Registrant’s telephone number, including area code:

(877) 848-3866

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol(s)

Name of Each Exchange on Which

Registered

Class A Voting Common Shares, no par

value per share LGF.A New York Stock Exchange

Class B Non-Voting Common Shares, no

par value per share LGF.B New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange

Act of 1934. Yes ‘ No Í

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and

(2) has been subject to such filing requirements for the past 90 days. Yes Í No ‘

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant

to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such

files). Yes Í No ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”

and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer Í Accelerated filer ‘

Non-accelerated filer ‘ Smaller reporting company ‘

Emerging growth company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of

its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public

accounting firm that prepared or issued its audit report. Í

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant

included in the filing reflect the correction of an error to previously issued financial statements. ‘

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based

compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No Í

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of September 30, 2022 (the last

business day of the registrant’s most recently completed second fiscal quarter) was approximately $1,331,282,071, based on the closing sale

price of such shares as reported on the New York Stock Exchange.

As of May 23, 2023, 83,505,571 shares of the registrant’s no par value Class A voting common shares were outstanding, and

146,023,089 shares of the registrant’s no par value Class B non-voting common shares were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement relating to its 2023 annual meeting of shareholders (the “ 2023 Proxy

Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2023 Proxy

Statement will be filed with the U.S. Securities and Exchange Commission (the “SEC”) within 120 days after the end of the fiscal year

to which this report relates. Portions of the Registrant’s Annual Report on Form 10-K for Fiscal 2022, filed with the SEC on May 26,

2022, are incorporated by reference into Part II of this Annual Report on Form 10-K.

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Page

PART I

Item 1. Business ...................................................................... 5

Item 1A. Risk Factors ................................................................... 26

Item 1B. Unresolved Staff Comments ...................................................... 45

Item 2. Properties ..................................................................... 45

Item 3. Legal Proceedings .............................................................. 46

Item 4. Mine Safety Disclosures ......................................................... 46

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities ............................................................. 47

Item 6. [Reserved] .................................................................... 50

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ..... 51

Item 7A. Quantitative and Qualitative Disclosures About Market Risk ............................ 90

Item 8. Financial Statements and Supplementary Data ........................................ 92

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure ..... 92

Item 9A. Controls and Procedures ......................................................... 92

Item 9B. Other Information .............................................................. 95

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ...................... 95

PART III

Item 10. Directors, Executive Officers and Corporate Governance ............................... 95

Item 11. Executive Compensation ......................................................... 95

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters ..................................................................... 95

Item 13. Certain Relationships and Related Transactions, and Director Independence ................ 95

Item 14. Principal Accounting Fees and Services ............................................. 95

PART IV

Item 15. Exhibits, Financial Statement Schedules ............................................. 96

Item 16. Form 10-K Summary ............................................................ 100

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes statements that are, or may be deemed to be, “forward-looking

statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),

and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-

looking statements can be identified by the use of forward-looking terminology, including the terms “believes,”

“estimates,” “potential,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “forecasts,” “may,” “will,”

“could,” “would” or “should” or, in each case, their negative or other variations or comparable terminology.

These forward-looking statements include all matters that are not historical facts. They appear in a number of

places throughout this report and include statements regarding our intentions, beliefs or current expectations

concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth,

strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and

depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties

include, but are not limited to, those discussed under Part I, Item 1A. Risk Factors. These risk factors should not

be construed as exhaustive and should be read with the other cautionary statements and information in this report.

We caution you that forward-looking statements made in this report or anywhere else are not guarantees of

future performance and that our actual results of operations, financial condition and liquidity, and the

development of the industry in which we operate may differ materially and adversely from those made in or

suggested by the forward-looking statements contained in this report as a result of various important factors,

including, but not limited to: changes in our business strategy including the plan to potentially spin-off our studio

business; the substantial investment of capital required to produce and market films and television series; budget

overruns; limitations imposed by our credit facilities and notes; unpredictability of the commercial success of our

motion pictures and television programming; risks related to acquisition and integration of acquired businesses;

the effects of dispositions of businesses or assets, including individual films or libraries; the cost of defending our

intellectual property; technological changes and other trends affecting the entertainment industry; potential

adverse reactions or changes to business or employee relationships; the impact of global pandemics, such as

COVID-19 on the Company’s business; weakness in the global economy and financial markets, including a

recession and bank failures; wars, such as Russia’s invasion of Ukraine, terrorism, labor disruptions or strikes,

such as the impact of the ongoing Writers Guild strike and/or potential strikes from the Directors Guild or Screen

Actors Guild, and international conflicts that could cause significant economic disruption and political and social

instability; and the other risks and uncertainties discussed under Part I, Item 1A. Risk Factors herein.

Any forward-looking statements which we make in this report speak only as of the date of such statement,

and we undertake no obligation to update such statements. Comparisons of results for current and any prior

periods are not intended to express any future trends or indications of future performance, unless expressed as

such, and should only be viewed as historical data.

This report contains references to our trademarks and to trademarks belonging to other entities. Solely for

convenience, trademarks and trade names referred to in this report, including logos, artwork and other visual

displays, may appear without the

or TM symbols, but such references are not intended to indicate, in any way,

that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor

to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or

trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company.

Unless otherwise indicated or the context requires, all references to the “Company,” “Lionsgate,” “we,”

“us,” and “our” refer to Lions Gate Entertainment Corp., a corporation organized under the laws of the province

of British Columbia, Canada, and its direct and indirect subsidiaries.

SUMMARY OF RISK FACTORS

An investment in Lionsgate involves a high degree of risk because our business is subject to numerous risks

and uncertainties, as more fully described in “Part I, Item 1A. Risk Factors” of this Annual Report on Form 10-K.

Below are some of these risks, any one of which could materially adversely affect our business, financial

condition, results of operations, and prospects:

Risks Related to Our Business

• We face substantial capital requirements and financial risks.

• We may incur significant write-offs if our projects do not perform well enough to recoup costs.

• Changes in our business strategy, plans for growth or restructuring may increase our costs or otherwise

affect our profitability.

• Our revenues and results of operations may fluctuate significantly.

• We do not have long-term arrangements with many of our production or co-financing partners.

• We rely on a few major retailers and distributors and the loss of any of those could reduce our revenues

and operating results.

• A significant portion of our library revenues comes from a small number of titles.

• The ongoing impact of the COVID-19 global pandemic could continue to materially and adversely

affect our business, financial condition, and results of operations.

• Changes in consumer behavior, as well as evolving technologies and distribution models, may

negatively affect our business, financial condition or results of operations.

• Our success depends on the appeal and availability of desired programming.

• We depend on distributors that carry our STARZ and Lionsgate+ programming, and no assurance can

be given that we will be able to maintain and renew these affiliation agreements on as favorable terms

or at all.

• Our efforts to attract and retain subscribers for STARZ services may not be successful, which may

adversely affect our business.

• STARZ relies, in part, on third party sales platforms as well as third-party internet-connected devices

for distribution of our direct-to-consumer service.

• We are subject to payment processing risk.

• We face substantial competition in all aspects of our business, including competition for marketing and

carriage of our services.

• We face economic, political, regulatory, and other risks from doing business internationally.

• We are subject to risks associated with possible acquisitions, dispositions, business combinations, or

joint ventures.

• Our success depends on attracting and retaining key personnel and artistic talent.

• Global economic turmoil and economic instability could adversely affect our business.

• We could be adversely affected by labor disputes, strikes or other union job actions.

• Business interruptions from circumstances or events out of our control could adversely affect our

operations.

• Protecting and defending against intellectual property claims may have a material adverse effect on our

business.

• Our business involves risks of liability claims for content of material, which could adversely affect our

business, financial condition and results of operations.

• Piracy of films and television programs could adversely affect our business over time.

• Service disruptions or failures of the Company’s or our third-party service providers’ information

systems and networks may disrupt our businesses, damage our reputation, expose us to regulatory

investigations, actions, litigation, fines and penalties or have a negative impact on our results of

operations including but not limited to loss of revenue or profit, loss of customers or sales and other

adverse consequences.

• Failure of, or disruptions to, our technology facilities could adversely affect our business.

• We rely upon “cloud” computing services to operate certain aspects of our service and any disruption

of or interference with our use of our “cloud” computing servicer could impact our operations and our

business could be adversely impacted.

• Our activities are subject to stringent and evolving obligations which may adversely impact our

operations. Our actual or perceived failure to comply with such obligations could lead to regulatory

investigations or actions; litigation; fines and penalties; disruptions of our business operations;

reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business

consequences.

Risks Related To Our Indebtedness

• We have incurred significant indebtedness that could adversely affect our operations and financial

condition.

• We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to

take other actions to satisfy our obligations under our indebtedness, which may not be successful.

• Despite our current level of indebtedness, we and our subsidiaries may still be able to incur

substantially more debt. This could further exacerbate the risks to our financial condition described

above.

• The terms of our senior credit facilities and the indenture that governs our senior notes restrict our

current and future operations, particularly our ability to respond to changes or to take certain actions.

• Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service

obligations to increase significantly.

• An increase in the ownership of our Class A voting common shares by certain shareholders could

trigger a change in control under the agreements governing our indebtedness.

Risk Related to Tax Rules and Regulations

• The Internal Revenue Service may not agree that we should be treated as a non-U.S. corporation for

U.S. federal tax purposes and may not agree that our U.S. affiliates should not be subject to certain

adverse U.S. federal income tax rules.

• Recent and proposed changes to the tax laws could result in Lions Gate being treated as a U.S.

corporation for U.S. federal tax purposes or in STARZ and its U.S. affiliates (including the U.S.

affiliates historically owned by us) being subject to certain adverse U.S. federal income tax rules on

financing and other activities.

• Future changes to U.S. and non-U.S. tax laws could adversely affect us.

• Changes in foreign, state and local tax incentives may increase the cost of original programming

content to such an extent that they are no longer feasible.

• Our tax rate is uncertain and may vary from expectations.

• Legislative or other governmental action in the U.S. could adversely affect our business.

• Changes in, or interpretations of, tax rules and regulations, and changes in geographic operating results,

may adversely affect our effective tax rates.

PART I

ITEM 1. BUSINESS.

Overview

Lionsgate (NYSE: LGF.A, LGF.B) encompasses world-class motion picture and television studio

operations aligned with the STARZ premium global subscription platform to bring a unique and varied portfolio

of entertainment to consumers around the world. Our film, television, subscription and location-based

entertainment businesses are backed by an 18,000-title library and a valuable collection of iconic film and

television franchises.

We manage and report our operating results through three reportable business segments: Motion Picture,

Television Production and Media Networks. We refer to our Motion Picture and Television Production segments

collectively as our Studio Business and our Media Networks segment as our Media Networks Business. Financial

information for our segments is set forth in Item 7, Management’s Discussion and Analysis of Financial

Condition and Results of Operations, in this Annual Report.

Studio Business

Motion Picture: Our Motion Picture segment includes revenues derived from the following:

• Theatrical. The domestic theatrical release of motion pictures licensed to theatrical exhibitors on a

picture-by-picture basis (distributed by us directly in the U.S. and through a sub-distributor in Canada).

The revenues from Canada are reported net of distribution fees and release expenses of the Canadian

sub-distributor. The financial terms that we negotiate with our theatrical exhibitors in the U.S.

generally provide that we receive a percentage of the box office results.

• Home Entertainment. The sale or rental of our film productions and acquired or licensed films and

certain television programs (including theatrical and direct-to-video releases) on packaged media and

through digital media platforms (including pay-per-view and video-on-demand platforms, electronic

sell through, and digital rental). In addition, we have revenue sharing arrangements with certain digital

media platforms which generally provide that, in exchange for a nominal or no upfront sales price, we

share in the rental or sales revenues generated by the platform on a title-by-title basis.

• Television. The licensing of our theatrical productions and acquired films to the linear pay, basic cable

and free television markets. In addition, when a license in our traditional pay television window is

made to a subscription video-on-demand (“SVOD”) or other digital platform, the revenues are included

here.

• International. The (i) licensing of our productions, acquired films, our catalog product and libraries of

acquired titles to international distributors, on a territory-by-territory basis, and (ii) the direct

distribution of our productions, acquired films, and our catalog product and libraries of acquired titles

in the United Kingdom.

• Other. Among others, the licensing of our film and television and related content (e.g., games, music,

location-based entertainment royalties, etc.) to other ancillary markets.

Television Production: Our Television Production segment includes revenues derived from the following:

• Television. The licensing to domestic markets (linear pay, basic cable, free television and syndication)

of scripted and unscripted series, television movies, mini-series and non-fiction programming.

Television revenues include fixed fee arrangements as well as arrangements in which we earn

advertising revenue from the exploitation of certain content on television networks. Television

revenues also include revenue from licenses to SVOD platforms in which the initial license of a

television series is to an SVOD platform.

• International. The licensing and syndication to international markets of scripted and unscripted series,

television movies, mini-series and non-fiction programming.

• Home Entertainment. The sale or rental of television production movies or series on packaged media

and through digital media platforms.

• Other. Among others, the licensing of our television programs to other ancillary markets, the sales and

licensing of music from the television broadcasts of our productions, and from commissions and

executive producer fees earned related to talent management.

Media Networks

Our Media Networks segment includes revenues derived from the following:

• Starz Networks. The domestic distribution of our STARZ branded premium subscription video services

through over-the top (“OTT”) streaming platforms and distributors, on a direct-to-consumer basis

through the Starz app, and through U.S. multichannel video programming distributors (“MVPDs”)

including cable operators, satellite television providers and telecommunications companies

(collectively, “Distributors”) (and in the aggregate, the “Starz Domestic Platform”).

• LIONSGATE+. The OTT distribution of the Company’s STARZ branded premium subscription video

services outside of the U.S.

The Starz Domestic Platform together with the LIONSGATE+ platforms are referred to as the “Starz

Platforms.”

Segment Revenue

For the year ended March 31, 2023, contributions to the Company’s consolidated revenues from its

reporting segments included Motion Picture 34.3%, Television Production 45.7% and Media Networks 40.1%,

and intersegment revenue eliminations represented (20.1)% of consolidated revenues.

Within the Motion Picture segment, revenues were generated from the following:

• Theatrical, 9.1%;

• Home Entertainment, 45.1%;

• Television, 16.5%;

• International, 27.6%; and

• Motion Picture-Other, 1.7%.

Within the Television Production segment, revenues were generated from the following:

• Television, 65.0%;

• International, 15.8%;

• Home Entertainment, 13.9%; and

• Television Production-Other, 5.3%.

Within the Media Networks segment, revenues were generated from the following:

• Starz Networks, 90.3%;

• LIONSGATE+, 9.7%

Corporate Strategy

We manage a large and diversified portfolio of film and television content that we license to theatrical

exhibitors, streaming, broadcast, pay cable and other platform partners worldwide. We maintain a disciplined,

targeted and cost-effective approach to the acquisition, production, marketing and distribution of that content.

Our strategic focus on content makes us a preferred supplier to third-party buyers as well as our own STARZ

platform. The extension of our portfolio of brands and franchises, creation of new intellectual properties and

rigorous focus on retaining key rights to our content is designed to create incremental long-term value for our

shareholders through a combination of current releases and one of the most valuable film and television libraries

in the world.

STUDIO BUSINESS: MOTION PICTURE

Motion Picture — Theatrical

Production and Acquisition

We take a disciplined approach to theatrical production, with the goal of producing content that can be

distributed through various domestic and international platforms. In doing so, we may mitigate the financial risk

associated with production by, among other things:

• Negotiating co-financing development and co-production agreements which may provide for cost-

sharing with one or more third-party companies;

• Pre-licensing international distribution rights on a selective basis, including through international

output agreements (which license rights to distribute a film in one or more media generally for a

limited term, and in one or more specific territories prior to completion of the film);

• Structuring agreements that provide for talent participation in the financial success of the film in

exchange for reduced guaranteed “up-front payments” that would be paid regardless of the film’s

success; and

• Utilizing governmental incentives, programs and other structures from state and foreign countries (e.g.,

sales tax refunds, transferable tax credits, refundable tax credits, low interest loans, direct subsidies or

cash rebates, calculated based on the amount of money spent in the particular jurisdiction in connection

with the production).

Our approach to acquiring films complements our theatrical production strategy—we typically seek to limit

our financial exposure while adding films with high potential for commercial box office success, critical

recognition and successful monetization across a broad array of platforms.

Distribution

The economic life of a motion picture may consist of its exploitation in theaters, on packaged media and on

various digital and television platforms in territories around the world. We generally distribute motion pictures

directly to movie theaters in the U.S. whereby the exhibitor retains a portion of the gross box office receipts and

the balance is remitted to the distributor. Concurrent with their release in the U.S., films are generally released in

Canada and may also be released in one or more foreign countries. We construct release schedules taking into

account moviegoer attendance patterns and competition from other studios’ scheduled theatrical releases. After

the initial theatrical release, distributors seek to maximize revenues by releasing films in sequential release date

windows, which may be exclusive against other non-theatrical distribution platforms. In certain circumstances,

our distribution strategy has and may continue to change, and certain films intended for theatrical release may be

licensed to other platforms.

Producing, marketing and distributing films can involve significant risks and costs, and can cause our

financial results to vary depending on the timing of a film’s release. For instance, marketing costs are generally

incurred before and throughout the theatrical release of a film and, to a lesser extent, other distribution windows,

and are expensed as incurred. Therefore, we typically incur losses with respect to a particular film prior to and

during the film’s theatrical exhibition, and profitability for the film may not be realized until after its theatrical

release window. Further, we may revise the release date of a film as the production schedule changes or in such a

manner as we believe is likely to maximize revenues or for other business reasons. Additionally, there can be no

assurance that any of the films scheduled for release will be completed and/or in accordance with the anticipated

schedule or budget, or that the film will ever be released.

Theatrical Releases

For the fiscal year ended March 31, 2023, we released twenty (20) films theatrically in the U.S. across our

labels (including our partnership with Roadside Attractions). We also made changes to release dates as well as

release strategies of several of our films by releasing solely and/or earlier on streaming platforms, initially

releasing on premium video-on-demand (“PVOD”), premium electronic sell-through, or by licensing directly to

streaming platforms. In doing so, we capitalized on increased optionality in distribution and maintained a

platform agnostic approach to distribution to take full advantage of new windowing opportunities and alternative

distribution strategies (while also continuing to work closely with our theatrical exhibition partners).

For the fiscal year ended March 31, 2023, such titles and their release patterns included the following:

Fiscal 2023

Theatrical Releases

Title Theatrical Release Date Release Pattern Label

The Unbearable Weight Of Massive

Talent

April 22, 2022 Theatrical and

Accelerated Home

Entertainment

Lionsgate

Fall August 12, 2022 Theatrical and

Accelerated Home

Entertainment

Lionsgate

Clerks III September 13, 2022 Eventized Theatrical Lionsgate

Prey for the Devil October 28, 2022 Theatrical and

Accelerated Home

Entertainment

Lionsgate

Plane January 13, 2023 Theatrical and

Premium

Video-on-Demand

Lionsgate

Jesus Revolution February 22, 2023 Theatrical and

Accelerated Home

Entertainment

Lionsgate

My Happy Ending February 24, 2023 Theatrical and

Accelerated Home

Entertainment

Lionsgate

Moving On March 17, 2023 Theatrical and

Accelerated Home

Entertainment

Lionsgate

Fiscal 2023

Theatrical Releases

Title Theatrical Release Date Release Pattern Label

Operation Fortune: Ruse de Guerre March 21, 2023 Theatrical and

Premium

Video-on-Demand

Lionsgate

John Wick: Chapter 4 March 24, 2023 Theatrical and

Accelerated Home

Entertainment

Lionsgate

Fiscal 2023

Theatrical Releases

Title Theatrical Release Date Release Pattern Label

Aline April 8, 2022 Theatrical and

Accelerated Home

Entertainment

Roadside Attractions

Firebird April 29, 2022 Theatrical and

Accelerated Home

Entertainment

Roadside Attractions

Family Camp May 13, 2022 Theatrical and

Accelerated Home

Entertainment

Roadside Attractions

Benediction June 3, 2022 Theatrical and

Accelerated Home

Entertainment

Roadside Attractions

The Forgiven July 1, 2022 Theatrical and

Premium

Video-on-Demand

Roadside Attractions

Emily the Criminal August 12, 2022 Theatrical and

Premium

Video-on-Demand

Roadside Attractions

Gigi & Nate September 2, 2022 Theatrical and

Accelerated Home

Entertainment

Roadside Attractions

The Good House September 30, 2022 Theatrical and

Premium

Video-on-Demand

Roadside Attractions

Call Jane October 28, 2022 Theatrical and

Accelerated Home

Entertainment

Roadside Attractions

To the End December 9, 2022 Theatrical and

Accelerated Home

Entertainment

Roadside Attractions

Nominations and Awards

Lionsgate and affiliated companies (including its wholly-owned subsidiaries, Artisan Pictures, Mandate

Pictures and Summit Entertainment, and Roadside Attractions, of which Lionsgate owns a 43% equity interest)

have distributed films that have earned 134 Academy Award

nominations and 32 wins, as well as numerous

Golden Globe Awards

, Producers Guild Awards

, Screen Actors Guild Awards

, Directors Guild Awards

BAFTA Awards and Independent Spirit Awards nominations and wins.

Motion Picture — Home Entertainment

Our U.S. home entertainment distribution operation exploits our film and television content library of

18,000 motion picture titles and television episodes and programs, consisting of titles from, among others,

Lionsgate, our subsidiaries, affiliates and joint ventures (such as STARZ, Summit Entertainment, Anchor Bay

Entertainment, Artisan Entertainment, Grindstone Entertainment Group, Roadside Attractions, Trimark and

Vestron), as well as titles from third parties such as A24, A&E, AMC, Entertainment Studios, Saban

Entertainment, StudioCanal, Zoetrope, Gravitas, and Tyler Perry Studios. Home entertainment revenue consists

of packaged media and digital revenue.

Packaged Media

Packaged media distribution involves the marketing, promotion, sale and/or lease of DVDs/Blu-ray/4K

Ultra HD discs to wholesalers and retailers in the U.S. and Canada who then sell or rent such discs to consumers

for private viewing. Fulfillment of physical distribution services are substantially licensed to Sony Pictures Home

Entertainment. We distribute or sell content directly to retailers such as Wal-Mart, Best Buy, Target, Amazon

and others who buy large volumes of our discs to sell directly to consumers. We also directly distribute content to

the rental market through Redbox, Netflix and others.

Digital Media

We consider alternative distribution strategies for our films and releases several titles solely and/ or in an

accelerated post-theatrical window on various digital platforms (including multi-platform distribution). We

directly distribute this and other content (including certain titles not distributed theatrically or on physical media)

across a wide range of global distribution platforms and networks on an on-demand basis (whereby the viewer

controls the timing of playback) through dozens of transactional (transactional video-on-demand and electronic-

sell-through), subscription, ad-supported and free video-on-demand platforms. We also directly distribute content

on a linear distribution basis (i.e., whereby the programmer controls the timing of playback) through various

linear pay, basic cable, and free, over-the-air television platforms worldwide. SVOD services to which we license

our content include, among others, Netflix, Hulu, Amazon’s Prime Video, Peacock, Paramount+ and Max;

ad-supported video-on-demand services to which we license our content include, among others, The Roku

Channel, Tubi TV, YouTube, Freevee, Samsung and Pluto; and linear networks to which we distribute our

content include, among others, pay television networks such as STARZ, EPIX, HBO and Showtime, and basic

cable network groups such as NBCUniversal Cable Entertainment, Paramount Global Domestic Media

Networks, Disney Media & Entertainment Distribution Networks, Warner Media Entertainment Networks, A+E

Networks and AMC Networks, as well as Bounce, Telemundo and UniMás.

Motion Picture — Television

We license our theatrical productions and acquired films to the domestic linear pay, basic cable and free

television markets. For additional information regarding such distribution, see Motion Picture-Home

Entertainment — Digital Media above.

Motion Picture — International

Our international sales operations are headquartered at our offices in London, England. The primary

components of our international business are, on a territory-by-territory basis through third parties or directly

through our international divisions:

• The licensing of rights in all media of our in-house feature film product and third party acquisitions on

an output basis;

• The licensing of rights in all media of our in-house product and third party acquisitions on a sales basis

for non-output territories;

• The licensing of third party feature films on an agency basis; and

• Direct distribution of theatrical and/or ancillary rights licensing.

We license rights in all media on a territory-by-territory basis (other than the territories where we self-

distribute) of (i) our in-house Lionsgate and Summit Entertainment feature film product, and (ii) films produced

by third parties such as Silver Reel, Buzzfeed, Ace Entertainment and other independent producers. Films

licensed and/or released by us internationally in fiscal 2023 included such in-house productions as John Wick:

Chapter Four, Unbearable Weight of Massive Talent, Prey For the Devil, Bagman, Dirty Dancing, Mindcage,

Motherland, Alice Darling, Ballad of Songbirds and Snakes , One Ranger, Untitled Saw, Float, Puppy Love, Love

in Taipei, The Blackening, Imaginary and Miller’s Girl. Third party films for which we were engaged as

exclusive sales agent and/or released by us internationally in fiscal 2023 included Paradise Highway.

Through our territory-by-territory sales and output arrangements, we generally cover a substantial portion of

the production budget or acquisition cost of new theatrical releases which we license and distribute

internationally. Our output agreements for Lionsgate and Summit feature films currently cover Scandinavia and

France. These output agreements generally include all rights for all media (including home entertainment and

television rights). We also distribute theatrical titles in Latin America through our partnership with International

Distribution Company, as well as theatrical rights in Canada through our prior partnership with Mongrel Media

and our new distribution arrangement with Cineplex.

We also self-distribute motion pictures in the United Kingdom and Ireland through Lions Gate International

UK (“Lionsgate UK”). Lionsgate UK has established a reputation in the United Kingdom as a leading producer,

distributor and acquirer of commercially successful and critically acclaimed product. Following the closures and

gradual re-opening of theatres during fiscal years 2021 and 2022 as a result of the COVID-19 global pandemic,

we were able to release more titles theatrically through Lionsgate UK in fiscal 2023 than in such previous years,

including the following:

Fiscal 2023

Lionsgate UK

Title

Theatrical Release

Date

The Unbearable Weight of Massive Talent April 22, 2022

Good Luck To You Leo Grande June 17, 2022

Clerks III September 15, 2022

Prey For The Devil October 28, 2022

Triangle of Sadness October 28, 2022

Living November 4, 2022

Alice, Darling January 20, 2023

Plane January 27, 2023

John Wick: Chapter 4 March 24, 2023

Additionally, our office in India manages operations and growth opportunities in the South Asian/Indian

sub-continent. Through our local office in Mumbai, we manage the following activities:

• License our feature films, television series, library content to local linear and digital platforms;

• Appoint and work closely with theatrical distribution partners to maximize box office for our films;

• Partner with local production companies, as well as develop in-house, Indian local language television

series and feature films for distribution across other media platforms;

• Continue to expand our STARZ’s offering in the region and across emerging Asian markets (branded

as Lionsgate Play), through our direct-to-consumer launch and in collaboration with telco and

broadband partners, Amazon and Apple TV; and

• Explore investment opportunities throughout the South Asian and South East Asian media market.

Motion Picture — Other

Global Products and Experiences

Our Global Products and Experiences division drives incremental revenue and builds consumer engagement

across our entire portfolio of properties via licensing and launching live shows and experiences, location-based

entertainment destinations, games, physical and digital merchandise, and through select strategic partnerships

and investments.

Within the division, our Global Live Entertainment business focuses on licensing, developing, and

producing live stage shows, concerts, and live immersive experiences and events based on our theatrical and

television content. We have announced multiple live entertainment projects, including Wonder, Nashville and La

La Land for Broadway, as well as a live dance show inspired by our Step Up film franchise in partnership with

Channing Tatum and Free Association.

Our Interactive Entertainment business focuses on growing a slate that includes games across PC/console,

mobile, virtual reality and more, both through stand-alone games based solely on our content and the integration

of our properties with marquee games such as Call of Duty, Dead By Daylight and Evil Dead: The Game, as well

as Web3 projects, including the SANDBOX.

Our Location Based Entertainment business licenses and produces our Lionsgate, theatrical, and television

brands for theme parks, destinations, and stand-alone attractions and experiences. In January 2022, we opened an

expansion of the Lionsgate zone at Motiongate Dubai featuring new John Wick and Now You See Me attractions,

and in February 2023, we opened Saw: The Experience in London.

Our Consumer Products business licenses and develops products around our leading film and television

properties, including John Wick, The Hunger Games, Twilight , Saw and Mad Men. In July 2022, we signed an

agreement with IMG for global consumer products representation. Our merchandise is available in the Lionsgate

Store, our official ecommerce shop, and at many well- known retail outlets such as Hot Topic and Target. We are

developing new offerings across a broad range of categories with best in class licensees, including American

Classics, Ripple Junction, Goodie Two-Sleeves, Hot Toys, Funko and more.

Music

We manage music for our theatrical and television slates, including overseeing songs, scores and

soundtracks for all of our theatrical productions, co-productions and acquisitions, as well as music staffing,

scores and soundtracks for all of our television productions. Music revenues are derived from the sales and

licensing of music from our films, television, and other productions, and the theatrical exhibition of our films and

the broadcast and webcast of our productions.

Ancillary Revenues

Ancillary revenues are derived from the licensing of films and television content at non-theatrical venues

including educational and institutional facilities, U.S. military bases, oil rigs, hospitals, hotels, prisons, and on all

forms of common carrier transportation, including airlines and ships.

STUDIO BUSINESS: TELEVISION PRODUCTION

Our television business consists of the development, production, syndication and distribution of television

programming. We principally generate revenue from the licensing and distribution of such programming to

broadcast television networks, pay and basic cable networks, digital platforms and syndicators of first-run

programming, which license programs on a station-by-station basis and pay in cash or via barter (i.e., trade of

programming for airtime). Each of these platforms may acquire a mix of original and library programming.

After initial exhibition, we distribute programming to subsequent buyers, both domestically and

internationally, including basic cable network, premium subscription services or digital platforms (known as

“off-network syndicated programming”). Off-network syndicated programming can be sold in successive cycles

of sales which may occur on an exclusive or non-exclusive basis. In addition, television programming is sold on

home entertainment (packaged media and via digital delivery) and across all other applicable ancillary revenue

streams including music publishing, touring and integration.

As with film production, we use tax credits, subsidies, and other incentive programs for television

production in order to maximize our returns and ensure fiscally responsible production models.

Television Production — Television

Lionsgate Television

We currently produce, syndicate and distribute nearly 80 television shows on more than 35 networks

(including programming produced by Pilgrim Media Group, of which we own a majority interest).

For the fiscal year ended March 31, 2023, scripted and unscripted programming produced, co-produced or

distributed by us and our affiliated entities (see Starz Original Programming below for original programming

that appears on our STARZ services), as well as programming syndicated by our wholly-owned subsidiary,

Debmar-Mercury, included the following:

Fiscal 2023

Scripted — Lionsgate

Fiscal 2023

Unscripted — Lionsgate

Title Network Title Network

Acapulco Apple 1619 Hulu

Black Mafia Family STARZ Derbez Family Vacation Pantaya

Blindspotting STARZ Hip Hop Homicides WE TV

Dangerous Liaisons STARZ House of Ho Max

Ghosts CBS Selling Sunset Netflix

Heels STARZ Selling the OC Netflix

Hightown STARZ

Home Economics ABC

Julia Max

Love & Death Max

Minx STARZ

Mythic Quest Apple

Party Down STARZ

Paul T. Goldman Peacock

Power Book II: Ghost STARZ

Power Book III: Raising Kanan STARZ

Power Book IV: Force STARZ

P-Valley STARZ

Run the World STARZ

Serpent Queen STARZ

The First Lady Showtime

We Thought We Were Done NBC

Welcome to Flatch Fox

Fiscal 2023

Unscripted — Pilgrim Media Group

Fiscal 2023

Syndication — Debmar-Mercury

Title Network Title

Fox Nation - Jussie Smollet Fox Nation Family Feud

Ghost Hunters 3.0 Discovery Nick Cannon

Hoffman Family Gold Discovery Schitt’s Creek

Horse for Dogs Animal Planet Sherri Shepherd

My Big Fat Fabulous Life TLC Wendy Williams

Renovation Impossible Discovery

Power Slap: Road to the Title TBS

Steve Austin A&E

Street Outlaws Discovery

Street Outlaws: America’s List Discovery

Street Outlaws: Endgame Discovery

Street Outlaws: Farm Truck & AZN Discovery

Street Outlaws: Fastest in America Discovery

Street Outlaws: Gone Girl Discovery

Street Outlaws: No Prep Kings

Grudge Night Discovery

The Ultimate Fighter ESPN+

UFO Live Discovery

Wicked Tuna Nat Geo

Wicked Tuna Outer Banks Nat Geo

Zombie Flippers A&E

Hoffman Family Gold Fox Nation

Starz Original Programming

For information regarding production of Starz original programming, see Media Networks — Starz

Networks — Starz Original Programming.

Television Production — International

We continue to expand our television business through international sales and distribution of original

Lionsgate television series, Starz original programming, third party television programming and format

acquisitions via packaged media and various digital platforms. Lionsgate UK also continues to build a robust

television business alongside its premier film brand through its various joint ventures and investments.

For the fiscal year ended March 31, 2023, Lionsgate UK television programming that was acquired, began

production, continued production after delays due to the COVID-19 global pandemic, was produced or was

broadcast, included the following:

Fiscal 2023

Television — Lionsgate UK

Title Network Partner(s)

The Pact Series 2 BBC Little Door

Motherland 2022 Christmas Special BBC BBC, Merman

Northern Lights TG4 Deadpan

Son of a Critch 2 CBC Project 10

Leopard Skin Peacock Skinny Leopard

Wong & Winchester Rogers & Québecor Pixcom International

Workin’ Moms Netflix & CBC Coldsprings Media,

Wolf + Rabbit Entertainment

Dark City: The Cleaner Sky NZ Endeavour Ventures

Prosper Stan Lingo Pictures

Television Production — Home Entertainment

For information regarding television production home entertainment revenue, see Motion Picture — Home

Entertainment above.

Television Production — Other

Other revenues are derived from, among others, the licensing of our television programs to other ancillary

distributors, the sales and licensing of music from the television broadcasts of our productions, and from our

interest in 3 Arts Entertainment, a talent management company. 3 Arts Entertainment receives commission

revenue from talent representation and are producers on a number of television shows and films where they

receive an executive producer fee and back-end participations.

MEDIA NETWORKS

Media Networks — Starz Networks — United States

Starz Networks is a leading provider of premium subscription video programming to consumers in the U.S.

We sell our services on a direct-to-consumer basis and through various distributors, including OTT providers

(such as Amazon, Apple, Google and Hulu) and MVPDs (such as Comcast, Charter, DIRECTV and DISH

Network).

Our flagship premium service STARZ had 20.3 million subscribers as of March 31, 2023 (not including

subscribers who receive programming free as part of a promotional offer). STARZ offers premium original series

and recently released and library movies without advertisements. Our other services, STARZ ENCORE and

MOVIEPLEX, offer theatrical and independent library movies as well as original and classic television series

also without advertisements. Our services include a stand-alone, direct-to-consumer app, 17 linear networks, and

on-demand and online viewing platforms. Our app and online viewing platforms offer thousands of monthly

movies and series episodes from studio partners, including first-run content, along with a growing line-up of

successful original programming. Our services are offered directly to consumers via the STARZ app and via our

website at www.starz.com as well as through our retail partners (such as Apple and Google) for a recurring fee,

or by our distributors to their subscribers either at a recurring price as part of a programming tier, package or

bundle with other products or services, or on an a la carte basis.

The table below depicts the STARZ app and our 17 existing linear services, their respective on-demand

services, and highlights some of their key attributes.

Demographics and Strategy

Designed to complement any television offering for general audiences across both wholesale and retail

OTT, as well as traditional MVPD distribution platforms, STARZ is a best-in-class subscription service

delivering premium original series and hit movies with appeal to women and diverse audiences worldwide.

We are focused on developing and distributing authentic and engaging programming that resonates with

women, African American, Latinx and LGBTQIA audiences, all of which have been traditionally underserved in

the premium television space.

Across our digital platforms, the STARZ app provides an alternative for subscribers looking for a

competitively priced option. Subscribers have access to a vast library of quality content and a top-rated user

experience, along with the ability to download and watch STARZ original series, blockbuster theatricals and

favorite classic TV series and movies without an internet connection.

We believe this strategy, combined with a proven management team, will ensure Starz Networks’ services

remain a “must have” for subscribers and a meaningful profit center for our distributors.

Affiliation Agreements

Our services are distributed pursuant to affiliation agreements with our distributors. We earn revenue under

these agreements either (i) based on amounts or rates tied to the total number of subscribers who receive our

services or (ii) based on amounts or rates which are not tied solely to the total number of subscribers who receive

our services. Our affiliation agreements expire at various dates into 2027.

We work with our distributors to increase the number of subscribers to our services. To accomplish this, we

may help fund the distributors’ efforts to market our services or may permit distributors to offer limited

promotional periods with discounted or no payment of subscriber fees. We believe these efforts enhance our

relationship with distributors, improve the awareness of our services and maximize subscribers and revenue over

the term of these affiliation agreements.

Distributors report the number of subscribers to our services and pay for services, generally, on a monthly

basis. The agreements are generally structured to be multi-year agreements with staggered expiration dates and

certain of the agreements provide for annual contractual rate increases.

STARZ App

The STARZ app is the single destination for both direct OTT subscribers and distributor authenticated

subscribers to stream or download our original series and movie content. The STARZ app:

• Is available for purchase as a standalone OTT service for a recurring monthly fee;

• Is available on a wide array of platforms and devices including Amazon Fire, iOS, Android and Roku,

among others;

• Includes on-demand streaming and downloadable access for internet-free viewing;

• Offers instant access to thousands of selections each month (including STARZ original series and

commercial free movies); and

• Is available as an additional benefit to paying MVPD subscribers of the Starz Networks’ linear

premium services.

Starz Original Programming

STARZ is a leader in high-quality, bold premium programming developed for women and underrepresented

audiences. Its slate is driven by critically-acclaimed and award-winning scripted original series with highly-

engaged audiences.

STARZ Original Series like “Outlander” and “Power” have become tentpole franchises with multiple

spinoff and derivative series to meet audience demand. STARZ also has brought audiences groundbreaking new

series including “P-Valley,” “BMF,” and “The Serpent Queen,” among many others.

STARZ is dedicated to bringing its audiences new content throughout the year with approximately 100 new

episodes on its slate each year.

Starz Networks contracts with Lionsgate’s Television Production segment and other independent studios

and production companies to produce original programming that appears on our Starz services.

Starz’s fiscal 2023 STARZ Originals line-up was as follows:

Title

Gaslit Season 1

P-Valley Season 2

Becoming Elizabeth Season 1

Who Is Ghislaine Maxwell (limited series)

Power Book III: Raising Kanan Season 2

Serpent Queen Season 1

Step Up Season 3

The BMF Documentary: Blowing Money Fast

Dangerous Liaisons Season 1

BMF Season 2

Party Down Season 3

Power Book II: Ghost Season 3

Total Episodes: 99

Output and Content License Agreements

The majority of acquired content on our services consists of movies that have been released theatrically.

Starz has an exclusive multiyear output licensing agreement with Lionsgate for Lionsgate label titles theatrically

released in the U.S. starting January 1, 2022, and for Summit label titles theatrically released in the U.S. starting

January 1, 2023. Starz also has an exclusive multiyear post pay-one output licensing agreement with Universal

for live-action films theatrically released in the U.S. starting January 1, 2022. The Universal agreement provides

Starz with rights to exhibit these films immediately following their pay-one windows. In addition, we continue to

exhibit films under our exclusive Sony output agreement, which covers qualifying movies released theatrically in

the U.S. by certain Sony labels through December 31, 2021.

Under these agreements, Starz has valuable exclusive rights to air these new movies on linear television

services, on-demand or online during two separate windows, with at least one year between the first and second

windows. Generally, except on a VOD or pay-per-view basis, no other linear service, online streaming or other

video service may air or stream these recent releases during Starz’s windows.

Starz also licenses first-run independent feature films acquired through U.S. and international film festivals

and other sources as well as library content comprised of older, previously released theatrical movies from many

of Hollywood’s major studios. In addition to theatrical movies, Starz licenses television series and other content

from studios, production companies or other rights holders. The rights agreements for library content are of

varying duration and generally permit Starz’s services to exhibit these movies, series and other programming

during certain window periods.

A summary of significant output and library programming agreements (including a library agreement with

Lionsgate) are as follows:

Significant output programming agreements Significant library programming agreements

Studio Studio

Lionsgate Paramount

Sony Warner Bros

Universal Twentieth Century Fox

MGM

Sony Pictures

Lionsgate

Universal

Our output agreements generally require us to pay for movies at rates calculated on a pricing grid that is

based on each film’s domestic box office performance (subject to maximum amounts payable per movie and a

cap on the number of movies that can be put to Starz each year). The amounts Starz pays for library content vary

based on each specific agreement, but generally reflect an amount per movie, series or other programming

commensurate with the quality (e.g., utility and perceived popularity) of the content being licensed.

Transmission

We currently uplink our programming for our linear services to non-pre-emptible, protected transponders on

two satellites positioned in geo-synchronous orbit. These satellites feed our signals to various swaths of the

Americas. We lease these transponders under recently renewed multi-year agreements. We currently transmit to

these satellites from our uplink center in Englewood, Colorado, but will be moving our primary uplink facilities

from the Englewood location and outsourcing them to a third party starting in the fall of 2023. We have made

arrangements at a vendor’s facility to uplink our linear channels to these satellites in the event we are unable to

do so from our primary uplink facilities.

Regulatory Matters

In the U.S., the Federal Communications Commission (the “FCC”) regulates several aspects of our and our

distribution ecosystem’s operations and programming. This includes FCC oversight in connection with

communications satellites and related uplink/downlink equipment and transmissions, content-specific

requirements such as closed captioning, messaging during children’s programming, loudness of commercials,

and program access requirements in connection with certain distributors and programmer services with shared

attributable interests.

Regulation

The regulation of programming services, cable television systems, direct broadcast satellite providers,

broadcast television licensees and online services is subject to the political process and has been in constant flux

historically. To the extent that our programming services are distributed through online platforms, we must

comply with various federal and state laws and regulations applicable to online communications and commerce.

Further material changes in the law and regulatory requirements that affect our business must be anticipated and

there can be no assurance that we will not be materially adversely affected by future legislation, new regulation

or deregulation.

Media Networks — LIONSGATE+ — International

Starz is available in nearly 50 countries outside the U.S. through our four (4) international branded services:

LIONSGATE+ in the UK, Ireland, Latin America and Australia; STARZ in Canada; LIONSGATE PLAY in

India; and through our STARZPLAY Arabia joint venture in the Middle East and North Africa. We offer our

branded services on a direct-to-consumer basis and through various distributors, including OTT providers (such

as Amazon and Claro) as well as local internet protocol television (“IPTV”), cable and satellite companies (such

as Airtel, Izzi, DISH Mexico and Sky Brasil). Across these services, Starz had 10.0 million subscribers as of

March 31, 2023 (including OTT subscribers totaling 0.6 million in the international territories still to be exited).

The remainder of this section addresses the offerings operated by LIONSGATE+ in the UK, Ireland, Latin

America and Australia.

International Strategy

LIONSGATE+ is quickly growing its distribution by strategically positioning itself as a complementary

pure-play premium content service offered at a competitive subscription price, made available through a diverse

ecosystem of wholesale and retail distribution partners. Premium content that targets all adults is the foundation

of our international content strategy. We believe this allows us to operate as a complementary service, not a

direct competitor, with other higher priced, broad-based video services. LIONSGATE+ provides subscribers with

access to STARZ original series, often airing day-and-date with the U.S., a rich and diverse library of television

series, feature films and documentaries from Lionsgate and other studios, and first-run, exclusive third-party

programming, including locally produced television shows that align with the STARZ brand – LIONSGATE+

Originals. All content available on LIONSGATE+ is available with sub-titles and/or local language dubbing for

each country.

Our distribution strategy is led with a wholesale model and supplemented through direct OTT retail sales.

We expect to launch with additional wholesale and retail partners in the coming years.

Affiliation Agreements

Our services are distributed pursuant to affiliation agreements with our distributors under a wholesale

license, where LIONSGATE+ is sold as an a la carte channel or bundled within our distributors’ platforms,

including Amazon and Apple, as well as local IPTV, cable, satellite and telco partners. Our wholesale

distributors manage the technology and infrastructure associated with the exhibition of LIONSGATE+ in

exchange for recurring license fees. Our affiliation agreements expire at various dates through 2026.

We work with distributors to increase the number of subscribers to our services. To accomplish this, we may

help fund the distributors’ efforts to market these services or may permit distributors to offer limited promotional

periods with discounted or no payment of subscriber fees. We believe these efforts enhance our relationship with

distributors, improve the awareness of our services and ultimately increase subscribers and revenue over the term

of these affiliation agreements.

Distributors report the number of subscribers to our services and pay for services, generally, on a monthly

basis. The agreements are structured on a country-by-country basis, to be multi-year agreements with staggered

expiration dates across our distributors.

LIONSGATE+ App

To enhance our subscriber reach, we modified our domestic (U.S.) STARZ retail app for deployment

internationally to include, among other new features, full European Union General Data Protection Regulation

compliance, support for local languages, multiple audio/closed captioning options and a variety of potential

carrier/billing integrations.

The LIONSGATE+ app is the single destination for direct OTT subscribers to stream on-demand or

download our original series and movie content. The LIONSGATE+ app:

• Is currently available in twenty-one (21) countries across Europe and Latin America, including the UK,

Mexico, Brazil, and Argentina;

• Is offered directly via the LIONSGATE+ website or via retail storefronts such as the Apple Store, Play

Store, Roku Channels, LG, Samsung and Amazon Fire;

• Includes a language toggle allowing users to select their preferred language for viewing;

• Offers instant access to approximately 1,000 selections each month (including original series and

commercial free movies); and

• Is available for purchase as a standalone OTT service for a recurring monthly fee.

LIONSGATE+ Programming

LIONSGATE+ programming is driven by the slate of STARZ Original Series and is supplemented with

high-quality, bold premium original series that have proven success in the U.S. on other platforms such as

“Dr. Death” and “The Great.” Additionally, LIONSGATE+ delivers local language scripted original series to its

audiences in Latin America including Brazil.

LIONSGATE+’s fiscal 2023 first-run original programming included:

Title

Tokyo Vice Season 1

P-Valley Season 2

The Girl from Plainville (limited series)

Power Book III: Raising Kanan Season 2

Serpent Queen Season 1

Gangs of London Season 2

BMF Season 2

Express Season 2

Power Book II: Ghost Season 3

Nacho Season 1

Significant multi-country library programming agreements include those with Paramount, Sony, Universal

and Lionsgate.

Regulatory Matters

Distribution of our programming services in non-U.S. jurisdictions may be subject to the laws of the

jurisdictions in which they operate. The applicability and enforcement of laws in some non-U.S. jurisdictions can

be inconsistent and unpredictable. As a result, our ability to generate revenue and our expenses in non-U.S.

jurisdictions could be impacted. There may be further material changes in the law and regulatory requirements in

the future.

JOINT VENTURES, PARTNERSHIPS AND OWNERSHIP INTERESTS

Our joint ventures, partnerships and ownership interests support our strategy of being a multiplatform global

industry leader in entertainment. (For a list of certain of our equity method investees and redeemable

noncontrolling interests, See Note 5 and Note 11 to our Audited Consolidated Financial Statements). We

regularly evaluate our existing properties, libraries and other assets and businesses in order to determine whether

they continue to enhance our competitive position in the industry, have the potential to generate significant long-

term returns, represent an optimal use of our capital, and are aligned with our goals. When appropriate, we

discuss potential strategic transactions with third parties for purchase of our properties, libraries or other assets or

businesses that factor into these evaluations. As a result, we may, from time to time, determine to sell individual

properties, libraries or other assets or businesses or enter into additional joint ventures, strategic transactions and

similar arrangements for individual properties, libraries or other assets or businesses.

Intellectual Property

We currently use and own or license a number of trademarks, service marks, copyrights, domain names and

similar intellectual property in connection with our businesses and own registrations and applications to register

them both domestically and internationally. We believe that ownership of, and/or the right to use, such

trademarks, service marks, copyrights, domain names and similar intellectual property is an important factor in

our businesses and that our success depends, in part, on such ownership.

Motion picture and television piracy is extensive in many parts of the world, including South America, Asia

and certain Eastern European countries, and is made easier by technological advances and the conversion of

content into digital formats. This trend facilitates the creation, transmission and sharing of high quality

unauthorized copies of content on packaged media and through digital formats. The proliferation of unauthorized

copies of these products has had and will likely continue to have an adverse effect on our business, because these

products may reduce the revenue we receive from our products. Our ability to protect and enforce our intellectual

property rights is subject to certain risks and, from time to time, we encounter disputes over rights and

obligations concerning intellectual property. We cannot provide assurance that we will prevail in any intellectual

property disputes.

Competitive Conditions

Our businesses operate in highly competitive markets. We compete with companies within the

entertainment and media business and from alternative forms of leisure entertainment, such as travel, sporting

events, outdoor recreation and other cultural related activities. We compete with the major studios, numerous

independent motion picture and television production companies, television networks, pay television services and

digital media platforms for the acquisition of literary, film and television properties, the services of performing

artists, directors, producers and other creative and technical personnel and production financing, all of which are

essential to the success of our businesses. In addition, our motion pictures compete for audience acceptance and

exhibition outlets with motion pictures produced and distributed by other companies. Likewise, our television

product faces significant competition from independent distributors as well as major studios. Moreover, our

networks compete with other programming networks for viewing and subscribership by each distributor’s

customer base, as well as for carriage by such distributors. As a result, the success of any of our motion picture,

television or media networks business is dependent not only on the quality and acceptance of a particular film or

program, but also on the quality and acceptance of other competing content released into the marketplace at or

near the same time as well as on the ability to license and produce content for the networks that is adequate in

quantity and quality and will generate satisfactory subscriber levels.

Human Capital Management

Employees

As of May 23, 2023, we had approximately 1,500 full-time employees in our worldwide operations. We also

utilize many consultants in the ordinary course of our business and hire additional employees on a

project-by-project basis in connection with the production of our motion pictures and television programming.

Diversity, Equity and Inclusion

We believe that embracing diversity, promoting a culture of inclusivity and accelerating the representation

of women and historically excluded groups in our workforce is crucial to our success. Our Chief Diversity

Officer partners with our leadership team across all of our businesses to effect changes in recruitment, hiring,

promotions, policies and culture, and to orchestrate our Company-wide response to issues of inequality and

workforce disparity.

We also maintain the following recruitment and hiring initiatives:

• Internship Programs: We maintain an internship program designed to increase inclusion across the

entertainment industry.

• Targeted Recruitment: We maintain recruitment efforts that include collaborating with diverse partner

organizations, college campus diversity organizations for underrepresented groups, as well as

historically black colleges in our search for new employees and interns.

• Inclusive Hiring Process: We implement inclusive hiring practices to ensure that we are attracting the

best talent in the industry through an equitable, inclusive, and accessible approach. Key components of

the framework include bias free job descriptions, inclusive hiring training, external diversity partners,

diverse candidate slates, and diverse, cross-functional interview panels.

• Supplier Diversity and Inclusion Program: The mission of our Supplier Diversity and Inclusion

Program is to actively establish relationships with diverse businesses and to continuously strive to

increase spend with diverse suppliers, while delivering more competitive pricing, quality, service,

innovation and creativity in procurement of services. We believe that this initiative increases the

breadth of our vendor pool, while creating greater economic opportunity for diverse suppliers. Where

applicable, our Code of Business Conduct and Ethics, governs conduct with, and applies to, our

suppliers, vendors, contractors and agents.

Employee Resource Groups

We provide our employees with an array of Employee Resource Groups (“ERGs”) which offer them the

chance to establish a greater presence at Lionsgate and an opportunity to enhance cross-cultural awareness,

develop leadership skills and network across the Company’s various business units and levels. The ERGs are

voluntary, employee-led groups that foster a diverse, engaging, and inclusive workplace.

• Lionsgate Early Career Group aims to inspire curiosity and networking to foster growth for

professionals in early stages of their careers.

• Lionsgate Multicultural Employee Resource Group advocates for a more inclusive workplace and

entertainment landscape through programs that educate, activate and celebrate multicultural diversity

and its global impact. This consists of resource groups for the Asian American Pacific Islander

community, the Black community and the Latine community.

• Lionsgate Parents and Caregivers Group aims to bring together parents, expecting parents, caregivers,

and allies to ensure our community fosters an environment that supports all families.

• Lionsgate Pride supports, develops and inspires future LGBTQIA leaders within the Company and the

industry.

• Lionsgate Vets creates a community of veterans and their supporters working together to enhance

veteran presence and engage the industry from the unique perspective of a military background.

• Lionsgate Women’s Empowerment Group creates a community that improves the prominence of

female leaders and empowers women at all levels within the Company and the industry.

Community Involvement

We are committed to acting responsibly and making a positive difference in the local and global community

through Lionshares, our volunteer program that seeks to provide opportunities for employees to partner with a

diverse range of charitable organizations. We maintain a Corporate Sponsorship Committee that prioritizes

corporate philanthropic initiatives throughout Lionsgate, focusing particularly on organizations and activities

related to diversity and poverty in order to increase our impact and to develop meaningful relationships with a

core group of organizations and events.

Other Employee Benefits and Programs

We offer a comprehensive benefits package which includes health, dental and vision insurance, family

forming benefits, mental health support, resources for caregiving (children and adult family), online fitness and

meditation classes, and new parent coaching. We offer programs to develop and enrich the employee experience

with offerings such as tuition reimbursement, leadership development programs, mentorship, and additional

programs to help support specific populations (e.g., minorities, women, parents, LGBTQIA). We conduct annual

employee training on anti-harassment, information technology security, the Foreign Corrupt Practices Act, as

well as manager, diversity, equity and inclusion trainings. We also provide training and development to all

employees, focusing on career development, professional development and industry knowledge.

Corporate, Environmental and Social Responsibility

We protect our social, financial, informational, environmental, and reputational assets and make it a priority

to operate our business in a responsible and sustainable manner. Engaging in such responsibility not only helps

us manage risks and maximize opportunities, but also helps us understand and manage our social, environmental,

and economic impact that enables us to contribute to society’s wider goal of sustainable development. This

includes, but is not limited to, conducting business in a socially responsible and ethical manner, supporting

human rights, and committing to environmental sustainability.

In all our offices, we prioritize efforts to prevent pollution, and to conserve, recover, and recycle materials,

water and energy wherever possible. Our productions distribute documents electronically to minimize paper

consumption and waste and limit the use of single-use plastics. Our productions follow best practices featured in

the Producers Guild of America and Sustainable Production Alliance’s Green Production Guide, which are

designed to reduce the film, television, and streaming industry’s carbon footprint and environmental impact. Our

U.S. productions encourage the employment of green vendors that provide sustainable goods and services for

film, television and streaming productions.

We also prioritize vendors whose dedication to operating business in a responsible and sustainable manner

directly aligns with those of Lionsgate. Vantiva, our U.S. and Canadian vendor for manufacturing and assembly

of DVDs/Blu-rays: ensures that all of its products comply with all consumer safety regulations in each country

where marketed, including compliance with use of hazardous substances within products and systems, and

end-of-life handling of electrical and electronic equipment waste; supports product life cycle assessments

assessing core product designs, reducing single-use plastics and packaging and decreasing carbon emissions due

to transportation; and prohibits the use of child labor, forced labor, human trafficking and modern slavery in its

supply chain. Wynalda, our vendor for wraps, inserts and other special home entertainment packaging: maintains

a ride sharing method of delivery for all of packaging goods, significant reducing shipping carbon footprint for

delivery of such goods; uses recycled or reclaimed materials for all trim from print and cut manufacturing; and

conducts periodic ethical trade audits to address sustainability as well as ethical treatment of people while

minimizing their environmental impact. Max Solutions, our vendor for non-standardized home entertainment

packaging: sources all materials from forest stewardship certified mills; partners with companies that use plant-

based, eco-friendly, compostable, and biodegradable alternative to plastic packaging; and uses carbon-neutral

presses designed to the highest levels of energy efficiency to drastically reduce emissions, scrap and process

waste.

Corporate History

We are a corporation organized under the laws of the Province of British Columbia, resulting from the

merger of Lions Gate Entertainment Corp. and Beringer Gold Corp. on November 13, 1997. Beringer Gold Corp.

was incorporated under the Business Corporation Act (British Columbia) on May 26, 1986 as IMI Computer

Corp. Lions Gate Entertainment Corp. was incorporated under the Canada Business Corporations Act using the

name 3369382 Canada Limited on April 28, 1997, amended its articles on July 3, 1997 to change its name to

Lions Gate Entertainment Corp., and on September 24, 1997, continued under the Business Corporations Act

(British Columbia).

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy

statements and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the

Exchange Act, are available, free of charge, on our website at investors.lionsgate.com as soon as reasonably

practicable after we electronically file such material with, or furnish it to, the Securities and Exchange

Commission (the “SEC”). The Company’s Disclosure Policy, Corporate Governance Guidelines, Standards for

Director Independence, Code of Business Conduct and Ethics for Directors, Officers and Employees, Policy on

Shareholder Communications, Related Person Transaction Policy, Charter of the Audit & Risk Committee,

Charter of the Compensation Committee and Charter of the Nominating and Corporate Governance Committee

and any amendments thereto are also available on the Company’s website, as well as in print to any shareholder

who requests them. The information posted on our website is not incorporated into this Annual Report on

Form 10-K. We will disclose on our website waivers of, or amendments to, our Code of Business Conduct and

Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or persons

performing similar functions.

The SEC maintains an internet site that contains reports, proxy and information statements and other

information regarding issuers that file electronically with the SEC at www.sec.gov.

ITEM 1A. RISK FACTORS.

You should carefully consider the following risks as well as other information included in, or incorporated by

reference into this Form 10-K. The risk and uncertainties described below are not the only ones facing the

Company; additional risks and uncertainties not presently known to us or that we currently deem immaterial may

also impair our business. If any of these risks and uncertainties occur, they could adversely affect our business,

financial condition, operating results, liquidity and prospects.

Risks Related to Our Business

We face substantial capital requirements and financial risks.

The production, acquisition and distribution of motion picture and television content requires substantial capital

and may subject us to financial risks. A significant amount of time may elapse between our expenditure of funds

and the receipt of revenues after release or distribution of such content and we cannot assure you that we are able

to successfully implement arrangements to reduce the risks of production exposure such as tax credit,

government or industry programs. Additionally, we may experience delays and increased expenditures due to

disruptions or events beyond our control and if a production incurs substantial budget overruns, we may have to

seek additional financing or fund the overrun itself. We cannot make assurances regarding the availability of

such additional financing on terms acceptable to us, or that we will recoup these costs. Increased costs or budget

overruns incurred with respect to a particular film may prevent a picture from being completed or released or

may result in a delayed release and the postponement to a potentially less favorable date, all of which could cause

a decline in box office performance, and, thus, the overall financial success of such film. Any of the foregoing

could have a material adverse effect on our business, financial condition, operating results, liquidity and

prospects.

We may incur significant write-offs if our projects do not perform well enough to recoup costs.

We are required to amortize capitalized production costs over the expected revenue streams as we recognize

revenue from films or other projects. The amount of production costs that will be amortized each quarter depends

on, among other things, how much future revenue we expect to receive from each project. Unamortized

production costs are evaluated for impairment each reporting period on a project-by-project basis when events or

changes in circumstances indicate that the fair value of a film is less than its unamortized cost. These events and

changes in circumstances include, among others, an adverse change in the expected performance of a film prior

to its release, actual costs substantially in excess of budgeted cost for the film, delays or changes in release plans

and actual performance subsequent to the film’s release being less than previously expected performance

estimates. In any given quarter, if we lower our previous forecast with respect to total anticipated revenue from

any film or other project or increase our previous forecast of cost of making or distribution of the film, we may

be required to accelerate amortization or record impairment charges with respect to the unamortized costs, even

if we previously recorded impairment charges for such film or other project. Such impairment charges could

adversely impact our business, operating results and financial condition.

Changes in our business strategy, plans for growth or restructuring may increase our costs or otherwise affect

our profitability.

As changes in our business environment occur, we may adjust our business strategies to meet these changes,

which may include growing a particular area of business or restructuring a particular business or asset. In

addition, external events including changing technology, changing consumer patterns, acceptance of our

theatrical and television offerings and changes in macroeconomic conditions may impair the value of our assets.

When these occur, we may incur costs to change our business strategy and may need to write down the value of

assets. We may also make investments in existing or new businesses, including investments in the international

expansion of our business and in new business lines (e.g., our direct-to-consumer and licensed offerings). Some

of these investments may have negative or low short-term returns and the ultimate prospects of the businesses

may be uncertain or, in international markets, may not develop at a rate that supports our level of investment. In

any of these events, our costs may increase, we may have significant charges associated with the write-down of

assets, or returns on new investments may be lower than prior to the change in strategy, plans for growth or

restructuring. In March 2023, we announced that we had confidentially submitted a draft registration statement

on Form 10 with the SEC relating to the proposed spin-off of our studio business, consisting of our Television

Production and Motion Picture segments. The proposed spin-off will be subject to the satisfaction of a number of

conditions and our board of directors may decide not to proceed with the spin-off at any time. A failure to satisfy

required conditions, or disruptions in market conditions, could delay the completion of the proposed spin-off for

a significant period of time or prevent it from occurring at all. Additionally, the proposed spin-off is complex in

nature, and unanticipated developments or changes, including disruptions in general market conditions, changes

in law or challenges in executing the spin-off, may affect our ability to complete the spin-off on the terms or on

the timeline we announced, or at all. These or other developments could cause us not to realize some of all of the

expected benefits, or to realize them on a different timeline than expected. Although we intend for the spin-off to

be tax-free to shareholders for U.S. federal income tax purposes, we expect to incur non-U.S. cash taxes on the

preparatory restructuring. Moreover, there can be no assurance that the proposed spinoff will qualify as tax-free

to shareholders for U.S. federal income tax purposes. If we are unable to complete the proposed spin-off, we will

have incurred costs without realizing the benefits of such transaction.

Whether or not the spin-off is completed, our businesses may face material challenges as a result of the spin-off,

including the diversion of management’s attention from ongoing business concerns and impact on the businesses

of the Company; maintaining employee morale and retaining and attracting key management and other

employees; retaining existing or attracting new business and operational relationships, including with customers,

suppliers, employees and other counterparties; establishing transition service agreements and standalone

readiness for key functions, and potential negative reactions from investors or the financial community.

Moreover, completion of the spin-off will result in independent public companies that are smaller, less

diversified companies with more limited businesses. As a result, each company may be more vulnerable to global

economic trends, geopolitical risks and changing market conditions, which could have a material adverse effect

on its business, financial condition, cash flows and results of operations. Each of the separate companies will also

incur ongoing costs, including costs of operating as independent public companies, that the separated businesses

will no longer be able to share. Additionally, we cannot predict whether the market value of our common shares

and the common shares of each of the new independent companies after the spin-off will be, in the aggregate,

less than, equal to or greater than the market value of our common shares prior to the spin-off.

Our revenues and results of operations may fluctuate significantly.

Our results of operations depend significantly upon the commercial success of the motion picture, television and

other content that we sell, license or distribute, which cannot be predicted with certainty. The underperformance

at the box office of one or more motion pictures in any period may cause our revenue and earnings results for

that period (and potentially, subsequent periods) to be less than anticipated. Our results of operations also

fluctuate due to the timing, mix, number and availability of our theatrical motion picture and home entertainment

releases, as well as license periods for content. Moreover, low ratings for television programming produced by us

may lead to the cancellation of a program resulting in significant programming impairments in a given period

and can negatively affect license fees for the cancelled program in future periods. In addition, the comparability

of our results may be affected by changes in accounting guidance or changes in our ownership of certain assets

and businesses. As a result of the factors above, our results of operations may fluctuate and differ from period to

period, and therefore may not be indicative of the results for any future periods or directly comparable to prior

reporting periods.

We do not have long-term arrangements with many of our production or co-financing partners.

We typically do not enter into long-term production contracts with the creative producers of motion picture and

television content that we produce, acquire or distribute. Moreover, we generally have certain derivative rights

that provide us with distribution rights to, for example, prequels, sequels and remakes of certain content we

produce, acquire or distribute. There is no guarantee that we will produce, acquire or distribute future content by

any creative producer or co-financing partner, and a failure to do so could adversely affect our business, financial

condition, operating results, liquidity and prospects.

We rely on a few major retailers and distributors and the loss of any of those could reduce our revenues and

operating results.

A small number of retailers and distributors account for a material percentage of the revenues in home

entertainment for our Motion Picture segment. We do not have long-term agreements with retailers. In addition,

in fiscal 2023, we generated over 10% of our revenue from one external customer. We cannot assure you that we

will continue to maintain favorable relationships with our retailers and distributors or that they will not be

adversely affected by economic conditions, including as a result of global pandemics, such as COVID-19, wars,

such as Russia’s invasion of Ukraine (including sanctions therefrom), rising interest rates, inflation or a

recession.

A significant portion of our library revenues comes from a small number of titles.

We depend on a limited number of titles in any given fiscal quarter for the majority of the revenues generated by

our library. In addition, many of the titles in our library are not presently distributed and generate substantially no

revenue. Moreover, our rights to the titles in our library vary; in some cases, we only hold the right to distribute

titles in certain media and territories for a limited term. If we cannot acquire new product and the rights to

popular titles through production, distribution agreements, acquisitions, mergers, joint ventures or other strategic

alliances, or renew expiring rights to titles generating a significant portion of our revenue on acceptable terms,

any such failure could have a material adverse effect on our business, financial condition, operating results,

liquidity and prospects.

The ongoing impact of the COVID-19 global pandemic could continue to materially and adversely affect our

business, financial condition, and results of operations.

Since fiscal 2020, the economic, social and regulatory impacts associated with the COVID-19 global pandemic,

continued measures to prevent its spread, and the resulting economic uncertainty, have affected our business in a

number of ways. We experienced delays in theatrical distribution of our films, both domestically and

internationally, as well as delays in the production of film and television content (resulting in changes in future

release dates for some titles and series). Although film and television production have generally resumed in full,

disruption of production activities could occur again, depending on local circumstances. We cannot predict

whether productions will be paused again or the impact of incremental costs required to adhere to new health and

safety protocols. Additionally, although theaters have generally reopened, we are not able to accurately predict if

and at what level consumers will return to movie theaters. We have incurred and we may continue to incur

additional costs to address any government regulations and the safety of our employees and talent. All of these

impacts could place limitations on our ability to execute our business plan and materially and adversely affect

our business, financial condition and results of operations.

Changes in consumer behavior, as well as evolving technologies and distribution models, may negatively

affect our business, financial condition or results of operations.

Our success depends on our ability to anticipate and adapt to shifting content consumption patterns. The ways in

which viewers consume content, and technology and business models in our industry, continue to evolve, and

new distribution platforms, as well as increased competition from new entrants and emerging technologies, have

added to the complexity of maintaining predictable revenues. Developments in technology and new content

delivery products and services have also led to an increased amount of video content, as well as changes in

consumers’ expectations regarding the availability of video content and their willingness to pay for access to

such content. These changes include the increase in the number of advertising-based video on demand services or

free, ad-supported streaming linear channels (also known as FAST channels) or increased cord-cutting. If we fail

to successfully exploit emerging technologies and effectively anticipate or adapt to emerging competitors,

content distribution platforms, changes in consumer behavior and shifting business models, this could have a

material adverse effect on our competitive position, business, financial condition and results of operations.

Our success depends on the appeal and availability of desired programming.

Our success depends, in part, upon popularity, viewer preferences and audience acceptance of our content

(including STARZ’s and LIONSGATE+’s programming). These preferences are difficult to predict and are

subject to influences beyond our control, such as the critical acclaim of our content, the format in which content

is released, the talent involved, the genre and specific subject matter of our content, audience reaction to our

content, the quality and acceptance of content that our competitors release into the marketplace, and the

availability of alternative forms of entertainment and leisure activities (including user-generated content). A

change in viewer preferences could cause STARZ’s and LIONSGATE+’s programming to decline in popularity,

which could jeopardize renewal of affiliation agreements with distributors. Reduced popularity of our programs

or negative publicity associated with our content or brands may decrease our audience share and viewer reach

and could have a material adverse effect on our business, financial condition and results of operations. In

addition, our competitors may have more flexible programming arrangements, as well as greater amounts of

available content, distribution and capital resources and may be able to copy our successful programming

strategies to our detriment or react more quickly than we can to shifts in tastes and interests.

To an increasing extent, the success of STARZ and LIONSGATE+ depends on exclusive original programming

and our ability to accurately predict how audiences will respond to our original programming. We must invest

substantial amounts in the production and marketing of our original programming before we learn whether such

content will reach anticipated audience acceptance levels. Because original programming often involves a greater

degree of financial commitment, as compared to acquired programming that we license from third parties, and

because our branding strategies depend significantly on a relatively small number of original series, a failure to

anticipate viewer preferences for such series could be especially detrimental to our business.

We also compete with other programming networks, including cable television, national broadcast television,

local broadcast television stations and digital services to secure desired programming. Some content providers

increasingly resist licensing their content to third parties, such as STARZ or LIONSGATE+, which may impede

our ability to secure desired programming. Increased competition may drive up talent and production costs and

has required us to increasingly commit to straight-to-series orders for programming instead of pilot orders. If a

straight-to-series order does not meet anticipated production or quality standards or is otherwise not accepted by

audiences, revisions to the programming may be necessary, which could increase production costs. The increased

financial commitment for a straight-to-series order also could increase the risks associated with such an order.

We cannot assure you that we will ultimately be successful in negotiating renewals of our programming rights

agreements or in negotiating adequate substitute agreements. In the event that these agreements expire or are

terminated and are not replaced by programming content, including additional original programming, acceptable

to our distributors and subscribers, it could have a material adverse effect on our business, financial condition

and results of operations.

We depend on distributors that carry our STARZ and Lionsgate+ programming, and no assurance can be

given that we will be able to maintain and renew these affiliation agreements on as favorable terms or at all.

STARZ and LIONSGATE+ currently distribute programming through affiliation agreements with many

distributors, including Altice, Amazon, Charter, Comcast, Cox, DIRECTV, DISH Network, Hulu and Verizon.

These agreements are scheduled to expire at various dates into 2027. The largest distributors can have significant

leverage in their relationships with certain programmers, including us. If there is further consolidation in the

industry, these distributors may have additional leverage in negotiating their affiliation agreements with us,

which may result in less favorable terms to us. It is possible that we may be unable to obtain renewals with our

current distributors on as favorable terms, if at all, or negotiate affiliation agreements with new distributors to

carry our programming. Such failure could result in a discontinuation of carriage, or could otherwise materially

adversely affect our subscriber growth, revenue and earnings. In addition, affiliation agreements are complex and

individually negotiated. If we were to disagree with one of the counterparties on the interpretation of an

affiliation agreement, it could damage our relationship with that counterparty. Furthermore, we depend on a

limited number of major global partners to distribute our content internationally, and the loss of one or more of

STARZ and LIONSGATE+ global partners could have a material adverse effect on our business, financial

condition and results of operations.

Our efforts to attract and retain subscribers for STARZ services may not be successful, which may adversely

affect our business.

Our ability to continue to attract subscribers will depend in part on our ability to consistently provide compelling

content choices, effectively market our services, as well as provide a quality user experience for direct-to-consumer

subscribers. At times, certain of our distributors do not allow us to participate in marketing campaigns or other

promotional activities to market our services or may not surface or position us favorably on their platforms. Our

inability to participate in the marketing of our services or limited discoverability on distributor platforms may put us

at a competitive disadvantage. If our distributors do not sign up new subscribers to our services, we may lose

subscribers.

Furthermore, we face increasing competition from other streaming providers and our competitors’ relative

service levels, content offerings, pricing and related features may adversely impact our ability to attract and

retain subscribers. For example, in the future, it is possible that prices for our services may increase, which could

result in subscribers cancelling their subscriptions or potential subscribers not choosing to sign up for our

services. We continually seek to add new subscriptions both to replace canceled subscriptions and to grow

beyond our current subscription base and this may require us to incur significantly higher marketing expenditures

than we currently anticipate. While we permit multiple users within the same household to share a single account

for noncommercial purposes, if account sharing is abused, our ability to add new subscribers may be hindered

and our results of operations may be adversely impacted. If we are unable to successfully compete with current

and new competitors in both retaining our existing subscriptions and attracting new subscriptions, our results of

operations could be materially adversely affected.

STARZ relies, in part, on third party sales platforms as well as third-party internet-connected devices for

distribution of our direct-to-consumer service.

Our direct-to-consumer service relies, in part, on sales platforms owned by third parties, some of which are

affiliated with or have investments in competing streaming products, to make our service available to our

subscribers and viewers. If these third parties do not continue to provide access to our direct-to-consumer service

on their platforms or are unwilling to do so on terms acceptable to us, our business could be adversely affected. If

we are not successful in maintaining existing or creating new relationships with these third parties, our ability to

retain subscribers and grow our business could be adversely impacted. We also currently offer the ability to

stream our STARZ and LIONSGATE+ direct-to-consumer service through a host of internet-connected devices,

including TVs, computers, and mobile devices. If we encounter licensing, technological, regulatory, business or

other impediments to delivering our streaming content to our subscribers via these devices, our ability to retain

subscribers and grow our business could be adversely impacted.

We are subject to payment processing risk.

Subscribers to our STARZ and LIONSGATE+ direct-to-consumer service pay for our service using a variety of

different payment methods, including credit and debit cards. We rely on internal systems and those of third

parties to process payment. Acceptance and processing of these payment methods are subject to certain rules,

regulations, and industry standards, including data storage requirements, additional authentication requirements

for certain payment methods, and require payment of interchange and other fees. To the extent there are increases

in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment

cards, delays in receiving payments from payment processors, changes to rules, regulations or industry standards

concerning payments, loss of payment partners and/or disruptions or failures in our payment processing systems,

partner systems or payment products, including products we use to update payment information, our revenue,

operating expenses and results of operations could be adversely impacted. In addition, from time to time, we

encounter fraudulent use of payment methods, which could impact our results of operations and if not adequately

controlled and managed could create negative consumer perceptions of our service. If we are unable to maintain

our fraud and chargeback rate at acceptable levels, card networks may impose fines, our card approval rate may

be impacted and we may be subject to additional card authentication requirements.

We face substantial competition in all aspects of our business, including competition for marketing and

carriage of our services.

We are an independent distributor and producer. Most of the major U.S. studios are part of large diversified

corporate groups with a variety of other operations that can provide both the means of distributing their products

and stable sources of earnings that may allow them to better offset fluctuations in the financial performance of

their motion picture and television operations. Moreover, our services compete with other video programming

services for marketing and distribution. We face intense competition from other providers of programming

services for the right to be carried by a particular distributor, for the right to be carried by such distributor on a

particular tier, in a particular package of service or in bundles with other services, and for prominent placement

and effective merchandising on distributor and advertising platforms. To the extent distributors remove us from

tiers or packages in which we are currently carried, or we are limited in our ability to be merchandised or

marketed effectively, it could have a materially adverse impact on our business, financial condition and results of

operations. Moreover, certain of our competitors have long operating histories, large customer bases, strong

brand recognition, exclusive rights to certain content, large content libraries, and significant financial, marketing

and other resources.

Certain of our distributors have affiliated video programming services that they may choose to favor in terms of

carriage, marketing and/or placement over STARZ of LIONSGATE+. Certain of our distributors also own or

control marketing channels, app stores and/or distribution platforms that are important to STARZ and

LIONSGATE+. In addition, certain programming networks affiliated with broadcast networks like ABC, CBS,

Fox or NBC or other programming networks affiliated with sports and certain general entertainment networks

with strong viewer ratings, have a competitive advantage over our services in obtaining distribution through the

“bundling” of carriage agreements for such programming networks with a distributor’s right to carry the

affiliated broadcasting network. If distributors refuse to carry our services, choose to offer, market, promote and/

or position affiliated services more favorably than our services or take actions that are detrimental to STARZ and

LIONSGATE+ in terms of owned or controlled marketing channels, app stores or distribution platforms, it could

have a material adverse effect on our business, financial condition and results of operations.

Through new and existing distribution channels, consumers also have increasing options to access entertainment

video. Traditional providers of entertainment video, including broadcasters and cable network operators, as well

as internet-based e-commerce or entertainment video providers are increasing their streaming video offerings.

Such providers may offer more compelling content or secure better terms from suppliers, adopt more aggressive

pricing and devote more resources to product development, technology, infrastructure, content acquisitions and

marketing. If we are unable to successfully or profitably compete with current and new competitors, our business

will be adversely affected.

We face economic, political, regulatory, and other risks from doing business internationally.

We have operations and distribute content outside the U.S. and derive revenues from international sources. As a

result, our business is subject to certain risks inherent in international business, many of which are beyond our

control. These risks may include:

• difficulties in understanding and complying with local laws, regulations and customs in foreign

jurisdictions;

• the loss of one or more of the major global partners that we rely upon to distribute our programming

internationally;

• laws and policies adversely affecting trade, investment and taxes, including laws and policies relating

to the repatriation of funds and withholding taxes, and changes in these laws;

• sanctions imposed on countries, entities and individuals with whom we conduct business (such as those

imposed due to Russia’s invasion of Ukraine);

• the impact of trade disputes; anti-corruption laws and regulations such as the Foreign Corrupt Practices

Act and the U.K. Bribery Act that impose strict requirements on how we conduct our foreign

operations and changes in these laws and regulations;

• changes in local regulatory requirements including regulations designed to stimulate local productions,

promote and preserve local culture and economic activity (including local content quotas, investment

obligations, local ownership requirements, and levies to support local film funds);

• differing degrees of consumer protection laws and changes in these laws;

• differing degrees of employee or labor laws and changes in these laws that may impact our ability to

hire and retain foreign employees;

• strikes or other employment actions that may make it difficult to produce and/or localize content;

• censorship requirements that may cause us to remove or edit popular content, leading to consumer

disappointment, brand tarnishment or consumer dissatisfaction;

• regulatory requirements or government action against our service, whether in response to enforcement

of actual or purported legal and regulatory requirements or otherwise, that results in disruption or

non-availability of our service or particular content in the applicable jurisdiction;

• inability to adapt our offerings successfully to differing languages, cultural tastes, and preferences in

international markets;

• international jurisdictions where laws are less protective of intellectual property and varying attitudes

towards the piracy of intellectual property;

• establishing and protecting a new brand identity in competitive markets; the instability of foreign

economies and governments;

• currency exchange restrictions, export controls and currency devaluation risks in some foreign

countries; and

• the spread of communicable diseases (such as the COVID-19 global pandemic), which may impact

business in such jurisdictions.

Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions,

litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or

profits, loss of customers or sales, and other adverse business consequences.

We are subject to risks associated with possible acquisitions, dispositions, business combinations, or joint

ventures.

From time to time, we engage in discussions and activities with respect to possible acquisitions, sale of assets,

business combinations, joint ventures intended to complement or expand our business, or other transactions, such

as the proposed spin-off of our studio business, consisting of our Television Production and Motion Picture

segments. However, we may not realize the anticipated benefit from the transactions we pursue; there may be

liabilities assumed that we did not discover or that we underestimated in the course of performing our due

diligence; the negotiation of the transaction and the integration of the acquired business could require us to incur

significant costs and cause diversion of management’s time and resources; the transaction could result in

impairment of goodwill and other intangibles, development write-offs and other related expenses; the transaction

may pose challenges in the consolidation and integration of information technology, accounting systems,

personnel and operations; and we may have difficulty managing the combined entity in the short term if we

experience a significant loss of management personnel during the transition period after a significant acquisition.

No assurance can be given that expansion, acquisition or other opportunities will be successful, completed on

time, or that we will realize expected operating efficiencies, cost savings, revenue enhancements, synergies or

other benefits. Any of the foregoing could have a material adverse effect on our business, financial condition,

operating results, liquidity and prospects. If we determine to sell individual properties, libraries or other assets or

businesses, we will benefit from the net proceeds realized from such sales. However, our revenues may suffer in

the long term due to the disposition of a revenue generating asset, or the timing of such dispositions may be poor,

causing us to fail to realize the full value of the disposed asset. Furthermore, our future growth may be inhibited

if the disposed asset contributed in a significant way to the diversification of our business platform.

Our success depends on attracting and retaining key personnel and artistic talent.

Our success depends upon the continued efforts, abilities and expertise of our executive teams and other key

employees, including production, creative and technical personnel, including, in turn, on our ability to identify,

attract, hire, train and retain such personnel. We have entered into employment agreements with top executive

officers and production executives but do not currently have significant “key person” life insurance policies for

any employee. Although it is standard in the industry to rely on employment agreements as a method of retaining

the services of key employees, these agreements cannot assure us of the continued services of such employees. In

addition, we depend on the availability of a number of actors, writers, directors, producers and others, who are

employees of third-party production companies that create our original programming. We cannot assure you that

we will be successful in identifying, attracting, hiring, training and retaining such personnel in the future, and our

inability to do so could have a material adverse effect on our business, financial condition, operating results,

liquidity and prospects.

Global economic turmoil and economic instability could adversely affect our business.

Global economic turmoil or economic instability resulting from, such events as, global pandemics, wars,

inflation, rising interest rates, bank failures or a recession, may cause a general tightening in the credit markets,

lower levels of liquidity, increases in the rates of default and bankruptcy, levels of intervention from the U.S.

federal government and other foreign governments, decreased consumer confidence and spending, overall slower

economic activity and extreme volatility in credit, equity and fixed income markets. A decrease in economic

activity in the U.S. or in other regions of the world in which we do business could adversely affect demand for

our content, thus reducing our revenues and earnings. A decline in economic conditions could reduce

performance of our theatrical, television and home entertainment releases. In addition, an increase in price levels

generally could result in a shift in consumer demand away from the entertainment we offer, which could also

adversely affect our revenues and, at the same time, increase our costs. For instance, lower household income and

decreases in U.S. consumer discretionary spending, which is sensitive to general economic conditions, may affect

consumer demand for video service subscriptions, in particular with respect to premium video service

subscriptions such as STARZ and LIONGATE+. Economic conditions also could adversely impact our

distributors, resulting in larger than anticipated subscriber declines or distributors exiting the market entirely. A

reduction in consumer spending or distributor financial difficulties or failures could lead to a decrease in the

number of STARZ or LIONSGATE+ subscribers, which could have a materially adverse impact on our business,

financial condition and results of operations. Moreover, financial institution failures may make it more difficult

to finance any future acquisitions, or engage in other financing activities.

We could be adversely affected by labor disputes, strikes or other union job actions.

We are directly or indirectly dependent upon highly specialized union members who are essential to the

production of motion pictures and television content, including writers, directors, actors and other talent as well

as trade employees and others who are subject to collective bargaining agreements. In general, a labor dispute,

work stoppage, work slowdown, strike by, or a lockout of, one or more of the unions that provide personnel

essential to the production of motion pictures or television content, including the ongoing strike by the Writers’

Guild of America, and/or potential strikes from the Directors Guild or Screen Actors Guild, could delay or halt

our ongoing production activities, or could cause a delay or interruption in our release of new motion pictures

and television content. Labor disputes have in the past, and may restrict our access to content, result in work

stoppages, and may result in increased costs and decreased revenue, which could have a material adverse effect

on our business, financial condition, operating results, liquidity and prospects.

Business interruptions from circumstances or events out of our control could adversely affect our operations.

Our operations are vulnerable to outages and interruptions due to fire, floods, power loss, telecommunications

failures, war or acts of terrorism, pandemics such as the COVID-19 global pandemic, work stoppages and strikes,

and similar events beyond our control. Our headquarters are located in Southern California, which is subject to

natural disasters such as earthquakes. Although we have developed certain plans to respond in the event of a

disaster, there can be no assurance that they will be effective in the event of a specific disaster. In the event of a

short-term power outage, we have installed uninterrupted power source equipment designed to protect our

equipment. A long-term power outage, however, could disrupt our operations. Although we currently carry

business interruption insurance for potential losses (including earthquake-related losses), there can be no

assurance that such insurance will be sufficient to compensate us for losses that may occur or that such insurance

may continue to be available on affordable terms. Any losses or damages incurred by us could have a material

adverse effect on our business, financial condition, operating results, liquidity and prospects.

Protecting and defending against intellectual property claims may have a material adverse effect on our

business.

Our ability to compete depends, in part, upon successful protection of our intellectual property. We attempt to

protect proprietary and intellectual property rights to our productions through available copyright and trademark

laws and licensing and distribution arrangements with reputable international companies in specific territories

and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only

limited practical protection in certain countries where we distribute our products. As a result, it may be possible

for unauthorized third parties to copy and distribute our productions or certain portions or applications of our

intended productions, which could have a material adverse effect on our business, financial condition, operating

results, liquidity and prospects. Litigation may also be necessary to enforce our intellectual property rights, to

protect our trade secrets, or to determine the validity and scope of the proprietary rights of others or to defend

against claims of infringement or invalidity. Any such litigation, infringement or invalidity claims could result in

substantial costs and the diversion of resources and could have a material adverse effect on our business,

financial condition, operating results, liquidity and prospects. Our more successful and popular film or television

products or franchises may experience higher levels of infringing activity, particularly around key release dates.

Alleged infringers have claimed and may claim that their products are permitted under fair use or similar

doctrines, that they are entitled to compensatory or punitive damages because our efforts to protect our

intellectual property rights are illegal or improper, and that our key trademarks or other significant intellectual

property are invalid. Such claims, even if meritless, may result in adverse publicity or costly litigation. We

vigorously defend our copyrights and trademarks from infringing products and activity, which can result in

litigation. We may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be

no assurance that a favorable final outcome will be obtained in all cases. Additionally, one of the risks of the film

and television production business is the possibility that others may claim that our productions and production

techniques misappropriate or infringe the intellectual property rights of third parties.

From time to time, we are subject to claims and legal proceedings regarding alleged infringement by us of the

intellectual property rights (including patents) of third parties. Such claims, whether or not meritorious, may

result in the expenditure of significant financial and managerial resources, require the development of alternative

technology or business practices, injunctions against us, or payments for licenses or damages. These risks have

been amplified by the increase in third parties whose sole or primary business is to assert such claims. Regardless

of the validity or the success of the assertion of any such claims, we could incur significant costs and diversion of

resources in enforcing our intellectual property rights or in defending against such claims, which could have a

material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Our business involves risks of liability claims for content of material, which could adversely affect our

business, financial condition and results of operations.

As a distributor of media content, we may face potential liability for defamation, invasion of privacy, negligence,

on the nature and content of the materials distributed, or statements made by personnel or talent regarding or

promoting those materials or attributable to our business. These types of claims have been brought, sometimes

successfully, against producers and distributors of media content. Any imposition of liability that is not covered

by insurance or is in excess of insurance coverage could have a material adverse effect on our business and

results of operations.

Piracy of films and television programs could adversely affect our business over time.

Piracy is extensive in many parts of the world and is made easier by the availability of digital copies of content

and technological advances allowing conversion of films and television content into digital formats. This trend

facilitates the creation, transmission and sharing of high quality unauthorized copies of motion pictures and

television content. The proliferation of unauthorized copies of these products has had and will likely continue to

have an adverse effect on our business, because these products reduce the revenue we receive from our products.

In order to contain this problem, we may have to implement elaborate and costly security and anti-piracy

measures, which could result in significant expenses and losses of revenue. We cannot assure you that even the

highest levels of security and anti-piracy measures will prevent piracy.

Service disruptions or failures of the Company’s or our third-party service providers’ information systems and

networks may disrupt our businesses, damage our reputation, expose us to regulatory investigations, actions,

litigation, fines and penalties or have a negative impact on our results of operations including but not limited

to loss of revenue or profit, loss of customers or sales and other adverse consequences.

In the ordinary course of our business, we and the third parties in which we rely process proprietary, confidential,

and sensitive data, including personal information, intellectual property, and trade secrets (collectively, sensitive

information). Our ability to monitor third parties’ information security practices is limited, and these third parties

may not have adequate information security measures in place. In addition to experiencing a security incident,

third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or

other means that reveals competitively sensitive details about our organization and could be used to undermine

our competitive advantage or market position. Threats such as cyberattacks, malicious internet-based activity,

and online and offline fraud are becoming more prevalent and are increasingly difficult to detect. These threats

come from a variety of sources, including traditional computer “hackers,” threat actors, personnel (such as

through theft or misuse), sophisticated nation-states, and nation-state-supported actors. We and the third parties

upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering

attacks, malicious code, malware (, denial-of-service attacks, personnel misconduct or error, ransomware attacks,

supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other

information technology assets, adware, telecommunications failures and other similar threats. In particular,

ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our

operations, loss of data and income, reputational harm, and diversion of funds. Extortion payments may alleviate

the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to,

for example, applicable laws or regulations prohibiting such payments. Similarly, supply-chain attacks have

increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply

chain or our third-party partners’ supply chains have not been compromised. Further, a partially remote

workforce created by the COVID-19 global pandemic poses increased risks to our information technology

systems and data, as certain employees work from home on a full or part-time basis, utilizing network

connections outside our premises. Business transactions (such as acquisitions or integrations) could expose us to

additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities

present in acquired or integrated entities’ systems and technologies.

Any of the previously identified or similar threats could cause a security incident or other interruption that could

result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption,

disclosure of, or access to our sensitive information. A security incident or other interruption could disrupt our

ability (and that of third parties upon whom we rely) to provide our services. We may expend significant

resources or modify our business activities to try to protect against security incidents. Certain data privacy and

security obligations may require us to implement and maintain specific security measures, industry-standard or

reasonable security measures to protect our information technology systems and sensitive information. While we

have implemented security measures designed to protect against security incidents, there can be no assurance that

these measures will be effective. We take steps to detect and remediate vulnerabilities, but may not be able to

detect and remediate all vulnerabilities because the threat and techniques used to exploit change frequently and

are often sophisticated in nature. Therefore, such vulnerabilities could be exploited but, may not be detected until

after a security incident has occurred. These vulnerabilities pose material risk to our business. Further, we may

experience delays in developing and deploying remedial measures designed to address any such identified

vulnerabilities.

Applicable data privacy and security obligations may require us to notify relevant stakeholders of security

incidents. Such disclosures are costly, and the disclosures or the failure to comply with such requirements could

lead to adverse consequences. If we (or a third party upon whom we rely) experience a security incident or are

perceived to have experienced a security incident, we may experience adverse consequences, such as:

government enforcement actions (; additional reporting requirements and/or oversight; restrictions on processing

sensitive information; litigation; indemnification obligations; negative publicity; reputational harm; monetary

fund diversions; interruptions in our operations; financial loss; and other similar harms. Security incidents and

attendant consequences may cause customers to stop using our services, deter new customers from using our

services, and negatively impact our ability to grow and operate our business. Our contracts may not contain

limitations of liability, and even where they do, there can be no assurance that limitations of liability in our

contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security

obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to

mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be

available on commercially reasonable terms or at all, or that such coverage will pay future claims.

Shutdowns or service disruptions of our information systems or network caused by power outages, natural

disasters, extreme weather, terrorist attacks, pandemics (such as the COVID-19 global pandemic), wars (such as

Russia’s invasion of Ukraine), or other similar events pose increasing risks. Shutdowns or disruption from such

events could have an adverse impact on us and our customers, including degradation or disruption of service, loss

of data, release or threatened release of data publicly, misuse or threatened misuse of data, and damage to

equipment and data. System redundancy may be ineffective or inadequate, and our disaster recovery planning

may not be sufficient to cover everything that could happen. Significant events could result in a disruption of our

operations, reduced revenues, the loss of or damage to the integrity of data used by management to make

decisions and operate our business, damage to our reputation or brands or a loss of customers. We may not have

adequate insurance coverage to compensate it for any losses associated with such events.

Failure of, or disruptions to, our technology facilities could adversely affect our business.

STARZ’s programming is currently transmitted from STARZ’s uplink center in Englewood, Colorado. STARZ

uses this center for a variety of purposes, including signal processing, satellite uplinking, program editing, on-air

promotions, creation of programming segments (i.e., interstitials) to fill short gaps between featured programs,

quality control and live and recorded playback. STARZ is moving its primary uplink facilities from the

Englewood location and is outsourcing them to a third party starting in the fall of 2023. Primary uplink facilities

used by STARZ are equipped with backup generator power and other redundancies. However, like other

facilities, uplink facilities are subject to interruption from fire, adverse weather conditions and other natural

causes. Equipment failure, employee misconduct or third-party interference could also disrupt the facility’s

services. STARZ has arrangements at a separate third-party back-up facility to uplink STARZ’s linear channels

and services to STARZ’s satellites in the event STARZ is unable to do so from its primary facility.

Notwithstanding these precautions, any significant or prolonged interruption of operations at STARZ’s primary

facility, and any failure by STARZ’s back-up third-party facility to perform as intended, could have a materially

adverse effect on our business, financial condition and results of operations. STARZ’s success in the U.S. is also

dependent upon our continued ability to transmit STARZ’s programming to distributors. STARZ has entered into

multi-year satellite transponder leases for carriage of the STARZ networks’ programming. These leases provide

for replacement transponders and/or replacement satellites, as applicable, throughout the term of the leases to

ensure continued carriage of STARZ programming in the event of transponder or satellite failures. Termination

or interruption of satellite transmissions may occur and could have a material adverse effect on our business,

financial condition, operating results, liquidity and prospects. Despite STARZ’s efforts to secure transponder

capacity with multi-year satellite transponder leases, there is a risk that when these leases expire, we may not be

able to secure capacity on a transponder on the same or similar terms, if at all.

We rely upon “cloud” computing services to operate certain aspects of our service and any disruption of or

interference with our use of our “cloud” computing servicer could impact our operations and our business

could be adversely impacted.

We utilize “cloud” computing services to deliver a distributed computing infrastructure platform for our business

operations. We have architected our software and computer systems so as to utilize data processing, storage

capabilities and other services provided by our current “cloud” computing service provider and we run our

computing via such “cloud” computing service provider. Given this, along with the fact that switching “cloud”

computing services to another provider may be difficult, any problems faced by our “cloud” computing provider,

including technological or business related disruptions, as well as cybersecurity threats and regulatory

interference, or any unanticipated interference with our use of our current “cloud” service provider could impact

our operations and our business could be adversely impacted.

Our activities are subject to stringent and evolving obligations which may adversely impact our operations.

Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or

actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of

revenue or profits; loss of customers or sales; and other adverse business consequences.

Data Privacy and Security. In the ordinary course of its business, we collect, generate, use, store, process,

disclose, transmit, share and transfer (collectively “processing”) personal information and other sensitive

information, including proprietary and confidential business data, trade secrets, intellectual property, and

sensitive third-party data, through our websites and applications and those of third parties. Among other

purposes, we use this information to engage with users, promote our programming, and monitor the use of our

digital platforms. Our collection and use of personal information may subject us to numerous data privacy and

security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy

and security policies, contractual requirements, and other obligations relating to data privacy and security.

In the U.S, federal, state, and local governments have enacted numerous data privacy and security laws, including

data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal

Trade Commission Act), and other similar laws. For example, the California Consumer Privacy Act of 2018

(“CCPA”) applies to personal information of consumers, business representatives, and employees, and requires

businesses to provide specific disclosures in privacy notices and honor requests of California residents to

exercise certain privacy rights. The CCPA allows for civil penalties (up to $7,500 per violation) and allows

private litigants affected by certain data breaches to recover significant statutory damages. In addition, the

California Privacy Rights Act of 2020 (“CPRA”), expands the CCPA’s requirements, including by adding a new

right for individuals to correct their personal information and establishing a new regulatory agency to implement

and enforce the law. Other states, including Colorado and Virginia have passed comprehensive privacy laws, and

similar laws are being considered in several other states, as well as at the federal and local levels. These

developments further complicate compliance efforts and increase legal risk and compliance costs for us and the

third parties upon whom we rely.

Outside the U.S, an increasing number of laws, regulations, and industry standards apply to data privacy and

security. For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United

Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados

Pessoais, or “LGPD”) (Law No. 13,709/2018) and Canada’s Personal Information Protection and Electronic

Documents Act (“PIPEDA”) impose strict requirements for processing personal data. For example, under the EU

GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of

up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to

processing of personal data brought by classes of data subjects or consumer protection organizations authorized

at law to represent their interests. Additionally, under various privacy laws and other obligations, we may be

required to obtain certain consents to process personal data. Our inability or failure to do so could result in

adverse consequences.

In the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the U.S.

or other countries. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the

transfer of personal data to other countries. In particular, the European Economic Area (“EEA”) and the United

Kingdom (“UK”) have significantly restricted the transfer of personal data to the U.S. and other countries whose

privacy laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their

data localization and cross-border data transfer laws. Although there are currently various mechanisms that may

be used to transfer personal data from the EEA and UK to the U.S. in compliance with law, such as the EEA and

UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance

that we can satisfy or rely on these measures to lawfully transfer personal data to the U.S.

If there is no lawful manner for us to transfer personal data from the EEA, the UK or other jurisdictions to the

U.S., or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse

consequences, including the interruption or degradation of our operations, the need to relocate part of or all our

business or data processing activities to other jurisdictions at significant expense, increased exposure to

regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors

and other third parties, and injunctions against processing or transferring of personal data necessary to operate

our business. Additionally, some European regulators have ordered certain companies to suspend or permanently

cease certain transfers out of the EEA for allegedly violating the GDPR’s cross-border data transfer limitations.

We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with

such obligations may not be successful. For example, certain privacy laws, such as the GDPR and the CCPA,

require specific contractual restrictions on service providers. We publish privacy policies, marketing materials

and other statements regarding data privacy and security. If these policies, materials or statements are found to be

deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to

investigation, enforcement actions by regulators or other adverse consequences.

Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and

creating regulatory uncertainty. Additionally, these obligations may be subject to differing applications and

interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with

these obligations requires significant resources and may necessitate changes to its information technologies,

systems, and practices and to those of any third parties that process personal data on our behalf.

We may at times fail (or be perceived to have failed) in efforts to comply with data privacy and security

obligations. Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply

with such obligations, which could negatively impact our business operations and compliance posture. If we or

the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data

privacy and security obligations, we could face significant consequences, including, but not limited to:

government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation

(including class-action claims); additional reporting requirements and/or oversight; bans on processing personal

data; or orders to destroy or not use personal data. Any of these events could have a material adverse effect on

our reputation, business, or financial condition, including, but not limited to: loss of customers; interruptions or

stoppages in business operations; inability to process personal data or to operate in certain jurisdictions; limited

ability to develop or commercialize our products; expenditure of time and resources to defend any claim or

inquiry; adverse publicity; or substantial changes to our business model or operations.

Consumer Protection Laws. The continued growth and development of the market for online commerce may lead

to more stringent consumer protection laws both domestically and internationally, which may impose additional

burdens on us. In the United States some examples include the Children’s Online Privacy Protection Act, the

Controlling the Assault of Non-Solicited Pornography and Marketing Act, and the Video Privacy Protection Act.

In addition, many states have enacted laws regulating automatically renewing online subscription services. If

authorities start taking increased enforcement action related to statutes governing perceived unfair deceptive acts

and practices, we could suffer additional costs, complaints and/or regulatory investigations or fines. Other

changes in consumer protection laws and the interpretations thereof, could have a materially adverse effect on

our business, financial condition and results of operations.

Levies/Taxes. Governments are increasingly looking to introduce regulations related to media and tax that may

apply to our services. For example, some international governments have enacted or are considering enacting

laws that impose levies and other financial obligations on media operators located outside their jurisdiction.

Other changes in levy or tax laws and the interpretations thereof could have a materially adverse effect on our

business, financial condition and results of operations.

Network Regulations. Under the Communications Act of 1934 and the 1992 Cable Act, there are certain FCC

regulations that govern the distribution of our services by traditional MVPDs, including cable, DBS and telco

operators. Furthermore, to the extent that regulations and laws, either presently in force or proposed, hinder or

stimulate the growth of the cable television and satellite industries, our network business will be affected. As we

continue to expand internationally, we also may be subject to varying degrees of local government regulations.

Regulations governing our services are subject to the political process and have been in constant flux historically.

We cannot assure you that we will be able to anticipate material changes in laws or regulatory requirements or

that future legislation, new regulation or deregulation will not have a materially adverse effect on our business,

financial condition and results of operations.

Internet and Other Media Operator Regulations. The adoption or modification of laws or regulations relating to

the internet or other areas of our business could limit or otherwise adversely affect the manner in which we

currently conduct our business. We anticipate that several jurisdictions may, over time, attempt to impose

additional financial and regulatory obligations on us. Other changes in laws relating to the internet or other areas

of our business and the interpretations thereof could cause us to incur additional expenses or otherwise negatively

affect our business. Additionally, as we grow our STARZ and LIONSGATE+ direct-to-consumer business, we

may be subject to additional consumer legal claims and state and local consumer protection regulation. We rely

upon the ability of consumers to access our service through the internet. If network operators block, restrict or

otherwise impair access to our service over their networks, our service and business could be negatively affected.

Changes in laws or regulations that adversely affect the growth, popularity or use of the internet, including laws

impacting net neutrality, could decrease the demand for our service and increase our cost of doing business.

Given uncertainty around these rules, coupled with potentially significant political and economic power of local

network operators, we could experience discriminatory or anti-competitive practices that could impede our

growth, cause us to incur additional expense or otherwise negatively affect our business.

Risks Related To Our Indebtedness

We have incurred significant indebtedness that could adversely affect our operations and financial condition.

We currently have a substantial amount of indebtedness. As of March 31, 2023, we and our subsidiaries have

corporate debt of approximately $2,059.9 million, and film related obligations of approximately

$2,035.1 million, and our revolving credit facility provides for unused commitments of $1.25 billion. On the

same basis, approximately $1,259.9 million of such indebtedness is secured (excluding all of our film related

obligations). Our high level of debt could have adverse consequences on our business, such as: making it more

difficult for us to satisfy our obligations with respect to our notes and our other debt; limiting our ability to

refinance such indebtedness or to obtain additional financing to fund future working capital, capital expenditures,

acquisitions or other general corporate requirements; requiring a substantial portion of our cash flows to be

dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows

available for working capital, capital expenditures, acquisitions and other general corporate purposes; increasing

our vulnerability to global pandemics, economic downturns and adverse developments in our business; exposing

us to the risk of increased interest rates as certain of our borrowings, including borrowings under the revolving

credit facility, Term Loan A and Term Loan B (the “Senior Credit Facilities”), and borrowings under our film

related obligations, are at variable rates of interest; limiting our flexibility in planning for, and reducing our

flexibility in reacting to, changes in the conditions of the financial markets and our industry; placing us at a

competitive disadvantage compared to other, less leveraged competitors; increasing our cost of borrowing; and

restricting the way in which we conduct our business because of financial and operating covenants in the

agreements governing our existing and future indebtedness and exposing us to potential events of default (if not

cured or waived) under covenants contained in our debt instruments.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take

other actions to satisfy our obligations under our indebtedness, which may not be successful.

A significant portion of our cash flows from operations is expected to be dedicated to the payments of principal

and interest obligations under the Senior Credit Facilities and our 5.500% Senior Notes (the “Senior Notes”). Our

ability to make scheduled payments on or refinance our debt obligations will depend on our financial condition

and operating performance, which are subject to prevailing economic and competitive conditions and to certain

financial, business, legislative, regulatory and other factors beyond our control, including global pandemics, wars

and their effects. If our cash flow from operations declines significantly, it could result in the inability to pay the

principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face

substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to

dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our

indebtedness. In addition, during times of economic instability, including disruptions to, and volatility in, the

credit and financial markets in the United States and worldwide resulting from global pandemics, wars, or

recessions, it has been difficult for many companies to obtain financing in the public markets or to obtain debt

financing. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable

terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt

service obligations. The Senior Credit Facilities and the indenture that governs the Senior Notes restrict our

ability to dispose of assets and use the proceeds from those dispositions, and also restrict our ability to raise debt

or certain types of equity to be used to repay other indebtedness when it becomes due. We may not be able to

consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations

then due. Additionally, there can also be no assurance that we will not face credit rating downgrades as a result of

weaker than anticipated performance of our businesses, fluctuations in our leverage or cost of capital or other

factors. Future downgrades could further adversely affect our cost of funds and related margins, liquidity,

competitive position and access to capital markets, and a significant downgrade could have an adverse

commercial impact on our business.

In addition, we conduct a substantial portion of our operations through our subsidiaries, certain of which are not

guarantors of the Senior Notes or our other indebtedness. Accordingly, repayment of our indebtedness, including

the Senior Notes, is dependent on the generation of cash flow by our subsidiaries and their ability to make such

cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of the Senior Notes or

our other indebtedness, our subsidiaries do not have any obligation to pay amounts due on the Senior Notes or

our other indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may

not be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including

the Senior Notes. While the Senior Credit Facilities and the indentures that govern the Senior Notes limit the

ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other

intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that we

do not receive distributions from our subsidiaries, we may be unable to make required principal and interest

payments on our indebtedness.

Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more

debt. This could further exacerbate the risks to our financial condition described above.

We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although the

Senior Credit Facilities and the indenture that governs the Senior Notes contain restrictions on the incurrence of

additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the

additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions

also will not prevent us from incurring obligations that do not constitute indebtedness under the indenture

governing the Senior Notes, such as certain qualified receivables financings. If new debt is added to our current

debt levels, the related risks that we and our guarantors now face could intensify.

The terms of the Senior Credit Facilities and the indenture that governs the Senior Notes restrict our current

and future operations, particularly our ability to respond to changes or to take certain actions.

The Senior Credit Facilities and the indenture that governs the Senior Notes contain a number of restrictive

covenants that impose significant operating and financial restrictions on us and limit our ability to engage in acts

that may be in our long-term best interest, including restrictions on our ability to: incur, assume or guarantee

additional indebtedness; issue certain disqualified stock; pay dividends or distributions or redeem or repurchase

capital stock; prepay, redeem or repurchase debt that is junior in right of payment to the debt under the Senior

Credit Facilities and the Senior Notes; make loans or investments; incur liens; restrict dividends, loans or asset

transfers from our restricted subsidiaries; sell or otherwise dispose of assets, including capital stock of

subsidiaries and sale/leaseback transactions; consolidate or merge with or into, or sell substantially all of our

assets to, another person; enter into transactions with affiliates; and enter into new lines of business.

In addition, the Senior Credit Facilities require us to maintain specified financial ratios, tested quarterly. Our

ability to meet those financial ratios can be affected by events beyond our control, including the effects on our

business from global pandemics and related government actions and consumer behavior; as such, we may be

unable to meet such financial ratios.

A breach of the covenants under the Senior Credit Facilities or the indenture that governs the Senior Notes, or

nonpayment of any principal or interest due thereunder, could result in an event of default under the applicable

indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the

acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an

event of default under the Senior Credit Facilities would permit the lenders under our revolving facility to

terminate all commitments to extend further credit thereunder. Furthermore, if we were unable to repay the

amounts due and payable under the Senior Credit Facilities, the lenders thereof could proceed against the

collateral granted to them to secure the Senior Credit Facilities. In the event our lenders or noteholders accelerate

the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that

indebtedness.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations

to increase significantly.

Borrowings under the Senior Credit Facilities and advances under our production and related loans and IP Credit

Facility are at variable rates of interest and expose us to interest rate risk, which could increase the cost of capital.

If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase

even though the amount borrowed remained the same, and our net income and cash flows, including cash

available for servicing our indebtedness, will correspondingly decrease.

An increase in the ownership of our Class A voting common shares by certain shareholders could trigger a

change in control under the agreements governing our indebtedness.

The agreements governing certain of our long-term indebtedness contain change in control provisions that are

triggered when any of our shareholders, directly or indirectly, acquires ownership or control of in excess of a

certain percentage of the total voting power of our Class A voting common shares, no par value per share (the

“Class A voting shares”). Upon the occurrence of certain change of control events, an event of default may occur

under our Senior Credit Facilities and the holders of the Senior Notes may require us to repurchase all or a

portion of such notes. Dr. Mark H. Rachesky, M.D. and his affiliates, who collectively currently hold over 24%

of our voting stock and over 10% of our non-voting common stock are “Permitted Holders” for purposes of the

Senior Credit Facilities and the indentures that govern the Senior Notes. Accordingly, certain increases of

ownership or other transactions involving Dr. Rachesky and his affiliates would not constitute a change of

control under the Senior Credit Facilities or the indenture that governs the Senior Notes, but could constitute a

change of control under the other existing or future indebtedness of us and our subsidiaries.

Risk Related to Tax Rules and Regulations

The Internal Revenue Service may not agree that we should be treated as a non-U.S. corporation for U.S.

federal tax purposes and may not agree that our U.S. affiliates should not be subject to certain adverse U.S.

federal income tax rules.

Under current U.S. federal tax law, a corporation is generally considered for U.S. federal tax purposes to be a tax

resident in the jurisdiction of its organization or incorporation. Because we are incorporated in Canada, we would

generally be classified as a non-U.S. corporation (and, therefore, a non-U.S. tax resident) under these rules.

However, Section 7874 of the Internal Revenue Code (the “Code”) (“Section 7874”) provides an exception to

this general rule under which a non-U.S. incorporated entity may, in certain circumstances, be treated as a U.S.

corporation for U.S. federal tax purposes.

Under Section 7874, if (a) the STARZ stockholders held (within the meaning of Section 7874) 80% or more (by

vote or value) of our post-reclassification shares after the STARZ merger by reason of holding STARZ common

stock (the “80% ownership test,” and such ownership percentage the “Section 7874 ownership percentage”), and

(b) our “expanded affiliated group” did not have “substantial business activities” in Canada when compared to

the total business activities of such expanded affiliated group (the “substantial business activities test”), we will

be treated as a U.S. corporation for U.S. federal tax purposes. If the Section 7874 ownership percentage of the

STARZ stockholders in Lions Gate after the merger was less than 80% but at least 60% (the “60% ownership

test”), and the substantial business activities test was not met, STARZ and its U.S. affiliates (including the U.S.

affiliates historically owned by us) may, in some circumstances, be subject to certain adverse U.S. federal income

tax rules (which, among other things, could limit our ability to utilize certain U.S. tax attributes to offset U.S.

taxable income, such as the use of net operating losses and certain tax credits, or to offset the gain resulting from

certain transactions, such as from the transfer or license of property to a foreign related person during the 10-year

period following the merger).

Based on the terms of the merger, the rules for determining share ownership under Section 7874 and certain

factual assumptions, STARZ stockholders are believed to have held (within the meaning of Section 7874) less

than 60% (by both vote and value) of our post-reclassification shares after the merger by reason of holding shares

of STARZ common stock. Therefore, under current law, it is expected that we should not be treated as a U.S.

corporation for U.S. federal tax purposes and that Section 7874 should otherwise not apply to us or our affiliates

as a result of the merger. However, since the rules are relatively new, there is limited guidance regarding the

application of Section 7874, including the application of the ownership test and the application of the rules to the

facts as they existed at the time of the closing of the acquisition. If we were to be treated as a U.S. corporation for

federal tax purposes, we could be subject to substantially greater U.S. tax liability than currently contemplated as

a non-U.S. corporation. In addition, non-U.S. shareholders of Lions Gate would be subject to U.S. withholding

tax on the gross amount of any dividends paid by us to such shareholders (subject to an exemption or reduced

rate available under an applicable tax treaty).

Recent and proposed changes to the tax laws could result in Lions Gate being treated as a U.S. corporation for

U.S. federal tax purposes or in STARZ and its U.S. affiliates (including the U.S. affiliates historically owned

by us) being subject to certain adverse U.S. federal income tax rules on financing and other activities.

As discussed above, under current law, we are expected to be treated as a non-U.S. corporation for U.S. federal

tax purposes and Section 7874 is not otherwise expected to apply as a result of the merger. However, changes to

Section 7874 and the U.S. Treasury regulations promulgated thereunder, as well as the treatment of expatriated

companies under Section 7874 for income treaty purposes, could affect our status as a non-U.S. corporation for

U.S. federal tax purposes or could result in the application of certain adverse U.S. federal income tax rules to

STARZ and its U.S. affiliates (including the U.S. affiliates historically owned by us). Any such changes could

have prospective or retroactive application. If we were to be treated as a U.S. corporation for federal tax purposes

or if STARZ and its U.S. affiliates (including the U.S. affiliates historically owned by us) were to become subject

to such adverse U.S. federal income tax rules, we and our U.S. affiliates could be subject to substantially greater

U.S. tax liability than currently contemplated.

Recent legislative proposals under President Joe Biden’s “Made in America Tax Plan” are aimed to expand the

scope of U.S. corporate tax residence to address certain perceived issues arising from so-called inversion

transactions, by reducing the ownership threshold (discussed above) to 50% from 80% and by treating the foreign

acquiring company as a U.S. corporation if it is determined to be managed and controlled in the U.S. Such

proposals, if enacted and applicable on or prior to the date of the closing of the merger, could cause us to be

treated as a U.S. corporation for U.S. federal tax purposes or cause our affiliates to be subject to adverse U.S. tax

rules, in which case, we would be subject to substantially greater U.S. tax liability than currently contemplated.

Recent legislative changes enacted as part of the Tax Cuts and Jobs Act (discussed in more detail below),

including the limitations on deduction of interest expense and the adoption of the base erosion and anti-abuse tax,

contain provisions intended to broaden the tax base and could affect our financing arrangements. Further,

additional legislative and other proposals (including the final Treasury regulations under Section 385 of the Code

issued by the IRS on October 13, 2016 (the “Final Section 385 Regulations”), if permitted to go into full effect,

could cause us and our affiliates to be subject to certain intercompany financing limitations, including with

respect to their ability to deduct certain interest expense. These recent and proposed legislative changes could

cause us and our affiliates to recognize additional taxable income and could have a significant adverse effect on

us and our affiliates.

It is presently uncertain whether any such proposals or other legislative action relating to the scope of U.S. tax

residence, Section 7874 or so-called inversion transactions and inverted groups will be enacted into law and/or

how new laws will be interpreted or applied.

Future changes to U.S. and non-U.S. tax laws could adversely affect us.

The U.S. Congress, the Organisation for Economic Co-operation and Development (“OECD”) and other

government agencies in jurisdictions where we and our affiliates will conduct business have had an extended

focus on issues related to the taxation of multinational corporations. For the past several years, the primary focus

has been in the area of “base erosion and profit shifting,” including situations where payments are made between

affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As part of its so-called Base

Erosion and Profit Shifting (“BEPS”) project, OECD and the G-20 developed changes to numerous long-standing

international tax principles. More recently, countries are increasingly seeking ways to tax what is sometimes

referred to as the digitalized economy. For example, in response to the increasing globalization and digitalization

of trade and business operations, OECD is working on a proposal as an extension of its BEPS project to establish

a global minimum corporate taxation rate. The rules are designed to ensure that large multinational groups pay

corporate income taxes at the minimum rate of 15% in the countries where they operate. The goal is for OECD

members to enact domestic legislation implementing these rules by 2024.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued

or applied. As discussed in more detail below, the U.S. recently enacted significant tax reform, and certain

provisions of the new law may adversely affect us. Further, certain provisions of the Build Back Better Act

passed by the House of Representatives but which failed to be enacted would have added new limitations on

business interest deductions and tightened current rules on the base erosion and anti-abuse tax. Many countries in

the European Union, as well as a number of other countries and organizations such as OECD, are increasingly

scrutinizing the tax positions of companies and actively considering changes to existing tax laws that, if enacted,

could increase our tax obligations in countries where we do business. For example, the U.K. has enacted

legislation to increase its corporate tax rate from 19% to 25%, starting in April 2023. If U.S. or other foreign tax

authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or

results of operations may be adversely impacted.

Changes in foreign, state and local tax incentives may increase the cost of original programming content to

such an extent that they are no longer feasible.

Original programming requires substantial financial commitment, which can occasionally be offset by foreign,

state or local tax incentives. However, there is a risk that the tax incentives will not remain available for the

duration of a series. If tax incentives are no longer available or reduced substantially, it may result in increased

costs for us to complete the production, or make the production of additional seasons more expensive. If we are

unable to produce original programming content on a cost effective basis our business, financial condition and

results of operations would be materially adversely affected.

Our tax rate is uncertain and may vary from expectations.

There is no assurance that we will be able to maintain any particular worldwide effective corporate tax rate

because of uncertainty regarding the tax policies of jurisdictions in which we and our affiliates operate. Our

actual effective tax rate may vary from our expectations, and such variance may be material. Additionally, tax

laws or their implementation and applicable tax authority practices in any particular jurisdiction could change in

the future, possibly on a retroactive basis, and any such change could have an adverse impact on us and our

affiliates.

Legislative or other governmental action in the U.S. could adversely affect our business.

Legislative action may be taken by the U.S. Congress that, if ultimately enacted, could limit the availability of

tax benefits or deductions that we currently claim, override tax treaties upon which we rely, or otherwise increase

the taxes that the U.S. imposes on our worldwide operations. Such changes could materially adversely affect our

effective tax rate and/or require us to take further action, at potentially significant expense, to seek to preserve

our effective tax rate. In addition, if proposals were enacted that had the effect of limiting our ability as a

Canadian company to take advantage of tax treaties with the U.S., we could incur additional tax expense and/or

otherwise incur business detriment.

Changes in, or interpretations of, tax rules and regulations, and changes in geographic operating results, may

adversely affect our effective tax rates.

We are subject to income taxes in Canada, the U.S. and foreign tax jurisdictions. We also conduct business and

financing activities between our entities in various jurisdictions and we are subject to complex transfer pricing

regulations in the countries in which we operate. Although uniform transfer pricing standards are emerging in

many of the countries in which we operate, there is still a relatively high degree of uncertainty and inherent

subjectivity in complying with these rules. In addition, due to economic and political conditions, tax rates in

various jurisdictions may be subject to significant change. Our future effective tax rates could be affected by

changes in tax laws or regulations or the interpretation thereof (including those affecting the allocation of profits

and expenses to differing jurisdictions), by changes in the amount of revenue or earnings that we derive from

international sources in countries with high or low statutory tax rates, by changes in the valuation of our deferred

tax assets and liabilities, by changes in the expected timing and amount of the release of any tax valuation

allowance, or by the tax effects of stock-based compensation. Unanticipated changes in our effective tax rates

could affect our future results of operations.

Further, we may be subject to examination of our income tax returns by federal, state, and foreign tax

jurisdictions. We regularly assess the likelihood of outcomes resulting from possible examinations to determine

the adequacy of our provision for income taxes. In making such assessments, we exercise judgment in estimating

our provision for income taxes. While we believe our estimates are reasonable, we cannot assure you that final

determinations from any examinations will not be materially different from those reflected in our historical

income tax provisions and accruals. Any adverse outcome from any examinations may have an adverse effect on

our business and operating results, which could cause the market price of our securities to decline.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTIES.

Our corporate office is located at 250 Howe Street, 20th Floor, Vancouver, BC V6C 3R8. Our principal

executive offices are located at 2700 Colorado Avenue, Santa Monica, California, 90404, where we occupy

192,584 square feet (per a lease that expires in August 2025).

In addition, we lease the following properties used by our Motion Picture, Television Production and Media

Networks segments:

• 280,000 square feet at 8900 Liberty Circle, Englewood, Colorado (per a lease that expires in December

2023);

• 100,119 square feet at 6363 South Fiddler’s Green Circle, Greenwood Village, Colorado (per a lease

that expires in September 2034);

• 93,670 square feet at 12020 Chandler Blvd., Valley Village, California (per a lease that expires in

December 2027);

• 60,116 square feet at 1647 Stewart Street, Santa Monica, California (per a lease that expires in

December 2028);

• 34,332 square feet at 530 Fifth Avenue, New York, New York (per a lease that expires in August

2028);

• 25,346 square feet at 9460 Wilshire Blvd., Beverly Hills, California (per a lease that expires in

February 2026);

• 11,243 square feet at 45 Mortimer Street, London, United Kingdom (per a lease that expires in July

2029);

• An aggregate of 18,220 square feet for properties located in Los Angeles, California (per a lease that

expires in April 2026), Mumbai, India (per a lease that expires in August 2024), New York, New York

(per a lease that expires in May 2025), Toronto, Canada (per a lease that expires in June 2025), Beijing,

China (per a lease that expires in December 2023) and Luxembourg City, Luxembourg (per a lease that

expires in May 2024).

We believe that our current facilities are adequate to conduct our business operations for the foreseeable

future. We believe that we will be able to renew these leases on similar terms upon expiration. If we cannot

renew, we believe that we could find other suitable premises without any material adverse impact on our

operations.

ITEM 3. LEGAL PROCEEDINGS.

From time to time, the Company is involved in certain claims and legal proceedings arising in the normal

course of business. While the resolution of these matters cannot be predicted with certainty, we do not believe,

based on current knowledge, that the outcome of any currently pending legal proceedings in which the Company

is currently involved will have a material adverse effect on the Company’s consolidated financial position, results

of operations or cash flow.

For a discussion of certain claims and legal proceedings, see Note 17 — Commitments and Contingencies to

our consolidated financial statements, which discussion is incorporated by reference into this Part I, Item 3, Legal

Proceedings.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

We have two (2) classes of common shares listed on the New York Stock Exchange (“NYSE”). Our Class A

voting shares, no par value per share (the “Class A voting shares”), are listed on the NYSE under the symbol

“LGF.A” and our Class B non-voting shares, no par value per share (the “Class B non-voting shares”), are listed

on the NYSE under the symbol “LGF.B”.

Holders

As of May 23, 2023, there were approximately 576 and 1,469 shareholders of record of our Class A voting

shares and Class B non-voting shares, respectively.

Dividends

The amount of any future dividends, if any, that we pay to our shareholders is determined by our Board of

Directors, at its discretion, and is dependent on a number of factors, including our financial position, results of

operations, cash flows, capital requirements and restrictions under our credit agreements, and shall be in

compliance with applicable law. We cannot guarantee the amount of dividends paid in the future, if any.

Securities Authorized for Issuance Under Equity Compensation Plans

The information required by this item is incorporated by reference to our Proxy Statement for our 2023

Annual General Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year

ended March 31, 2023.

Taxation

The following is a general summary of certain Canadian federal income tax consequences to U.S. Holders

(who, at all relevant times, deal at arm’s length with the Company) with respect to the purchase, ownership and

disposition of common shares. For the purposes of this Canadian income tax discussion, a “U.S. Holder” means a

holder of common shares who (1) for the purposes of the Income Tax Act (Canada) (the “ITA”) is not, has not,

and will not be, or deemed to be, resident in Canada at any time while such holder holds common shares, (2) at

all relevant times is a resident of the United States under the Canada-United States Tax Convention (1980) (the

“Convention”) and is eligible for benefits under the Convention, (3) is not a “foreign affiliate” as defined in the

ITA of a person resident in Canada, and (4) does not and will not use or be deemed to use the common shares in

carrying on a business in Canada. This summary does not apply to a U.S. Holder that is an insurer or an

“authorized foreign bank” within the meaning of the ITA. Such U.S. Holders should seek tax advice from their

advisors.

This summary is not intended to be, and should not be construed to be, legal or tax advice and no

representation with respect to the tax consequences to any particular investor is made. The summary does not

address any aspect of any provincial, state or local tax laws or the tax laws of any jurisdiction other than Canada

or the tax considerations applicable to non-U.S. Holders. Accordingly, prospective investors should consult with

their own tax advisors for advice with respect to the income tax consequences to them having regard to their own

particular circumstances, including any consequences of an investment in common shares arising under any

provincial, state or local tax laws or the tax laws of any jurisdiction other than Canada.

This summary is based upon the current provisions of the ITA, the regulations thereunder and the proposed

amendments thereto publicly announced by the Department of Finance, Canada before the date hereof and our

understanding of the current administrative policies and assessing practices of the Canada Revenue Agency

published in writing prior to the date hereof. No assurance may be given that any proposed amendment will be

enacted in the form proposed, if at all. This summary does not otherwise take into account or anticipate any

changes in law, whether by legislative, governmental or judicial action.

The following summary applies only to U.S. Holders who hold their common shares as capital property. In

general, common shares will be considered capital property of a holder where the holder is neither a trader nor

dealer in securities, does not hold the common shares in the course of carrying on a business and is not engaged

in an adventure in the nature of trade in respect thereof. This summary does not apply to a U.S. Holder that is a

“financial institution” within the meaning of the mark-to-market rules contained in the ITA or to holders who

have entered into a “dividend rental arrangement”, a “derivative forward agreement” or a “synthetic disposition

arrangement” as these terms are defined in the ITA.

For purposes of the ITA, any amount relating to the acquisition, holding or disposition of common shares,

including dividends, adjusted cost base and proceeds of disposition, must be expressed in Canadian dollars using

the applicable rate of exchange (for purposes of the ITA) quoted by the Bank of Canada on the date such

amounts arose, or such other rate of exchange as is acceptable to the Minister of Finance (Canada).

Amounts in respect of common shares paid or credited or deemed to be paid or credited as, on account or in

lieu of payment of, or in satisfaction of, dividends to a shareholder who is not a resident of Canada within the

meaning of the ITA will generally be subject to Canadian non-resident withholding tax. Canadian withholding

tax applies to dividends that are formally declared and paid by the Company and also to deemed dividends such

as those that may be triggered by a cancellation of common shares if the cancellation occurs otherwise than as a

result of a simple open market transaction. For either deemed or actual dividends, withholding tax is levied at a

rate of 25%, which rate may be reduced pursuant to the terms of an applicable tax treaty between Canada and the

country of residence of the non-resident shareholder. The Multilateral Convention to Implement Tax Treaty

Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI”), of which Canada is a signatory,

affects many of Canada’s bilateral tax treaties (excluding the Convention), including the ability to claim benefits

thereunder. Affected Non-Resident Holders should consult their own tax advisors in this regard. Under the

Convention, the rate of Canadian non-resident withholding tax on the gross amount of dividends received by a

U.S. Holder, which is the beneficial owner of such dividends, is generally 15%. However, where such beneficial

owner of the dividends is a company that owns at least 10% of the voting shares of the company paying the

dividends, the rate of such withholding is 5%. For these purposes, a company that is a resident of the United

States for the purposes of the Convention and which holds an interest in an entity (other than an entity that is

resident in Canada) that is fiscally transparent under the laws of the United States will be considered to own the

voting shares of the Company owned by that fiscally transparent entity in proportion to the company’s ownership

interest in the fiscally transparent entity.

In addition to the Canadian withholding tax on actual or deemed dividends, a U.S. Holder also needs to

consider the potential application of Canadian income tax on capital gains. A U.S. Holder will generally not be

subject to tax under the ITA in respect of any capital gain arising on an actual or deemed disposition of common

shares (including, generally, on a purchase by the Company on the open market) unless at the time of disposition

such shares constitute “taxable Canadian property” of the holder for purposes of the ITA and such U.S. Holder is

not entitled to relief under the Convention. If the common shares are listed on a designated stock exchange

(which includes the NYSE) at the time they are disposed of, they will generally not constitute taxable Canadian

property of a U.S. Holder unless, at any time during the 60-month period immediately preceding the disposition

of the common shares, the U.S. Holder, persons with whom such U.S. Holder does not deal at arm’s length, or

the U.S. Holder together with such non-arm’s length persons, owned 25% or more of the issued shares of any

class or series of the capital stock of the Company and at such time, more than 50% of the fair market value of

the shares was derived from one or any combination of (i) real or immovable property situated in Canada,

(ii) Canadian resource properties, (iii) timber resource properties, and (iv) options in respect of, interests in, or

civil law rights in, such properties. Assuming that the common shares have never derived their value principally

from any of the items listed in (i)-(iv) above, capital gains derived by a U.S. Holder from the disposition of

common shares will generally not be subject to tax in Canada.

Issuer Purchases of Equity Securities

On May 31, 2007, our Board of Directors authorized the repurchase of up to $50 million of our common

shares. On each of May 29, 2008 and November 6, 2008, our Board of Directors authorized additional

repurchases up to an additional $50 million of our common shares. On December 17, 2013, our Board of

Directors authorized the Company to increase its stock repurchase plan to $300 million and on February 2, 2016,

our Board of Directors authorized the Company to further increase its stock repurchase plan to $468 million. To

date, approximately $288.1 million (or 16,608,796) of our common shares have been purchased, leaving

approximately $179.9 million of authorized potential purchases. The remaining $179.9 million of our common

shares may be purchased from time to time at the Company’s discretion, including quantity, timing and price

thereof, and will be subject to market conditions. Such purchases will be structured as permitted by securities

laws and other legal requirements. The share repurchase program has no expiration date.

No common shares were purchased by us during the three months ended March 31, 2023.

Additionally, during the three months ended March 31, 2023, no Class A voting shares and 217,666 Class B

non-voting shares were withheld upon the vesting of restricted share units and share issuances to satisfy

minimum statutory federal, state and local tax withholding obligations.

Unregistered Sales of Equity Securities

None.

Stock Performance Graph

The following graph compares our cumulative total shareholder return with those of the NYSE Composite

Index and the S&P Movies & Entertainment Index for the period commencing March 31, 2018 and ending

March 31, 2023. All values assume that $100 was invested on March 31, 2018 in our common shares and each

applicable index and all dividends were reinvested.

The comparisons shown in the graph below are based on historical data and we caution that the stock price

performance shown in the graph below is not indicative of, and is not intended to forecast, the potential future

performance of our common shares.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Lions Gate Entertainment Corp., the NYSE Composite Index

and the Dow Jones U.S. Media Sector Index

3/18

3/19 3/20 3/21 3/23

3/22

$100

$120

$140

$160

$180

Lions Gate Entertainment Corporation-Class A Lions Gate Entertainment Corporation-Class B

Dow Jones US Media SectorNYSE Composite

$80

$60

$40

$20

*$100 invested on 3/31/18 in stock or index, including reinvestment of dividends.

Fiscal year ending March 31.

3/18 3/19 3/20 3/21 3/22 3/23

Lions Gate Entertainment

Corporation-Class A ..................... $100.00 $ 61.01 $23.72 $ 58.32 $ 63.39 $ 43.18

Lions Gate Entertainment

Corporation-Class B ..................... $100.00 $ 63.21 $23.36 $ 54.00 $ 62.92 $ 43.45

NYSE Composite .......................... $100.00 $104.63 $87.13 $135.10 $147.41 $139.37

Dow Jones US Media Sector ................. $100.00 $111.90 $96.31 $169.44 $138.88 $103.91

The graph and related information are being furnished solely to accompany this Form 10-K pursuant to

Item 201(e) of Regulation S-K. They shall not be deemed “soliciting materials” or to be “filed” with the SEC

(other than as provided in Item 201), nor shall such information be incorporated by reference into any future

filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by

reference into such filing.

ITEM 6. [Reserved].

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS.

This section of our Annual Report Form 10-K includes a discussion and analysis of our financial condition

and results of operation for the fiscal years ended March 31, 2023 and 2022, and year-to-year comparisons

between fiscal 2023 and fiscal 2022. A discussion and analysis of our financial condition and results of operation

for the fiscal year ended March 31, 2021 and year-to-year comparisons between fiscal 2022 and fiscal 2021 can

be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part

II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, and is herein

incorporated by reference.

Overview

Lionsgate Entertainment Corp. (the “Company,” “Lionsgate,” “Lions Gate,” “we,” “us” or “our”)

encompasses world-class motion picture and television studio operations aligned with the STARZ premium

global subscription platform to bring a unique and varied portfolio of entertainment to consumers around the

world. The Company’s film, television, subscription and location-based entertainment businesses are backed by

an 18,000-title library and a valuable collection of iconic film and television franchises. We classify our

operations through three reporting segments: Motion Picture, Television Production, and Media Networks (see

further discussion below).

Proposed Spin-off of Studio Business

In March 2023, we announced that we had confidentially submitted a draft registration statement on Form

10 with the SEC relating to the proposed spin-off of our studio business, consisting of our Television Production

and Motion Picture segments. The proposed spin-off will be subject to the satisfaction of a number of conditions

and our board of directors may decide not to proceed with the spin-off at any time. A failure to satisfy required

conditions, or disruptions in market conditions, could delay the completion of the proposed spin-off for a

significant period of time or prevent it from occurring at all. Additionally, the proposed spin-off is complex in

nature, and unanticipated developments or changes, including disruptions in general market conditions, changes

in law or challenges in executing the spin-off, may affect our ability to complete the spin-off on the terms or on

the timeline we announced, or at all. These or other developments could cause us not to realize some of all of the

expected benefits, or to realize them on a different timeline than expected.

Media Networks Restructuring and Goodwill Impairment

Media Networks Restructuring. In fiscal 2023, for the second quarter ended September 30, 2022, due to the

macro and microeconomic conditions, including the competitive environment, continued inflationary trends and

recessionary economies worldwide and its impact on our growth in subscribers worldwide, we began a plan to

restructure our LIONSGATE+ business (formerly STARZPLAY International). This restructuring includes

exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and

Japan).

During the third quarter ended December 31, 2022, due to the continuing macro and micro economic

conditions which led to the LIONSGATE+ restructuring, we expanded our restructuring plan discussed above to

identify additional cost-saving initiatives, which included a strategic review of content performance across

Starz’s domestic and international platforms, resulting in certain programming being removed from those

platforms and written down to fair value.

As a result of these restructuring initiatives, we recorded content impairment charges related to the Media

Networks segment in fiscal 2023 of $379.3 million. The Company also incurred severance cost under these

restructuring initiatives. These charges are included in restructuring and other in the consolidated statement of

operations (see Note 15 to our consolidated financial statements).

The Company is substantially complete with executing its LIONSGATE+ restructuring plan including

exiting the territories discussed above, negotiating certain content related contractual commitments and

performing its strategic review of content performance for consideration of removal from the Company’s various

platforms. As of March 31, 2023, a portion of the territories had been exited, with the remaining territories fully

exited in May 2023. The Company estimates it will incur additional charges ranging from approximately

$20 million to $50 million related to certain contractual content commitments or programming content

impairment charges, among other items, as the Company fully implements the plan. Of these total estimated

future charges, the net future cash outlay is estimated to range from approximately $20 million to $50 million,

which includes content commitments on content in territories being exited and estimates of payments on content

that may be abandoned as part of the ongoing strategic review, as well as the incremental cost related to the

restructuring. Of the content impairment charges recorded in fiscal 2023, approximately $90 million reflects the

future cash to be paid for the remaining amounts payable for this content. As the Company continues to fully

implement the plan, including further strategic review of content performance, the Company may incur

additional content impairment charges beyond these estimates. The Company expects the restructuring plan to be

substantially completed by June 30, 2023, however certain settlements of contractual commitments could extend

beyond that date.

Goodwill Impairment. The Company’s Starz domestic operations have also been impacted by these current

market conditions, and the Company has revised its subscriber growth and forecasted cash flow assumptions and

implemented certain cost-saving measures. These changes in forecasted cash flow resulted in an impairment of

$1.475 billion of goodwill related to the Media Networks reporting unit in the second quarter of fiscal 2023

(quarter ended September 30, 2022). See Item 2. Management’s Discussion and Analysis, “Critical Accounting

Policies and Estimates”, Goodwill and Indefinite-Lived Intangible Assets and Note 1 to our consolidated financial

statements for further information.

COVID-19 Global Pandemic

Since fiscal 2020, the economic, social and regulatory impacts associated with the COVID-19 global

pandemic (including its variants), measures to prevent its spread, and the resulting economic uncertainty,

affected our business in a number of ways.

We experienced delays in theatrical distribution of our films, both domestically and internationally, as well

as delays in the production of film and television content (resulting in changes in future release dates for some

titles and series). Although film and television production have generally resumed in full, disruption of

production activities could occur again, depending on local circumstances. Additionally, although theaters have

generally reopened, we are not able to accurately predict if and at what level consumers will return to movie

theaters.

We have incurred and may incur additional costs to address any government regulations and the safety of

our employees and talent. To the extent that the costs are related to implementing production safety protocols, or

other such costs that add value to the film or television program, the costs are capitalized as part of the cost of the

film or television program. Incremental direct operating costs associated with the pausing and restarting of

productions, including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs,

contractual marketing spends for film releases and events that have been canceled or delayed that will provide no

economic benefit, and certain incremental general and administrative costs associated with the COVID-19 global

pandemic, such as costs related to transitioning the Company to a remote-work environment, costs associated

with return-to-office safety protocols and other incremental general and administrative costs associated with the

COVID-19 global pandemic, are expensed as incurred. In fiscal 2022 and 2023, these costs have decreased due

to the lessening severity of the COVID-19 global pandemic, and we expect these costs to continue to decrease if

the severity of the COVID-19 global pandemic continues to decline.

We have received some insurance recovery and are in the process of seeking additional insurance recovery

for some of the costs incurred. The ultimate amount of insurance recovery cannot be estimated at this time. The

full extent of the impacts related to COVID-19 and its variants on our business, operations and financial results

will depend on numerous evolving factors that we may not be able to accurately predict.

The following table presents certain incremental costs incurred and expensed, net of insurance recoveries,

and the line item in our consolidated statements of operations such amounts are included in, due to the

disruptions associated with the COVID-19 global pandemic:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

COVID-19 related charges (benefit) included in:

Direct operating expense

(1)

...................................... $(11.6) $(3.6) $50.6

Distribution and marketing expense ............................... — 0.2 16.9

Restructuring and other ......................................... 0.1 1.1 3.0

Total COVID-19 related charges (benefit) .................... $(11.5) $(2.3) $70.5

(1) In the fiscal years ended March 31, 2023 and 2022, insurance recoveries exceeded the incremental costs

expensed in the year, resulting in a net benefit included in direct operating expense (insurance recoveries in

fiscal 2023, 2022 and 2021 amounted to $14.1 million, $22.1 million and immaterial amounts, respectively).

In fiscal 2021, these amounts also included film impairment due to changes in performance expectations

resulting from circumstances associated with the COVID-19 global pandemic.

See further discussion in the Results of Operations section below.

Revenues

Our revenues are derived from the Motion Picture, Television Production and Media Networks segments, as

described below. We refer to our Motion Picture and Television Production segments collectively as our Studio

Business. Our revenues are derived from the U.S., Canada, the United Kingdom and other foreign countries.

None of the non-U.S. countries individually comprised greater than 10% of total revenues for the years ended

March 31, 2023, 2022 and 2021.

Studio Business

Motion Picture: Our Motion Picture segment includes revenues derived from the following:

• Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures

licensed to theatrical exhibitors on a picture-by-picture basis (distributed by us directly in the U.S. and

through a sub-distributor in Canada). The revenues from Canada are reported net of distribution fees

and release expenses of the Canadian sub-distributor. The financial terms that we negotiate with our

theatrical exhibitors in the U.S. generally provide that we receive a percentage of the box office results.

• Home Entertainment. Home entertainment revenues are derived from the sale or rental of our film

productions and acquired or licensed films and certain television programs (including theatrical and

direct-to-video releases) on packaged media and through digital media platforms (including

pay-per-view and video-on-demand platforms, electronic sell through, and digital rental). In addition,

we have revenue sharing arrangements with certain digital media platforms which generally provide

that, in exchange for a nominal or no upfront sales price, we share in the rental or sales revenues

generated by the platform on a title-by-title basis.

• Television. Television revenues are primarily derived from the licensing of our theatrical productions

and acquired films to the linear pay, basic cable and free television markets. In addition, when a license

in our traditional pay television window is made to a subscription video-on-demand (“SVOD”) or other

digital platform, the revenues are included here.

• International. International revenues are derived from (1) licensing of our productions, acquired films,

our catalog product and libraries of acquired titles to international distributors, on a

territory-by-territory basis; and (2) the direct distribution of our productions, acquired films, and our

catalog product and libraries of acquired titles in the United Kingdom.

• Other. Other revenues are derived from, among others, the licensing of our film and television and

related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets.

Television Production: Our Television Production segment includes revenues derived from the following:

• Television. Television revenues are derived from the licensing to domestic markets (linear pay, basic

cable, free television and syndication) of scripted and unscripted series, television movies, mini-series

and non-fiction programming. Television revenues include fixed fee arrangements as well as

arrangements in which we earn advertising revenue from the exploitation of certain content on

television networks. Television revenues also include revenue from licenses to SVOD platforms in

which the initial license of a television series is to an SVOD platform.

• International. International revenues are derived from the licensing and syndication to international

markets of scripted and unscripted series, television movies, mini-series and non-fiction programming.

• Home Entertainment. Home entertainment revenues are derived from the sale or rental of television

production movies or series on packaged media and through digital media platforms.

• Other. Other revenues are derived from, among others, the licensing of our television programs to other

ancillary markets, the sales and licensing of music from the television broadcasts of our productions,

and from commissions and executive producer fees earned related to talent management.

Media Networks

Our Media Networks segment includes revenues derived from the following:

• Starz Networks. Starz Networks’ revenues are derived from the domestic distribution of our STARZ

branded premium subscription video services through over-the-top (“OTT”) streaming platforms and

distributors, on a direct-to-consumer basis through the Starz App, and through U.S. multichannel video

programming distributors (“MVPDs”) including cable operators, satellite television providers and

telecommunications companies (collectively “Distributors”) (in the aggregate, the “Starz Domestic

Platform”).

• LIONSGATE+. LIONSGATE+ revenues are primarily derived from OTT distribution of the STARZ

branded premium subscription video services outside of the U.S.

The Starz Domestic Platform together with the LIONSGATE+ platforms are referred to as the “Starz

Platforms”.

Expenses

Our primary operating expenses include direct operating expenses, distribution and marketing expenses and

general and administration expenses.

Direct operating expenses include amortization of film and television production or acquisition costs,

amortization of programming production or acquisition costs and programming related salaries, participation and

residual expenses, provision for doubtful accounts, and foreign exchange gains and losses.

Participation costs represent contingent consideration payable based on the performance of the film or

television program to parties associated with the film or television program, including producers, writers,

directors or actors. Residuals represent amounts payable to various unions or “guilds” such as the Screen Actors

Guild — American Federation of Television and Radio Artists, Directors Guild of America, and Writers Guild of

America, based on the performance of the film or television program in certain ancillary markets or based on the

individual’s (i.e., actor, director, writer) salary level in the television market.

Distribution and marketing expenses primarily include the costs of theatrical prints and advertising (“P&A”)

and premium video-on-demand (“Premium VOD”) expense and of DVD/Blu-ray duplication and marketing.

Theatrical P&A includes the costs of the theatrical prints delivered to theatrical exhibitors and the advertising and

marketing cost associated with the theatrical release of the picture. Premium VOD expense represents the

advertising and marketing cost associated with the Premium VOD release of the picture. DVD/Blu-ray

duplication represents the cost of the DVD/Blu-ray product and the manufacturing costs associated with creating

the physical products. DVD/Blu-ray marketing costs represent the cost of advertising the product at or near the

time of its release or special promotional advertising. Marketing costs for Media Networks includes advertising,

consumer marketing, distributor marketing support and other marketing costs. In addition, distribution and

marketing costs includes our Media Networks segment operating costs for the direct-to-consumer service,

transponder expenses and maintenance and repairs.

General and administration expenses include salaries and other overhead. Corporate general and

administrative expenses include certain corporate executive expense (such as salaries and wages for the office of

the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers), investor

relations costs, costs of maintaining corporate facilities, and other unallocated common administrative support

functions, including corporate accounting, finance and financial reporting, internal and external audit and tax

costs, corporate and other legal support functions, and certain information technology and human resources

expense.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are more fully described in Note 1 to our consolidated financial statements. As

disclosed in Note 1 to our consolidated financial statements, the preparation of our financial statements in

conformity with accounting principles generally accepted in the United States requires management to make

estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements

and accompanying notes. The application of the following accounting policies, which are important to our

financial position and results of operations, requires significant judgments and estimates on the part of

management. As described more fully below, these estimates bear the risk of change due to the inherent

uncertainty of the estimate. In some cases, changes in the accounting estimates are reasonably likely to occur

from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that

there are material differences between these estimates and actual results, our financial condition or results of

operations will be affected. We base our estimates on past experience and other assumptions that we believe are

reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We believe that the

following discussion addresses our most critical accounting policies, which are those that are most important to

the portrayal of our financial condition and results of operations and require management’s most difficult,

subjective and complex judgments.

Accounting for Films and Television Programs and Licensed Program Rights

Capitalized costs for films or television programs are amortized and tested for impairment based on whether

the content is predominantly monetized individually or as a group.

Film and Television Programs Monetized Individually. For films and television programs monetized

individually, film cost amortization, participations and residuals expense are based on management’s estimates.

Costs of acquiring and producing films and television programs and of acquired libraries that are monetized

individually are amortized and estimated liabilities for participations and residuals costs are accrued using the

individual-film-forecast method, based on the ratio of the current period’s revenues to management’s estimated

remaining total gross revenues to be earned (“ultimate revenue”). Management’s judgment is required in

estimating ultimate revenue and the costs to be incurred throughout the life of each film or television program.

Management estimates ultimate revenues based on historical experience with similar titles or the title genre,

the general public appeal of the cast, audience test results when available, actual performance (when available) at

the box office or in markets currently being exploited, and other factors such as the quality and acceptance of

motion pictures or programs that our competitors release into the marketplace at or near the same time, critical

reviews, general economic conditions and other tangible and intangible factors, many of which we do not control

and which may change.

For motion pictures, ultimate revenue includes estimates over a period not to exceed ten years following the

date of initial release of the motion picture. The most sensitive factor affecting our estimate of ultimate revenues

for a film intended for theatrical release is the film’s theatrical performance, as subsequent revenues from the

licensing and sale in other markets have historically been highly correlated to its theatrical performance. After a

film’s release, our estimates of revenue from succeeding markets are revised based on historical relationships and

an analysis of current market trends.

For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten

years following the date of delivery of the first episode, or, if still in production, five years from the date of

delivery of the most recent episode, if later. The most sensitive factors affecting our estimate of ultimate

revenues for a television series is whether the series will be ordered for a subsequent season and estimates of

revenue in secondary markets other than the initial license fee, which may depend on a number of factors,

including, among others, the ratings or viewership the program achieves on the customers’ platforms. The initial

estimate of ultimate revenue may include estimates of revenues outside of the initial license window (i.e.,

international, home entertainment and other distribution platforms) and are based on historical experience for

similar programs (genre, duration, etc.) and the estimated number of seasons of the series. Ultimates of revenue

beyond the initial license fee are generally higher for programs that have been or are expected to be ordered for

multiple seasons. We regularly monitor the performance of each season, and evaluate whether impairment

indicators are present (i.e., low ratings, cancellations or the season is not reordered), and based upon our review,

we revise our estimates as needed and perform an impairment assessment if impairment indicators are present

(see below).

For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed

twenty years following the date of acquisition.

Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses,

these estimates have differed in the past from actual results and are likely to differ to some extent in the future

from actual results. In addition, in the normal course of our business, some films and titles are more successful or

less successful than anticipated. Management regularly reviews and revises when necessary its ultimate revenue

and cost estimates, which may result in a change in the rate of amortization of film costs and participations and

residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its

estimated fair value (see below).

An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and,

therefore, less film and television program amortization expense, while a decrease in the estimate of ultimate

revenue will generally result in a higher amortization rate and, therefore, higher film and television program

amortization expense, and also periodically results in an impairment requiring a write-down of the film cost to

the title’s fair value. These write-downs are included in amortization expense within direct operating expenses in

our consolidated statements of operations. See further discussion below under Impairment Assessment.

Film and Television Programs Monetized as a Group. Licensed programming rights may include rights to

more than one exploitation window under the Company’s output and library agreements. For films with multiple

windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of

each window which generally results in the majority of the cost allocated to the first window on newer releases.

While not significant through March 31, 2023, certain license agreements and productions may include

additional ancillary rights in addition to the rights for exploitation on the Starz Platforms. A portion of the cost of

these licenses and in some cases the cost of produced content, is allocated between the programming rights for

exploitation on the Starz Platforms and investment in film and television programs for exploitation outside of the

Starz Platforms in ancillary markets (e.g., home video, digital platforms, television, etc.) based on the relative

fair value of those markets. The estimates of fair value for the allocation between windows of exploitation on the

Starz Platform and ancillary markets is based on historical experience of the values of similar titles licensed in

subsequent windows and estimates of future revenues in ancillary markets. Management believes these are

reasonably reliable estimates of these values, however, these estimates involve uncertainty and management

judgment.

The cost of licensed program rights for films and television programs (including original series) exhibited

by the Media Networks segment are generally amortized on a title-by-title or episode-by-episode basis using on

an accelerated or straight-line method based on the expected and historical viewership patterns or the current and

anticipated number of exhibitions over the license period or estimated life for owned or produced programs. The

number of exhibitions is estimated based on the number of exhibitions allowed in the agreement (if specified)

and the expected usage of the content. Participations and residuals are expensed in line with the amortization of

production costs.

Changes in management’s estimate of the anticipated exhibitions and viewership patterns of films and

original series on our platforms could result in the earlier recognition of our programming costs than anticipated.

Impairment Assessment. A film group or individual film or television program is evaluated for impairment

when events or changes in circumstances indicate that the fair value of an individual film or film group is less

than its unamortized cost. If the result of the impairment test indicates that the carrying value exceeds the

estimated fair value, an impairment charge will then be recorded for the amount of the difference.

Estimate of Fair Value. For content that is predominantly monetized individually (primarily investment in

film and television programs related to the Motion Picture and Television Production segments), the fair value is

determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. For

motion pictures intended for theatrical release, the discounted cash flow analysis used in the impairment

evaluation prior to theatrical release is subjective and the key inputs include estimates of future anticipated

revenues, estimates of box office performance, which may differ from future actual results. These estimates are

based in part on the historical performance of similar films, test audience results when available, information

regarding competing film releases, and critic reviews. As disclosed in Note 3 to the consolidated financial

statements, the unamortized balance related to completed and not released and in progress theatrical films was

$561.5 million at March 31, 2023. For television programs, the discounted cash flow analysis used in the

impairment evaluation includes key inputs such as estimates of future anticipated revenue, as discussed above.

See further discussion of Valuation Assumptions below.

For content that is predominantly monetized as a group (primarily licensed program rights in the Media

Networks segment and internally produced programming, as discussed above), the fair value is determined based

on the present value of the discounted cash flows of the group using the lowest level for which identifiable cash

flows are independent of other produced and licensed content. The Company’s film groups are generally aligned

with the Company’s networks and digital content offerings domestically (i.e., Starz Networks) and

internationally by territory or groups of territories, where content assets are shared across the various territories.

Content removed from the service and abandoned is written down to its fair value, if any, determined using a

discounted cash flow approach.

In fiscal 2023, for the second quarter ended September 30, 2022, due to the macro and microeconomic

conditions, including the competitive environment, continued inflationary trends and recessionary economies

worldwide and its impact on the our growth in subscribers worldwide, we began a plan to restructure our

LIONSGATE+ business (formerly STARZPLAY International). This restructuring includes exiting the business

in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan).

During the third quarter ended December 31, 2022, due to the continuing macro and micro economic

conditions which led to the LIONSGATE+ restructuring, we expanded our restructuring plan discussed above to

identify additional cost-saving initiatives, which included a strategic review of content performance across

Starz’s domestic and international platforms, resulting in certain programming being removed from those

platforms and written down to fair value.

As a result of these restructuring initiatives, we recorded content impairment charges related to the Media

Networks segment in fiscal 2023 of $379.3 million. These charges are included in restructuring and other in the

consolidated statement of operations (see Note 3 and Note 15 to our consolidated financial statements).

Valuation Assumptions. The discounted cash flow analysis includes cash flows estimates of ultimate

revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 10 to our consolidated

financial statements). The discount rate utilized in the discounted cash flow analysis is based on the weighted

average cost of capital of the Company plus a risk premium representing the risk associated with producing a

particular film or television program or film group. Estimates of future revenue involve measurement uncertainty

and it is therefore possible that reductions in the carrying value of investment in films and television programs

may be required as a consequence of changes in management’s future revenue estimates.

Revenue Recognition. Our Motion Picture and Television Production segments generate revenue

principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital

media and packaged media), television, and international market places. Our Media Networks segment generates

revenue primarily from the distribution of our STARZ premium subscription video services and, through

March 31, 2021, from our formerly majority owned premium Spanish language streaming services business,

Pantaya, which includes subscriber based streaming revenue and other distribution revenue. We sold our interest

in Pantaya on March 31, 2021, see Note 2 to our consolidated financial statements for further information.

Our content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or

usage based royalties. Our fixed fee or minimum guarantee licensing arrangements in the television, digital

media and international markets may, in some cases, include multiple titles, multiple license periods (windows)

with a substantive period in between the windows, rights to exploitation in different media, or rights to

exploitation in multiple territories, which may be considered distinct performance obligations. When these

performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is

allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone

selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are

recognized when the content has been delivered, and the window for the exploitation right in that territory has

begun, which is the point in time at which the customer is able to begin to use and benefit from the content.

Sales or usage based royalties represent amounts due to us based on the “sale” or “usage” of our content by

the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the

performance obligation to which some or all the sales or usage-based royalty has been allocated has been

satisfied (or partially satisfied). Generally, when we license completed content (with standalone functionality,

such as a movie, or television show), our performance obligation will be satisfied prior to the sale or usage.

When we license intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos,

etc.), our performance obligation is generally satisfied in the same period as the sale or usage. The actual

amounts due to us under these arrangements are generally not reported to us until after the close of the reporting

period. We record revenue under these arrangements for the amounts due and not yet reported to us based on

estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are

based on information from our customers, historical experience with similar titles in that market or territory, the

performance of the title in other markets and/or available data in the industry. While we believe these estimates

are reasonable estimates of the amounts due under these arrangements, such estimated amounts could differ from

the actual amounts to be subsequently reported by the customer, which could be higher or lower than our

estimates, and could result in an adjustment to revenues in future periods.

Revenue from the theatrical release of feature films are treated as sales or usage-based royalties and

recognized starting at the exhibition date and based on our participation in box office receipts of the theatrical

exhibitor.

Digital media revenue sharing arrangements are recognized as sales or usage based royalties.

Revenue from the sale of physical discs (DVDs, Blu-ray or 4K Ultra HD), referred to as “Packaged Media”,

in the retail market, net of an allowance for estimated returns and other allowances, is recognized on the later of

receipt by the customer or “street date” (when it is available for sale by the customer).

Revenue from commissions are recognized as such services are provided.

Media Networks revenues may be based on a variable fee (i.e., a fee based on number of subscribers who

receive our networks or other subscriber based factors) or to a lesser extent, may be based on a monthly fixed fee

or minimum guarantee, subject to nominal annual escalations. Media Networks revenue is also generated through

the distribution of our SVOD service directly to consumer through the Starz App. The variable distribution fee

arrangements represent sales or usage based royalties, which are recognized over the period of such sales or

usage by our distributor, which is the same period that the content is provided to the distributor. Estimates of

revenue generated but not yet reported to us by our distribution partners are made based on the estimated number

of subscribers using historical trends and recent reporting. Media Networks fixed fee or minimum guarantee

programming revenue is recognized over the contract term based on the continuous delivery of the content to the

distributor. Subscribers through the Starz App are billed in advance of the start of their monthly or annual

membership and revenues are recognized ratably over each applicable membership period. Payments to

distributors for marketing support costs for which Starz receives a discrete benefit are recorded as distribution

and marketing costs, and payments to distributors for which Starz receives no discrete benefit are recorded as a

reduction of revenue.

Goodwill and Indefinite-Lived Intangibles. At March 31, 2023, the carrying value of goodwill and

indefinite-lived intangible assets was $1.29 billion and $250.0 million, respectively. Our indefinite-lived

intangible assets consist of trade names primarily representing the estimated fair value of the Starz brand name

determined in connection with the acquisition of Starz as of December 8, 2016. Goodwill is allocated to our

reporting units, which are our operating segments or one level below our operating segments (component level).

Reporting units are determined by the discrete financial information available for the component and whether

that information is regularly reviewed by segment management. Components are aggregated into a single

reporting unit if they share similar economic characteristics. Our reporting units for purposes of goodwill

impairment testing, along with their respective goodwill balances at March 31, 2023, were Motion Picture

(goodwill of $394 million), Media Networks (goodwill of $493.9 million, net of $1.475 billion impairment

recorded in the second quarter ended September 30, 2022, as discussed further below), and our Television

(goodwill of $309 million) and Talent Management (goodwill of $93 million) businesses, both of which are part

of our Television Production segment.

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment each

fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-

than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value.

We perform our annual impairment test as of January 1 in each fiscal year. A goodwill or indefinite-lived

intangible asset impairment loss would be recognized for the amount that the carrying amount of a reporting unit,

including goodwill or an indefinite-lived intangible asset, exceeds its fair value. An entity may perform a

qualitative assessment of the likelihood of the existence of a goodwill or indefinite-lived intangible asset

impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which

impact the fair value of the reporting unit or indefinite-lived intangible asset, of whether or not it is more-likely-

than-not that the fair value is less than the carrying value of the reporting unit or indefinite-lived intangible asset.

If we believe that as a result of our qualitative assessment it is more likely than not that the fair value of a

reporting unit or indefinite-lived intangible asset is greater than its carrying amount, a quantitative impairment

test is not required but may be performed at the option of the Company. A quantitative assessment requires

determining the fair value of our reporting units or indefinite-lived intangible assets. The determination of fair

value requires considerable judgment and requires assumptions and estimates of many factors, including revenue

and market growth, operating margins and cash flows, market multiples and discount rates.

In performing a quantitative assessment of goodwill, we determine the fair value of our reporting units by

using a combination of discounted cash flow (“DCF”) analyses and market-based valuation methodologies. The

models rely on significant judgments and assumptions surrounding general market and economic conditions,

short-term and long-term growth rates, discount rates, income tax rates, and detailed management forecasts of

future cash flow and operating margin projections, and other assumptions, all of which are based on our internal

forecasts of future performance as well as historical trends. The market-based valuation method utilizes EBITDA

multiples from guideline public companies operating in similar industries and a control premium. The results of

these valuation methodologies are weighted as to their relative importance and a single fair value is determined.

The fair value of our reporting units is reconciled to the market value of our equity, determined based on the

average prices of our common shares just prior to the period end. Fair value determinations require considerable

judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no

assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment

tests will prove to be an accurate prediction of the future.

Goodwill Impairment Assessments:

For our annual goodwill impairment test for fiscal 2022, due to overall macroeconomic conditions,

including the uncertainty of the longer-term economic impacts of the COVID-19 global pandemic, and the

competitive environment for subscribers and its impact on subscriber growth rates and our businesses, we

performed a quantitative impairment assessment for all of our reporting units as of January 1, 2022. Based on our

annual quantitative impairment assessment for fiscal 2022, the Company determined that one of our reporting

units (Media Networks) was at risk for impairment due to relatively small changes in certain key assumptions

that could cause an impairment of goodwill.

In fiscal 2023, during the second quarter ended September 30, 2022, due to continued adverse macro and

microeconomic conditions, including the competitive environment, continued inflationary trends and

recessionary economies worldwide and its impact on our growth in subscribers worldwide, we began

implementing a plan to restructure our LIONSGATE+ business (formerly STARZPLAY International). This

restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain,

Benelux, the Nordics and Japan). Our Starz domestic operations have also been impacted by these current market

conditions and we have revised our subscriber growth and forecasted cash flow assumptions and implemented

certain cost-saving measures. Additionally, companies in the media and entertainment industry, and particularly

those with significant streaming platforms, have experienced a decline in market valuations, and reflecting this

industry trend, as well as potential capital market transactions, and the factors discussed above, the market price

of our common shares had declined significantly through September 30, 2022. Accordingly, for the second

quarter ended September 30, 2022, we updated our quantitative impairment assessment for all of our reporting

units based on the most recent data and expected growth trends. The DCF analysis components of the fair value

estimates were determined primarily by discounting estimated future cash flows, which included weighted

average perpetual nominal growth rates ranging from 1.5% to 3.5%, at a weighted average cost of capital

(discount rate) ranging from 10.5% to 13.0%, which considered the risk of achieving the projected cash flows,

including the risk applicable to the reporting unit, industry and market as a whole.

Based on our quantitative impairment assessment, the Company determined that the fair value of our

reporting units exceeded the carrying values for all of our reporting units, except the Media Networks reporting

unit which was previously disclosed as a reporting unit “at risk” of impairment. The analysis resulted in a

goodwill impairment charge of $1.475 billion in the second quarter ended September 30, 2022, related to our

Media Networks reporting unit goodwill, which is recorded as a separate line item “goodwill impairment” in the

consolidated statement of operations (see Note 6 to the consolidated financial statements). Since the impairment

charge reduced the carrying value of the Media Networks reporting unit to its fair value, at September 30, 2022

the fair value and carrying value of the Media Networks reporting unit were equal and thus it continues to be

considered “at risk” of impairment.

For our annual goodwill impairment test for fiscal 2023, we performed a qualitative goodwill impairment

assessment for all our reporting units. Our qualitative assessment considered the increase in the market price of

the Company’s common shares from September 30, 2022, the recent performance of the Company’s reporting

units, and updated forecasts of performance and cash flows, as well as the continuing micro and macroeconomic

environment, and industry considerations, and determined that since the quantitative assessment performed in the

quarter ended September 30, 2022, there were no events or circumstances that rise to a level that would more-

likely-than-not reduce the fair value of those reporting units below their carrying values; therefore, a quantitative

goodwill impairment analysis was not required.

Management will continue to monitor all of its reporting units for further changes in the business

environment that could impact the recoverability in future periods. The recoverability of goodwill is dependent

upon the continued growth of revenue and cash flows from our business activities. Examples of events or

circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill

impairment tests, and ultimately impact the estimated fair value of our reporting units may include the duration

of the COVID-19 global pandemic, its impact on the global economy and the creation and consumption of our

content; continued and increasingly adverse macroeconomic conditions related to higher inflation and interest

rates and currency rate fluctuations, and the impact on the global economy from Russia’s invasion of Ukraine;

volatility in the equity and debt markets which could result in higher weighted-average cost of capital; capital

market transactions; the commercial success of our television programming and motion pictures; our continual

contractual relationships with our customers; including our affiliate agreements of our Media Networks business;

our subscriber growth rates domestically and internationally across our traditional and OTT platforms and

changes in consumer behavior. If our assumptions are not realized, it is possible that additional impairment

charges may need to be recorded in the future.

Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment:

For fiscal 2023, during the second quarter ended September 30, 2022, due to the events and their impact

discussed above related to our Media Networks reporting unit, we performed a quantitative impairment

assessment of our indefinite-lived trade names. Based on the quantitative impairment assessment of our trade

names, we concluded that the fair value of our trade names was more than its carrying amount, and therefore our

trade names were not considered at risk of impairment.

During the fourth quarter ended March 31, 2023, for our annual impairment assessment, since the indefinite-

lived intangible asset was not considered at risk for impairment when quantitatively tested at September 30,

2022, we performed a qualitative impairment assessment of our indefinite-lived trade names. Based on the

qualitative impairment assessment of our trade names, we concluded that it is more-likely-than-not that the fair

value of our trade names was more than its carrying amount, and therefore our trade names were not considered

at risk of impairment. This qualitative analysis considered the relative impact of market-specific and

macroeconomic factors. The market-specific factors considered included recent projections of revenues and

growth in OTT subscribers, both domestic and internationally, associated with the STARZ brand name. The

Company also considered the macroeconomic impact including the uncertainty around the COVID-19 global

pandemic, and the resulting uncertain long-term economic impact on discount rates and growth rates, as well as

the impact from tax law changes inclusive of the reduction of the federal tax rate since the acquisition of Starz.

Finite-Lived Intangible Assets. At March 31, 2023, the carrying value of our finite-lived intangible assets

was approximately $1.05 billion. Our finite-lived intangible assets primarily relate to customer relationships

associated with U.S. MVPDs, including cable operators, satellite television providers and telecommunications

companies (“Traditional Affiliate”), which amounted to $1.04 billion. The amount of our customer relationship

asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer

relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization

recorded since the date of the Starz acquisition. Identifiable intangible assets with finite lives are amortized to

depreciation and amortization expense over their estimated useful lives, ranging from 5 to 16 years. The Starz

Traditional Affiliate customer relationship intangible asset is amortized in the proportion that current period

revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset,

which results in greater amortization in the earlier years of the estimated useful life of the asset than the latter

years.

Amortizable intangible assets are tested for impairment whenever events or changes in circumstances

(triggering events) indicate that the carrying amount of the asset may not be recoverable. If a triggering event has

occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted

future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset. The

impairment test is performed at the lowest level of cash flows associated with the asset. If the carrying value of

the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable.

Impairment would then be measured as the excess of the asset’s carrying value over its fair value.

The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each

reporting period for indicators of possible impairments or a change in the useful life or method of amortization of

our finite-lived intangible assets. For fiscal 2022 and fiscal 2023, due to changes in the industry related to the

migration from linear to OTT and direct-to-consumer consumption, and the economic uncertainty from the

COVID-19 global pandemic, we performed an impairment analysis of our amortizable intangible assets. The

impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the

useful life of an asset to the carrying value of the asset. Based on our impairment analysis, the estimated

undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was

required.

Determining whether an intangible asset is recoverable or impaired requires various estimates and

assumptions, including whether events or circumstances indicate that the carrying amount of the asset may not be

recoverable, determining estimates of future cash flows for the assets involved and, when applicable, the

assumptions applied in determining fair value, including discount rates, growth rates, market risk premiums and

other assumptions about the economic environment. Should the revenues from our Traditional Affiliate

relationships decline more than the assumed attrition rates used in our current estimates, either as a result of

decreases in subscriber rates or changes of the terms of our renewals of our Traditional Affiliate contracts, we

may have indicators of impairment which could result in an impairment of our customer relationships intangible

assets, or we may need to further shorten the useful life or adopt a more accelerated method of amortization both

of which would increase the amount of amortization expense we record.

Income Taxes. We are subject to federal and state income taxes in the U.S., and in several foreign

jurisdictions. We record deferred tax assets related to net operating loss carryforwards and certain temporary

differences, net of applicable reserves in these jurisdictions. We recognize a future tax benefit to the extent that

realization of such benefit is more likely than not on a jurisdiction-by-jurisdiction basis; otherwise, a valuation

allowance is applied. In order to realize the benefit of our deferred tax assets, we will need to generate sufficient

taxable income in the future in each of the jurisdictions which have these deferred tax assets. However, the

assessment as to whether there will be sufficient taxable income in a jurisdiction to realize our net deferred tax

assets in that jurisdiction is an estimate which could change in the future depending primarily upon the actual

performance of our Company. We will be required to continually evaluate the more likely than not assessment

that our net deferred tax assets will be realized, and if operating results deteriorate in a particular jurisdiction, we

may need to record a valuation allowance for all or a portion of our deferred tax assets through a charge to our

income tax provision. As of March 31, 2023, we have a valuation allowance of $455.7 million against certain

U.S. and foreign deferred tax assets that may not be realized on a more likely than not basis.

Our effective tax rates differ from the federal statutory rate and are affected by many factors, including the

overall level of pre-tax income (loss), the mix of our pre-tax income (loss) generated across the various

jurisdictions in which we operate, any changes in tax laws and regulations in those jurisdictions, changes in

uncertain tax positions, changes in valuation allowances against our deferred tax assets, tax planning strategies

available to us and other discrete items.

Recent Accounting Pronouncements

See Note 1 to the accompanying consolidated financial statements for a discussion of recent accounting

guidance.

RESULTS OF OPERATIONS

Fiscal 2023 Compared to Fiscal 2022

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the fiscal years ended March 31,

2023 and 2022.

Year Ended

March 31, Increase (Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Revenues

Studio Business

Motion Picture ....................................... $1,323.7 $1,185.3 $ 138.4 11.7%

Television Production ................................. 1,760.1 1,531.0 229.1 15.0%

Total Studio Business .............................. 3,083.8 2,716.3 367.5 13.5%

Media Networks ...................................... 1,546.5 1,536.2 10.3 0.7%

Intersegment eliminations .............................. (775.5) (648.2) (127.3) 19.6%

Total revenues ................................... 3,854.8 3,604.3 250.5 7.0%

Expenses:

Direct operating ...................................... 2,312.5 2,064.2 248.3 12.0%

Distribution and marketing ............................. 801.7 861.0 (59.3) (6.9)%

General and administration ............................. 531.1 475.4 55.7 11.7%

Depreciation and amortization ........................... 180.3 177.9 2.4 1.3%

Restructuring and other ................................ 411.9 16.8 395.1 nm

Goodwill impairment .................................. 1,475.0 — 1,475.0 n/a

Total expenses ................................... 5,712.5 3,595.3 2,117.2 58.9%

Operating income (loss) ................................... (1,857.7) 9.0 (1,866.7) nm

Interest expense .......................................... (221.2) (176.0) (45.2) 25.7%

Interest and other income ................................... 6.4 30.8 (24.4) nm

Other expense ............................................ (26.9) (10.9) (16.0) 146.8%

Gain (loss) on extinguishment of debt ......................... 57.4 (28.2) 85.6 n/a

Gain on investments ....................................... 44.0 1.3 42.7 nm

Equity interests income (loss) ............................... 0.5 (3.0) 3.5 (116.7)%

Loss before income taxes .................................. (1,997.5) (177.0) (1,820.5) nm

Income tax provision ...................................... (21.3) (28.4) 7.1 (25.0)%

Net loss ................................................. (2,018.8) (205.4) (1,813.4) nm

Less: Net loss attributable to noncontrolling interest ......... 8.6 17.2 (8.6) (50.0)%

Net loss attributable to Lions Gate Entertainment Corp.

shareholders .......................................... $(2,010.2) $ (188.2) $(1,822.0) nm

nm — Percentage not meaningful.

Revenues. Consolidated revenues increased $250.5 million in fiscal 2023 reflecting an increase of

$367.5 million from our Studio Business, offset by increased intersegment eliminations of $127.3 million.

Intersegment eliminations relate to the licensing of product from our Studio Business (primarily our Television

Production segment) to the Media Networks segment.

Motion Picture revenue increased $138.4 million in fiscal 2023 due to higher international, theatrical, digital

media home entertainment, and other revenue, partially offset by lower packaged media home entertainment and

television revenue. Motion Picture revenue included $44.2 million of revenue from licensing Motion Picture

segment product to the Media Networks segment, representing an increase of $6.2 million from fiscal 2022.

Television Production revenue increased $229.1 million due to increased digital home entertainment

revenue, increased domestic television revenue from greater intersegment revenues from the licensing of Starz

original series, and increased international and other revenue. Television Production revenue included

$731.3 million of revenue from licensing Television Production segment product to our Media Networks

segment, representing an increase of $121.1 million from fiscal 2022.

The increase in intersegment eliminations is primarily associated with higher Television Production

revenues for licenses of original series to Starz Networks and LIONSGATE+, both in the Media Networks

segment as discussed above.

Media Networks revenue increased $10.3 million reflecting increased revenue at LIONSGATE+ of

$43.4 million, partially offset by a decrease of $33.1 million at Starz Networks.

See further discussion in the Segment Results of Operations section below.

Direct Operating Expenses. Direct operating expenses by segment were as follows for the fiscal years

ended March 31, 2023 and 2022:

Year Ended March 31,

2023 2022 Increase (Decrease)

Amount

%of

Segment

Revenues Amount

%of

Segment

Revenues Amount Percent

(Amounts in millions)

Direct operating expenses

Studio Business ........................

Motion Picture .................... $ 666.5 50.4% $ 547.1 46.2% $119.4 21.8%

Television Production ............... 1,541.5 87.6 1,373.9 89.7 167.6 12.2%

Total Studio Business ........... 2,208.0 71.6 1,921.0 70.7 287.0 14.9%

Media Networks ....................... 846.8 54.8 747.9 48.7 98.9 13.2%

COVID-19 related charges (benefit) ....... (11.6) nm (3.6) nm (8.0) 222.2%

Other ................................ 9.4 nm 44.4 nm (35.0) nm

Intersegment eliminations ............... (740.1) nm (645.5) nm (94.6) 14.7%

$2,312.5 60.0% $2,064.2 57.3% $248.3 12.0%

nm — Percentage not meaningful.

Direct operating expenses increased in fiscal 2023, due to higher direct operating expenses of our Studio

Business and the Media Networks segment, partially offset by higher intersegment eliminations and lower other

direct operating expense and a slight increase in COVID-19 related benefit resulting from insurance recoveries,

as described below. The increase at the Studio Business reflects higher direct operating expenses of the

Television Production segment and Motion Picture segment due to higher revenues of the Television Production

and Motion Picture segments, respectively. The increase in Media Networks direct operating expense was driven

by increases at Starz Networks of $88.7 million and LIONSGATE+ of $10.2 million due to higher programming

cost amortization, and foreign exchange losses at LIONSGATE+ related to the strengthening U.S. dollar. The

increase in intersegment eliminations is due to increased revenue from licenses of original series to Starz

Networks and LIONSGATE+, as discussed above. See further discussion in the Segment Results of Operations

section below.

COVID-19 Related Charges (Benefit). As discussed previously, we incurred certain incremental costs

associated with the COVID-19 global pandemic. In fiscal 2023, direct operating expense included a benefit of

$11.6 million representing insurance recoveries of $14.1 million which exceeded the incremental costs associated

with the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle

facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic

(fiscal 2022 — benefit of $3.6 million, net of insurance recoveries of $22.1 million). We may incur additional

incremental costs for direct operating expenses related to the COVID-19 global pandemic in future periods,

however, such costs are declining and are expected to decline if the severity of the COVID-19 global pandemic

continues to decline. We are in the process of seeking additional insurance recovery for some of the costs

incurred. The ultimate amount of insurance recovery cannot be estimated at this time.

Other. In fiscal 2023, other direct operating expenses includes approximately $7.2 million in development

costs written off in connection with certain management changes and changes in the theatrical marketplace in the

Motion Picture segment, as a result of changes in strategy across its theatrical slate.

In fiscal 2022, other direct operating expenses includes certain programming and content charges of

$36.9 million, as a result of a strategic review of original programming on the STARZ platform, which identified

certain titles with limited viewership or strategic purpose which were removed from the STARZ service and

abandoned by the Media Networks segment. Other direct operating expenses in fiscal 2022 also includes

$5.9 million representing charges related to Russia’s invasion of Ukraine, primarily related to bad debt reserves

for accounts receivable from customers in Russia.

These charges are excluded from segment operating results but included in direct operating expense in the

consolidated statement of operations and reflected in the “other” line item above. In addition, the remaining

amounts of “other” direct operating expense in the table above consists of share-based compensation, and the

amortization of the non-cash fair value adjustments on film and television assets associated with the application

of purchase accounting related to recent acquisitions.

Distribution and Marketing Expenses. Distribution and marketing expenses by segment were as follows for

the fiscal years ended March 31, 2023 and 2022:

Year Ended

March 31, Increase (Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Distribution and marketing expenses

Studio Business

Motion Picture ...................................... $270.9 $282.2 $(11.3) (4.0)%

Television Production ................................. 33.3 33.0 0.3 0.9%

Total Studio Business ............................. 304.2 315.2 (11.0) (3.5)%

Media Networks ......................................... 496.5 545.1 (48.6) (8.9)%

COVID-19 related charges ................................. — 0.2 (0.2) (100.0)%

Other .................................................. 0.7 0.5 0.2 40.0%

Intersegment eliminations .................................. 0.3 — 0.3 n/a

$801.7 $861.0 $(59.3) (6.9)%

U.S. theatrical P&A and Premium VOD expense included in Motion

Picture distribution and marketing expense ...................... $149.8 $153.3 $ (3.5) (2.3)%

Distribution and marketing expenses decreased in fiscal 2023 due to lower Media Networks and Studio

Business distribution and marketing expense. The decrease at the Studio Business reflects lower Motion Picture

home entertainment distribution and marketing expense and slightly lower Motion Picture theatrical P&A and

Premium VOD expense. The decrease in Media Networks distribution and marketing expense was due to a

decrease at Starz Networks of $25.5 million due to lower overall spend for advertising purchased in fiscal 2023

and lower media spend for our Starz Originals’ premieres, and a decrease at LIONSGATE+ of $23.1 million

primarily due to a decrease in direct response advertising in connection with the exited territories. See further

discussion in the Segment Results of Operations section below.

General and Administrative Expenses. General and administrative expenses by segment were as follows

for the fiscal years ended March 31, 2023 and 2022:

Year Ended March 31, Increase (Decrease)

2023

%of

Revenues 2022

%of

Revenues Amount Percent

(Amounts in millions)

General and administrative expenses

Studio Business

Motion Picture ..................... $109.8 $ 93.1 $16.7 17.9%

Television Production ................ 51.9 40.2 11.7 29.1%

Total Studio Business ............ 161.7 133.3 28.4 21.3%

Media Networks ........................ 96.4 88.0 8.4 9.5%

Corporate .............................. 122.9 97.1 25.8 26.6%

Share-based compensation expense ......... 95.4 98.3 (2.9) (3.0)%

Purchase accounting and related

adjustments .......................... 54.7 58.7 (4.0) (6.8)%

Total general and administrative expenses ........ $531.1 13.8% $475.4 13.2% $55.7 11.7%

General and administrative expenses increased in fiscal 2023, resulting from increases in corporate, Studio

Business and Media Networks general and administrative expenses, partially offset by decreased share-based

compensation expense and purchase accounting and related adjustments. See further discussion in the Segment

Results of Operations section below.

Corporate general and administrative expenses increased $25.8 million, or 26.6%, primarily due to an

increase in incentive based compensation.

Share-based compensation expense included in general and administrative expense in the fiscal year ended

March 31, 2023 was comparable to the fiscal year ended March 31, 2022. The following table presents share-

based compensation expense by financial statement line item:

Year Ended March 31,

2023 2022

(Amounts in millions)

Share-based compensation expense included in:

General and administrative expense ........................................ $ 95.4 $ 98.3

Restructuring and other

(1)

................................................. 4.2 —

Direct operating expense ................................................. 1.7 1.2

Distribution and marketing expense ........................................ 0.7 0.5

Total share-based compensation expense ................................ $102.0 $100.0

(1) Represents share-based compensation expense included in restructuring and other expenses reflecting the

impact of the acceleration of vesting schedules for equity awards pursuant to certain severance

arrangements.

Purchase accounting and related adjustments include the non-cash charge for the accretion of the

noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge

for the amortization of the recoupable portion of the purchase price and the expense associated with the

noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, all of which are

accounted for as compensation and are included in general and administrative expense. The noncontrolling equity

interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than

noncontrolling interest in the consolidated statement of operations due to the relationship to continued

employment. Purchase accounting and related adjustments decreased $4.0 million, or 6.8%, due to lower

noncontrolling interest discount amortization of $9.4 million, partially offset by increased noncontrolling equity

interest in the distributable earnings of 3 Arts Entertainment of $5.4 million (see further detail in the

reconciliation of operating income (loss) to total segment profit further below).

Depreciation and Amortization Expense. Depreciation and amortization of $180.3 million for fiscal 2023

increased $2.4 million from $177.9 million in fiscal 2022.

Restructuring and Other. Restructuring and other increased $395.1 million in fiscal 2023 as compared to

fiscal 2022, and includes restructuring and severance costs, certain transaction and other costs, and certain

unusual items, when applicable. Restructuring and other costs were as follows for the fiscal years ended

March 31, 2023 and 2022 (see Note 15 to our consolidated financial statements):

Year Ended March 31,

Increase

(Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Restructuring and other:

Content and other impairment

(1)

............................. $385.2 $ — $385.2 n/a

Severance

(2)

Cash .............................................. 18.0 $ 4.6 13.4 291.3%

Accelerated vesting on equity awards (see Note 13 to our

consolidated financial statements) ..................... 4.2 — 4.2 n/a

Total severance costs ............................. 22.2 4.6 17.6 382.6%

COVID-19 related charges

(3)

............................... 0.1 1.1 (1.0) (90.9)%

Transaction and other costs

(4)

............................... 4.4 11.1 (6.7) (60.4)%

$411.9 $16.8 $395.1 nm

nm — Percentage not meaningful.

(1) Media Networks Goodwill Impairment and Restructuring: As previously discussed in the “Overview”

section above, in fiscal 2023, in the second quarter ended September 30, 2022, due to the macro and

microeconomic conditions, including the competitive environment, continued inflationary trends and

recessionary economies worldwide and its impact on the Company’s growth in subscribers worldwide, we

began a plan to restructure our LIONSGATE+ business (formerly STARZPLAY International). This

restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain,

Benelux, the Nordics and Japan). Our Starz domestic operations have also been impacted by these current

market conditions, and we have revised our subscriber growth and forecasted cash flow assumptions and

implemented certain cost-saving measures. These changes in forecasted cash flow resulted in an impairment

of $1.475 billion of goodwill related to the Media Networks segment in the second quarter ended

September 30, 2022, as discussed in Note 1 to our consolidated financial statements.

During the third quarter ended December 31, 2022, due to the continuing macro and microeconomic

conditions which led to the LIONSGATE+ restructuring, we expanded our restructuring plan discussed

above to identify additional cost-saving initiatives, which included a strategic review of content

performance across Starz’s domestic and international platforms, resulting in certain programming being

removed from those platforms and written down to fair value.

As a result of these restructuring initiatives, we recorded content impairment charges associated with

impairment of programming related to the territories being exited and individual content abandonment upon

removal of certain titles from the Starz platforms related to the Media Networks segment in fiscal 2023 of

$379.3 million. We are substantially complete with executing our LIONSGATE+ restructuring plan

including exiting the territories discussed above, negotiating certain content related contractual

commitments and performing our strategic review of content performance for consideration of removal

from our various platforms. As of March 31, 2023, a portion of the territories had been exited, with the

remaining territories fully exited in May 2023. We estimate we will incur additional charges ranging from

approximately $20 million to $50 million related to certain contractual content commitments or

programming content impairment charges, among other items, as we fully implement the plan. Of these total

estimated future charges, the net future cash outlay is estimated to range from approximately $20 million to

$50 million, which includes content commitments on content in territories being exited and estimates of

payments on content that may be abandoned as part of the ongoing strategic review, as well as the

incremental cost related to the restructuring. Of the content impairment charges recorded in fiscal 2023,

approximately $90 million reflects the future cash to be paid for the remaining amounts payable for this

content. As we continue to fully implement the plan, including further strategic review of content

performance, we may incur additional content impairment charges beyond these estimates. We expect the

restructuring plan to be substantially completed by June 30, 2023, however, certain settlements of

contractual commitments could extend beyond that date.

Other Impairments: Amounts in the fiscal year ended March 31, 2023 also include an impairment of an

operating lease right-of-use asset related to the Studio Business and corporate facilities amounting to

$5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company. The

impairment reflects a decline in market conditions since the inception of the lease impacting potential

sublease opportunities, and represents the difference between the estimated fair value, which was

determined based on the expected discounted future cash flows of the lease asset, and the carrying value.

(2) Severance costs in the fiscal years ended March 31, 2023 and 2022 were primarily related to restructuring

activities and other cost-saving initiatives.

(3) Amounts represent certain incremental general and administrative costs associated with the COVID-19

global pandemic, such as costs related to transitioning the Company to a remote-work environment, costs

associated with return-to-office safety protocols, and other incremental general and administrative costs

associated with the COVID-19 global pandemic.

(4) Transaction and other costs in the fiscal years ended March 31, 2023 and 2022 reflect transaction,

integration and legal costs associated with certain strategic transactions, and restructuring activities and also

include costs and benefits associated with certain legal matters. In fiscal 2023, these amounts include a

benefit of $11.0 million for a settlement of a legal matter related to the Media Networks segment.

Goodwill Impairment. Goodwill impairment of $1.475 billion for the fiscal year ended March 31, 2023

reflects the impairment charge recorded in the second quarter ended September 30, 2022 related to the Media

Networks reporting unit, as discussed in Item 2. Management’s Discussion and Analysis, “Critical Accounting

Policies and Estimates”, Goodwill and Indefinite-Lived Intangible Assets (see Note 6 to our consolidated

financial statements). There was no comparable charge in the fiscal year ended March 31, 2022.

Interest Expense. Interest expense of $221.2 million in fiscal 2023 increased $45.2 million from fiscal 2022

due to higher average interest rates and balances on the revolving credit facility, higher average interest rates on

the term loans, and higher average balances and interest rates associated with film related obligations in fiscal

2023. These increases were partially offset by a decrease due to the amortization of unrealized gains in

accumulated other comprehensive income (loss) related to the termination of certain of our interest rate swaps on

May 20, 2022 (see Note 18 to our consolidated financial statements). The following table sets forth the

components of interest expense for the fiscal years ended March 31, 2023 and 2022:

Year Ended March 31,

2023 2022

(Amounts in millions)

Interest Expense

Cash Based:

Revolving credit facility ............................................. $ 12.9 $ 6.6

Term loans ........................................................ 63.0 33.1

Senior Notes ....................................................... 51.8 54.8

Other

(1)

........................................................... 67.8 31.0

195.5 125.5

Amortization of debt issuance costs and other non-cash interest

(2)

................. 25.7 50.5

Total interest expense ............................................... $221.2 $176.0

(1) Amounts include payments and receipts associated with the Company’s interest rate swaps (see Note 18 to

our consolidated financial statements) and interest payments associated with certain film related obligations

(Production Tax Credit Facility, IP Credit Facility, Backlog Facility and other, see Note 8 to our

consolidated financial statements). The increase in other interest expense primarily reflects an increase of

$55.0 million related to film related obligations, partially offset by a $19.4 million benefit related to the

Company’s interest rate swaps.

(2) Amounts include the amortization of unrealized losses in accumulated other comprehensive loss related to

de-designated interest rate swaps which are being amortized to interest expense (see Note 18 to our

consolidated financial statements).

Interest and Other Income. Interest and other income of $6.4 million for the fiscal year ended March 31,

2023 compared to interest and other income of $30.8 million for the fiscal year ended March 31, 2022, due to

insurance recoveries on prior shareholder litigation of $22.7 million in fiscal 2022 (see Note 17 to our

consolidated financial statements).

Other Expense. Other expense of $26.9 million for fiscal 2023 compared to other expense of $10.9 million

for fiscal 2022, and represented the loss recorded related to our monetization of accounts receivable programs

(see Note 19 to our consolidated financial statements).

Gain (Loss) on Extinguishment of Debt. Gain on extinguishment of debt of $57.4 million for fiscal 2023

represented a gain associated with the repurchase of $200.0 million principal amount of 5.500% Senior Notes at a

discount, partially offset by the write-off of debt issuance costs associated with the voluntary prepayment of the

entire outstanding amount of Term Loan A due March 22, 2023 and the repurchases of the 5.500% Senior Notes.

In fiscal 2022, the loss on extinguishment of debt of $28.2 million was related to the write-off of a portion

of debt issuance costs (including a portion of call premiums) associated with the redemption of the 5.875%

Senior Notes and 6.375% Senior Notes and associated issuance of the 5.500% Senior Notes, the amendment of

our credit agreement to extend the maturity of a portion of our revolving credit commitments and a portion of our

outstanding term A loans, repurchases of the Term Loan B, and the termination of a portion of our revolving

credit commitments. See Note 7 to our consolidated financial statements.

Gain on Investments. Gain on investments of $44.0 million for fiscal 2023 primarily represented a gain

associated with the sale of a portion of our ownership interest in STARZPLAY Arabia, compared to a gain on

investments of $1.3 million for fiscal 2022.

Equity Interests Income (Loss). Equity interests income of $0.5 million in fiscal 2023 compared to equity

interests loss of $3.0 million in fiscal 2022.

Income Tax Provision. We had an income tax provision of $21.3 million in fiscal 2023, compared to an

income tax provision of $28.4 million in fiscal 2022. Our income tax provision differs from the federal statutory

rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various

jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and certain

minimum taxes and foreign withholding taxes. Our income tax provision for fiscal 2023 and fiscal 2022 was also

impacted by charges for interest on uncertain tax benefits and additional uncertain tax benefits related to state

income taxes identified during state tax audits, and benefited from the release of uncertain tax benefits due to the

close of audits or expiration of statutory limitations.

At March 31, 2023, we had U.S. net operating loss carryforwards of approximately $1,561.5

million available to reduce future federal income taxes, certain of which expire beginning in 2037 through 2042,

state net operating loss carryforwards of approximately $988.2 million available to reduce future state income

taxes which expire in varying amounts beginning 2024, Canadian loss carryforwards of $2.5 million which will

expire beginning in 2030, Luxembourg loss carryforwards of $235.1 million which will expire beginning in

2036, and other foreign jurisdiction loss carryforwards of $18.1 million which will expire beginning in 2028. In

addition, at March 31, 2023, we had U.S. credit carryforwards related to foreign taxes paid of

approximately $73.0 million to offset future federal income taxes that will expire beginning in 2024.

Net Loss Attributable to Lions Gate Entertainment Corp. Shareholders. Net loss attributable to our

shareholders for the fiscal year ended March 31, 2023 was $2,010.2 million, or basic and diluted net loss per

common share of $8.82 on 227.9 million weighted average common shares outstanding. This compares to net

loss attributable to our shareholders for the fiscal year ended March 31, 2022 of $188.2 million, or basic and

diluted net loss per common share of $0.84 on 224.1 million weighted average common shares outstanding.

Segment Results of Operations and Non-GAAP Measures

The Company’s primary measure of segment performance is segment profit. Segment profit is defined as

segment revenues, less segment direct operating and segment distribution and marketing expense, less segment

general and administration expenses. Total segment profit represents the sum of segment profit for our individual

segments, net of eliminations for intersegment transactions. Segment profit and total segment profit excludes,

when applicable, corporate general and administrative expense, restructuring and other costs, share-based

compensation, certain programming and content charges as a result of changes in management and/or

programming and content strategy, certain charges related to the COVID-19 global pandemic, charges resulting

from Russia’s invasion of Ukraine, and purchase accounting and related adjustments. Segment profit is a GAAP

financial measure and is disclosed in Note 16 to our consolidated financial statements.

We also present below our total segment profit for all of our segments and the sum of our Motion Picture

and Television Production segment profit as our “Studio Business” segment profit. Total segment profit and

Studio Business segment profit, when presented outside of the segment information and reconciliations included

in Note 16 to our consolidated financial statements, is considered a non-GAAP financial measure, and should be

considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in

accordance with United States GAAP. We use this non-GAAP measure, among other measures, to evaluate the

aggregate operating performance of our business.

The Company believes the presentation of total segment profit and Studio Business segment profit is

relevant and useful for investors because it allows investors to view total segment performance in a manner

similar to the primary method used by the Company’s management and enables them to understand the

fundamental performance of the Company’s businesses before non-operating items. Total segment profit and

Studio Business segment profit is considered an important measure of the Company’s performance because it

reflects the aggregate profit contribution from the Company’s segments, both in total and for the Studio Business

and represents a measure, consistent with our segment profit, that eliminates amounts that, in management’s

opinion, do not necessarily reflect the fundamental performance of the Company’s businesses, are infrequent in

occurrence, and in some cases are non-cash expenses. Not all companies calculate segment profit or total

segment profit in the same manner, and segment profit and total segment profit as defined by the Company may

not be comparable to similarly titled measures presented by other companies due to differences in the methods of

calculation and excluded items.

The following table reconciles the GAAP measure, operating income (loss), to the non-GAAP measure,

total segment profit, for the fiscal years ended March 31, 2023 and 2022. In addition, each of segment direct

operating expense, distribution and marketing expense and general and administrative expense is reconciled to

the respective line items presented in the GAAP-based statement of operations in the preceding section of the

Management’s Discussion and Analysis of Financial Condition and Results of Operations which discusses

consolidated results of operations.

Year Ended March 31, Increase (Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Operating income (loss) ................................... $(1,857.7) $ 9.0 $(1,866.7) nm

Corporate general and administrative expenses .............. 122.9 97.1 25.8 26.6%

Goodwill impairment .................................. 1,475.0 — 1,475.0 n/a

Adjusted depreciation and amortization

(1)

................... 40.2 43.0 (2.8) (6.5)%

Restructuring and other ................................. 411.9 16.8 395.1 nm

COVID-19 related charges (benefit)

(2)

..................... (11.6) (3.4) (8.2) 241.2%

Programming and content charges

(2)

....................... 7.0 36.9 (29.9) (81.0)%

Charges related to Russia’s invasion of Ukraine

(3)

............ — 5.9 (5.9) (100.0)%

Adjusted share-based compensation expense

(4)

.............. 97.8 100.0 (2.2) (2.2)%

Purchase accounting and related adjustments

(5)

.............. 195.5 194.0 1.5 0.8%

Total segment profit ...................................... $ 481.0 $499.3 $ (18.3) (3.7)%

nm — Percentage not meaningful.

(1) Adjusted depreciation and amortization represents depreciation and amortization as presented on our

consolidated statements of operations less the depreciation and amortization related to the non-cash fair

value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are

included in the purchase accounting and related adjustments line item above, as shown in the table below:

Year Ended March 31,

2023 2022

(Amounts in millions)

Depreciation and amortization ........................................ $180.3 $ 177.9

Less: Amount included in purchase accounting and related adjustments ....... (140.1) (134.9)

Adjusted depreciation and amortization ................................ $ 40.2 $ 43.0

(2) COVID-19 related charges (benefit) represent the incremental costs included in direct operating expense and

distribution and marketing expense resulting from circumstances associated with the COVID-19 global

pandemic, net of insurance recoveries. Programming and content charges represent certain charges included

in direct operating expense in the consolidated statements of operations, and excluded from segment

operating results (see Note 3 and Note 15 to our consolidated financial statements for further information).

(3) Amounts represent charges related to Russia’s invasion of Ukraine, primarily related to bad debt reserves

for accounts receivable from customers in Russia, included in direct operating expense in the consolidated

statements of operations, and excluded from segment operating results.

(4) The following table reconciles total share-based compensation expense to adjusted share-based

compensation expense:

Year Ended March 31,

2023 2022

(Amounts in millions)

Total share-based compensation expense ............................... $102.0 $100.0

Less:

Amount included in restructuring and other

(i)

........................ (4.2) —

Adjusted share-based compensation ................................... $ 97.8 $100.0

(i) Represents share-based compensation expense included in restructuring and other expenses reflecting

the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain

severance arrangements.

(5) Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value

adjustments to certain assets acquired in recent acquisitions. The following sets forth the amounts included

in each line item in the financial statements:

Year Ended March 31,

2023 2022

(Amounts in millions)

Purchase accounting and related adjustments:

Direct operating ............................................... $ 0.7 $ 0.4

General and administrative expense

(i)

.............................. 54.7 58.7

Depreciation and amortization .................................... 140.1 134.9

$195.5 $194.0

(i) These adjustments include the non-cash charge for the accretion of the noncontrolling interest discount

related to Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge for the amortization of

the recoupable portion of the purchase price and the expense associated with the noncontrolling equity

interests in the distributable earnings related to 3 Arts Entertainment, all of which are accounted for as

compensation and are included in general and administrative expense, as presented in the table below.

The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as

an expense rather than noncontrolling interest in the consolidated statement of operations due to the

relationship to continued employment.

Year Ended March 31,

2023 2022

(Amounts in millions)

Amortization of recoupable portion of the purchase price .......... $ 7.7 $ 7.7

Noncontrolling interest discount amortization ................... 13.2 22.7

Noncontrolling equity interest in distributable earnings ............ 33.8 28.3

$54.7 $58.7

We refer to our Motion Picture and Television Production segments collectively as our Studio Business. The

table below sets forth the revenues and segment profit of our collective Studio Business and Media Networks

segment.

Year Ended March 31, Increase (Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Revenue

Studio Business

Motion Picture ..................................... $1,323.7 $1,185.3 $ 138.4 11.7%

Television Production ................................ 1,760.1 1,531.0 229.1 15.0%

Total Studio Business ............................ $3,083.8 $2,716.3 $ 367.5 13.5%

Media Networks ........................................ 1,546.5 1,536.2 10.3 0.7%

Intersegment eliminations ................................ (775.5) (648.2) (127.3) 19.6%

$3,854.8 $3,604.3 $ 250.5 7.0%

Segment Profit

Studio Business

Motion Picture ..................................... $ 276.5 $ 262.9 $ 13.6 5.2%

Television Production ................................ 133.4 83.9 49.5 59.0%

Total Studio Business ............................ $ 409.9 $ 346.8 $ 63.1 18.2%

Media Networks ........................................ 106.8 155.2 (48.4) (31.2)%

Intersegment eliminations ................................ (35.7) (2.7) (33.0) nm

Total Segment Profit ............................... $ 481.0 $ 499.3 $ (18.3) (3.7)%

nm — Percentage not meaningful.

See the following discussion for further detail of our individual segments. The segment results of operations

presented below do not include the elimination of intersegment transactions which are eliminated when

presenting consolidated results.

Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the fiscal years ended

March 31, 2023 and 2022:

Year Ended March 31, Increase (Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Motion Picture Segment:

Revenue .................................................. $1,323.7 $1,185.3 $138.4 11.7%

Expenses:

Direct operating expense ................................. 666.5 547.1 119.4 21.8%

Distribution & marketing expense .......................... 270.9 282.2 (11.3) (4.0)%

Gross contribution ......................................... 386.3 356.0 30.3 8.5%

General and administrative expenses ............................ 109.8 93.1 16.7 17.9%

Segment profit ............................................. $ 276.5 $ 262.9 $ 13.6 5.2%

U.S. theatrical P&A and Premium VOD expense included in

distribution and marketing expense ........................... $ 149.8 $ 153.3 $ (3.5) (2.3)%

Direct operating expense as a percentage of revenue ................ 50.4% 46.2%

Gross contribution as a percentage of revenue ..................... 29.2% 30.0%

Revenue. The table below sets forth Motion Picture revenue by media and product category for the fiscal

years ended March 31, 2023 and 2022:

Year Ended March 31,

2023 2022

Total

Increase

(Decrease)

Lionsgate

Original

Releases

(1)

Other

Film

(2)

Total

Lionsgate

Original

Releases

(1)

Other

Film

(2)

Total

(Amounts in millions)

Motion Picture Revenue

Theatrical ...................... $115.6 $ 5.1 $ 120.7 $ 54.8 $ 10.5 $ 65.3 $ 55.4

Home Entertainment

Digital Media ............... 354.7 172.8 527.5 325.5 171.6 497.1 30.4

Packaged Media ............. 35.8 34.7 70.5 64.7 50.3 115.0 (44.5)

Total Home

Entertainment ......... 390.5 207.5 598.0 390.2 221.9 612.1 (14.1)

Television ...................... 173.8 44.0 217.8 213.1 44.8 257.9 (40.1)

International .................... 298.7 66.3 365.0 178.4 56.0 234.4 130.6

Other .......................... 15.1 7.1 22.2 9.1 6.5 15.6 6.6

$993.7 $330.0 $1,323.7 $845.6 $339.7 $1,185.3 $138.4

(1) Lionsgate Original Releases: Includes titles originally planned for a wide theatrical release by Lionsgate,

including titles that have changed from a planned wide theatrical release to an initial direct-to-streaming

release. These releases include films developed and produced in-house, films co-developed and co-produced

and films acquired or licensed from third parties. In addition, Lionsgate Original Releases also includes

multi-platform and direct-to-platform motion pictures originally released or licensed by Lionsgate, and the

licensing of our original release motion picture content to other ancillary markets (location-based

entertainment, games, etc.).

(2) Other Film: Includes acquired and licensed brands and libraries originally released by other parties such as

third-party library product, including our titles released by acquired companies prior to our acquisition of

the company (i.e., Summit Entertainment library), and titles released with our equity method investees,

Roadside Attractions and Pantelion Films, and other titles.

Theatrical revenue increased $55.4 million in fiscal 2023, as compared to fiscal 2022, due to an increase of

$60.8 million from Lionsgate Original Releases driven by the performance of our fiscal 2023 theatrical slate

releases, and in particular, John Wick: Chapter 4, Jesus Revolution and Plane (all released in the fourth quarter

of fiscal 2023). John Wick: Chapter 4 was theatrically released on March 24, 2023, therefore fiscal 2023 reflects

revenue from seven days of the title’s theatrical release. This increase was offset partially by a decrease of

$5.4 million from Other Film due to lower revenue from our acquired library titles.

Home entertainment revenue decreased $14.1 million, or 2.3%, in fiscal 2023, as compared to fiscal 2022,

due to lower packaged media revenue of $44.5 million, partially offset by higher digital media revenue of

$30.4 million. The decrease in packaged media revenue was due to a decrease of $28.9 million from Lionsgate

Original Releases due to fewer theatrical slate titles released on packaged media in fiscal 2023 as compared to

fiscal 2022, resulting from the timing of our fiscal 2023 theatrical slate releases, and a decrease of $15.6 million

from Other Film due to lower revenue from our acquired library and licensed library titles. The increase in digital

media revenue was due to an increase of $29.2 million from Lionsgate Original Releases driven by the license of

Shotgun Wedding to a direct-to-streaming platform in fiscal 2023, and revenue in fiscal 2023 from the fiscal 2022

theatrical slate release, Moonfall, partially offset by lower revenue from our direct-to-platform (i.e., SVOD) and

multi-platform releases.

Television revenue decreased $40.1 million, or 15.5%, in fiscal 2023, as compared to fiscal 2022, due to a

decrease from Lionsgate Original Releases of $39.3 million due to fewer television windows opening for our

theatrical slate titles than in fiscal 2022 resulting from the timing of our fiscal 2023 theatrical slate releases. In

particular, fiscal 2023 included revenue from the fiscal 2023 theatrical release, The Unbearable Weight of

Massive Talent, and the fiscal 2022 theatrical releases, American Underdog and Moonfall. These compared to

revenue in fiscal 2022 from the fiscal 2022 theatrical releases, Spiral, The Hitman’s Wife’s Bodyguard and

Voyager, and the fiscal 2021 theatrical releases, Chaos Walking, Barb and Star Go to Vista Del Mar and Fatale.

International revenue increased $130.6 million, or 55.7%, in fiscal 2023, as compared to fiscal 2022 due to

an increase from Lionsgate Original Releases of $120.3 million due to higher revenue generated in fiscal 2023

from our fiscal 2023 theatrical slate titles as compared to the revenue in fiscal 2022 from our fiscal 2022

theatrical slate titles, and higher revenue from direct-to-platform (i.e., SVOD) and multi-platform releases. In

particular, fiscal 2023 included significant international revenue from the fiscal 2023 theatrical slate titles John

Wick: Chapter 4, Shotgun Wedding, and The Unbearable Weight of Massive Talent. In addition, the increase in

international revenue reflected an increase of $10.3 million from Other Film due to higher revenue in fiscal 2023

from our acquired library titles.

Direct Operating Expense. The increase in direct operating expenses is due to higher motion picture

revenue in fiscal 2023. The increase in direct operating expenses as a percentage of motion picture revenue is

driven by the change in the mix of titles and product categories generating revenue in fiscal 2023 as compared to

fiscal 2022, including the higher amortization rate of the fiscal 2023 theatrical slate titles as compared to the

fiscal 2022 theatrical slate titles. In addition, fiscal 2023 included an increase in development write-offs of

$19.1 million on Lionsgate Original Releases, and an increase of $4.9 million related to foreign exchange losses.

Investment in film write-downs included in Motion Picture segment direct operating expense in fiscal 2023 were

$6.2 million, as compared to $1.2 million in fiscal 2022.

Distribution and Marketing Expense. The decrease in distribution and marketing expense in fiscal 2023 is

due to lower home entertainment distribution and marketing expense and slightly lower theatrical P&A and

Premium VOD expense for Lionsgate Original Releases. Theatrical P&A and Premium VOD expense decreased

due to lower expense associated with the fiscal 2023 theatrical slate releases, partially offset by higher expense

for films to be released in subsequent quarters. In fiscal 2023, approximately $23.2 million of P&A and Premium

VOD expense was incurred in advance for films to be released in subsequent quarters (Are You There God? It’s

Me, Margaret, White Bird: A Wonder Story and The Ballad of Songbirds and Snakes), compared to

approximately $14.1 million in fiscal 2022. We expect Motion Picture distribution and marketing expense in

fiscal 2024 to increase as compared to fiscal 2023, due to our larger expected fiscal 2024 theatrical slate and

related theatrical P&A expense.

Gross Contribution. Gross contribution of the Motion Picture segment for fiscal 2023 increased

$30.3 million, or 8.5%, as compared to fiscal 2022 due to higher Motion Picture revenue and lower distribution

and marketing expense, partially offset by higher direct operating expense.

General and Administrative Expense. General and administrative expenses of the Motion Picture

segment increased $16.7 million, or 17.9%, due to an increase in incentive based compensation.

Television Production

The table below sets forth Television Production gross contribution and segment profit for the fiscal years

ended March 31, 2023 and 2022:

Year Ended March 31, Increase (Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Television Production Segment:

Revenue .................................................. $1,760.1 $1,531.0 $229.1 15.0%

Expenses:

Direct operating expense ................................. 1,541.5 1,373.9 167.6 12.2%

Distribution & marketing expense .......................... 33.3 33.0 0.3 0.9%

Gross contribution ......................................... 185.3 124.1 61.2 49.3%

General and administrative expenses ............................ 51.9 40.2 11.7 29.1%

Segment profit ............................................. $ 133.4 $ 83.9 $ 49.5 59.0%

Direct operating expense as a percentage of revenue ................ 87.6% 89.7%

Gross contribution as a percentage of revenue ..................... 10.5% 8.1%

Revenue. The table below sets forth Television Production revenue and changes in revenue by media for the

fiscal years ended March 31, 2023 and 2022:

Year Ended March 31,

Increase

(Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Television Production

Television ............................................. $1,144.3 $1,094.5 $ 49.8 4.6%

International ............................................ 277.7 256.5 21.2 8.3%

Home Entertainment

Digital ............................................ 241.7 85.1 156.6 184.0%

Packaged Media ..................................... 3.3 6.9 (3.6) (52.2)%

Total Home Entertainment ........................ 245.0 92.0 153.0 166.3%

Other ................................................. 93.1 88.0 5.1 5.8%

$1,760.1 $1,531.0 $229.1 15.0%

The primary component of Television Production revenue is domestic television revenue. Domestic

television revenue increased in fiscal 2023 as compared to fiscal 2022, due to an increase of $62.6 million from

intersegment revenues from the licensing of Starz original series Power Book II: Ghost Season 3, Power Book

IV: Force Season 2, Heels Season 2, P-Valley Season 2, BMF Season 2, and Power Book III: Raising Kanan

Seasons 2 and 3, among others) to Starz Networks, partially offset by a decrease from fewer television episodes

delivered to third-parties.

International revenue in fiscal 2023 increased $21.2 million, or 8.3%, as compared to fiscal 2022, due to

revenue in fiscal 2023 from Mythic Quest Season 3, The First Lady Season 1 and Acapulco Season 2, as

compared to revenue in fiscal 2022 from Pam & Tommy Season 1, Dear White People Season 4 and Acapulco

Season 1. In addition, the increase reflects an increase of $8.5 million from intersegment revenues from the

licensing of Starz original series to LIONSGATE+.

Home entertainment revenue in fiscal 2023 increased $153.0 million, or 166.3%, as compared to fiscal

2022, due to digital media revenue in fiscal 2023 from Schitt’s Creek Seasons 1 to 6 from the license to a

streaming platform, Nashville Season 1 to 6, and Ghosts Season 1, which compared to digital media revenue in

fiscal 2022 for Weeds Seasons 1 to 8 and Welcome to Flatch Season 1. In addition, the increase reflects higher

digital media intersegment revenues of $49.6 million from the licensing of Starz original series to Starz

Networks.

Other revenue increased in fiscal 2023 as compared to fiscal 2022, and primarily includes revenue of 3 Arts

Entertainment which is generated from commissions and executive producer fees earned related to talent

management.

Direct Operating Expense. Direct operating expense of the Television Production segment in fiscal 2023

increased $167.6 million, or 12.2%, due to the increase in Television Production revenues. Direct operating

expenses as a percentage of television production revenue decreased slightly as compared to fiscal 2022,

primarily due to the mix of titles generating revenue in fiscal 2023 as compared to fiscal 2022. In addition, fiscal

2023 included lower write-downs to fair value of investment in film and television programs, amounting to

$4.6 million in aggregate, as compared to $34.9 million in fiscal 2022.

Gross Contribution. Gross contribution of the Television Production segment for fiscal 2023 increased by

$61.2 million as compared to fiscal 2022 due to increased television production revenue, partially offset by

higher direct operating expenses.

General and Administrative Expense. General and administrative expenses of the Television Production

segment increased $11.7 million, or 29.1%, due to increases in salaries and related expenses and incentive based

compensation.

Media Networks

The table below sets forth Media Networks gross contribution and segment profit for the fiscal years ended

March 31, 2023 and 2022:

Year Ended

March 31, Increase (Decrease)

2023 2022 Amount Percent

(Amounts in millions)

Media Networks Segment:

Revenue ....................................... $1,546.5 $1,536.2 $ 10.3 0.7%

Expenses:

Direct operating expense ...................... 846.8 747.9 98.9 13.2%

Distribution & marketing expense ............... 496.5 545.1 (48.6) (8.9)%

Gross contribution .............................. 203.2 243.2 (40.0) (16.4)%

General and administrative expenses ................ 96.4 88.0 8.4 9.5%

Segment profit ................................. $ 106.8 $ 155.2 $(48.4) (31.2)%

Direct operating expense as a percentage of revenue .... 54.8% 48.7%

Gross contribution as a percentage of revenue ......... 13.1% 15.8%

The following table sets forth the Media Networks segment profit by product line:

Year Ended

March 31, 2023

Year Ended

March 31, 2022

Starz

Networks LIONSGATE+

Total

Media

Networks

Starz

Networks LIONSGATE+

Total

Media

Networks

(Amounts in millions)

Media Networks Segment:

Revenue ....................... $1,395.8 $ 150.7 $1,546.5 $1,428.9 $ 107.3 $1,536.2

Expenses:

Direct operating expense ...... 695.5 151.3 846.8 606.8 141.1 747.9

Distribution & marketing

expense ................. 412.4 84.1 496.5 437.9 107.2 545.1

Gross contribution .............. 287.9 (84.7) 203.2 384.2 (141.0) 243.2

General and administrative

expenses ..................... 69.6 26.8 96.4 63.7 24.3 88.0

Segment profit ................. $ 218.3 $(111.5) $ 106.8 $ 320.5 $(165.3) $ 155.2

Subscriber Data. The number of period-end service subscribers is a key metric which management uses to

evaluate a non-ad supported subscription video service. We believe this key metric provides useful information

to investors as a growing or decreasing subscriber base is a key indicator of the health of the overall business.

Service subscribers may impact revenue differently depending on specific distribution agreements we have with

our distributors which may include fixed fees, rates per basic video household or a rate per STARZ subscriber.

The table below sets forth, for the periods presented, subscriptions to our Media Networks and STARZPLAY

Arabia services.

March 31,

2023

March 31,

2022

(Amounts in millions)

Starz Domestic

Linear Subscribers .................................... 8.0 9.5

OTT Subscribers ..................................... 12.3 11.5

Total .......................................... 20.3 21.0

LIONSGATE+

Linear Subscribers .................................... 1.9 1.8

OTT Subscribers

(1)

................................... 5.6 11.0

Total .......................................... 7.5 12.8

Total Starz

Linear Subscribers .................................... 9.9 11.3

OTT Subscribers

(1)

................................... 17.9 22.5

Total Starz ..................................... 27.8 33.8

STARZPLAY Arabia

(2)

.................................... 2.5 2.0

Total Domestic and International Subscribers

(2)

.............. 30.3 35.8

Subscribers by Platform:

Linear Subscribers .................................... 9.9 11.3

OTT Subscribers

(1)(3)

.................................. 20.4 24.5

Total Global Subscribers ........................... 30.3 35.8

(1) March 31, 2023 includes OTT subscribers totaling 0.6 million in the international territories still to be

exited, and reflects a decrease from March 31, 2022 of 6.5 million for the international territories already

exited as of March 31, 2023. March 31, 2022 includes OTT subscribers totaling 7.1 million for the

international territories exited or being exited.

(2) Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.

(3) OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.

Revenue. Media Networks revenue increased $10.3 million reflecting increased revenue at LIONSGATE+

of $43.4 million, mostly offset by a decrease of $33.1 million at Starz Networks. Revenue for the international

territories exited or to be exited was approximately $40.6 million in fiscal 2023 and accounted for approximately

$6.8 million of the $43.4 million increase in LIONSGATE+ revenue mentioned above. Starz Networks’ revenue

decreased primarily as a result of declines in revenue of $132.0 million from traditional linear services, which

were offset by higher OTT revenue of $94.1 million resulting from increased subscriptions.

During fiscal 2023 and fiscal 2022, the following original series premiered on STARZ:

Year Ended March 31, 2023 Year Ended March 31, 2022

Title Premiere Date Title Premiere Date

First Quarter: First Quarter:

Gaslit April 24, 2022 The Girlfriend Experience Season 3 May 2, 2021

P-Valley Season 2 June 3, 2022 Run the World Season 1 May 16, 2021

Becoming Elizabeth Season 1 June 12, 2022 Blindspotting Season 1 June 13, 2021

Who is Ghislaine Maxwell June 26, 2022

Second Quarter: Second Quarter:

Power Book III: Raising Kanan Season 2

August 14, 2022

Power Book III: Raising Kanan

Season 1 July 18, 2021

Serpent Queen Season 1 September 11, 2022 Heels Season 1 August 15, 2021

BMF—Black Mafia Family Season 1 September 26, 2021

Third Quarter: Third Quarter:

(1)

Step Up Season 3 October 16, 2022 Hightown Season 2 October 17, 2021

Dangerous Liaisons Season 1 November 6, 2022 Power Book II: Ghost Season 2 November 21, 2021

Fourth Quarter: Fourth Quarter:

BMF — Black Mafia Family Season 2 January 6, 2023 Power Book IV: Force Season 1 February 6, 2022

Party Down Season 3 February 24, 2023 Outlander Season 6 March 6, 2022

Power Book II: Ghost Season 3 March 17, 2023 Shining Vale Season 1 March 6, 2022

(1) In addition, BMF — Black Mafia Family Season 1 premiered on September 26, 2021, with the majority of

episodes airing during the three months ended December 31, 2021.

Direct Operating and Distribution and Marketing Expenses. Direct operating and distribution and

marketing expenses primarily represent programming cost amortization and advertising and marketing costs,

respectively. The level of programming cost amortization and advertising and marketing costs and thus the

segment profit margin for the Media Networks’ segment can fluctuate from period to period depending on the

number of new original series and first-run output theatrical movies premiering on the network during the period.

Programming cost amortization and advertising and marketing costs generally increase in periods where new

original series premiere. In addition, the LIONSGATE+ international service, in its remaining territories, has and

will continue to result in an increase in expenses as the service continues to expand.

The increase in Media Networks direct operating expenses is due to increases at Starz Networks of

$88.7 million and LIONSGATE+ of $10.2 million in the fiscal year ended March 31, 2023. The increase in Starz

Networks direct operating expense was primarily due to higher programming cost amortization related to our

Starz Originals of $89.2 million primarily related to higher cost original series premieres, higher programming

cost amortization of $3.6 million related to library content, and other increases in direct operating expense,

partially offset by lower programming amortization of $4.1 million related to theatrical releases under our

programming output agreements, and a benefit in fiscal 2023 of $10.0 million associated with the modification of

a content licensing arrangement. Direct operating expenses at LIONSGATE+ increased as a result of higher

programming cost amortization of approximately $1.7 million and foreign exchange losses of approximately

$6.1 million related to the strengthening U.S. dollar.

The decrease in Media Networks distribution and marketing expense is due to a decrease of $25.5 million at

Starz Networks due to lower overall spend for advertising purchased in fiscal 2023 and lower media spend for

our Starz Originals’ premieres, and a decrease of $23.1 million at LIONSGATE+ primarily due to a decrease in

direct response advertising in connection with the exited territories.

Gross Contribution. The decrease in gross contribution compared to the fiscal year ended March 31, 2022

was due to a decrease in gross contribution at Starz Networks of $96.3 million, partially offset by lower negative

gross contribution at LIONSGATE+ of $56.3 million, driven by higher direct operating expense, and lower Starz

Networks revenue, partially offset by higher LIONSGATE+ revenue and lower distribution and marketing

expense, as described above. The negative gross contribution related to the exited territories was approximately

$34.8 million for fiscal 2023.

General and Administrative Expense. General and administrative expenses in the fiscal year ended

March 31, 2023 increased from fiscal 2022, due to increases of $5.9 million at Starz Networks, and $2.5 million

at LIONSGATE+.

Liquidity and Capital Resources

Sources of Cash

Our liquidity and capital requirements in fiscal 2023 were provided principally through cash generated from

operations, corporate debt, our film related obligations (as further discussed below), and the monetization of

trade accounts receivable. As of March 31, 2023, we had cash and cash equivalents of $272.1 million.

Corporate Debt

Our corporate debt at March 31, 2023, excluding film related obligations discussed further below, consisted

of the following:

• Senior Credit Facilities:

• Revolving Credit Facility. We have a $1.25 billion revolving credit facility (with no amounts

outstanding at March 31, 2023) due April 2026 (the “Revolving Credit Facility”). We maintain

significant availability under our Revolving Credit Facility, which is currently used to meet our

short-term liquidity requirements, and could also be used for longer term liquidity requirements.

• Term Loan A. We have a term loan A facility due April 2026 (the “Term Loan A”), with

$428.2 million outstanding at March 31, 2023.

• Term Loan B. We have a term loan B facility due March 2025 (the “Term Loan B”, and, together

with the Revolving Credit Facility and the Term Loan A, the “Senior Credit Facilities”), with

$831.7 million outstanding at March 31, 2023.

• Senior Notes: We have $800.0 million outstanding of 5.500% senior notes due 2029 (the “5.500%

Senior Notes”) at March 31, 2023.

See Note 7 to our consolidated financial statements for a discussion of our corporate debt.

Film Related Obligations

We utilize our film related obligations to fund our film and television productions or licenses. Our film

related obligations at March 31, 2023 include the following:

• Production Loans: Production loans represent individual and multi-title loans for the production of

film and television programs that we produce or license. The majority of the Company’s production

loans have contractual repayment dates either at or near the expected completion or release dates, with

the exception of certain loans containing repayment dates on a longer term basis. At March 31, 2023,

there was $1,349.9 million outstanding of production loans.

• Programming Notes: Programming notes represent individual loans for the licensing of film and

television programs that we license, related to our Media Networks business. The Company’s

programming notes had contractual repayment dates in April and May 2023. At March 31, 2023, there

was $83.6 million outstanding of programming notes.

• Production Tax Credit Facility: We have a $235.0 million non-recourse senior secured revolving

credit facility due January 2025 based on collateral consisting solely of certain of the Company’s tax

credit receivables (the “Production Tax Credit Facility”). Cash collections from the underlying

collateral (tax credit receivables) are used to repay the Production Tax Credit Facility. At March 31,

2023, there was $231.8 million outstanding under the Production Tax Credit Facility.

• IP Credit Facility: In July 2021, as amended in September 2022, certain of our subsidiaries entered

into a senior secured amortizing term credit facility due July 2027 (the “IP Credit Facility”) based on

the collateral consisting solely of certain of our rights in certain library titles, including the Spyglass

and other recently acquired libraries. The maximum principal amount of the IP Credit Facility is

$161.9 million, subject to the amount of collateral available, which is based on the valuation of cash

flows from the libraries. At March 31, 2023, there was $143.8 million outstanding under the IP Credit

Facility.

• Backlog Facility and Other:

• Backlog Facility. In March 2022, as amended in August 2022, certain subsidiaries of the

Company entered into a committed secured revolving credit facility (the “Backlog Facility”)

based on collateral consisting solely of certain of the Company’s fixed fee or minimum guarantee

contracts where cash will be received in the future. The maximum principal amount of the

Backlog Facility is $175.0 million, subject to the amount of eligible collateral contributed to the

facility. The Backlog Facility revolving period finishes on May 16, 2025, at which point cash

collections from the underlying collateral is used to repay the facility. The facility maturity date is

up to two years and 90 days after the revolving period ends, currently August 14, 2027. As of

March 31, 2023, there was $175.0 million outstanding under the Backlog Facility.

• Other. In September 2022, the Company borrowed $43.4 million under a loan agreement which is

secured by contracted receivables which are not yet recognized as revenue under certain licensing

agreements, which matures on March 28, 2026 (the “September 2022 Distribution Loan”). In

December 2022, the Company borrowed $16.2 million under a loan agreement which matures on

November 1, 2025 (the “December 2022 Distribution Loan”, and together with the September

2022 Distribution Loan, the “Distribution Loans”). Outstanding loan balances under the

Distribution Loans must be repaid with any cash collections from the underlying collateral if and

when received by the Company, and may be voluntarily repaid at any time without prepayment

penalty fees. As of March 31, 2023, $51.0 million remains outstanding under the Distribution

Loans.

See Note 8 to our consolidated financial statements for a discussion of our film related obligations.

Accounts Receivable Monetization and Governmental Incentives

Our accounts receivable monetization programs include individual agreements to monetize certain of our

trade accounts receivable directly with third-party purchasers and a revolving agreement to monetize designated

pools of trade accounts receivable with various financial institutions.

In addition, we utilize governmental incentives, programs and other structures from states and foreign

countries (e.g., sales tax refunds, transferable tax credits, refundable tax credits, low interest loans, direct

subsidies or cash rebates, calculated based on the amount of money spent in the particular jurisdiction in

connection with the production) to fund our film and television productions and reduce financial risk.

See Note 19 to our consolidated financial statements for our accounts receivable monetization programs and

our tax credit receivables.

Uses of Cash

Our principal uses of cash in operations include the funding of film and television productions, film and

programming rights acquisitions, the distribution and marketing of films and television programs, and general

and administrative expenses. We also use cash for debt service (i.e. principal and interest payments)

requirements, equity method or other equity investments, quarterly cash dividends when declared, the purchase

of common shares under our share repurchase program, capital expenditures, and acquisitions of or investment in

businesses.

Redeemable Noncontrolling Interests. In addition, the Company has a redeemable noncontrolling interest

balance of $343.6 million as of March 31, 2023 related to its acquisition of a controlling interest, consisting of a

limited liability company interest, in each of Pilgrim Media Group and 3 Arts Entertainment, which may require

the use of cash in the event the holders of the noncontrolling interests require the Company to repurchase their

interests (see Note 11 to our consolidated financial statements).

• 3 Arts Entertainment. The noncontrolling interest holders have a right to put the noncontrolling interest

of 3 Arts Entertainment, at fair value, exercisable beginning May 29, 2023, for a 60 day period.

Beginning 30 days after the expiration of the exercise period for the put rights held by the

noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts

Entertainment, at fair value, for a 60 day period.

• Pilgrim Media Group. Pursuant to an amendment dated April 2, 2021, the put and call rights associated

with the noncontrolling interest were extended and modified, such that the noncontrolling interest

holder had a right to put and the Company had a right to call a portion of the noncontrolling interest,

equal to 25% of Pilgrim Media Group, at fair value, exercisable for thirty (30) days beginning

November 12, 2022. On November 14, 2022, the noncontrolling interest holder exercised the right to

put a portion of the noncontrolling interest, equal to 25% of Pilgrim Media Group. In February 2023,

the Company paid $36.5 million as settlement of the exercised put option. The noncontrolling interest

holder has a right to put and the Company has a right to call the remaining amount of noncontrolling

interest at fair value, subject to a cap, exercisable for thirty (30) days beginning November 12, 2024, as

amended.

We may from time to time seek to retire or purchase or refinance our outstanding debt through cash

purchases, and/or exchanges for equity securities, in open market purchases, privately negotiated transactions,

refinancings, or otherwise. Such repurchases or exchanges or refinancings, if any, will depend on prevailing

market conditions, our liquidity requirements, our assessment of opportunities to lower interest expense,

contractual restrictions and other factors, and such repurchases or exchanges could result in a charge from the

early extinguishment of debt. The amounts involved may be material.

Anticipated Cash Requirements. The nature of our business is such that significant initial expenditures are

required to produce, acquire, distribute and market films and television programs, while revenues from these

films and television programs are earned over an extended period of time after their completion or acquisition.

We expect to continue to increase our investments in film and television programs and film and programming

rights acquisitions. In addition, the LIONSGATE+ international service, in its remaining territories, has and will

require capital investment as the service continues to expand. We are in the process of executing our

LIONSGATE+ restructuring plan previously discussed under “Item 2. Management’s Discussion and Analysis of

Results of Operations and Financial Condition—Overview”, including exiting certain territories, negotiating

certain content related contractual commitments and performing our strategic review of content performance for

consideration of removal from our various platforms. We estimate we will incur additional charges ranging from

approximately $20 million to $50 million related to certain contractual content commitments or programming

content impairment charges, among other items, as we fully implement the plan. Of these total estimated future

charges, the net future cash outlay is estimated to range from approximately $20 million to $50 million, which is

inclusive of the amounts payable for the content, as well as the incremental cost related to the restructuring. Of

the content impairment charges recorded in the fiscal year ended March 31, 2023, approximately $90 million

reflects the future cash to be paid for the remaining amounts payable for this content. As we continue to fully

implement the plan, including further strategic review of content performance, we may incur additional content

impairment charges beyond these estimates. We expect the restructuring plan to be substantially completed by

June 30, 2023, however, certain settlements of contractual commitments could extend beyond that date.

In the short-term, we currently expect that our cash requirements for productions and marketing spend will

increase in fiscal 2024 as compared to fiscal 2023.

However, we currently believe that cash flow from operations, cash on hand, revolving credit facility

availability, the monetization of trade accounts receivable, tax-efficient financing, the availability of our

Production Tax Credit Facility, IP Credit Facility and Backlog Facility and other financing obligations, and

available production or license financing will be adequate to meet known operational cash and debt service (i.e.

principal and interest payments) requirements for the next 12 months and beyond, including the funding of future

film and television production, film and programming rights acquisitions and theatrical and home entertainment

release schedules, and future equity method or other investment funding requirements, and international

expansion in our remaining international territories. We monitor our cash flow liquidity, availability, fixed

charge coverage, capital base, film spending and leverage ratios with the long-term goal of maintaining our credit

worthiness.

Our current financing strategy is to fund operations and to leverage investment in films and television

programs in the short-term and long-term through our cash flow from operations, our revolving credit facility,

production loans and programming notes, government incentive programs, the monetization of trade accounts

receivable, our Production Tax Credit Facility, our IP Credit Facility, our Backlog Facility, and other obligations.

In addition, we continue to invest in our LIONSGATE+ international service in its remaining territories, and may

acquire businesses or assets, including individual films or libraries that are complementary to our business. Any

such transaction could be financed through our cash flow from operations, credit facilities, equity or debt

financing. If additional financing beyond our existing cash flows from operations and credit facilities cannot fund

such transactions, there is no assurance that such financing will be available on terms acceptable to us. Our

ability to obtain any additional financing will depend on, among other things, our business plans, operating

performance, the condition of the capital markets at the time we seek financing, and short and long-term debt

ratings assigned by independent rating agencies. Additionally, circumstances related to the COVID-19 global

pandemic, inflation and rising interest rates and bank failures has caused disruption in the capital markets, which

could make financing more difficult and/or expensive, and we may not be able to obtain such financing. We may

also dispose of businesses or assets, including individual films or libraries, and use the net proceeds from such

dispositions to fund operations or such acquisitions, or to repay debt.

Material Cash Requirements from Known Contractual and Other Obligations. Our material cash

requirements from known contractual and other obligations primarily relate to our corporate debt and film related

obligations. The following table sets forth our significant contractual and other obligations as of March 31, 2023

and the estimated timing of payment:

Total

Next 12

Months

Beyond 12

Months

(Amounts in millions)

Future annual repayment of debt and other

obligations recorded as of March 31, 2023

(on-balance sheet arrangements)

Corporate debt

(1)

Revolving credit facility ..................... $ — $ — $ —

Term Loan A

(1)

............................ 428.2 28.9 399.3

Term Loan B .............................. 831.7 12.5 819.2

5.500% Senior Notes ....................... 800.0 — 800.0

Film related obligations

(2)

.................... 2,035.1 1,007.2 1,027.9

Content related payables

(3)

................... 243.5 184.1 59.4

Operating lease obligations

(4)

................. 206.6 47.4 159.2

4,545.1 1,280.1 3,265.0

Contractual commitments by expected repayment

date (off-balance sheet arrangements)

Film related obligations commitments

(5)

........ 818.0 450.0 368.0

Interest payments on corporate debt

(6)

.......... 399.7 96.6 303.1

Other contractual obligations ................. 451.1 119.0 332.1

1,668.8 665.6 1,003.2

Total future repayment of debt and other

commitments under contractual obligations

(6)

. . . $6,213.9 $1,945.7 $4,268.2

(1) See Note 7 to our consolidated financial statements for further information on our corporate debt.

(2) See Note 8 to our consolidated financial statements for further information on our film related obligations.

(3) Content related payables include minimum guarantees and accrued licensed program rights obligations

included on our consolidated balance sheet, which represent amounts payable for film or television rights

that we have acquired or licensed.

(4) See Note 9 to our consolidated financial statements for further information on leases.

(5) Film related obligations commitments include distribution and marketing commitments, minimum

guarantee commitments, program rights commitments, and production loan commitments not reflected on

the consolidated balance sheets as they did not then meet the criteria for recognition. See Note 17 to our

consolidated financial statements for further information.

(6) Includes cash interest payments on our corporate debt, excluding the interest payments on the revolving

credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

(7) Not included in the amounts above are $343.6 million of redeemable noncontrolling interest, as future

amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently

reliable estimations of future payments (see Note 11 to our consolidated financial statements).

We have an exclusive multiyear post pay-one output licensing agreement with Universal for live-action

films theatrically released in the U.S. starting January 1, 2022. The Universal agreement provides us with rights

to exhibit these films immediately following their pay-one windows. We are unable to estimate the amounts to be

paid under the Universal agreement for films that have not yet been released in theaters, however, such amounts

are expected to be significant.

For additional details of commitments and contingencies, see Note 17 to our consolidated financial

statements.

Covenants. The Senior Credit Facilities contain representations and warranties, events of default and

affirmative and negative covenants that are customary for similar financings and which include, among other

things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create

liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other

person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance

covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly. As of March 31,

2023, the Company was in compliance with all applicable covenants.

The 5.500% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit

the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common

shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain

conditions, among other limitations. As of March 31, 2023, the Company was in compliance with all applicable

covenants.

Share Repurchase Plan. On February 2, 2016, our Board of Directors authorized to increase our previously

announced share repurchase plan from $300 million to $468 million. To date, approximately $288.1 million of

our common shares have been purchased under the plan, leaving approximately $179.9 million of authorized

potential repurchases. The remaining $179.9 million of our common shares authorized under the plan may be

purchased from time to time at our discretion, including quantity, timing and price thereof, and will be subject to

market conditions. Such purchases will be structured as permitted by securities laws and other legal

requirements. During the fiscal year ended March 31, 2023, the Company did not repurchase any common

shares.

Dividends. The amount of dividends, if any, that we pay to our shareholders is determined by our Board of

Directors, at its discretion, and is dependent on a number of factors, including our financial position, results of

operations, cash flows, capital requirements and restrictions under our credit agreements, and shall be in

compliance with applicable law.

Capacity to Pay Dividends. At March 31, 2023, the capacity to pay dividends under the Senior Credit

Facilities and the Senior Notes significantly exceeded the amount of the Company’s accumulated deficit or net

loss, and therefore the Company’s net loss of $2,018.8 million and accumulated deficit of $2,439.6 million were

deemed free of restrictions from paying dividends at March 31, 2023.

Discussion of Operating, Investing, Financing Cash Flows

Cash, cash equivalents and restricted cash decreased by $68.8 million for the fiscal year ended March 31,

2023 and decreased by $142.0 million for the fiscal year ended March 31, 2022, before foreign exchange effects

on cash. Components of these changes are discussed below in more detail.

Operating Activities. Cash flows used in operating activities for the fiscal years ended March 31, 2023 and

2022 were as follows:

Year Ended March 31,

2023 2022 Net Change

(Amounts in millions)

Net Cash Flows Used In Operating Activities ......................... $(114.3) $(660.9) $546.6

Cash flows used in operating activities for the fiscal year ended March 31, 2023 were $114.3 million

compared to cash flows used in operating activities of $660.9 million for the fiscal year ended March 31, 2022.

The lower cash used in operating activities is due to lower cash used from changes in operating assets and

liabilities of $581.3 million driven by lower cash used for investment in films and television programs and

program rights, proceeds from the termination of interest rate swaps (see further discussion below for interest

rate swap transactions in fiscal 2023), and higher cash from other changes in operating assets and liabilities,

partially offset by higher increases in accounts receivable, net, and higher decreases in accounts payable and

accrued liabilities. The lower cash used from changes in operating assets and liabilities was partially offset by

higher use of cash related to higher interest associated with higher interest rates and film related obligations

balances. In addition, cash flows used in operating activities for the fiscal year ended March 31, 2023 included a

net benefit of approximately $11.6 million from the monetization of accounts receivables programs, as compared

to a net use of cash of approximately $151.4 million for the fiscal year ended March 31, 2022 (see Note 19 to our

consolidated financial statements).

During the fiscal year ended March 31, 2023, we terminated certain interest rate swaps (a portion of which

were considered hybrid instruments with a financing component and an embedded at-market derivative that was

a designated cash flow hedge), and received approximately $56.4 million. The $56.4 million received was

classified in the consolidated statement of cash flows as cash provided by operating activities of $188.7 million

reflecting the amount received for the derivative portion of the termination of swaps (and presented in the

“proceeds from the termination of interest rate swaps” line item on the consolidated statement of cash flows), and

a use of cash in financing activities of $134.5 million reflecting the pay down of the financing component of the

Terminated Swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to

$3.2 million) (see Financing Activities below). See Note 18 to our consolidated financial statements.

Investing Activities. Cash flows used in investing activities for the fiscal years ended March 31, 2023 and

2022 were as follows:

Year Ended March 31,

2023 2022

(Amounts in millions)

Investing Activities:

Proceeds from the sale of Pantaya .............................................. $ — $123.6

Proceeds from the sale of equity method and other investments ....................... 46.3 1.5

Investment in equity method investees and other .................................. (17.5) (14.0)

Distributions from equity method investees and other .............................. 1.9 7.2

Acquisition of assets (film library and related assets) ............................... — (161.4)

Increase in loans receivable ................................................... — (4.3)

Capital expenditures ......................................................... (49.0) (33.1)

Net Cash Flows Used In Investing Activities .................................... $(18.3) $ (80.5)

Cash flows used in investing activities of $18.3 million for the fiscal year ended March 31, 2023 reflects

cash used for capital expenditures and investment in equity method investees and other, offset by proceeds from

the sale of a portion of our ownership interest in STARZPLAY Arabia in the fiscal year ended March 31, 2023,

compared to cash used for the acquisition of a film library and related assets offset by the receipt of proceeds

during the fiscal year ended March 31, 2022 from the sale of Pantaya.

Financing Activities. Cash flows provided by financing activities for the fiscal years ended March 31, 2023

and 2022 were as follows:

Year Ended March 31,

2023 2022

(Amounts in millions)

Debt — borrowings, net of debt issuance and redemption costs ..................... $1,523.0 $ 2,448.4

Debt — repurchases and repayments .......................................... (1,880.8) (2,693.9)

Net repayments and repurchases of debt ................................... (357.8) (245.5)

Film related obligations — borrowings ........................................ 1,688.6 1,253.4

Film related obligations — repayments ........................................ (1,073.0) (347.6)

Net proceeds from film related obligations ................................. 615.6 905.8

Other financing activities ................................................... (194.0) (60.9)

Net Cash Flows Provided By Financing Activities ............................. $ 63.8 $ 599.4

Cash flows provided by financing activities of $63.8 million for the fiscal year ended March 31, 2023

compared to cash flows provided by financing activities of $599.4 million for the fiscal year ended March 31,

2022.

Cash flows provided by financing activities for fiscal 2023 primarily reflects net film related obligations

borrowings of $615.6 million due to net borrowings under production loans and the Production Tax Credit

Facility of $372.8 million and net borrowings under the Backlog Facility, IP Credit Facility and Distribution

Loans of $242.5 million, offset by net debt repayments and repurchases of $357.8 million. Net debt repayments

and repurchases of $357.8 million in fiscal 2023 included the below transactions, along with required repayments

on our term loans:

• In April 2022, we voluntarily prepaid the entire outstanding principal amount of the Term Loan A due

March 22, 2023 of $193.6 million.

• During fiscal 2023, we repurchased $200.0 million principal amount of the 5.500% Senior Notes for

$135.0 million.

In addition, other financing activities in the fiscal year ended March 31, 2023 includes $134.5 million for

interest rate swap settlement payments due to $134.5 million for the pay down of the financing component of our

terminated interest rate swaps in fiscal 2023 (inclusive of payments made between April 1, 2022 and the

termination date amounting to $3.2 million) (see discussion above in Operating Activities, and Note 18 to our

consolidated financial statements). Other financing activities also includes tax withholding required on equity

awards of $19.2 million and the purchase of noncontrolling interest of $36.5 million representing the settlement

of the exercised Pilgrim Media Group put option.

Cash flows provided by financing activities for fiscal 2022 primarily reflects net film related obligations

borrowings of $905.8 million as production activity increased in fiscal 2022, offset by net debt repayments and

repurchases of $245.5 million (discussed below). In addition, other financing activities in fiscal 2022 includes

$28.5 million for interest rate swap settlement payments due to an other-than-insignificant financing element on a

portion of our interest rate swaps (see Note 18 to our consolidated financial statements), and $35.1 million for tax

withholding required on equity awards. Net debt repayments and repurchases of $245.5 million in fiscal 2022

included the below transactions and associated debt issuance and redemption costs, along with required

repayments on our term loans:

• On April 1, 2021, we redeemed in full all $518.7 million outstanding principal amount of our 5.875%

Senior Notes and all $545.6 million outstanding principal amount of our 6.375% Senior Notes, and

paid a prepayment premium of $15.2 million and $17.4 million on the 5.875% Senior Notes and

6.375% Senior Notes, respectively.

• On April 1, 2021, in connection with the redemption of the 5.875% Senior Notes and the 6.375%

Senior Notes, we issued $1.0 billion aggregate principal amount of 5.500% Senior Notes.

• On April 6, 2021, we amended our Credit Agreement to, among other things, extend the maturity of a

portion of our revolving credit commitments, amounting to $1.25 billion, and a portion of our

outstanding term A loans, amounting to $444.9 million to April 6, 2026.

• During fiscal 2022, the Company also completed a series of repurchases of the Term Loan B and, in

aggregate, paid $95.3 million to repurchase $96.0 million principal amount of the Term Loan B.

Remaining Performance Obligations and Backlog

Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or

minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e.,

backlog). As disclosed in Note 12 to our consolidated financial statements, remaining performance obligations

were $1.9 billion at March 31, 2023 (March 31, 2022 — $1.8 billion). The backlog portion of remaining

performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production

segments was $1.5 billion at March 31, 2023 (March 31, 2022 — $1.3 billion).

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Currency and Interest Rate Risk Management

Market risks relating to our operations result primarily from changes in interest rates and changes in foreign

currency exchange rates. Our exposure to interest rate risk results from the financial debt instruments that arise

from transactions entered into during the normal course of business. As part of our overall risk management

program, we evaluate and manage our exposure to changes in interest rates and currency exchange risks on an

ongoing basis. Hedges and derivative financial instruments will continue to be used in the future in order to

manage our interest rate and currency exposure. We have no intention of entering into financial derivative

contracts, other than to hedge a specific financial risk.

Currency Rate Risk. We enter into forward foreign exchange contracts to hedge our foreign currency

exposures on future production expenses denominated in various foreign currencies. These contracts are entered

into with major financial institutions as counterparties. We are exposed to credit loss in the event of

nonperformance by the counterparty, which is limited to the cost of replacing the contracts, at current market

rates. We do not require collateral or other security to support these contracts. See Note 18 to our consolidated

financial statements for additional information on our financial instruments.

Interest Rate Risk. At March 31, 2023, we had interest rate swap agreements to fix the interest rate on $1.7

billion of variable rate LIBOR-based debt. See Note 18 to our consolidated financial statements for additional

information. The difference between the fixed rate to be paid and the variable rate received under the terms of the

interest rate swap agreements will be recognized as interest expense for the related debt. Changes in the variable

interest rates to be paid or received pursuant to the terms of the interest rate swap agreements will have a

corresponding effect on future cash flows.

Certain of our borrowings, primarily borrowings under our Senior Credit Facilities, and our film related

obligations are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk.

If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even

though the amount borrowed remained the same, and our net income would decrease. The applicable margin with

respect to loans under the revolving credit facility and Term Loan A is a percentage per annum equal to a LIBOR

rate plus 1.75%. The applicable margin with respect to loans under our Term Loan B is a percentage per annum

equal to a LIBOR rate plus 2.25%. Assuming the revolving credit facility is drawn up to its maximum borrowing

capacity of $1.25 billion, based on the applicable LIBOR in effect as of March 31, 2023, each quarter point

change in interest rates would result in a $2.0 million change in annual net interest expense on the revolving

credit facility, Term Loan A, Term Loan B and interest rate swap agreements.

The variable interest film related obligations (which includes our production loans, programming notes,

Production Tax Credit Facility, IP Credit Facility, Backlog Facility and other) incur primarily SOFR and LIBOR-

based interest, with applicable margins ranging from 1.15% to 3.50% per annum. A quarter point increase of the

interest rates on the variable interest film related obligations would result in $3.6 million in additional costs

capitalized to the respective film or television asset for production loans and programming notes (based on the

outstanding principal amount of such loans), and a $1.5 million change in annual net interest expense (based on

the outstanding principal amount of such loans, and assuming the Production Tax Credit Facility and Backlog

Facility are utilized up to their maximum capacity of $235.0 million and $175.0 million, respectively).

At March 31, 2023, our 5.500% Senior Notes had an outstanding carrying value of $776.0 million, and an

estimated fair value of $510.0 million. A 1% increase in the level of interest rates would decrease the fair value

of the 5.500% Senior Notes by approximately $23.1 million, and a 1% decrease in the level of interest rates

would increase the fair value of the 5.500% Senior Notes by approximately $24.0 million.

The following table presents information about our financial instruments that are sensitive to changes in

interest rates. The table also presents the cash flows of the principal amounts of the financial instruments, or the

cash flows associated with the notional amounts of interest rate derivative instruments, and related weighted-

average interest rates by expected maturity or required principal payment dates and the fair value of the

instrument as of March 31, 2023:

Year Ended March 31,

Fair Value

March 31,

20232024 2025 2026 2027 2028 Thereafter Total

(Amounts in millions)

Variable Rates:

Revolving Credit

Facility

(1)

.......... $—$—$—$—$— $— $—$—

Average Interest

Rate .......... — — — — — —

Term Loan A

(1)

...... 28.9 41.2 44.5 313.6 — — 428.2 415.4

Average Interest

Rate .......... 6.61% 6.61% 6.61% 6.61% — —

Term Loan B

(1)

...... 12.5 819.2 — — — — 831.7 817.1

Average Interest

Rate .......... 7.11% 7.11% — — — —

Film related

obligations

(2)

....... 1,007.2 796.3 59.8 30.4 141.4 — 2,035.1 2,035.1

Average Interest

Rate .......... 6.90% 6.58% 7.05% 7.46% 6.28% —

Fixed Rates:

5.500% Senior

Notes ............. — — — — — 800.0 800.0 510.0

Average Interest

Rate .......... — — — — — 5.50%

Interest Rate

Swaps

(3)

...........

Variable to fixed

notional

amount ....... — 1,700.0 — — — — 1,700.0 41.1

(1) The effective interest rate in the table above is before the impact of interest rate swaps.

(2) Represents amounts outstanding under film related obligations (i.e., production loans, Production Tax Credit

Facility, programming notes, Backlog Facility and other, and IP Credit Facility), actual amounts outstanding

and the timing of expected future repayments may vary in the future (see Note 8 to our consolidated

financial statements for further information).

(3) Represents interest rate swap agreements on certain of our LIBOR-based floating-rate debt with fixed rates

paid ranging from 2.723% to 2.915% with maturities in March 2025. See Note 18 to our consolidated

financial statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Auditors’ Report and our Consolidated Financial Statements and Notes thereto appear in a separate

section of this report (beginning on page F-1 following Part IV). The index to our Consolidated Financial

Statements is included in Item 15.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be

disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is

recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms,

and that such information is accumulated and communicated to management, including our Chief Executive

Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We

periodically review the design and effectiveness of our disclosure controls and internal control over financial

reporting. We make modifications to improve the design and effectiveness of our disclosure controls and internal

control structure, and may take other corrective action, if our reviews identify a need for such modifications or

actions.

As of March 31, 2023, the end of the period covered by this report, the Company’s management had carried

out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief

Financial Officer of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act

Rules 13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have

concluded that such controls and procedures were effective as of March 31, 2023.

Internal Control Over Financial Reporting

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial

reporting for the Company. Our internal control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of our financial reporting and the preparation of financial

statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal

control over financial reporting includes policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the Company;

• provide reasonable assurance that (a) transactions are recorded as necessary to permit preparation of

financial statements in accordance with U.S. generally accepted accounting principles, and (b) that our

receipts and expenditures are being recorded and made only in accordance with authorizations of

management and directors of the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use

or disposition of our assets that could have a materially effect on the financial statements.

Our management has made an assessment of the effectiveness of our internal control over financial

reporting as of March 31, 2023. Management based its assessment on criteria established in Internal Control-

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission

(2013 Framework).

Based on this assessment, our management has concluded that, as of March 31, 2023, the Company

maintained effective internal control over financial reporting. The effectiveness of the Company’s internal

control over financial reporting has been audited by Ernst & Young LLP, an independent registered public

accounting firm. Their report is included below.

Inherent Limitation on Effectiveness of Controls and Procedures

A control system, no matter how well designed and operated, can provide only reasonable, not absolute,

assurance that the objectives of the control system are met. Because of the inherent limitations, internal controls

over financial reporting may not prevent or detect misstatements. Projections of any evaluation of the

effectiveness of internal control over financial reporting to future periods are subject to the risks that controls

may become inadequate because of changes in conditions, or that the degree of compliance with the policies or

procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting during the fiscal fourth quarter ended

March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control

over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Lions Gate Entertainment Corp.

Opinion on Internal Control Over Financial Reporting

We have audited Lions Gate Entertainment Corp.’s internal control over financial reporting as of March 31,

2023, based on criteria established in Internal Control–Integrated Framework issued by the Committee of

Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,

Lions Gate Entertainment Corp. (the Company) maintained, in all material respects, effective internal control

over financial reporting as of March 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board

(United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2023 and 2022, the

related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the

three years in the period ended March 31, 2023, and the related notes and financial statement schedule listed in

the Index at Item 15(a) and our report dated May 25, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and

for its assessment of the effectiveness of internal control over financial reporting included in the accompanying

Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion

on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm

registered with the PCAOB and are required to be independent with respect to the Company in accordance with

the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether effective internal control over financial

reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that

a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based

on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We

believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles. A company’s internal control over financial reporting

includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance

with generally accepted accounting principles, and that receipts and expenditures of the company are being made

only in accordance with authorizations of management and directors of the company; and (3) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the

company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect

misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that

controls may become inadequate because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Los Angeles, California

May 25, 2023

ITEM 9B. OTHER INFORMATION.

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item is incorporated by reference to our Proxy Statement for our 2023 Annual

General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended

March 31, 2023.

We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees.

The Code of Business Conduct and Ethics is available on our website at investors.lionsgate.com. If we ever were

to amend or waive any provision of our Code of Business Conduct and Ethics that applies to our principal

executive officer, principal financial officer, principal accounting officer or any person performing similar

functions, we intend to satisfy our disclosure obligations, if any, with respect to any such waiver or amendment

by posting such information on our website set forth above rather than by filing a Current Report on Form 8-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference to our Proxy Statement for our 2023 Annual

General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended

March 31, 2023.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED SHAREHOLDER MATTERS.

The information required by this Item is incorporated by reference to our Proxy Statement for our 2023 Annual

General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended

March 31, 2023.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE.

The information required by this Item is incorporated by reference to our Proxy Statement for our 2023 Annual

General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended

March 31, 2023.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is incorporated by reference to our Proxy Statement for our 2023 Annual

General Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended

March 31, 2023.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as part of this report:

(1) Financial Statements

The financial statements listed on the accompanying Index to Financial Statements are filed as part of

this report at pages F-1 to F-68.

(2) Financial Statement Schedules

Schedule II. Valuation and Qualifying Accounts

All other Schedules are omitted since the required information is not present or is not present in

amounts sufficient to require submission of the schedule.

(3) and (b) Exhibits

The exhibits listed on the accompanying Index to Exhibits are filed as part of this report.

Item 15(a).

Schedule II. Valuation and Qualifying Accounts

Lions Gate Entertainment Corp.

March 31, 2023

(In Millions)

Additions

Description

Balance at

Beginning

of Period

Charged to Costs

and Expenses

(1)

Charged to

Other

Accounts Deductions

Balance at

End of Period

Year Ended March 31, 2023:

Reserves:

Returns and allowances .......... $ 19.3 $ 40.6 $ — $(42.3)

(2)

$ 17.6

Provision for doubtful accounts .... $ 11.5 $ 1.1 $ — $ (3.4)

(3)

$ 9.2

Deferred tax valuation allowance . . $362.8 $115.9 $(23.0)

(4)

$ — $455.7

Year Ended March 31, 2022:

Reserves:

Returns and allowances .......... $ 26.1 $ 44.4 $ — $(51.2)

(2)

$ 19.3

Provision for doubtful accounts .... $ 6.5 $ 5.3 $ — $ (0.3)

(3)

$ 11.5

Deferred tax valuation allowance . . $

350.9 $ 40.4 $(28.5)

(4)

$ — $362.8

Year Ended March 31, 2021:

Reserves:

Returns and allowances .......... $ 33.7 $ 53.3 $ — $(60.9)

(2)

$ 26.1

Provision for doubtful accounts .... $ 9.3 $ (2.5) $ — $ (0.3)

(3)

$ 6.5

Deferred tax valuation allowance . . $435.8 $ (56.3) $(28.6)

(4)

$ — $350.9

(1) Charges for returns and allowances are charges against revenue.

(2) Actual returns and fluctuations in foreign currency exchange rates.

(3) Uncollectible accounts written off and fluctuations in foreign currency exchange rates. Includes $2.5 million

related to accounts receivable previously reserved for bad debt from customers in Russia, related to Russia’s

invasion of Ukraine.

(4) Valuation allowance adjustments recorded in other comprehensive income and primarily associated with

hedging activity.

Item 15(b).

INDEX TO EXHIBITS

Exhibit

Number

Exhibit Description

Incorporated by Reference

Form Exhibit

Filing Date/

Period End Date

2.1 Agreement and Plan of Merger, dated as of June 30, 2016, by and

among Lions Gate, Starz, and Orion Arm Acquisition Inc. 8-K 2.1 7/1/2016

3.1 Articles 8-K 3.1 12/8/2016

3.2 Notice of Articles 10-K 3.2 5/28/2021

4.1 Indenture, dated as of April 1, 2021, by and among Lions Gate

Capital Holdings, LLC the Guarantors named therein, and Deutsche

Bank Trust Company, as Trustee 8-K 4.1 4/1/2021

4.2 Description of Class A voting shares, no par value per share S-4 — 8/1/2016

4.3 Description of Class B non-voting shares, no par value per share S-4 — 8/1/2016

10.1*x Director Compensation Summary

10.2 Form of Director Indemnity Agreement 10-Q 10.62 12/31/2008

10.3 Letter Agreement between Mark H. Rachesky and Lions Gate

Entertainment Corp. dated July 9, 2009 8-K 10.65 7/10/2009

10.4 Registration Rights Agreement, dated as of October 22, 2009, by

and among Lions Gate Entertainment Corp. and the persons listed

on the signature pages thereto 8-K 10.68 10/23/2009

10.5 Stock Exchange Agreement, dated as of February 10, 2015, by and

between Lions Gate Entertainment Corp., LG Leopard Canada LP

and the stockholders listed on Schedule 1 thereto 8-K 10.1 2/11/2015

10.6 Investor Rights Agreement, dated as of November 10, 2015, by and

among Lions Gate Entertainment Corp., Liberty Global plc,

Discovery Communications, Inc., Liberty Global Incorporated

Limited, Discovery Lightning Investments Ltd. and affiliates of

MHR Fund Management, LLC 8-K 10.1 11/10/2015

10.6.1 Amendment No. 1 to Investor Rights Agreement, dated as of

June 30, 2016, by and among Lions Gate, Mammoth, Liberty,

Discovery, Liberty Global plc, Discovery Communications, Inc.,

and the affiliated funds of Mammoth party thereto 8-K 10.8 7/1/2016

10.7 Voting and Standstill Agreement, dated as of November 10, 2015,

by and among Lions Gate Entertainment Corp., Liberty Global plc,

Discovery Communications, Inc., Liberty Global Incorporated

Limited, Discovery Lightning Investments Ltd., Dr. John C. Malone

and affiliates of MHR Fund Management, LLC 8-K 10.2 11/10/2015

10.7.1 Amendment to Voting and Standstill Agreement, dated as of

June 30, 2016, by and among Lions Gate, Liberty Global plc,

Discovery, Dr. John C. Malone, MHR Fund Management, LLC,

Liberty, Discovery Communications, Inc. and the Mammoth Funds

(as defined therein) 8-K 10.7 7/1/2016

Exhibit

Number Exhibit Description

Incorporated by Reference

Form Exhibit

Filing Date/

Period End Date

10.8 Registration Rights Agreement, dated as of November 10, 2015, by

and among Lions Gate Entertainment Corp. and Liberty Global

Incorporated Limited 8-K 10.3 11/10/2015

10.9 Registration Rights Agreement, dated as of November 10, 2015, by

and among Lions Gate Entertainment Corp. and Discovery

Lightning Investments Ltd. 8-K 10.4 11/10/2015

10.10 Amendment No. 1, dated as of February 3, 2016, to Registration

Rights Agreement, dated as of October 22, 2009, by and among

Lions Gate Entertainment Corp. and the persons listed on the

signatures pages thereto 10-Q 10.116 2/4/2016

10.11 Stock Exchange Agreement, dated as of June 30, 2016, by and

among Lions Gate, Orion Arm Acquisition Inc., and the

stockholders listed on Schedule 1 thereto 8-K 10.1 7/1/2016

10.12 Credit and Guarantee Agreement, dated as of December 8, 2016,

among Lions Gate, as borrower, the guarantors party thereto, the

lenders referred to therein, and JPMorgan Chase Bank, N.A., as

Administrative Agent 8-K 10.1 12/8/2016

10.12.1 Amendment No. 1, dated as of December 11, 2017, to the Credit

and Guarantee Agreement dated as of December 8, 2016, among

Lions Gate Entertainment Corp., as borrower, each guarantor party

thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as

administrative agent, and the other parties thereto 8-K 10.1 12/11/2017

10.12.2 Amendment No. 2, dated as of March 22, 2018, to the Credit and

Guarantee Agreement dated as of December 8, 2016, among Lions

Gate Entertainment Corp., as borrower, each guarantor party

thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as

administrative agent, and the other parties thereto (as previously

amended by that certain Amendment No. 1 dated as of

December 11, 2017). 8-K 10.1 3/22/2018

10.12.3 Amendment No. 3 dated as of March 11, 2019, to the Credit and

Guarantee Agreement dated as of December 8, 2016, as amended

and restated as of March 22, 2018 (as further amended,

supplemented, amended and restated or otherwise modified from

time to time) among Lions Gate Entertainment Corp., Lions Gate

Capital Holdings LLC, as borrower, each guarantor party thereto,

each lender party thereto, JPMorgan Chase Bank, N.A., as

administrative agent, and the other parties thereto. 10-K 10.34 5/23/2019

10.12.4 Amendment No. 4, dated as of April 6, 2021, to the Credit and

Guarantee Agreement dated as of December 8, 2016, among Lions

Gate Entertainment Corp., as borrower, each guarantor party

thereto, each lender party thereto, JPMorgan Chase Bank, N.A., as

administrative agent, and the other parties thereto. 8-K 10.1 4/6/2021

10.13* Lions Gate Entertainment Corp. 2019 Performance Incentive Plan. 8-K 10.1 9/15/2021

10.13.1* Form of Restricted Share Unit Award Agreement 10-Q 10.39 11/7/2019

10.13.2* Form of Nonqualified Stock Option Agreement 10-Q 10.40 11/7/2019

Exhibit

Number Exhibit Description

Incorporated by Reference

Form Exhibit

Filing Date/

Period End Date

10.13.3* Form of Share Appreciation Rights Award Agreement 10-Q 10.41 11/7/2019

10.14* Deferred Compensation Plan 10-Q 10.41 2/4/2021

10.15* Employment Agreement between Lions Gate Entertainment Corp.

and James W. Barge dated November 1, 2019 10-Q 10.38 11/7/2019

10.15.1* Amendment to Employment Agreement between Lions Gate

Entertainment Corp. and James W. Barge dated June 22, 2020 10-Q 10.35 8/6/2020

10.16* Employment Agreement among Jon Feltheimer and Lions Gate

Entertainment Corp. dated as of August 21, 2020 8-K 10.1 8/26/2020

10.16.1* First Amendment to Employment Agreement, dated August 12,

2022, between the Company and Jon Feltheimer 8-K 10.1 8/15/2022

10.17* Employment Agreement among Michael Burns and Lions Gate

Entertainment Corp. dated as of December 18, 2020 8-K 10.1 12/21/2020

10.18* Waiver and General Release Agreement dated February 15, 2023 8-K 10.1 2/17/2023

10.19x* Employment Agreement between Lions Gate Entertainment Corp.

and Brian Goldsmith dated as of October 1, 2022

10.20x* Employment Agreement between Lions Gate Entertainment Corp.

and Bruce Tobey dated as of March 27, 2023

21.1x Subsidiaries of the Company

23.1x Consent of Ernst & Young LLP

24.1x Power of Attorney (Contained on Signature Page)

31.1x Certification of CEO pursuant to Section 302 of Sarbanes-Oxley

Act of 2002

31.2x Certification of CFO pursuant to Section 302 of Sarbanes-Oxley

Act of 2002

32.1xx Certification of CEO and CFO pursuant to Section 906 of Sarbanes-

Oxley Act of 2002

101x The following financial statements from the Company’s Annual

Report on Form 10-K for the year ended March 31, 2023, formatted

in Inline XBRL: (i) Consolidated Balance Sheets (ii) Consolidated

Statements of Operations, (iii) Consolidated Statements of

Comprehensive Income (Loss), (iv) Consolidated Statements of

Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes

to Consolidated Financial Statements, tagged as blocks of text and

including detailed tags.

104x The cover page from the Company’s Annual Report on Form 10-K

for the year ended March 31, 2023 (formatted as Inline XBRL and

contained in Exhibit 101).

* Management contract or compensatory plan or arrangement.

x Filed herewith

xx Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act and shall

not be deemed to be incorporated by reference into any filing under the Securities Act, or the Exchange Act,

irrespective of any general incorporation language contained in such filing

ITEM 16. FORM 10-K SUMMARY.

None.

100

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 25,

2023.

LIONS GATE ENTERTAINMENT CORP.

By: /s/ James W. Barge

James W. Barge

Chief Financial Officer

DATE: May 25, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the

following persons in the capacities and on the dates so indicated.

Each person whose signature appears below authorizes each of Jon Feltheimer, Michael Burns, and James

W. Barge, severally and not jointly, to be his true and lawful attorney-in-fact and agent, with full power of

substitution and resubstitution, for him and in such person’s name, place and stead, in any and all capacities, to

sign any amendments to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023;

granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and

thing requisite and necessary to be done, as fully for all intents and purposes as he might or could do in person,

hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, shall

lawfully do or cause to be done by virtue hereof.

Signature Title Date

/s/ JAMES W. BARGE

James W. Barge

Chief Financial Officer (Principal

Financial Officer and Principal

Accounting Officer)

May 25, 2023

/s/ MICHAEL BURNS

Michael Burns

Vice Chairman, Director May 25, 2023

/s/ MIGNON CLYBURN

Mignon Clyburn

Director May 25, 2023

/s/ GORDON CRAWFORD

Gordon Crawford

Director May 25, 2023

/s/ JON FELTHEIMER

Jon Feltheimer

Chief Executive Officer (Principal

Executive Officer) and Director

May 25, 2023

/s/ EMILY FINE

Emily Fine

Director May 25, 2023

/s/ MICHAEL T. FRIES

Michael T. Fries

Director May 25, 2023

/s/ SUSAN MCCAW

Susan McCaw

Director May 25, 2023

101

Signature Title Date

/s/ YVETTE OSTOLAZA

Yvette Ostolaza

Director May 25, 2023

/s/ MARK H. RACHESKY, M.D.

Mark H. Rachesky, M.D.

Chairman of the Board of Directors May 25, 2023

/s/ DARYL SIMM

Daryl Simm

Director May 25, 2023

/s/ HARDWICK SIMMONS

Hardwick Simmons

Director May 25, 2023

/s/ HARRY SLOAN

Harry Sloan

Director May 25, 2023

102

INDEX TO FINANCIAL STATEMENTS

Page

Number

Audited Financial Statements

Report of Ernst & Y oung, LLP, Independent Registered Public Accounting Firm (PCAOB ID: 42) ...... F-2

Consolidated Balance Sheets — March 31, 2023 and 2022 .................................... F-5

Consolidated Statements of Operations — Years Ended March 31, 2023, 2022 and 2021 ............ F-6

Consolidated Statements of Comprehensive Income (Loss) — Years Ended March 31, 2023, 2022 and

2021 ............................................................................. F-7

Consolidated Statements of Equity — Years Ended March 31, 2023, 2022 and 2021 ................ F-8

Consolidated Statements of Cash Flows — Years Ended March 31, 2023, 2022 and 2021 ............ F-9

Notes to Audited Consolidated Financial Statements ......................................... F-10

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Lions Gate Entertainment Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lions Gate Entertainment Corp. (the

Company) as of March 31, 2023 and 2022, the related consolidated statements of operations, comprehensive

income (loss), equity and cash flows for each of the three years in the period ended March 31, 2023, and the

related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the

“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company at March 31, 2023 and 2022, and the results of its

operations and its cash flows for each of the three years in the period ended March 31, 2023, in conformity with

U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board

(United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2023, based

on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (2013 framework), and our report dated May 25, 2023 expressed an

unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express

an opinion on the Company’s financial statements based on our audits. We are a public accounting firm

registered with the PCAOB and are required to be independent with respect to the Company in accordance with

the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of

material misstatement of the financial statements, whether due to error or fraud, and performing procedures that

respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the financial statements. Our audits also included evaluating the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the financial

statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial

statements that were communicated or required to be communicated to the audit committee and that: (1) relate to

accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective or complex judgments. The communication of the critical audit matters does not alter in any way our

opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical

audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to

which they relate.

F-2

Pre-release Film Impairments

Description of the

Matter

As disclosed in Note 1 to the consolidated financial statements, Investment in Films and

Television Programs is stated at the lower of unamortized cost or estimated fair value. As

disclosed in Note 3 to the consolidated financial statements, total impairment charges on

investment in films and television programs related to theatrical films were $6.2 million

for the year ended March 31, 2023 and the unamortized balance related to completed and

not released and in progress theatrical films was $561.5 million at March 31, 2023.

Auditing the Company’s impairment evaluation for theatrical films prior to release is

challenging and subjective as the key assumptions in the analysis include estimates of

future anticipated revenues and box office performance, which may differ from future

actual results. These estimates are based in part on the historical performance of similar

films, test audience results when available, information regarding competing film releases,

and critic reviews.

How We Addressed

the Matter in Our

Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness

of controls over the Company’s theatrical impairment review process. For example, we

tested controls over management’s review of unreleased theatrical films for indicators of

impairment and management’s determination of the significant assumptions mentioned

above.

To test the assessment of unreleased theatrical films for impairment, our audit procedures

included, among others, evaluating unreleased theatrical films for indicators of

impairment and testing the completeness and accuracy of the underlying data as well as

the significant assumptions mentioned above. For example, we assessed management’s

assumptions by comparing them to historical performance of comparable films and to

current operating information, we evaluated test audience results when available, and we

considered the historical accuracy of management’s estimates. We also performed

sensitivity analyses to evaluate the potential changes in the expected profitability of

unreleased films resulting from reasonable changes in the assumptions.

Goodwill

Description of the

Matter

As disclosed in Note 1 to the consolidated financial statements, goodwill is tested for

impairment at least annually at the reporting unit level, and between annual tests if an

event occurs or circumstances change that indicates it is more-likely-than-not that the fair

value of a reporting unit is less than its carrying value. As disclosed in Note 6 to the

consolidated financial statements, the Company recorded a goodwill impairment charge of

$1.475 billion during the year ended March 31, 2023 related to the Media Networks

reporting unit, and the remaining goodwill balance was $1.3 billion at March 31, 2023.

Auditing management’s evaluation of goodwill for impairment is complex and requires

significant judgment due to the estimation required in determining the fair value of the

reporting units. These fair value estimates are affected by significant assumptions such as

the discount rate, projected annual revenue growth rate and EBITA margin, terminal

growth rate, and market multiples, which are affected by expectations about future market

or economic conditions.

How We Addressed

the Matter in Our

Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness

of controls over the Company’s goodwill impairment review process, including controls

over management’s assessment of the significant assumptions used in the fair value

measurements described above.

F-3

To test the estimated fair values of the Company’s reporting units, we performed audit

procedures that included, among others, assessing the methodologies used and testing the

significant assumptions discussed above and the underlying data used by the Company in

its analyses. We compared the significant assumptions used by management to current

industry and economic trends, changes to the Company’s business model, historical

financial performance, and other relevant factors. We assessed the historical accuracy of

management’s forecasts and performed sensitivity analyses of significant assumptions to

evaluate the changes in the fair value of the reporting units that would result from changes

in the assumptions. In addition, we tested management’s reconciliation of the fair value of

the reporting units to the market capitalization of the Company. We also involved our

specialists to evaluate the reasonableness of certain significant assumptions and the

valuation methodologies used.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2001.

Los Angeles, California

May 25, 2023

F-4

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

March 31,

2023

March 31,

2022

(Amounts in millions)

ASSETS

Cash and cash equivalents ................................................... $ 272.1 $ 371.2

Accounts receivable, net .................................................... 582.1 442.2

Other current assets ........................................................ 264.2 244.7

Total current assets .................................................... 1,118.4 1,058.1

Investment in films and television programs and program rights, net ................. 2,947.9 3,013.6

Property and equipment, net ................................................. 89.5 81.2

Investments .............................................................. 64.7 56.0

Intangible assets ........................................................... 1,300.1 1,440.2

Goodwill ................................................................ 1,289.5 2,764.5

Other assets .............................................................. 616.1 577.6

Total assets ....................................................... $7,426.2 $8,991.2

LIABILITIES

Accounts payable .......................................................... $ 368.1 352.1

Content related payables .................................................... 184.1 199.6

Other accrued liabilities ..................................................... 273.4 233.7

Participations and residuals .................................................. 549.3 468.5

Film related obligations ..................................................... 1,007.2 751.5

Debt—short term portion .................................................... 41.4 222.8

Deferred revenue .......................................................... 147.2 174.9

Total current liabilities .................................................. 2,570.7 2,403.1

Debt .................................................................... 1,978.2 2,202.1

Participations and residuals .................................................. 329.6 265.1

Film related obligations ..................................................... 1,016.4 650.3

Other liabilities ........................................................... 317.9 377.4

Deferred revenue .......................................................... 52.0 49.8

Deferred tax liabilities ...................................................... 31.8 38.8

Total liabilities ........................................................ 6,296.6 5,986.6

Commitments and contingencies (Note 17)

Redeemable noncontrolling interest 343.6 321.2

EQUITY

Class A voting common shares, no par value, 500.0 shares authorized, 83.5 shares issued

(March 31, 2022 — 83.3 shares issued) ...................................... 672.3 668.2

Class B non-voting common shares, no par value, 500.0 shares authorized, 145.9 shares

issued (March 31, 2022 — 142.0 shares issued) ................................ 2,430.9 2,353.8

Accumulated deficit ........................................................ (2,439.6) (369.7)

Accumulated other comprehensive income ...................................... 120.9 29.3

Total Lions Gate Entertainment Corp. shareholders’ equity ..................... 784.5 2,681.6

Noncontrolling interests ..................................................... 1.5 1.8

Total equity .............................................................. 786.0 2,683.4

Total liabilities, redeemable noncontrolling interest and equity .............. $7,426.2 $8,991.2

See accompanying notes.

F-5

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended March 31,

2023 2022 2021

(Amounts in millions, except per share amounts)

Revenues ................................................. $3,854.8 $3,604.3 $3,271.5

Expenses:

Direct operating .................................... 2,312.5 2,064.2 1,725.9

Distribution and marketing ........................... 801.7 861.0 719.3

General and administration ........................... 531.1 475.4 486.6

Depreciation and amortization ......................... 180.3 177.9 188.5

Restructuring and other .............................. 411.9 16.8 24.7

Goodwill impairment ................................ 1,475.0 — —

Gain on sale of Pantaya .............................. — — (44.1)

Total expenses ................................. 5,712.5 3,595.3 3,100.9

Operating income (loss) ..................................... (1,857.7) 9.0 170.6

Interest expense ............................................ (221.2) (176.0) (181.5)

Interest and other income ..................................... 6.4 30.8 5.8

Other expense .............................................. (26.9) (10.9) (6.7)

Gain (loss) on extinguishment of debt ........................... 57.4 (28.2) —

Gain on investments ......................................... 44.0 1.3 0.5

Equity interests income (loss) ................................. 0.5 (3.0) (6.1)

Loss before income taxes .................................... (1,997.5) (177.0) (17.4)

Income tax provision ........................................ (21.3) (28.4) (17.1)

Net loss .................................................. (2,018.8) (205.4) (34.5)

Less: Net loss attributable to noncontrolling interests ........... 8.6 17.2 15.6

Net loss attributable to Lions Gate Entertainment Corp.

shareholders ............................................ $(2,010.2) $ (188.2) $ (18.9)

Per share information attributable to Lions Gate Entertainment

Corp. shareholders:

Basic net loss per common share ............................. $ (8.82) $ (0.84) $ (0.09)

Diluted net loss per common share ............................ $ (8.82) $ (0.84) $ (0.09)

Weighted average number of common shares outstanding:

Basic ............................................ 227.9 224.1 220.5

Diluted ........................................... 227.9 224.1 220.5

See accompanying notes.

F-6

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Net loss ........................................................... $(2,018.8) $(205.4) $ (34.5)

Foreign currency translation adjustments, net of tax ........................ (1.9) (4.6) 3.7

Net unrealized gain on cash flow hedges, net of tax ........................ 93.5 117.2 119.0

Comprehensive income (loss) ........................................ (1,927.2) (92.8) 88.2

Less: Comprehensive loss attributable to noncontrolling interest .............. 8.6 17.2 15.6

Comprehensive income (loss) attributable to Lions Gate Entertainment

Corp. shareholders ............................................... $(1,918.6) $ (75.6) $103.8

See accompanying notes.

F-7

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF EQUITY

Class A Voting

Common Shares

Class B Non-Voting

Common Shares

Accumulated

Deficit

Accumulated

Other

Comprehensive

Income (Loss)

Total LGEC

Shareholders’

Equity

Non-controlling

Interests (a)

Total

EquityNumber Amount Number Amount

(Amounts in millions)

Balance at March 31, 2020 ................. 83.0 $659.2 136.4 $2,221.7 $ (16.9) $(206.0) $ 2,658.0 $ 2.0 $ 2,660.0

Exercise of stock options .................... — 0.1 0.2 1.3 — — 1.4 — 1.4

Share-based compensation, net of share

cancellations for taxes .................... 0.2 4.7 1.6 72.8 — — 77.5 — 77.5

Issuance of common shares .................. — 0.2 — 0.2 — — 0.4 — 0.4

Repurchase of common shares, no par value ..... (0.2) (1.0) — — — — (1.0) — (1.0)

Noncontrolling interests ..................... — — — — — — — (0.6) (0.6)

Net loss .................................. — — — — (18.9) — (18.9) 0.2 (18.7)

Other comprehensive income ................ — — — — — 122.7 122.7 — 122.7

Redeemable noncontrolling interests adjustments

to redemption value ...................... — — — — (47.1) — (47.1) — (47.1)

Balance at March 31, 2021 ................. 83.0 $663.2 138.2 $2,296.0 $ (82.9) $ (83.3) $ 2,793.0 $ 1.6 $ 2,794.6

Exercise of stock options .................... — 0.5 0.3 3.7 — — 4.2 — 4.2

Share-based compensation, net of share

cancellations for taxes .................... 0.3 4.3 3.5 53.9 — — 58.2 — 58.2

Issuance of common shares .................. — 0.2 — 0.2 — — 0.4 — 0.4

Noncontrolling interests ..................... — — — — — — — (0.3) (0.3)

Net loss .................................. — — — — (188.2) — (188.2) 0.5 (187.7)

Other comprehensive income ................ — — — — — 112.6 112.6 — 112.6

Redeemable noncontrolling interests adjustments

to redemption value ...................... — — — — (98.6) — (98.6) — (98.6)

Balance at March 31, 2022 ................. 83.3 $668.2 142.0 $2,353.8 $ (369.7) $ 29.3 $ 2,681.6 $ 1.8 $ 2,683.4

Exercise of stock options .................... — — 0.4 3.8 — — 3.8 — 3.8

Share-based compensation, net of share

cancellations for taxes .................... 0.2 3.8 3.5 73.1 — — 76.9 — 76.9

Issuance of common shares .................. — 0.3 — 0.2 — — 0.5 — 0.5

Noncontrolling interests ..................... — — — — — — — (0.9) (0.9)

Net loss .................................. — — — — (2,010.2) — (2,010.2) 0.6 (2,009.6)

Other comprehensive income ................ — — — — — 91.6 91.6 — 91.6

Redeemable noncontrolling interests adjustments

to redemption value ...................... — — — — (59.7) — (59.7) — (59.7)

Balance at March 31, 2023 ................. 83.5 $672.3 145.9 $2,430.9 $(2,439.6) $ 120.9 $ 784.5 $ 1.5 $ 786.0

(a) Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 11).

See accompanying notes.

F-8

LIONS GATE ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Operating Activities:

Net loss ................................................................. $(2,018.8) $ (205.4) $ (34.5)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization ........................................... 180.3 177.9 188.5

Amortization of films and television programs and program rights .............. 1,665.3 1,567.7 1,189.8

Amortization of debt financing costs and other non-cash interest ................ 25.7 50.5 44.8

Non-cash share-based compensation ...................................... 102.0 100.0 89.0

Other amortization .................................................... 69.2 92.5 73.2

Goodwill impairment .................................................. 1,475.0 — —

Content and other impairments .......................................... 385.2 — —

Gain on sale of Pantaya ................................................ — — (44.1)

(Gain) loss on extinguishment of debt ..................................... (57.4) 28.2 —

Equity interests income (loss) ........................................... (0.5) 3.0 6.1

Gain on investments ................................................... (44.0) (1.3) (0.5)

Deferred income taxes ................................................. (5.3) (1.7) 3.4

Changes in operating assets and liabilities:

Proceeds from the termination of interest rate swaps ......................... 188.7 — —

Accounts receivable, net ............................................... (140.6) (44.5) 137.9

Investment in films and television programs and program rights, net ............. (1,979.2) (2,211.7) (1,616.7)

Other assets ......................................................... (41.9) (212.4) (4.0)

Accounts payable and accrued liabilities ................................... (2.9) 1.4 32.7

Participations and residuals ............................................. 145.4 (71.3) (49.1)

Content related payables ............................................... (35.1) 64.9 (64.9)

Deferred revenue ..................................................... (25.4) 1.3 47.9

Net Cash Flows Used In Operating Activities ................................. (114.3) (660.9) (0.5)

Investing Activities:

Proceeds from the sale of Pantaya ............................................ — 123.6 —

Proceeds from the sale of equity method and other investments ..................... 46.3 1.5 4.1

Investment in equity method investees and other ................................ (17.5) (14.0) (0.2)

Distributions from equity method investees and other ............................. 1.9 7.2 —

Acquisition of assets (film library and related assets) ............................. — (161.4) —

Increase in loans receivable ................................................. — (4.3) —

Capital expenditures ....................................................... (49.0) (33.1) (35.0)

Net Cash Flows Used In Investing Activities .................................. (18.3) (80.5) (31.1)

Financing Activities:

Debt — borrowings, net of debt issuance and redemption costs ..................... 1,523.0 2,448.4 200.0

Debt — repurchases and repayments .......................................... (1,880.8) (2,693.9) (267.6)

Film related obligations — borrowings ........................................ 1,688.6 1,253.4 392.5

Film related obligations — repayments ........................................ (1,073.0) (347.6) (53.0)

Settlement of financing component of interest rate swaps .......................... (134.5) (28.5) (22.3)

Repurchase of common shares ............................................... — — (2.2)

Purchase of noncontrolling interest ........................................... (36.5) — —

Distributions to noncontrolling interest ........................................ (7.6) (1.5) (3.4)

Exercise of stock options ................................................... 3.8 4.2 1.6

Tax withholding required on equity awards ..................................... (19.2) (35.1) (7.7)

Net Cash Flows Provided By Financing Activities ............................. 63.8 599.4 237.9

Net Change In Cash, Cash Equivalents and Restricted Cash .................... (68.8) (142.0) 206.3

Foreign Exchange Effects on Cash, Cash Equivalents and Restricted Cash ........ (2.8) (2.1) 4.2

Cash, Cash Equivalents and Restricted Cash — Beginning Of Period ............. 384.6 528.7 318.2

Cash, Cash Equivalents and Restricted Cash — End Of Period .................. $ 313.0 $ 384.6 $ 528.7

See accompanying notes.

F-9

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business, Basis of Presentation and Significant Accounting Policies

Description of Business

Lionsgate Entertainment Corp. (the “Company,” “Lionsgate,” “Lions Gate,” “we,” “us” or “our”)

encompasses world-class motion picture and television studio operations aligned with the STARZ premium

global subscription platform to bring a unique and varied portfolio of entertainment to consumers around the

world. The Company’s film, television, subscription and location-based entertainment businesses are backed by

an 18,000-title library and a valuable collection of iconic film and television franchises.

Basis of Presentation

Generally Accepted Accounting Principles

These consolidated financial statements have been prepared in accordance with United States (“U.S.”)

generally accepted accounting principles (“GAAP”).

Principles of Consolidation

The accompanying consolidated financial statements of the Company include the accounts of Lionsgate and

its majority-owned and controlled subsidiaries. The Company reviews its relationships with other entities to

identify whether it is the primary beneficiary of a variable interest entity (“VIE”). If the determination is made

that the Company is the primary beneficiary, then the entity is consolidated.

All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses

during the reporting period. The most significant estimates made by management in the preparation of the

financial statements relate to ultimate revenue and costs used for the amortization of investment in films and

television programs; estimates of future viewership used for the amortization of licensed program rights;

estimates related to the revenue recognition of sales or usage-based royalties; fair value of equity-based

compensation; fair value of assets and liabilities for allocation of the purchase price of companies acquired;

income taxes including the assessment of valuation allowances for deferred tax assets; accruals for contingent

liabilities; and impairment assessments for investment in films and television programs and licensed program

rights, property and equipment, equity investments, goodwill and intangible assets. Actual results could differ

from such estimates.

Reclassifications

Certain amounts presented in prior years have been reclassified to conform to the current year’s

presentation.

F-10

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Significant Accounting Policies

Revenue Recognition

The Company’s Motion Picture and Television Production segments generate revenue principally from the

licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged

media), television, and international market places. The Company’s Media Networks segment generates revenue

primarily from the distribution of the Company’s STARZ premium subscription video services, and through

March 31, 2021, from the Company’s formerly majority owned premium Spanish language streaming services

business, Pantaya. The Company sold its interest in Pantaya on March 31, 2021, see Note 2 for further

information.

Revenue is recognized upon transfer of control of promised services or goods to customers in an amount

that reflects the consideration the Company expects to receive in exchange for those services or goods. Revenues

do not include taxes collected from customers on behalf of taxing authorities such as sales tax and value-added

tax.

In the ordinary course of business, the Company’s reportable segments enter into transactions with one

another. The most common types of intersegment transactions include licensing motion pictures or television

programming (including Starz original productions) from the Motion Picture and Television Production segments

to the Media Networks segment. While intersegment transactions are treated like third-party transactions to

determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by

the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not

affect consolidated results.

Licensing Arrangements. The Company’s content licensing arrangements include fixed fee and minimum

guarantee arrangements, and sales or usage based royalties.

Fixed Fee or Minimum Guarantees: The Company’s fixed fee or minimum guarantee licensing

arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a

substantive period in between the windows, rights to exploitation in different media, or rights to exploitation

in multiple territories, which may be considered distinct performance obligations. When these performance

obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to

the title, window, media right or territory as applicable, based on estimates of relative standalone selling

prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are

recognized when the content has been delivered, and the window for the exploitation right in that territory

has begun, which is the point in time at which the customer is able to begin to use and benefit from the

content.

Sales or Usage Based Royalties: Sales or usage based royalties represent amounts due to the Company

based on the “sale” or “usage” of the Company’s content by the customer, and revenues are recognized at

the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the

sales or usage-based royalty has been allocated and has been satisfied (or partially satisfied). Generally,

when the Company licenses completed content with standalone functionality (such as a movie, or television

show), its performance obligation will be satisfied prior to the sale or usage. When the Company licenses

intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its

performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due

to the Company under these arrangements are generally not reported to the Company until after the close of

the reporting period. The Company records revenue under these arrangements for the amounts due and not

yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the

F-11

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

terms of the contracts. Such estimates are based on information from the Company’s customers, historical

experience with similar titles in that market or territory, the performance of the title in other markets, and/or

data available in the industry.

Revenues by Market or Product Line. The following describes the revenues generated by market or product

line. Theatrical revenues are included in the Motion Picture segment; home entertainment, television,

international and other revenues are applicable to both the Motion Picture and Television Production segments;

Media Networks programming revenues are included in the Media Networks segment.

• Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures

licensed to theatrical exhibitors on a picture-by-picture basis (distributed by the Company directly in

the United States and through a sub-distributor in Canada). Revenue from the theatrical release of

feature films are treated as sales or usage- based royalties, are recognized as revenue starting at the

exhibition date and are based on the Company’s participation in box office receipts of the theatrical

exhibitor.

• Home Entertainment. Home entertainment consists of Digital Media and Packaged Media.

Digital Media. Digital media includes digital transaction revenue sharing arrangements

(pay-per-view and video-on-demand platforms, electronic sell through (“EST”), and digital rental)

and licenses of content to digital platforms for a fixed fee.

Digital Transaction Revenue Sharing Arrangements: Primarily represents revenue sharing

arrangements with certain digital media platforms which generally provide that, in exchange for a

nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by

the platform on a title-by-title basis. These digital media platforms generate revenue from rental

and EST arrangements, such as download-to-own, download-to-rent, and video-on-demand. These

revenue sharing arrangements are recognized as sales or usage based royalties based on the

performance of these platforms and pursuant to the terms of the contract, as discussed above.

Licenses of Content to Digital Platforms: Primarily represents the licensing of content to

subscription-video-on-demand (“SVOD”) or other digital platforms for a fixed fee. As discussed

above, revenues are recognized when the content has been delivered and the window for the

exploitation right in that territory has begun.

Packaged Media. Packaged media revenues represent the sale of motion pictures and television

shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as

“Packaged Media”) in the retail market. Revenues are recognized, net of an allowance for

estimated returns and other allowances, on the later of receipt by the customer or “street date”

(when it is available for sale by the customer).

• Television. Television revenues are derived from the licensing to domestic markets (linear pay, basic

cable, free television markets, syndication) of motion pictures (including theatrical productions and

acquired films) and scripted and unscripted television series, television movies, mini-series, and

non-fiction programming. Television revenues include fixed fee arrangements as well as arrangements

in which the Company earns advertising revenue from the exploitation of certain content on television

networks. Television also includes revenue from licenses to SVOD platforms in which the initial

license of a television series is to an SVOD platform or the traditional pay window for a motion picture

is licensed to an SVOD platform. Revenues associated with a title, right, or window from television

licensing arrangements are recognized when the feature film or television program is delivered (on an

episodic basis for television product) and the window for the exploitation right has begun.

F-12

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• International. International revenues are derived from (1) licensing of the Company’s productions,

acquired films, catalog product and libraries of acquired titles to international distributors, on a

territory-by-territory basis; (2) the direct distribution of the Company’s productions, acquired films,

and the Company’s catalog product and libraries of acquired titles in the United Kingdom; and

(3) licensing to international markets of scripted and unscripted series, television movies, mini-series

and non-fiction programming. License fees and minimum guarantee amounts associated with title,

window, media or territory, are recognized when access to the feature film or television program has

been granted or delivery has occurred, as required under the contract, and the right to exploit the

feature film or television program in that window, media or territory has commenced. Revenues are

also generated from sales or usage based royalties received from international distributors based on

their distribution performance pursuant to the terms of the contracts after the recoupment of certain

costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the

Company’s customer generating a royalty due to the Company has occurred.

• Other. Other revenues are derived from the licensing of the Company’s film and television and related

content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from

commissions and executive producer fees earned related to talent management.

Revenues from the licensing of film and television content and the sales and licensing of music are

recognized when the content has been delivered and the license period has begun, as discussed above.

Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or

television characters, brands, storylines, themes or logos) is recognized over the corresponding license

term. Commissions are recognized as such services are provided.

• Media Networks—Programming Revenues. Media Networks’ revenues are primarily derived from the

domestic distribution of the Company’s STARZ branded premium subscription video services through

over-the-top (“OTT”) streaming platforms and distributors, on a direct-to-consumer basis through the

Starz App and through U.S. multichannel video programming distributors (“MVPDs”), including cable

operators, satellite television providers, and telecommunications companies (collectively “Distributors”)

(in the aggregate, the “Starz Domestic Platform”). Media Networks revenues also include revenue from

LIONSGATE+, which represents international revenues primarily from the OTT distribution of the

Company’s STARZ branded premium subscription video services outside the United States. The Starz

Domestic platform together with the LIONSGATE+ platforms are referred to as the “Starz Platforms”).

Through March 31, 2021, Media Networks’ revenues also included revenues from the Company’s

formerly majority owned premium Spanish language streaming services business, Pantaya. The Company

sold its interest in Pantaya on March 31, 2021, see Note 2 for further information.

Pursuant to the Company’s distribution agreements, revenues are primarily based on a fee based on the

number of subscribers who receive the Company’s services or based on other factors (variable fee

arrangements), or to a lesser extent, may be based on a monthly fixed fee or minimum guarantee,

subject to nominal annual escalations. The Company also generates revenue through the distribution of

its SVOD service directly to consumers through the Starz App.

The variable distribution fee arrangements represent sales or usage based royalties, which are recognized

over the period of such sales or usage by the Company’s distributor, which is the same period that the

content is provided to the distributor. Estimates of revenue generated, but not yet reported to the

Company by its distribution partners, are made based on an estimated number of subscribers using

historical trends and recent reporting. Other fixed fee or minimum guarantee programming revenue is

recognized over the contract term based on the continuous delivery of the content to the distributor.

Subscribers through the Starz App are billed in advance of the start of their monthly or annual

membership and revenues are recognized ratably over each applicable membership period.

F-13

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred Revenue. Deferred revenue relates primarily to customer cash advances or deposits received prior

to when the Company satisfies the corresponding performance obligation.

Deferred revenue also relates to customer payments are made in advance of when the Company fulfills its

performance obligation and recognizes revenue. This primarily occurs under television production contracts, in

which payments may be received as the production progresses, international motion picture contracts, where a

portion of the payments are received prior to the completion of the movie and prior to license rights start dates,

and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent

exploitation windows commence. These arrangements do not contain significant financing components because

the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate

the Company’s risk of customer non-performance and incentivize the customer to exploit the Company’s

content.

See Note 12 for further information.

Accounts Receivable. Payment terms vary by location and type of customer and the nature of the licensing

arrangement. However, other than certain multi-year license arrangements; payments are generally due within 60

days after revenue is recognized. For certain multi-year licensing arrangements, primarily in the television,

digital media, and international markets, payments may be due over a longer period. When the Company expects

the period between fulfillment of its performance obligation and the receipt of payment to be greater than a year,

a significant financing component is present. In these cases, such payments are discounted to present value based

on a discount rate reflective of a separate financing transaction between the customer and the Company, at

contract inception. The significant financing component is recorded as a reduction to revenue and accounts

receivable initially, with such accounts receivable discount amortized to interest income over the period to

receipt of payment. The Company does not assess contracts with deferred payments for significant financing

components if, at contract inception, the Company expects the period between fulfillment of the performance

obligation and subsequent payment to be one year or less.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash deposits at financial institutions and investments in money market

mutual funds.

Restricted Cash

At March 31, 2023, the Company had restricted cash of $40.9 million, primarily representing amounts

related to required cash reserves for interest payments associated with the Production Tax Credit Facility, IP

Credit Facility and Backlog Facility (March 31, 2022—$13.4 million). Restricted cash is included within “other

current assets” and “other non-current assets” on the consolidated balance sheets (see Note 19).

Investment in Films and Television Programs and Licensed Program Rights

Investment in Films and Television Programs:

General. Investment in films and television programs includes the unamortized costs of films and television

programs, a portion of which are monetized individually (i.e., through domestic theatrical, home entertainment,

television, international or other ancillary-market distribution), and a portion of which are monetized as part of a

film group (i.e., primarily content internally produced by our Television Production segment for our Media

Networks segment).

F-14

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Recording Cost. Costs of acquiring and producing films and television programs and of acquired libraries

are capitalized when incurred. For films and television programs produced by the Company, capitalized costs

include all direct production and financing costs, capitalized interest and production overhead. For the years

ended March 31, 2023, 2022, and 2021, total capitalized interest was $28.1 million, $12.8 million, and

$2.8 million, respectively. For acquired films and television programs, capitalized costs consist of minimum

guarantee payments to acquire the distribution rights.

Amortization. Costs of acquiring and producing films and television programs and of acquired libraries that

are monetized individually are amortized using the individual-film-forecast method, whereby these costs are

amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to

management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from

the exploitation, exhibition or sale of the films or television programs.

For investment in films and television programs monetized as a group, see further discussion below under

Licensed Program Rights for a description of amortization of costs monetized as a group.

Ultimate Revenue. Ultimate revenue includes estimates over a period not to exceed ten years following the

date of initial release of the motion picture. For an episodic television series, the period over which ultimate

revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in

production, five years from the date of delivery of the most recent episode, if later. For titles included in acquired

libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of

acquisition.

Development. Films and television programs in development include costs of acquiring film rights to books,

stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and, upon

commencement of production, are transferred to production costs. Projects in development are written off at the

earlier of the date they are determined not to be recoverable or when abandoned, or three years from the date of

the initial investment unless the fair value of the project exceeds its carrying cost.

Licensed Program Rights:

General. Licensed program rights include content licensed from third parties that is monetized as part of a

film group for distribution on Media Networks distribution platforms. Licensed content is comprised of films or

series that have been previously produced by third parties and the Company retains specified airing rights over a

contractual term. Program licenses typically have fixed terms and require payments during the term of the

license.

Recording Cost. The cost of licensed content is capitalized when the cost is known or reasonably

determinable, the license period for programs has commenced, the program materials have been accepted by the

Company in accordance with the license agreements, and the programs are available for the first showing.

Licensed programming rights may include rights to more than one exploitation window under the Company’s

output and library agreements. For films with multiple windows, the license fee is allocated between the

windows based upon the proportionate estimated fair value of each window which generally results in the

majority of the cost allocated to the first window on newer releases.

While not significant through March 31, 2023, certain license agreements and productions may include

additional ancillary rights in addition to the rights for exploitation on the Starz Platforms. A portion of the cost of

these licenses and in some cases the cost of produced content, is allocated between the programming rights for

F-15

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

exploitation on the Starz Platforms and investment in film and television programs for exploitation outside of the

Starz Platforms in ancillary markets (e.g., home entertainment, digital platforms, television, etc.) based on the

relative fair value of those markets. The estimates of fair value for the allocation between windows of

exploitation on the Starz Platforms and ancillary markets is based on historical experience of the values of

similar titles licensed in subsequent windows and estimates of future revenues in ancillary markets. Management

believes these are reasonably reliable estimates of these values, however, these estimates involve uncertainty and

management judgment.

Amortization. The cost of licensed program rights for films and television programs (including original

series) are generally amortized on a title-by-title or episode-by-episode basis using an accelerated or straight-line

method based on the expected and historical viewership patterns or the current and anticipated number of

exhibitions over the license period or estimated life for owned or produced programs. The number of exhibitions

is estimated based on the number of exhibitions allowed in the agreement (if specified) and the expected usage of

the content. Participations and residuals are expensed in line with the amortization of production costs.

Changes in management’s estimate of the anticipated exhibitions and viewership patterns of films and

original series on our platforms could result in the earlier recognition of our programming costs than anticipated.

Impairment Assessment for Investment in Films and Television Programs and Licensed Program

Rights:

General. A film group or individual film or television program is evaluated for impairment when an event

or change in circumstances indicates that the fair value of an individual film or film group is less than its

unamortized cost. A film group represents the unit of account for impairment testing for a film or license

agreement for program material when the film or license agreement is expected to be predominantly monetized

with other films and/or license agreements instead of being predominantly monetized on its own. A film group is

defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other

films and/or license agreements.

Content Monetized Individually. For content that is predominantly monetized individually (primarily

investment in film and television programs related to the Motion Picture and Television Production segments),

whenever events or changes in circumstances indicate that the fair value of the individual film may be less than

its unamortized costs, the unamortized costs of the individual film are compared to the estimated fair value of the

individual film. The fair value is determined based on a discounted cash flow analysis of the cash flows directly

attributable to the title. To the extent the unamortized costs exceed the fair value, an impairment charge is

recorded for the excess.

Content Monetized as a Group. For content that is predominantly monetized as a group (primarily licensed

program rights in the Media Networks segment and internally produced programming, as discussed above),

whenever events or changes in circumstances indicate that the fair value of the film group may be less than its

unamortized costs, the aggregate unamortized costs of the group are compared to the present value of the

discounted cash flows of the group using the lowest level for which identifiable cash flows are independent of

other produced and licensed content. The Company’s film groups are generally aligned with the Company’s

networks and digital content offerings domestically (i.e, Starz Networks) and internationally by territory or

groups of territories, where content assets are shared across the various territories. If the unamortized costs of the

film group exceed the present value of discounted cash flows, an impairment charge is recorded for the excess

and allocated to individual titles based on the relative carrying value of each title in the group. Content removed

from the service and abandoned is written down to its fair value, if any, determined using a discounted cash flow

approach.

F-16

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation Assumptions. The discounted cash flow analysis includes cash flows estimates of ultimate

revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 10). The discount rate

utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company

plus a risk premium representing the risk associated with producing a particular film or television program or

film group. Estimates of future revenue involve measurement uncertainty and it is therefore possible that

reductions in the carrying value of investment in films and television programs may be required as a consequence

of changes in management’s future revenue estimates.

Property and Equipment, net

Property and equipment is carried at cost less accumulated depreciation. Depreciation is provided for on a

straight line basis over the following useful lives:

Distribution equipment ....................... 3—7years

Computer equipment and software .............. 3—5years

Furniture and equipment ...................... 5—7years

Leasehold improvements ...................... Lease term or the useful life, whichever is shorter

Land ...................................... Notdepreciated

The Company periodically reviews and evaluates the recoverability of property and equipment. Where

applicable, estimates of net future cash flows, on an undiscounted basis, are calculated based on future revenue

estimates. If appropriate and where deemed necessary, a reduction in the carrying amount is recorded based on

the difference between the carrying amount and the fair value based on discounted cash flows.

Leases

The Company determines if an arrangement is a lease at its inception. The expected term of the lease used

for computing the lease liability and right-of-use (“ROU”) asset and determining the classification of the lease as

operating or financing may include options to extend or terminate the lease when it is reasonably certain that the

Company will exercise that option. The Company also elected to not separate lease components from non-lease

components across all lease categories. Instead, each separate lease component and non-lease component are

accounted for as a single lease component.

Operating Leases. Operating lease ROU assets, representing the Company’s right to use the underlying

asset for the lease term, are included in the “Other assets—non-current” line item in the Company’s consolidated

balance sheets. Operating lease liabilities, representing the present value of the Company’s obligation to make

payments over the lease term, are included in the “Other accrued liabilities” and “Other liabilities—non-current”

line items in the Company’s consolidated balance sheets. The Company has entered into various short-term

operating leases which have an initial term of 12 months or less. These short-term leases are not recorded on the

Company’s consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis

over the lease term.

Finance Leases. Finance lease ROU assets are included in “Property and equipment, net” and finance lease

liabilities are included in the “Debt—short-term portion” and “Debt—non-current” line items in the Company’s

consolidated balance sheets, when applicable. For finance leases, the Company recognizes interest expense on

lease liabilities using the effective interest method and amortization of ROU assets on a straight-line basis over

the lease term. The Company did not have any finance leases as of March 31, 2023 or 2022.

F-17

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The present value of the lease payments is calculated using a rate implicit in the lease, when readily

determinable. However, as most of the Company’s leases do not provide an implicit rate, the Company uses its

incremental borrowing rate to determine the present value of the lease payments for the majority of its leases.

Variable lease payments that are based on an index or rate are included in the measurement of ROU assets

and lease liabilities at lease inception. All other variable lease payments are expensed as incurred and are not

included in the measurement of ROU assets and lease liabilities.

Investments

Investments include investments accounted for under the equity method of accounting, and equity

investments with and without readily determinable fair value.

Equity Method Investments: The Company uses the equity method of accounting for investments in

companies in which it has a minority equity interest and the ability to exert significant influence over operating

decisions of the companies. Significant influence is generally presumed to exist when the Company owns

between 20% and 50% of the voting interests in the investee, holds substantial management rights or holds an

interest of less than 20% in an investee that is a limited liability partnership or limited liability corporation that is

treated as a flow-through entity.

Under the equity method of accounting, the Company’s share of the investee’s earnings (losses) are

included in the “equity interests income (loss)” line item in the consolidated statement of operations. The

Company records its share of the net income or loss of most equity method investments on a one quarter lag and,

accordingly, during the years ended March 31, 2023, 2022, and 2021, the Company recorded its share of the

income or loss generated by these entities for the years ended December 31, 2022, 2021 and 2020, respectively.

Dividends and other distributions from equity method investees are recorded as a reduction of the

Company’s investment. Distributions received up to the Company’s interest in the investee’s retained earnings

are considered returns on investments and are classified within cash flows from operating activities in the

consolidated statement of cash flows. Distributions from equity method investments in excess of the Company’s

interest in the investee’s retained earnings are considered returns of investments and are classified within cash

flows provided by investing activities in the statement of cash flows.

Other Equity Investments: Investments in nonconsolidated affiliates in which the Company owns less than

20% of the voting common stock, or does not exercise significant influence over operating and financial policies,

are recorded at fair value using quoted market prices if the investment has a readily determinable fair value. If an

equity investment’s fair value is not readily determinable, the Company will recognize it at cost less any

impairment, adjusted for observable price changes in orderly transactions in the investees’ securities that are

identical or similar to the Company’s investments in the investee. The unrealized gains and losses and the

adjustments related to the observable price changes are recognized in net income (loss).

Impairments of Investments: The Company regularly reviews its investments for impairment, including

when the carrying value of an investment exceeds its market value. If the Company determines that an

investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair

value by a charge to earnings. Factors that are considered by the Company in determining whether an other-than-

temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis,

(ii) the financial condition of the investee, and (iii) the Company’s intent and ability to retain the investment for a

sufficient period of time to allow for recovery in the market value of the investment.

F-18

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For investments accounted for using the equity method of accounting or equity investments without a

readily determinable fair value, the Company evaluates information available (e.g., budgets, business plans,

financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-

temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring

operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of the

Company’s investment.

Goodwill and Indefinite-Lived Intangible Assets

At March 31, 2023, the carrying value of goodwill and indefinite-lived intangible assets was $1.29 billion

and $250.0 million, respectively. The Company’s indefinite-lived intangible assets consist of trade names

primarily representing the estimated fair value of the Starz brand name determined in connection with the

acquisition of Starz as of December 8, 2016. Goodwill is allocated to the Company’s reporting units, which are

its operating segments or one level below its operating segments (component level). Reporting units are

determined by the discrete financial information available for the component and whether that information is

regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share

similar economic characteristics. Our reporting units for purposes of goodwill impairment testing at March 31,

2023 were Motion Picture, Media Networks, and our Television and Talent Management businesses, both of

which are part of our Television Production segment.

Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed for impairment each

fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-

than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value.

The Company performs its annual impairment test as of January 1 in each fiscal year. A goodwill or indefinite-

lived intangible asset impairment loss would be recognized for the amount that the carrying amount of a

reporting unit, including goodwill or an indefinite-lived intangible asset, exceeds its fair value. An entity may

perform a qualitative assessment of the likelihood of the existence of a goodwill or indefinite-lived intangible

asset impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances

which impact the fair value of the reporting unit or indefinite-lived intangible asset, of whether or not it is more-

likely-than-not that the fair value is less than the carrying value of the reporting unit or indefinite-lived intangible

asset. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair

value of a reporting unit or indefinite-lived intangible asset is greater than its carrying amount, a quantitative

impairment test is not required but may be performed at the option of the Company.

A quantitative assessment requires determining the fair value of our reporting units or indefinite-lived

intangible assets. The determination of the fair value of each reporting unit or indefinite-lived intangible asset

utilizes discounted cash flows (“DCF”) analyses and market-based valuation methodologies, which represent

Level 3 fair value measurements. Fair value determinations require considerable judgment and requires

assumptions and estimates of many factors, including revenue and market growth, operating margins and cash

flows, market multiples and discount rates, and are sensitive to changes in these underlying assumptions and

factors.

Goodwill Impairment Assessments:

For the Company’s annual goodwill impairment test for fiscal 2022, due to overall macroeconomic

conditions, including the uncertainty of the longer-term economic impacts of the COVID-19 global pandemic,

and the competitive environment for subscribers and its impact on subscriber growth rates, and our businesses,

the Company performed a quantitative impairment assessment for all of its reporting units as of January 1, 2022.

F-19

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Based on the Company’s annual quantitative impairment assessment for fiscal 2022, the Company determined

that one of its reporting units (Media Networks) was at risk for impairment due to relatively small changes in

certain key assumptions that could cause an impairment of goodwill.

In fiscal 2023, during the second quarter ended September 30, 2022, due to continued adverse macro and

microeconomic conditions, including the competitive environment, continued inflationary trends and

recessionary economies worldwide and its impact on our growth in subscribers worldwide, the Company began

implementing a plan to restructure its LIONSGATE+ business (formerly STARZPLAY International). This

restructuring includes exiting the business in seven international territories (France, Germany, Italy, Spain,

Benelux, the Nordics and Japan). The Company’s Starz domestic operations have also been impacted by these

current market conditions and the Company has revised its subscriber growth and forecasted cash flow

assumptions and implemented certain cost-saving measures. Additionally, companies in the media and

entertainment industry, and particularly those with significant streaming platforms, have experienced a decline in

market valuations, and reflecting this industry trend, as well as potential capital market transactions, and the

factors discussed above, the market price of the Company’s common shares had declined significantly through

September 30, 2022. Accordingly, for the second quarter ended September 30, 2022, the Company updated its

quantitative impairment assessment for all of its reporting units based on the most recent data and expected

growth trends. The DCF analysis components of the fair value estimates were determined primarily by

discounting estimated future cash flows, which included weighted average perpetual nominal growth rates

ranging from 1.5% to 3.5%, at a weighted average cost of capital (discount rate) ranging from 10.0% to 14.0%,

which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting

unit, industry and market as a whole.

Based on its quantitative impairment assessment, the Company determined that the fair value of its reporting

units exceeded the carrying values for all of its reporting units, except the Media Networks reporting unit which

was previously disclosed as a reporting unit “at risk” of impairment. The analysis resulted in a goodwill

impairment charge of $1.475 billion in the second quarter ended September 30, 2022, related to the Company’s

Media Networks reporting unit goodwill, which is recorded as a separate line item “goodwill impairment” in the

consolidated statement of operations (see Note 6 to the consolidated financial statements). Since the impairment

charge reduced the carrying value of the Media Networks reporting unit to its fair value, at September 30, 2022

the fair value and carrying value of the Media Networks reporting unit were equal and thus it continues to be

considered “at risk” of impairment.

For the Company’s annual goodwill impairment test for fiscal 2023, the Company performed a qualitative

goodwill impairment assessment for all its reporting units. The Company’s qualitative assessment considered the

increase in the market price of the Company’s common shares from September 30, 2022, the recent performance

of the Company’s reporting units, and updated forecasts of performance and cash flows, as well as the continuing

micro and macroeconomic environment, and industry considerations, and determined that since the quantitative

assessment performed in the quarter ended September 30, 2022, there were no events or circumstances that rise

to a level that would more-likely-than-not reduce the fair value of those reporting units below their carrying

values; therefore, a quantitative goodwill impairment analysis was not required.

Management will continue to monitor all of its reporting units for changes in the business environment that

could impact the recoverability of goodwill in future periods. The recoverability of goodwill is dependent upon

the continued growth of revenue and cash flows from the Company’s business activities. Examples of events or

circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill

impairment tests, and ultimately impact the estimated fair value of the Company’s reporting units may include

the duration of the COVID-19 global pandemic, its impact on the global economy and the creation and

F-20

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

consumption of the Company’s content; adverse macroeconomic conditions; volatility in the equity and debt

markets which could result in higher weighted-average cost of capital; capital market transactions; the

commercial success of the Company’s television programming and motion pictures; the Company’s continual

contractual relationships with its customers; including its affiliate agreements of its Media Networks business;

the Company’s subscriber growth rates domestically and internationally across its traditional and OTT platforms

and changes in consumer behavior. While historical performance and current expectations have resulted in fair

values of our reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an

impairment charge may need to be recorded in the future.

Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment:

For fiscal 2023, during the second quarter ended September 30, 2022, due to the events and their impact

discussed above related to the Company’s Media Networks reporting unit, the Company performed a quantitative

impairment assessment of its indefinite-lived trade names. Based on the quantitative impairment assessment of

its trade names, the Company concluded that the fair value of its trade names was more than its carrying amount,

and therefore its trade names were not considered at risk of impairment.

During the fourth quarter ended March 31, 2023, for its annual impairment assessment, since the indefinite-

lived intangible asset was not considered at risk for impairment when quantitatively tested at September 30,

2022, the Company performed a qualitative impairment assessment of its indefinite-lived trade names. Based on

the qualitative impairment assessment of its trade names, the Company concluded that it is more-likely-than-not

that the fair value of its trade names was more than its carrying amount, and therefore its trade names were not

considered at risk of impairment.

Finite-Lived Intangible Assets

At March 31, 2023, the carrying value of the Company’s finite-lived intangible assets was approximately

$1.05 billion. The Company’s finite-lived intangible assets primarily relate to customer relationships associated

with U.S. MVPDs, including cable operators, satellite television providers and telecommunications companies

(“Traditional Affiliate”), which amounted to $1.04 billion. The amount of the Company’s customer relationship

asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer

relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization

recorded since the date of the Starz acquisition. Identifiable intangible assets with finite lives are amortized to

depreciation and amortization expense over their estimated useful lives, ranging from 5 to 16 years. The Starz

Traditional Affiliate customer relationship intangible asset is amortized in the proportion that current period

revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset,

which results in greater amortization in the earlier years of the estimated useful life of the asset than the latter

years.

Amortizable intangible assets are tested for impairment whenever events or changes in circumstances

(triggering events) indicate that the carrying amount of the asset may not be recoverable. If a triggering event has

occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted

future cash flows expected to be generated over the remaining useful life of an asset to the carrying value of the

asset. The impairment test is performed at the lowest level of cash flows associated with the asset. If the carrying

value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable.

Impairment would then be measured as the excess of the asset’s carrying value over its fair value.

The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each

reporting period for indicators of possible impairments or a change in the useful life or method of amortization of

F-21

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

our finite-lived intangible assets. For fiscal 2022 and fiscal 2023, due to changes in the industry related to the

migration from linear to OTT and direct-to-consumer consumption, and the economic uncertainty from the

COVID-19 global pandemic, we performed an impairment analysis of our amortizable intangible assets. The

impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the

useful life of an asset to the carrying value of the asset. Based on our impairment analysis, the estimated

undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was

required.

Prints, Advertising and Marketing Expenses

The costs of prints, advertising and marketing expenses are expensed as incurred.

Certain of Starz’s affiliation agreements require Starz to provide marketing support to the distributor based

upon certain criteria as stipulated in the agreements. Marketing support includes cooperative advertising and

marketing efforts between Starz and its distributors such as cross channel, direct mail and point of sale

incentives. Marketing support is recorded as an expense and not a reduction of revenue when Starz has received a

direct benefit and the fair value of such benefit is determinable.

Advertising expenses for the year ended March 31, 2023 were $610.7 million (2022 — $662.4 million, 2021

— $532.6 million) which were recorded as distribution and marketing expenses.

Income Taxes

Income taxes are accounted for using an asset and liability approach for financial accounting and reporting

for income taxes and recognition and measurement of deferred assets are based upon the likelihood of realization

of tax benefits in future years. Under this method, deferred taxes are provided for the net tax effects of temporary

differences between the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for income tax purposes. Valuation allowances are established when management determines that

it is more likely than not that some portion or all of the net deferred tax asset, on a jurisdiction-by-jurisdiction

basis, will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of

enactment.

From time to time, the Company engages in transactions in which the tax consequences may be subject to

uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these

transactions. In determining the Company’s tax provision for financial reporting purposes, the Company

establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of

being sustained upon examination, based on their technical merits. The Company’s policy is to recognize interest

and/or penalties related to income tax matters in income tax expense.

Government Assistance

The Company has access to government programs that are designed to promote film and television

production and distribution in certain foreign countries. The Company also has access to similar programs in

certain states within the U.S. that are designed to promote film and television production in those states.

Tax credits earned with respect to expenditures on qualifying film and television productions are recorded

as a reduction to investment in films and television programs when the qualifying expenditures have been

incurred provided that there is reasonable assurance that the credits will be realized (see Note 3 and Note 19).

F-22

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Foreign Currency Translation

Monetary assets and liabilities denominated in currencies other than the functional currency are translated at

exchange rates in effect at the balance sheet date. Resulting unrealized and realized gains and losses are included

in the consolidated statements of operations.

Foreign company assets and liabilities in foreign currencies are translated into U.S. dollars at the exchange

rate in effect at the balance sheet date. Foreign company revenue and expense items are translated at the average

rate of exchange for the fiscal year. Gains or losses arising on the translation of the accounts of foreign

companies are included in accumulated other comprehensive income or loss, a separate component of

shareholders’ equity.

Derivative Instruments and Hedging Activities

Derivative financial instruments are used by the Company in the management of its foreign currency and

interest rate exposures. The Company’s policy is not to use derivative financial instruments for trading or

speculative purposes.

The Company uses derivative financial instruments to hedge its exposures to foreign currency exchange rate

and interest rate risks. All derivative financial instruments are recorded at fair value in the consolidated balance

sheets (see Note 10). The effective changes in fair values of derivatives designated as cash flow hedges are

recorded in accumulated other comprehensive income or loss and included in unrealized gains (losses) on cash

flow hedges until the underlying hedged item is recognized in earnings. The effective changes in the fair values

of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive income or

loss to net income or net loss when the underlying hedged item is recognized in earnings. If the derivative is not

designated as a hedge, changes in the fair value of the derivative are recognized in earnings. See Note 18 for

further discussion of the Company’s derivative financial instruments.

Share-Based Compensation

The Company measures the cost of employee services received in exchange for an award of equity

instruments based on the grant date fair value of the award. The fair value is recognized in earnings over the

period during which an employee is required to provide service. See Note 13 for further discussion of the

Company’s share-based compensation.

Transfers of Financial Assets

The Company enters into arrangements to sell certain financial assets (i.e., monetize its trade accounts

receivables). For a transfer of financial assets to be considered a sale, the asset must be legally isolated from the

Company and the purchaser must have control of the asset. Determining whether all the requirements have been

met includes an evaluation of legal considerations, the extent of the Company’s continuing involvement with the

assets transferred and any other relevant considerations. When the true sales criteria are met, the Company

derecognizes the carrying value of the financial asset transferred and recognizes a net gain or loss on the sale.

The proceeds from these arrangements with third party purchasers are reflected as cash provided by operating

activities in the combined statements of cash flows. If the sales criteria are not met, the transfer is considered a

secured borrowing and the financial asset remains on the consolidated balance sheets with proceeds from the sale

recognized as debt and recorded as cash flows from financing activities in the consolidated statements of cash

flows. See Note 19 for discussion of the Company’s accounts receivable monetization.

F-23

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Loss Per Share

Basic net loss per share is calculated based on the weighted average common shares outstanding for the

period. Basic and diluted net loss per share for the years ended March 31, 2023, 2022 and 2021 is presented

below:

Year Ended March 31,

2023 2022 2021

(Amounts in millions, except per share amounts)

Basic and Diluted Net Loss Per Common Share:

Numerator:

Net loss attributable to Lions Gate Entertainment

Corp. shareholders ........................ $(2,010.2) $(188.2) $ (18.9)

Denominator:

Weighted average common shares outstanding .... 227.9 224.1 220.5

Basic and diluted net loss per common share ......... $ (8.82) $ (0.84) $ (0.09)

As a result of the net loss in the fiscal years ended March 31, 2023, 2022 and 2021, the dilutive effect of the

share purchase options, restricted share units (“RSUs”) and restricted stock, and contingently issuable shares

were considered anti-dilutive and, therefore, excluded from diluted net loss per share. The weighted average anti-

dilutive shares excluded from the calculation due to the net loss for the fiscal years ended March 31, 2023, 2022

and 2021 totaled 2.9 million, 5.3 million and 2.2 million, respectively.

Additionally, for the years ended March 31, 2023, 2022 and 2021, the outstanding common shares issuable

presented below were excluded from diluted net loss per common share because their inclusion would have had

an anti-dilutive effect regardless of net income or loss in the period.

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Anti-dilutive shares issuable

Share purchase options .......................... 23.0 16.0 24.6

Restricted share units ............................ 2.2 0.4 1.4

Other issuable shares ............................ 3.5 2.2 3.1

Total weighted average anti-dilutive shares

issuable excluded from diluted net loss per

common share ........................... 28.7 18.6 29.1

Recent Accounting Pronouncements

Accounting Guidance Adopted in Fiscal 2023

Government Assistance: In November 2021, the Financial Accounting Standards Board (“FASB”) issued

guidance which requires certain annual disclosures about transactions with a government that are accounted for

by applying a grant or contribution accounting model. The Company adopted this guidance on April 1, 2022 and

is applying its provisions prospectively, with no material impact to the Company’s financial statements. See Note

3 and Note 19 for information related to production tax credits.

F-24

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accounting Guidance Adopted in Fiscal 2022

Reference Rate Reform: In March 2020, the FASB issued guidance which provides optional expedients and

exceptions for applying U.S. GAAP to contract modifications, hedging relationships, and other transactions

affected by the market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered

rates to alternative reference rates, if certain criteria are met. Additionally, in January 2021, the FASB issued

additional guidance, which allows entities to elect certain optional expedients and exceptions when accounting

for derivative contracts and certain hedging relationships affected by changes in the interest rates. In December

2022, the FASB issued final guidance deferring the sunset date of the transition relief. The guidance is applicable

to contract modifications made between March 12, 2020 and December 31, 2024 and hedging relationships that

exist as of the beginning of an interim period that includes March 12, 2020 and new eligible hedging

relationships designated in subsequent periods. The Company adopted this guidance on July 1, 2021 and is

applying its provisions prospectively through December 31, 2024, with no material impact to the Company’s

financial statements.

2. Acquisitions and Dispositions

Acquisition

Spyglass. On July 15, 2021, the Company purchased approximately 200 feature film titles (the “Spyglass

Library”) from Spyglass Media Group, LLC (“Spyglass”). The Company also formed a strategic content

partnership through an investment of a minority preferred equity interest in Spyglass. The purchase price,

including acquisition costs, of the Spyglass Library and preferred equity interest was $191.4 million, of which

$171.4 million was paid at closing, $10.0 million was paid in July 2022, and the remaining $10.0 million is to be

paid in July 2023. The Spyglass Library was accounted for as an asset acquisition and is included in investment

in film and television programs on the Company’s consolidated balance sheet. The equity interest was accounted

for as an equity-method investment (see Note 5).

Disposition

Pantaya. On March 31, 2021, the Company sold its 75% majority interest in Pantaya to Hemisphere Media

Group for approximately $123.6 million in cash. Under the terms of the purchase agreement, control of Pantaya

transferred to Hemisphere Media Group on March 31, 2021, with the cash consideration transferred on April 1,

2021. Pantaya was previously reflected in and represented substantially all of “Other Streaming Services” in the

Company’s Media Networks segment (see Note 16). The Company recorded a gain before income taxes of

approximately $44.1 million, which is reflected in the gain on sale of Pantaya line item in the consolidated

statement of operations in the year ended March 31, 2021. This gain amount was net of $69.0 million of goodwill

allocated from the Media Networks segment as required under the applicable accounting guidance.

F-25

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Investment in Films and Television Programs and Licensed Program Rights

Total investment in films and television programs and licensed program rights by predominant monetization

strategy is as follows:

March 31,

2023

March 31,

2022

(Amounts in millions)

Investment in Films and Television Programs:

Individual Monetization

(1)(2)

Released, net of accumulated amortization ............................... $ 611.7 $ 557.5

Completed and not released .......................................... 278.7 121.4

In progress ........................................................ 457.0 574.9

In development .................................................... 64.1 102.7

1,411.5 1,356.5

Film Group Monetization

Released, net of accumulated amortization ............................... $ 657.8 469.5

Completed and not released .......................................... 281.7 253.2

In progress ........................................................ 303.0 427.6

In development .................................................... 8.2 11.4

1,250.7 1,161.7

Licensed program rights, net of accumulated amortization .......................... 285.7 495.4

Investment in films and television programs and program rights, net .............. $2,947.9 $3,013.6

(1) At March 31, 2023, the unamortized balance related to completed and not released and in progress theatrical

films was $561.5 million.

(2) Production tax credits reduced total investment in films and television programs by $181.2 million during

the year ended March 31, 2023, which resulted in a reduction of direct operating expense related to the

amortization of investment in films and television programs cost of approximately $84.3 million for the year

ended March 31, 2023.

At March 31, 2023, acquired film and television libraries have remaining unamortized costs of

$132.8 million, which are monetized individually and are being amortized using the individual-film-forecast

method over a remaining period of approximately 18.2 years (March 31, 2022—unamortized costs of $149.9

million).

Amortization of investment in film and television programs and licensed program rights by predominant

monetization strategy is as follows, and was included in direct operating expense in the consolidated statement of

operations:

Year Ended March 31,

2023 2022 2021

Amortization expense:

Individual monetization ..................... $ 951.2 $ 887.3 $ 539.3

Film group monetization ..................... 330.0 303.0 229.0

Licensed program rights ..................... 384.1 377.4 421.5

$1,665.3 $1,567.7 $1,189.8

F-26

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below summarizes estimated future amortization expense for the Company’s investment in film

and television programs and licensed program rights as of March 31, 2023:

Year Ending March 31,

2024 2025 2026

(Amounts in millions)

Estimated future amortization expense:

Released investment in films and television programs:

Individual monetization .......................................... $237.0 $ 85.5 $83.2

Film group monetization ......................................... $317.8 $131.3 $79.5

Licensed program rights .............................................. $145.4 $ 42.6 $24.6

Completed and not released investment in films and television programs:

Individual monetization .......................................... $170.4 n/a n/a

Film group monetization ......................................... $281.7 n/a n/a

Impairments. Investment in films and television programs and licensed program rights includes write-downs

to fair value. The following table sets forth impairments by segment and the line item in our consolidated

statement of operations they are recorded in for the fiscal years ended March 31, 2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Impairments by segment:

Included in direct operating expense:

Motion Picture .................................................. $ 6.2 $ 1.2 $19.4

Television Production ............................................ 4.6 34.9 10.3

Impairments not included in segment operating results

(1)

Included in direct operating expense ................................. — 36.9 15.4

Included in restructuring and other .................................. 379.3 — —

$390.1 $73.0 $45.1

(1) Fiscal 2023: Represents charges related to the Media Networks restructuring plan initiatives, including

content impairment of programming in certain international territories associated with the restructuring of

LIONSGATE+ (formerly STARPLAY International), and individual content charges pursuant to a strategic

review of content performance across Starz’s domestic and international platforms resulting in certain

programming being removed from those platforms and written down to fair value.

Fiscal 2022: Represents impairment charges recorded as a result of a strategic review of original

programming on the STARZ platform, which identified certain titles with limited viewership or strategic

purpose which were removed from the STARZ service and abandoned by the Media Networks segment.

Fiscal 2021: Represents impairment charges as a result of changes in performance expectations associated

with the circumstances associated with the COVID-19 global pandemic.

Of the impairments not included in segment operating results, none, none and $15.4 million for fiscal 2023,

2022 and 2021, respectively, related to motion picture titles.

See Note 15 and Note 16 for further information.

F-27

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4. Property and Equipment

March 31,

2023

March 31,

2022

(Amounts in millions)

Distribution equipment .................................... $ 19.1 $ 18.8

Leasehold improvements .................................. 58.7 43.5

Property and equipment ................................... 23.8 25.3

Computer equipment and software ........................... 241.6 219.7

343.2 307.3

Less accumulated depreciation and amortization ................ (254.9) (227.3)

88.3 80.0

Land ................................................... 1.2 1.2

$ 89.5 $ 81.2

During the year ended March 31, 2023, depreciation expense amounted to $40.1 million (2022 -

$43.0 million; 2021 - $44.0 million, and amounts in fiscal 2021 include the amortization of assets previously

recorded under finance leases).

5. Investments

The Company’s investments consisted of the following:

March 31,

2023

March 31,

2022

(Amounts in millions)

Investments in equity method investees ....................... $63.1 $53.9

Other investments ........................................ 1.6 2.1

$64.7 $56.0

Equity Method Investments:

The Company has investments in various equity method investees with ownership percentages ranging from

approximately 6% to 49%. These investments include:

Spyglass. Spyglass is a global premium content company, focused on developing, producing, financing and

acquiring motion pictures and television programming across all platforms for worldwide audiences.

STARZPLAY Arabia. STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online

subscription video-on-demand service in the Middle East and North Africa. On October 17, 2022, the Company

sold a portion of its ownership interest in STARZPLAY Arabia and received net proceeds of $43.4 million, and

the Company recorded a gain of $43.4 million on the sale which is included in gain (loss) on investments in the

Company’s consolidated statement of operations. Subsequent to the transaction, the Company continues to hold a

minority ownership interest in STARZPLAY Arabia.

Roadside Attractions. Roadside Attractions is an independent theatrical distribution company.

F-28

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pantelion Films. Pantelion Films is a joint venture with Videocine, an affiliate of Televisa, which produces,

acquires and distributes a slate of English and Spanish language feature films that target Hispanic moviegoers in

the U.S.

Atom Tickets. Atom Tickets is the first-of-its-kind theatrical mobile ticketing platform and app.

Great Point Opportunity Fund. Great Point Opportunity Fund is an operating company that operates

Lionsgate Studios Yonkers, a studio facility in Yonkers, New York.

42. 42 is a fully integrated management and production company, producing film, television and content,

representing actors, writers, directors, comedians, presenters, producers, casting directors and media book rights;

with offices in London and Los Angeles.

Other. In addition to the equity method investments discussed above, the Company holds ownership

interests in other immaterial equity method investees.

Summarized Financial Information. Summarized financial information for the Company’s equity method

investees on an aggregate basis is set forth below:

March 31,

2023

March 31,

2022

(Amounts in millions)

Current assets ................................... $189.0 $125.3

Non-current assets ................................ $203.0 $166.4

Current liabilities ................................. $215.5 $253.9

Non-current liabilities ............................. $ 65.0 $ 59.8

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Revenues .................................. $185.3 $ 86.0 $ 84.6

Gross profit ................................ $ 35.1 $ 26.5 $ 32.0

Net loss ................................... $(39.0) $(46.1) $(62.6)

6. Goodwill and Intangible Assets

Goodwill

Changes in the carrying value of goodwill by reporting segment were as follows:

Motion

Picture

Television

Production

Media

Networks

Total

(Amounts in millions)

Balance as of March 31, 2021 and March 31,

2022 .................................... $393.7 $401.9 $ 1,968.9 $ 2,764.5

Impairment

(1)

........................... — — (1,475.0) (1,475.0)

Balance as of March 31, 2023 .................. $393.7 $401.9 $ 493.9 $ 1,289.5

(1) See Note 1, Goodwill Impairment Assessments, for further information on the goodwill impairment recorded

in fiscal 2023 related to the Media Networks segment.

F-29

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible Assets

Finite-Lived Intangible Assets. Finite-lived intangible assets consisted of the following:

March 31, 2023 March 31, 2022

Gross

Carrying

Amount

Accumulated

Amortization

Net

Carrying

Amount

Gross

Carrying

Amount

Accumulated

Amortization

Net Carrying

Amount

(Amounts in millions)

Finite-lived intangible assets subject

to amortization:

Customer relationships

(1)

...... $1,852.0 $807.8 $1,044.2 $1,852.0 $671.3 $1,180.7

Trademarks and trade names . . . 3.6 2.6 1.0 3.6 2.2 1.4

Other ...................... 23.9 19.0 4.9 23.9 15.8 8.1

$1,879.5 $829.4 $1,050.1 $1,879.5 $689.3 $1,190.2

(1) Customer relationships primarily represent Starz affiliation agreements with distributors.

Amortization expense associated with the Company’s intangible assets for the years ended March 31, 2023,

2022 and 2021 was approximately $140.2 million, $134.9 million, and $144.5 million, respectively.

Amortization expense remaining relating to intangible assets for each of the years ending March 31,

2024 through 2028 is estimated to be approximately

$134.7 million, $128.3 million, $118.7 million, $113.4 million, and $108.4 million, respectively.

Indefinite-Lived Intangible Assets. Indefinite-lived intangible assets not subject to amortization consisted of

the following:

March 31,

2023

March 31,

2022

(Amounts in millions)

Indefinite-lived intangible assets not subject to amortization:

Tradenames

(1)

....................................... $250.0 $250.0

(1) Tradenames are related to the Starz brand name, which have an indefinite useful life and are not amortized,

but rather are assessed for impairment at least annually or more frequently whenever events or

circumstances indicate that the rights might be impaired.

F-30

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. Debt

Total debt of the Company, excluding film related obligations, was as follows:

March 31,

2023

March 31,

2022

(Amounts in millions)

Corporate debt:

Revolving Credit Facility ................................................ $ — $ —

Term Loan A .......................................................... 428.2 638.5

Term Loan B .......................................................... 831.7 844.2

5.500% Senior Notes .................................................... 800.0 1,000.0

Total corporate debt ................................................ 2,059.9 2,482.7

Unamortized debt issuance costs .............................................. (40.3) (57.8)

Total debt, net ............................................................. 2,019.6 2,424.9

Less current portion ......................................................... (41.4) (222.8)

Non-current portion of debt .................................................. $1,978.2 $2,202.1

The following table sets forth future annual contractual principal payment commitments of debt as of

March 31, 2023:

Maturity Date

Year Ending March 31,

Debt Type 2024 2025 2026 2027 2028 Thereafter Total

(Amounts in millions)

Revolving Credit Facility ...... April 2026 $ — $ — $ — $ — $— $ — $ —

Term Loan A ................ April 2026 28.9 41.2 44.5 313.6 — — 428.2

Term Loan B ................ March 2025 12.5 819.2 — — — — 831.7

5.500% Senior Notes ......... April 2029 — — — — — 800.0 800.0

$41.4 $860.4 $44.5 $313.6 $— $800.0 2,059.9

Less aggregate unamortized debt issuance

costs ................................ (40.3)

$2,019.6

Senior Credit Facilities (Revolving Credit Facility, Term Loan A and Term Loan B)

Revolving Credit Facility Availability of Funds & Commitment Fee. The revolving credit facility provides

for borrowings and letters of credit up to an aggregate of $1.25 billion, and at March 31, 2023 there was

$1.25 billion available. There were no letters of credit outstanding at March 31, 2023. However, borrowing levels

are subject to certain financial covenants as discussed below. The Company is required to pay a quarterly

commitment fee on the revolving credit facility of 0.250% to 0.375% per annum, depending on the achievement

of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended

(the “Credit Agreement”), on the total revolving credit facility of $1.25 billion less the amount drawn.

Maturity Date:

• Revolving Credit Facility & Term Loan A: April 6, 2026.

• Term Loan B: March 24, 2025.

F-31

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Interest:

• Revolving Credit Facility & Term Loan A: The Revolving Credit Facility and term loan A facility due

April 2026 (the “Term Loan A”) bear interest at a rate per annum equal to LIBOR plus 1.75% (or an

alternative base rate plus 0.75%) margin, with a LIBOR floor of zero. The margin is subject to

potential increases of up to 50 basis points (two (2) increases of 25 basis points each) upon certain

increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of

6.61% as of March 31, 2023, before the impact of interest rate swaps).

• Term Loan B: The term loan B facility due March 2025 (the “Term Loan B”) bears interest at a rate per

annum equal to LIBOR plus 2.25% margin, with a LIBOR floor of zero (or an alternative base rate plus

1.25% margin) (effective interest rate of 7.11% as of March 31, 2023, before the impact of interest rate

swaps).

Required Principal Payments:

• Term Loan A: Quarterly principal payments, at quarterly rates of 1.25% beginning September 30, 2022,

1.75% beginning September 30, 2023, and 2.50% beginning September 30, 2024 through March 31,

2026, with the balance payable at maturity.

• Term Loan B: Quarterly principal payments, at a quarterly rate of 0.25%, with the balance payable at

maturity.

The Term Loan A and Term Loan B also require mandatory prepayments in connection with certain

asset sales, subject to certain significant exceptions, and the Term Loan B is subject to additional

mandatory repayment from specified percentages of excess cash flow, as defined in the Credit

Agreement.

Optional Prepayment:

• Revolving Credit Facility, Term Loan A & Term Loan B: The Company may voluntarily prepay the

Revolving Credit Facility, Term Loan A and Term Loan B at any time without premium or penalty.

Security. The Senior Credit Facilities are guaranteed by the guarantors named in the Credit Agreement and

are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in

the Credit Agreement), subject to certain exceptions.

Covenants. The Senior Credit Facilities contain representations and warranties, events of default and

affirmative and negative covenants that are customary for similar financings and which include, among other

things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create

liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other

person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance

covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly. As of March 31,

2023, the Company was in compliance with all applicable covenants.

Change in Control. The Company may also be subject to an event of default upon a change in control (as

defined in the Credit Agreement) which, among other things, includes a person or group acquiring ownership or

control in excess of 50% of the Company’s common shares.

Potential Impact of LIBOR Transition. The Chief Executive of the U.K. Financial Conduct Authority (the

“FCA”), which regulates the LIBOR has announced that the FCA will no longer persuade or compel banks to

F-32

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

submit rates for the calculation of LIBOR after the end of 2021. For U.S dollar LIBOR, publication of the

one-week and two-month LIBOR settings ceased on December 31, 2021, and publication of the overnight and

12-month LIBOR settings will cease after June 30, 2023. Immediately after June 30, 2023, the one-month, three-

month and six-month U.S. dollar LIBOR settings will no longer be representative.

In July 2021, the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions and other market participants, recommended replacing U.S. dollar LIBOR with the Secured

Overnight Financing Rate (“SOFR”), a new index based on transactions in the market for short-term treasury

securities. The publication of SOFR began in April 2018, and, therefore, it has a very limited history and the

effects of the phase out of LIBOR and the adoption of SOFR have not been fully determined.

Under the terms of the Company’s Credit Agreement, in the event of the discontinuance of LIBOR, a

mutually agreed-upon alternate benchmark rate will be established to replace LIBOR. The Company and Lenders

(as defined in the Credit Agreement) shall, in good faith, endeavor to establish an alternate benchmark rate that

gives due consideration to prevailing market convention for determining a rate of interest for syndicated loans in

the United States at such time, and which places the lenders under the Credit Agreement and the Company in the

same economic position that existed immediately prior to the discontinuation of LIBOR. The Company does not

anticipate that the discontinuance or modification of LIBOR will materially impact its liquidity or financial

position.

5.500% Senior Notes

Interest: Bears interest at 5.500% annually (payable semi-annually in arrears on April 15 and October 15 of

each year, commencing on October 15, 2021).

Maturity Date: April 15, 2029.

Optional Redemption:

(i) Prior to April 15, 2024, the Company may redeem the 5.500% Senior Notes in whole at any time, or in

part from time to time, at a price equal to 100% of the principal amount of the notes to be redeemed

plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but not including, the

redemption date. The make-whole premium is the greater of (i) 1.0% of the principal amount redeemed

and (ii) the excess, if any, of the present value at such redemption date of the redemption price at

April 15, 2024 (see redemption prices below) plus interest through April 15, 2024 (discounted to the

redemption date at the treasury rate plus 50 basis points) over the principal amount of the notes

redeemed on the redemption date.

(ii) On or after April 15, 2024, the Company may redeem the 5.500% Senior Notes in whole at any time, or

in part from time to time, at certain specified redemption prices, plus accrued and unpaid interest, if

any, to, but not including, the redemption date. Such redemption prices are as follows (as a percentage

of the principal amount redeemed): (i) on or after April 15, 2024 - 102.750%; (ii) on or after April 15,

2025 - 101.375%; and (iii) on or after April 15, 2026 - 100%. In addition, the Company may redeem up

to 40% of the aggregate principal amount of the notes at any time and from time to time prior to

April 15, 2024 with the net proceeds of certain equity offerings at a price of 105.500% of the aggregate

principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption

date.

Security. The 5.500% Senior Notes are unsubordinated, unsecured obligations of the Company.

F-33

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Covenants. The 5.500% Senior Notes contain certain restrictions and covenants that, subject to certain

exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the

Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets

subject to certain conditions, among other limitations. As of March 31, 2023, the Company was in compliance

with all applicable covenants.

Change in Control. The occurrence of a change of control will be a triggering event requiring the Company

to offer to purchase from holders all of the 5.500% Senior Notes, at a price equal to 101% of the principal

amount, plus accrued and unpaid interest, if any, to the date of purchase. In addition, certain asset dispositions

will be triggering events that may require the Company to use the excess proceeds from such dispositions to

make an offer to purchase the 5.500% Senior Notes at 100% of their principal amount, plus accrued and unpaid

interest, if any, to the date of purchase.

Capacity to Pay Dividends

At March 31, 2023, the capacity to pay dividends under the Senior Credit Facilities, and the 5.500% Senior

Notes significantly exceeded the amount of the Company’s accumulated deficit or net loss, and therefore the

Company’s net loss of $2,018.8 million and accumulated deficit of $2,439.6 million were deemed free of

restrictions from paying dividends at March 31, 2023.

Debt Transactions:

Term Loan A Prepayment. In April 2022, the Company voluntarily prepaid the entire outstanding principal

amount of the Term Loan A due March 22, 2023 of $193.6 million, together with accrued and unpaid interest.

Senior Notes Repurchases. In the fiscal year ended March 31, 2023, the Company repurchased

$200.0 million principal amount of the 5.500% Senior Notes for $135.0 million, together with accrued and

unpaid interest.

In May 2023, the Company repurchased $85.0 million principal amount of the 5.500% Senior Notes for

$61.4 million, together with accrued and unpaid interest.

Senior Notes Redemption and Issuance. On April 1, 2021, the Company redeemed in full all $518.7 million

outstanding principal amount of its 5.875% Senior Notes due November 2024 (“5.875% Senior Notes”) and all

$545.6 million outstanding principal amount of its 6.375% Senior Notes due February 2024 (“6.375% Senior

Notes”). In connection with the early redemption of the 5.875% Senior Notes and the 6.375% Senior Notes, the

Company paid a prepayment premium of $15.2 million and $17.4 million, respectively, plus accrued and unpaid

interest to the date of redemption, pursuant to the terms of the indentures governing the 5.875% Senior Notes and

the 6.375% Senior Notes, respectively.

In connection with the redemption of the 5.875% Senior Notes and the 6.375% Senior Notes, on April 1,

2021, the Company issued $1.0 billion aggregate principal amount of 5.500% Senior Notes due April 15, 2029

(“5.500% Senior Notes”).

Credit Agreement Amendment. On April 6, 2021, the Company amended its Credit Agreement to, among

other things, extend the maturity (the “Extension”) of a portion of its revolving credit commitments, amounting

to $1.25 billion, and a portion of its outstanding term A loans, amounting to $444.9 million to April 6, 2026, and

make certain other changes to the covenants and other provisions therein. After giving effect to the Extension,

F-34

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$250.0 million of the prior revolving credit commitments and $215.1 million of term A loans remained

outstanding with a maturity of March 22, 2023. The revolving credit commitments due in March of 2023 were

terminated in November 2021 and the term A loans due in March of 2023 were repaid in full in April 2022 (see

Fiscal 2023 discussion above).

See the Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement

Amendment section further below.

Term Loan B Repurchases. During the year ended March 31, 2022, the Company completed a series of

repurchases of the Term Loan B and, in aggregate, paid $95.3 million to repurchase $96.0 million principal

amount of the Term Loan B.

Gain (Loss) on Extinguishment of Debt

During the fiscal years ended March 31, 2023 and 2022, the Company recorded a gain (loss) on

extinguishment of debt related to the transactions described above as summarized in the table below. There was

no loss on extinguishment of debt in the year ended March 31, 2021.

Year Ended March 31,

2023 2022

Gain (Loss) on Extinguishment of Debt:

Term Loan A prepayment ................................................... $(1.3) $ —

Senior Notes repurchases in fiscal 2023; Senior Notes redemption and issuance in fiscal

2022

(1)

................................................................. 58.7 (24.7)

Credit Agreement amendment (Revolving Credit Facility and Term Loan A)

(1)

......... — (1.7)

Termination of a portion of Revolving Credit Facility commitments .................. — (1.1)

Term Loan B repurchases and other ............................................ — (0.7)

$57.4 $(28.2)

(1) See Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement

Amendment section below.

Accounting for the Fiscal 2022 Senior Notes Redemption and Issuance and Credit Agreement

Amendment:

Revolving Credit Facility Credit Agreement Amendment on April 6, 2021.

• Unamortized debt issuance costs: Where the borrowing capacity (measured as the amount available

under the revolving credit facility multiplied by the remaining term) was less than it was prior to the

amendment measured on a creditor-by-creditor basis, the unamortized debt issuance costs were written

off as a loss on extinguishment of debt in proportion to the decrease in borrowing capacity.

• Fees paid to creditors and third-party costs: All fees paid to creditors or third parties (i.e., new debt

issuance costs) are being amortized over the term of the Revolving Credit Facility due in 2026.

Term Loan A Credit Agreement Amendment on April 6, 2021 and Senior Notes Redemption and Issuance

on April 1, 2021. With respect to substantially all creditors participating in the Term Loan A and for the portion

of the Senior Notes where the creditors participated in both the redeemed Senior Notes and the new Senior Notes,

the amendment of the credit agreement and the Senior Notes redemption and issuance was considered a

F-35

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

modification of terms since the present value of the cash flows after the amendment differed by less than a 10%

change from the present value of the cash flows on a creditor-by-creditor basis prior to the amendment. Where

the cash flows differed by more than 10% on a creditor by creditor basis, that portion was considered a debt

extinguishment. For new participating creditors, their portion of the debt was treated as new issuances to new

creditors. Accordingly, the associated costs were accounted for as follows:

• Unamortized debt issuance costs, third-party costs and fees paid to creditors: To the extent the

refinancing was considered a modification of terms, the unamortized debt issuance costs and fees paid

to creditors were recorded as a reduction of the applicable debt outstanding, and are being amortized

over the applicable term of the debt and the third-party costs were expensed as a loss on

extinguishment of debt. To the extent the refinancing was considered an extinguishment, the

unamortized debt issuance costs and fees paid to creditors were expensed as a loss on extinguishment

of debt, and the third-party costs were recorded as a reduction of the applicable debt outstanding and

are being amortized over the applicable term of the debt. For both the Term Loan A and Senior Notes,

to the extent there was a reduction of the outstanding balance on a creditor-by-creditor basis (i.e., a

partial prepayment of debt), previously incurred unamortized debt issuance costs and fees were

expensed as a loss on extinguishment of debt on the consolidated statement of operations.

For all of the above transactions, debt issuance costs recorded as a reduction of outstanding debt are

amortized using the effective interest method.

The following table summarizes the accounting for the fiscal 2022 Credit Agreement amendment and Senior

Notes redemption and issuance transactions, as described above:

Year Ended

March 31, 2022

Loss on

Extinguishment

of Debt

Recorded as a

Reduction of

Outstanding Debt

Balances &

Amortized Over Life

of New Issuances Total

(Amounts in millions)

Credit Agreement amendment (Revolving Credit

Facility and Term Loan A) and Senior Notes

redemption and issuance:

New debt issuance costs and call premiums ..... $21.2 $31.0 $52.2

Previously incurred debt issuance costs ......... 5.2 31.1 36.3

$26.4 $62.1 $88.5

F-36

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Film Related Obligations

March 31,

2023

March 31,

2022

(Amounts in millions)

Film related obligations:

Production Loans ............................ 1,349.9 966.3

Production Tax Credit Facility ................. 231.8 224.0

Programming Notes .......................... 83.6 96.4

Backlog Facility and Other .................... 226.0 —

IP Credit Facility ............................ 143.8 123.5

Total film related obligations ................... 2,035.1 1,410.2

Unamortized debt issuance costs .................... (11.5) (8.4)

Total film related obligations, net ................... 2,023.6 1,401.8

Less current portion .............................. (1,007.2) (751.5)

Total non-current film related obligations ............. $1,016.4 $ 650.3

The following table sets forth future annual repayment of film related obligations as of March 31, 2023:

Year Ending March 31,

2024 2025 2026 2027 2028 Thereafter Total

(Amounts in millions)

Production Loans ..................... $ 810.0 $539.9 $ — $ — $ — $— $1,349.9

Production Tax Credit Facility

(1)

......... — 231.8 — — — — 231.8

Programming Notes ................... 83.6——— — — 83.6

Backlog Facility and Other

(1)

............ 77.5 — 29.4 — 119.1 — 226.0

IP Credit Facility

(2)

.................... 36.1 24.6 30.4 30.4 22.3 — 143.8

$1,007.2 $796.3 $59.8 $30.4 $141.4 $— $2,035.1

Less unamortized debt issuance

costs ......................... (11.5)

$2,023.6

(1) The repayment dates are based on the projected future amount of collateral available under these facilities.

Net advances and payments under these facilities can fluctuate depending on the amount of collateral

available.

(2) Repayment dates are based on the projected future cash flows generated from the exploitation of the rights,

subject to a minimum guaranteed payment amount, as applicable (see further information below).

Production Loans. Production loans represent individual and multi-title loans for the production of film and

television programs that the Company produces. The majority of the Company’s production loans have

contractual repayment dates either at or near the expected completion or release dates, with the exception of

certain loans containing repayment dates on a longer term basis, and incur primarily SOFR and LIBOR-based

interest at a weighted average rate of 6.74% (before the impact of interest rate swaps, see Note 18 for interest rate

swaps). Production loans amounting to $1,277.8 million are secured by collateral which consists of the

underlying rights related to the intellectual property (i.e. film or television show), and $72.1 million are

unsecured.

F-37

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Production Tax Credit Facility. In January 2021, as amended on March 29, 2022, the Company entered into

a non-recourse senior secured revolving credit facility (the “Production Tax Credit Facility”) based on and

secured by collateral consisting solely of certain of the Company’s tax credit receivables. The maximum

principal amount of the Production Tax Credit Facility is $235.0 million, subject to the amount of collateral

available, which is based on specified percentages of amounts payable to the Company by governmental

authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or

exploitation of motion pictures and television programming in such jurisdiction. Cash collections from the

underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility. Advances

under the Production Tax Credit Facility bear interest at a rate equal to SOFR plus 0.10% to 0.25% depending on

the SOFR term (i.e., one, three or six months), plus 1.50% per annum or the base rate plus 0.50% per annum

(effective interest rate of 6.41% at March 31, 2023). The Production Tax Credit Facility matures on January 27,

2025. As of March 31, 2023, there was $3.2 million available under the Production Tax Credit Facility.

Programming Notes. Programming notes represent individual unsecured loans for the licensing of film and

television programs that the Company licenses, related to the Company’s Media Networks business. The

Company’s programming notes had contractual repayment dates in April and May 2023, and incur SOFR and

LIBOR-based interest at a weighted average rate of 8.14%.

IP Credit Facility. In July 2021, as amended in September 2022, certain subsidiaries of the Company

entered into a senior secured amortizing term credit facility (the “IP Credit Facility”) based on and secured by the

collateral consisting solely of certain of the Company’s rights in certain library titles, including the Spyglass and

other recently acquired libraries. The maximum principal amount of the IP Credit Facility is $161.9 million,

subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries. The

cash flows generated from the exploitation of the rights will be applied to repay the IP Credit Facility subject to

cumulative minimum guaranteed payment amounts as set forth below:

Cumulative Period From September 29,

2022 Through:

Cumulative Minimum

Guaranteed Payment

Amounts Payment Due Date

(in millions)

September 30, 2023 ............. $ 30.4 November 14, 2023

September 30, 2024 ............. $ 60.7 November 14, 2024

September 30, 2025 ............. $ 91.1 November 14, 2025

September 30, 2026 ............. $121.4 November 14, 2026

July 30, 2027 ............... $161.9 July 30, 2027

Advances under the IP Credit Facility bear interest at a rate equal to, at the Company’s option, SOFR plus

0.11% to 0.26% depending on the SOFR term (i.e., one or three months) plus 2.25% per annum (with a SOFR

floor of 0.25%) or the base rate plus 1.25% per annum (effective interest rate of 7.46% at March 31, 2023). The

IP Credit Facility matures on July 30, 2027.

Backlog Facility and Other

Backlog Facility. In March 2022, as amended in August 2022, certain subsidiaries of the Company entered

into a committed secured revolving credit facility (the “Backlog Facility”) based on and secured by collateral

consisting solely of certain of the Company’s fixed fee or minimum guarantee contracts where cash will be

received in the future. The maximum principal amount of the Backlog Facility is $175.0 million, subject to the

amount of eligible collateral contributed to the facility. Advances under the Backlog Facility bear interest at a

rate equal to Term SOFR plus 0.10% to 0.25% depending on the SOFR term (i.e., one, three or six months), plus

F-38

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

an applicable margin amounting to 1.15% per annum. The applicable margin is subject to a potential increase to

either 1.25% or 1.50% based on the weighted average credit quality rating of the collateral contributed to the

facility (effective interest rate of 6.06% at March 31, 2023). The Backlog Facility revolving period ends on

May 16, 2025, at which point cash collections from the underlying collateral is used to repay the facility. The

facility maturity date is up to 2 years, 90 days after the revolving period ends, currently August 14, 2027. As of

March 31, 2023, there was $175.0 million outstanding under the Backlog Facility, and there were no amounts

available under the Backlog Facility (March 31, 2022 - no amounts outstanding).

Other. In June 2022, the Company borrowed $118.6 million under a loan agreement which was secured by

contracted receivables which are not yet recognized as revenue under certain licensing agreements (the “June

2022 Distribution Loan”), which was fully repaid in the second and third quarter of fiscal 2023.

In September 2022, the Company borrowed $43.4 million under a loan agreement which matures on

March 28, 2026 (the “September 2022 Distribution Loan”) and bears interest at a rate equal to Term SOFR plus

0.11%, plus an applicable margin amounting to 1.50% per annum (effective interest rate of 6.42% at March 31,

2023).

In December 2022, the Company borrowed $16.2 million under a loan agreement which matures on

November 1, 2025 (the “December 2022 Distribution Loan”, and together with the September 2022 Distribution

Loan, the “Distribution Loans”), and bears interest at a rate equal to Term SOFR plus 0.11%, plus an applicable

margin amounting to 2.10% per annum (effective interest rate of 7.02% at March 31, 2023). The December 2022

Distribution Loan provides for total borrowings up to an aggregate of $18.7 million.

Outstanding loan balances under the Distribution Loans must be repaid with any cash collections from the

underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without

prepayment penalty fees. As of March 31, 2023, $51.0 million remains outstanding under the Distribution Loans.

9. Leases

The Company has operating leases primarily for office space, studio facilities, and other equipment. The

Company’s leases have remaining lease terms of up to approximately 11.5 years.

The components of lease cost were as follows:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Operating lease cost

(1)

.............................. $ 48.4 $ 54.9 $ 45.1

Finance lease cost

Amortization of right-of-use assets ................. — — 2.6

Interest on lease liabilities ........................ — — 1.6

Total finance lease cost ...................... — — 4.2

Short-term lease cost

(2)

.............................. 145.0 233.1 129.5

Variable lease cost

(3)

................................ 3.1 1.4 2.6

Total lease cost ................................ $196.5 $289.4 $181.4

(1) Operating lease cost amounts primarily represent the amortization of right-of-use assets and are included in

the “other amortization” line of the consolidated statements of cash flows. Amounts include costs

capitalized during the period for leased assets used in the production of film and television programs.

F-39

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) Short-term lease cost primarily consists of leases of facilities and equipment associated with film and

television productions and are capitalized when incurred.

(3) Variable lease cost primarily consists of insurance, taxes, maintenance and other operating costs.

Supplemental balance sheet information related to leases was as follows:

Category Balance Sheet Location

March 31,

2023

March 31,

2022

Operating Leases (Amounts in millions)

Right-of-use assets ................. Other assets - non-current $169.0 170.7

Lease liabilities (current) ............ Other accrued liabilities $ 47.4 41.4

Lease liabilities (non-current) ........ Other liabilities - non-current 159.2 159.3

$206.6 200.7

March 31,

2023

March 31,

2022

Weighted average remaining lease term (in years):

Operating leases ....................................................... 5.6 6.0

Weighted average discount rate:

Operating leases ....................................................... 3.81% 3.32%

The expected future payments relating to the Company’s lease liabilities at March 31, 2023 are as follows:

Operating

Leases

(Amounts in

millions)

Year ending March 31, 2024 $ 52.8

2025 ........................................................................ 43.7

2026 ........................................................................ 36.4

2027 ........................................................................ 29.5

2028 ........................................................................ 28.6

Thereafter ........................................................................ 39.0

Total lease payments ........................................................... 230.0

Less imputed interest ........................................................... (23.4)

Total ........................................................................ $206.6

As of March 31, 2023, the Company has entered into certain leases that have not yet commenced primarily

related to studio facilities, certain of which are owned by an equity-method investee, for which construction

related to those leases has not yet been completed. The leases are for terms up to 10.5 years, commencing upon

completion of construction (currently expected to be ranging from calendar years 2023 to 2025). The leases

include an option to terminate the leases prior to expiration of lease year seven, and an option to extend the initial

term for an additional 10 years. The total minimum lease payments under these leases in aggregate are

approximately $254.1 million. See Note 20 for further information related to leases with equity-method

investees.

F-40

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10. Fair Value Measurements

Fair Value

Accounting guidance and standards about fair value define fair value as the price that would be received

from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date.

Fair Value Hierarchy

Fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of

unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value

hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The accounting

guidance and standards establish three levels of inputs that may be used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or

liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active

markets); or model-derived valuations in which all significant inputs are observable or can be derived

principally from or corroborated by observable market data for substantially the full term of the assets

or liabilities.

• Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement

of fair value of assets or liabilities.

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring

basis as of March 31, 2023 and 2022:

March 31, 2023 March 31, 2022

Level 1 Level 2 Total Level 1 Level 2 Total

(Amounts in millions)

Assets:

Equity securities with a readily determinable fair

value ...................................... $— $— $— $0.5 $ — $ 0.5

Forward exchange contracts (see Note 18) ........... — 2.9 2.9 — 3.5 3.5

Interest rate swaps (see Note 18)

(1)

................. — 41.1 41.1 — 120.1 120.1

Liabilities:

Forward exchange contracts (see Note 18) ........... — (0.1) (0.1) — (2.8) (2.8)

Interest rate swaps (see Note 18) .................. — — — — 28.6 28.6

(1) Amounts at March 31, 2022 exclude $88.1 million of financing component of interest rate swaps presented

in the table below (none at March 31, 2023).

F-41

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the carrying values and fair values of the Company’s outstanding debt, film

related obligations, and interest rate swaps at March 31, 2023 and 2022:

March 31, 2023 March 31, 2022

(Amounts in millions)

Carrying

Value Fair Value

(1)

Carrying

Value Fair Value

(1)

(Level 2) (Level 2)

Term Loan A ......................................... $ 424.2 $ 415.4 $631.9 $625.7

Term Loan B .......................................... 827.2 817.1 837.5 828.3

5.500% Senior Notes ................................... 776.0 510.0 965.8 962.5

Production Loans ...................................... 1,346.1 1,349.9 963.7 966.3

Production Tax Credit Facility ............................ 229.4 231.8 221.1 224.0

Programming Notes .................................... 83.6 83.6 96.4 96.4

Backlog Facility and Other ............................... 223.7 226.0 — —

IP Credit Facility ...................................... 140.8 143.8 120.6 123.5

Financing component of interest rate swaps

(2)

................ — — 134.0 122.9

(1) The Company measures the fair value of its outstanding debt and interest rate swaps using discounted cash

flow techniques that use observable market inputs, such as LIBOR-based yield curves, swap rates, and

credit ratings (Level 2 measurements).

(2) Amounts at March 31, 2022 include $88.1 million recorded as a reduction of assets under master netting

arrangements (none at March 31, 2023).

The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts

payable, content related payables, other accrued liabilities, other liabilities, and borrowings under the Revolving

Credit Facility, if any. The carrying values of these financial instruments approximated the fair values at

March 31, 2023 and 2022.

11. Noncontrolling Interests

Redeemable Noncontrolling Interests

The table below presents the reconciliation of changes in redeemable noncontrolling interests:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Beginning balance .......................................... $321.2 $219.1 $167.8

Net loss attributable to redeemable noncontrolling interests .......... (9.2) (17.7) (15.9)

Noncontrolling interests discount accretion ....................... 13.2 22.7 22.7

Adjustments to redemption value ............................... 78.4 98.6 47.1

Other ..................................................... 1.7 — —

Cash distributions ........................................... (6.6) (1.5) (2.6)

Purchase of noncontrolling interest ............................. (55.1) — —

Ending balance ............................................. $343.6 $321.2 $219.1

Redeemable noncontrolling interests (included in temporary equity on the consolidated balance sheets)

relate to the November 12, 2015 acquisition of a controlling interest in Pilgrim Media Group and the May 29,

2018 acquisition of a controlling interest in 3 Arts Entertainment.

F-42

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3 Arts Entertainment. In connection with the acquisition of a controlling interest in 3 Arts Entertainment

on May 29, 2018, the Company recorded a non-compensatory (see below) redeemable noncontrolling interest

of $15.8 million, representing the noncontrolling interest holders’ 49% equity interest in 3 Arts Entertainment.

The noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair

value, exercisable beginning May 29, 2023, for a 60 day period. Beginning 30 days after the expiration of the

exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the

noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period. The put and call options have

been determined to be embedded in the noncontrolling interest, and because the put rights are outside the control

of the Company, the noncontrolling interest holder’s interest is presented as redeemable noncontrolling interest

outside of shareholders’ equity on the Company’s consolidated balance sheets.

In addition, the noncontrolling interest holders have continued as employees of 3 Arts Entertainment.

Pursuant to the various 3 Arts Entertainment acquisition and related agreements, a portion of the noncontrolling

interest holders’ participation in the put and call proceeds is based on the noncontrolling interest holders’

performance during the period. Further, if the employment of a noncontrolling interest holder is terminated,

under certain circumstances, their participations in distributions cease and the put and call value is discounted

from the fair value of their equity ownership percentage. Accordingly, earned distributions are accounted for as

compensation and are being expensed within general and administrative expense as incurred. Additionally, the

amount of the put and call proceeds subject to the discount is also accounted for as compensation, and is being

amortized over the vesting period within general and administrative expense and reflected as an addition to

redeemable noncontrolling interest.

A portion of the purchase price of the controlling interest in 3 Arts Entertainment, up to $38.3 million, may

be recoupable for a five-year period commencing on the acquisition date of May 29, 2018, contingent upon the

continued employment of certain employees, or the achievement of certain EBITDA targets, as defined in the 3

Arts Entertainment acquisition and related agreements. Accordingly, $38.3 million was initially recorded as a

deferred compensation arrangement within other current and non-current assets and is being amortized in general

and administrative expenses over a five-year period.

Pilgrim Media Group. In connection with the acquisition of a controlling interest in Pilgrim Media Group

on November 12, 2015, the Company recorded a redeemable noncontrolling interest of $90.1 million,

representing 37.5% of Pilgrim Media Group. Pursuant to an amendment dated April 2, 2021, the put and call

rights associated with the Pilgrim Media Group noncontrolling interest were extended and modified, such that the

noncontrolling interest holder had a right to put and the Company had a right to call a portion of the

noncontrolling interest, equal to 25% of Pilgrim Media Group, at fair value, exercisable for thirty (30) days

beginning November 12, 2022. On November 14, 2022 the noncontrolling interest holder exercised the right to

put a portion of the noncontrolling interest, equal to 25% of Pilgrim Media Group. In February 2023, the

Company paid $36.5 million as settlement of the exercised put option, and recorded a reduction to redeemable

noncontrolling interest of $55.1 million representing the carrying value of the noncontrolling interest purchased,

with the difference between the carrying value of the noncontrolling interest purchased and the cash paid for the

settlement of the put recorded as an increase to accumulated deficit of $18.6 million. The noncontrolling interest

holder has a right to put and the Company has a right to call the remaining amount of noncontrolling interest at

fair value, subject to a cap, exercisable for thirty (30) days beginning November 12, 2024, as amended. The put

and call options have been determined to be embedded in the noncontrolling interest, and because the put rights

are outside the control of the Company and require partial cash settlement, the noncontrolling interest holder’s

interest is presented as redeemable noncontrolling interest outside of shareholders’ equity on the Company’s

consolidated balance sheets.

F-43

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition, the noncontrolling interest holder is the President and CEO of Pilgrim Media Group. Pursuant to

the original operating agreement of Pilgrim Media Group, if the employment of the noncontrolling interest holder

was terminated, under certain circumstances as defined in the operating agreement, the Company could call and

the noncontrolling interest holder could put the noncontrolling interest at a discount to fair value, which was

being expensed over the call periods in the original operating agreement. Pursuant to the amendment to the

operating agreement on April 2, 2021, this discount was eliminated and therefore the remaining unamortized

discount of $2.7 million was expensed in the first quarter ended June 30, 2021. The amortization of the discount

through June 30, 2021 was included in general and administrative expense of Pilgrim Media Group for the year

ended March 31, 2022, and reflected as an addition to redeemable noncontrolling interest.

Redeemable noncontrolling interests are measured at the greater of (i) the redemption amount that would be

paid if settlement occurred at the balance sheet date less the amount attributed to unamortized noncontrolling

interest discount if applicable, or (ii) the historical value resulting from the original acquisition date value plus or

minus any earnings or loss attribution, plus the amount of amortized noncontrolling interest discount, less the

amount of cash distributions that are not accounted for as compensation, if any. The amount of the redemption

value in excess of the historical values of the noncontrolling interest, if any, is recognized as an increase to

redeemable noncontrolling interest and a charge to retained earnings or accumulated deficit.

Other. The Company has other immaterial redeemable noncontrolling interests.

Other Noncontrolling Interests

The Company has other immaterial noncontrolling interests that are not redeemable.

F-44

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12. Revenue

Revenue by Segment, Market or Product Line

The table below presents revenues by segment, market or product line for the fiscal years ended March 31,

2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Revenue by Type:

Motion Picture

Theatrical ................................................ $ 120.7 $ 65.3 $ 12.0

Home Entertainment

Digital Media ......................................... 527.5 497.1 461.5

Packaged Media ...................................... 70.5 115.0 139.5

Total Home Entertainment .......................... 598.0 612.1 601.0

Television ............................................... 217.8 257.9 230.2

International ............................................. 365.0 234.4 217.0

Other ................................................... 22.2 15.6 20.9

Total Motion Picture revenues ........................... 1,323.7 1,185.3 1,081.1

Television Production

Television ....................................................... 1,144.3 1,094.5 474.0

International ............................................. 277.7 256.5 164.5

Home Entertainment

Digital Media ......................................... 241.7 85.1 127.1

Packaged Media ...................................... 3.3 6.9 5.7

Total Home Entertainment .......................... 245.0 92.0 132.8

Other ................................................... 93.1 88.0 60.5

Total Television Production revenues ...................... 1,760.1 1,531.0 831.8

Media Networks - Programming Revenues

Domestic

(1)

............................................... 1,395.8 1,428.9 1,497.2

International ............................................. 150.7 107.3 65.5

1,546.5 1,536.2 1,562.7

Intersegment eliminations ....................................... (775.5) (648.2) (204.1)

Total revenues .................................................... $3,854.8 $3,604.3 $3,271.5

(1) Media Networks domestic revenues for the year ended March 31, 2021 includes revenue of $50.3 million from the Company’s former

Other Streaming Services product line, related to the Company’s former interest in Pantaya, which was sold on March 31, 2021

(see Note 2).

F-45

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Remaining Performance Obligations

Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or

minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e.,

backlog). Revenues expected to be recognized in the future related to performance obligations that are unsatisfied

at March 31, 2023 are as follows:

Year Ending March 31,

2024 2025 2026 Thereafter Total

(Amounts in millions)

Remaining Performance Obligations ................... $1,126.3 $475.2 $153.2 $129.8 $1,884.5

The above table does not include estimates of variable consideration for transactions involving sales or

usage-based royalties in exchange for licenses of intellectual property. The revenues included in the above table

include all fixed fee contracts regardless of duration.

Revenues of $156.5 million, including variable and fixed fee arrangements, were recognized during the year

ended March 31, 2023 from performance obligations satisfied prior to March 31, 2022. These revenues were

primarily associated with the distribution of television and theatrical product in electronic sell-through and

video-on-demand formats, and to a lesser extent, the distribution of theatrical product in the domestic and

international markets related to films initially released in prior periods.

Accounts Receivable, Contract Assets and Deferred Revenue

The timing of revenue recognition, billings and cash collections affects the recognition of accounts

receivable, contract assets and deferred revenue (see Note 1). See the consolidated balance sheets or Note 19 for

accounts receivable, contract assets and deferred revenue balances at March 31, 2023 and 2022.

Accounts Receivable. Accounts receivable are presented net of a provision for doubtful accounts. The

Company estimates provisions for accounts receivable based on historical experience for the respective risk

categories and current and future expected economic conditions. To assess collectability, the Company analyzes

market trends, economic conditions, the aging of receivables and customer specific risks, and records a provision

for estimated credit losses expected over the lifetime of the receivables in direct operating expense.

The Company performs ongoing credit evaluations and monitors its credit exposure through active review

of customers’ financial condition, aging of receivable balances, historical collection trends, and expectations

about relevant future events that may significantly affect collectability. The Company generally does not require

collateral for its trade accounts receivable.

Changes in the provision for doubtful accounts consisted of the following:

March 31, 2022

(Benefit) provision for

doubtful

accounts

(1)

Uncollectible

accounts

written-off

(2)

March 31,

2023

(Amounts in millions)

Trade accounts receivable .................... $11.5 $1.1 $(3.4) $9.2

(1) Represents a provision for doubtful accounts offset by collections on accounts receivable previously

reserved.

(2) Includes $2.5 million related to accounts receivable previously reserved for bad debt from customers in

Russia, related to Russia’s invasion of Ukraine.

F-46

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contract Assets. Contract assets relate to the Company’s conditional right to consideration for completed

performance under the contract (e.g., unbilled receivables). Amounts relate primarily to contractual payment

holdbacks in cases in which the Company is required to deliver additional episodes or seasons of television

content in order to receive payment, complete certain administrative activities, such as guild filings, or allow the

Company’s customers’ audit rights to expire. See Note 19 for contract assets at March 31, 2023 and 2022.

Deferred Revenue. Deferred revenue relates primarily to customer cash advances or deposits received prior

to when the Company satisfies the corresponding performance obligation. Revenues of $164.4 million were

recognized during the year ended March 31, 2023, related to the balance of deferred revenue at March 31, 2022.

13. Capital Stock

(a) Common Shares

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B

non-voting shares, at March 31, 2023 and March 31, 2022.

The table below outlines common shares reserved for future issuance:

March 31,

2023

March 31,

2022

(Amounts in millions)

Stock options and Share Appreciation Rights outstanding ................. 24.8 27.6

Restricted share units and restricted stock — unvested ................... 14.0 7.9

Common shares available for future issuance ........................... 11.4 18.4

Shares reserved for future issuance ............................... 50.2 53.9

(b) Share Repurchases

On February 2, 2016, the Company’s Board of Directors authorized the Company to increase its previously

announced share repurchase plan from a total authorization of $300 million to $468 million. During the fiscal

years ended March 31, 2023 and March 31, 2022, the Company did not repurchase any common shares. During

the fiscal year ended March 31, 2021, the Company repurchased 0.2 million of its Class A voting shares for an

aggregate cost of $1.0 million, with an average repurchase price per share of $5.75. To date, approximately

$288.1 million common shares have been repurchased, leaving approximately $179.9 million of authorized

potential repurchases.

General. The Company has a performance incentive plan (the “2019 Plan”), as amended, which provides for

granting awards which include stock options, share appreciation rights, restricted stock, restricted share units,

stock bonuses and other forms of awards granted or denominated in the Company’s Class A voting shares and

the Company’s Class B non-voting shares (“Common Shares”) or units of Common Shares, as well as certain

cash bonus awards. Persons eligible to receive awards under the 2019 Plan include directors of the Company,

officers or employees of the Company or any of its subsidiaries, and certain consultants and advisors to the

Company or any of its subsidiaries.

Stock options are generally granted at exercise prices equal to or exceeding the market price of the

Company’s Common Shares at the date of grant. Substantially all stock options vest ratably over one to five

years from the grant date based on continuous service and expire seven to ten years from the date of grant.

F-47

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restricted stock and restricted share units generally vest ratably over one to three years based on continuous

service. The Company satisfies stock option exercises and vesting of restricted stock and restricted share units

with newly issued shares.

The measurement of all share-based awards uses a fair value method and the recognition of the related

share-based compensation expense in the consolidated financial statements is recorded over the requisite service

period. Further, the Company estimates forfeitures for share-based awards that are not expected to vest. As share-

based compensation expense recognized in the Company’s consolidated financial statements is based on awards

ultimately expected to vest, it has been reduced for estimated forfeitures.

Exchange Program. On January 10, 2020, the Company’s Board of Directors authorized, and on April 2,

2020, the Company’s shareholders approved, a stock option and share appreciation rights exchange program (the

“Exchange Program”) that permitted certain current employees to exchange certain outstanding stock options and

share appreciation rights with exercise prices substantially above the current market price of the Company’s

Class A voting shares and the Company’s Class B non-voting shares for a lesser number of stock options and

share appreciation rights that have a fair value that is lower than the fair value of the “out of the money” stock

options and share appreciation rights. The program began on April 9, 2020 and was completed on May 7, 2020.

As a result of this program 1.1 million outstanding eligible stock options and share appreciation rights of Class A

voting shares were exchanged for 0.1 million new stock options and share appreciation rights at an exercise price

of $7.70 per share and 4.3 million outstanding eligible stock options and share appreciation rights of Class B

non-voting shares were exchanged for 0.8 million new stock options and share appreciation rights at an exercise

price of $7.13. There was no incremental compensation expense recorded by the Company as a result of the

Exchange Program.

Share-Based Compensation Expense. The Company recognized the following share-based compensation

expense during the years ended March 31, 2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Compensation Expense:

Stock options ...................................................... $ 7.0 $ 19.2 $ 18.7

Restricted share units and other share-based compensation .................. 86.8 73.4 58.8

Share appreciation rights ............................................ 4.0 7.4 8.0

97.8 100.0 85.5

Impact of accelerated vesting on equity awards

(1)

......................... 4.2 — 3.5

Total share-based compensation expense ............................ $102.0 $100.0 $ 89.0

Tax impact

(2)

...................................................... (18.4) (19.7) (17.8)

Reduction in net income ............................................. $ 83.6 $ 80.3 $ 71.2

(1) Represents the impact of the acceleration of vesting schedules for equity awards pursuant to certain

severance arrangements.

(2) Represents the income tax benefit recognized in the statements of operations for share-based compensation

arrangements prior to the effects of changes in the valuation allowance.

F-48

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Share-based compensation expense, by expense category, consisted of the following:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Share-Based Compensation Expense:

Direct operating ................................. $ 1.7 $ 1.2 $ 2.0

Distribution and marketing ........................ 0.7 0.5 0.6

General and administration ........................ 95.4 98.3 82.9

Restructuring and other ........................... 4.2 — 3.5

$102.0 $100.0 $89.0

Stock Options

The following table sets forth the stock option, and share appreciation rights (“SARs”) activity during the

year ended March 31, 2023:

Stock Options and SARs

Class A Voting Shares Class B Non-Voting Shares

Number

of Shares

Weighted-

Average

Exercise

Price

Weighted-

Average

Remaining

Contractual

Term

(years)

Aggregate

Intrinsic

Value

Number

of Shares

Weighted-

Average

Exercise

Price

Weighted-

Average

Remaining

Contractual

Term

(years)

Aggregate

Intrinsic

Value

(Amounts in millions, except for weighted-average exercise price and years)

Outstanding at March 31, 2022 ..... 5.4 $24.34 22.2 $15.36

Granted ....................... — — 0.3 $ 8.97

Exercised ...................... —

(1)

$ 7.70 (0.4) $ 9.73

Forfeited or expired .............. (1.1) $16.81 (1.6) $17.25

Outstanding at March 31, 2023 ..... 4.3 $26.35 2.16 $0.2 20.5 $15.23 5.45 $12.3

Vested or expected to vest at

March 31, 2023 ............... 4.3 $26.35 2.16 $0.2 20.5 $15.25 5.44 $12.2

Exercisable at March 31, 2023 ..... 4.1 $26.60 2.36 $0.2 16.6 $16.68 4.95 $ 5.7

(1) Represents less than 0.1 million shares.

The fair value of each option award is estimated on the date of grant using a closed-form option valuation

model (Black-Scholes). The following table presents the weighted average grant-date fair value of options

granted in the years ended March 31, 2023, 2022 and 2021, and the weighted average applicable assumptions

used in the Black-Scholes option-pricing model for stock options and share-appreciation rights granted during the

years then ended:

Year Ended March 31,

2023 2022 2021

Weighted average fair value of grants ............. $4.56 $6.27 $3.10

Weighted average assumptions:

Risk-free interest rate

(1)

..................... 2.8% - 3.7% 0.8% - 2.5% 0.2% - 0.9%

Expected option lives (in years)

(2)

............. 3.5-7years 3.3 - 7 years 2.5 - 7 years

Expected volatility for options

(3)

.............. 44% 42%-44% 37%-42%

Expected dividend yield

(4)

................... 0% 0% 0%

F-49

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) The risk-free rate assumed in valuing the options is based on the U.S. Treasury Yield curve in effect applied

against the expected term of the option at the time of the grant.

(2) The expected term of options granted represents the period of time that options granted are expected to be

outstanding.

(3) Expected volatilities are based on implied volatilities from traded options on the Company’s shares,

historical volatility of the Company’s shares and other factors.

(4) The expected dividend yield is estimated by dividing the expected annual dividend by the market price of

the Company’s shares at the date of grant.

The total intrinsic value of options exercised during the year ended March 31, 2023 was $1.2 million (2022

— $2.3 million, 2021 — $1.7 million).

During the year ended March 31, 2023, less than 0.1 million shares (2022 — less than 0.1 million shares,

2021 — less than 0.1 million) were cancelled to fund withholding tax obligations upon exercise of options.

Restricted Share Units

The following table sets forth the restricted share unit and restricted stock activity during the year

ended March 31, 2023:

Restricted Share Units and Restricted Stock

Class A

Voting

Weighted-

Average

Grant-Date

Fair Value

Class B

Non-Voting

Weighted-

Average

Grant-Date

Fair Value

(Amounts in millions, except for weighted-average grant date

fair value)

Outstanding at March 31, 2022 ............. —

(1)

$11.51 7.9 $11.87

Granted ................................ —

(1)

$10.27 12.1 $ 9.05

Vested ................................ —

(1)

$11.19 (5.6) $11.83

Forfeited ............................... — $30.56 (0.4) $10.26

Outstanding at March 31, 2023 ............. —

(1)

$10.95 14.0 $ 9.48

(1) Represents less than 0.1 million shares.

The fair values of restricted share units and restricted stock are determined based on the market value of the

shares on the date of grant. The total fair value of restricted share units and restricted stock vested during the year

ended March 31, 2023 was $54.9 million (2022 — $67.8 million, 2021 — $35.3 million).

The following table summarizes the total remaining unrecognized compensation cost as of March 31, 2023

related to non-vested stock options and restricted stock and restricted share units and the weighted average

remaining years over which the cost will be recognized:

Total

Unrecognized

Compensation

Cost

Weighted

Average

Remaining

Years

(Amounts in

millions)

Stock Options ................................ $ 4.9 0.6

Restricted Share Units and Restricted Stock ........ 59.1 1.1

Total ....................................... $64.0

F-50

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Under the Company’s stock option and long term incentive plans, the Company withholds shares to satisfy

minimum statutory federal, state and local tax withholding obligations arising from the vesting of restricted share

units and restricted stock. During the year ended March 31, 2023, 2.2 million shares (2022 — 2.3 million shares,

2021 — 0.9 million shares) were withheld upon the vesting of restricted share units and restricted stock.

The Company becomes entitled to an income tax deduction in an amount equal to the taxable income

reported by the holders of the stock options and restricted share units when vesting or exercise occurs, the

restrictions are released and the shares are issued. Restricted share units are forfeited if the employees are

terminated prior to vesting.

The Company recognized excess tax deficiencies of $11.3 million associated with its equity awards in its tax

provision for the year ended March 31, 2023 (2022 — benefits of $14.9 million, 2021 — deficiencies of $12.1

million).

Other Share-Based Compensation

Pursuant to the terms of certain employment agreements, during the year ended March 31, 2023, the

Company granted the equivalent of $2.3 million (2022 — $2.3 million, 2021 — $2.3 million) in shares to certain

employees through the term of their employment contracts, which were recorded as compensation expense in the

applicable period. Pursuant to this arrangement, for the year ended March 31, 2023, the Company issued

0.3 million shares (2022 — 0.1 million shares, 2021 — 0.3 million shares), net of shares withheld to satisfy

minimum tax withholding obligations.

14. Income Taxes

The components of pretax income (loss), net of intercompany eliminations, are as follows:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

United States ................................... $(2,218.6) $(359.2) $(246.3)

International ................................... 221.1 182.2 228.9

$(1,997.5) $(177.0) $ (17.4)

The Company’s U.S. pre-tax losses and international pre-tax income are primarily driven by non-operating,

intercompany items resulting from the Company’s internal capital structure. The Company’s capital structure

generally provides foreign affiliate dividends to its Canadian parent company (i.e., Lionsgate) and interest-related

tax deductions to its U.S. companies. The Company’s international pre-tax income may be significantly impacted

by these foreign affiliate dividends related to its internal capital structure.

The Company’s current and deferred income tax provision (benefits) are as follows:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Current provision (benefit):

Federal .......................................... $11.9 $11.0 $ 5.0

States ........................................... (0.4) 10.7 2.9

International ...................................... 15.1 8.4 5.8

Total current provision (benefit) .................. $26.6 $30.1 $13.7

F-51

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Deferred provision (benefit):

Federal .......................................... $(7.7) $ 0.9 $ 1.1

States ........................................... (0.1) (2.6) 2.3

International ...................................... 2.5 — —

Total deferred provision (benefit) ................. (5.3) (1.7) 3.4

Total provision for income taxes .......................... $21.3 $28.4 $17.1

The Company’s income tax provision differs from the federal statutory rate multiplied by pre-tax income

(loss) due to the mix of the Company’s pre-tax income (loss) generated across the various jurisdictions in which

the Company operates and the tax deductions generated by the Company’s capital structure. The Company’s

income tax provision for the fiscal years ended March 31, 2023, March 31, 2022 and March 31, 2021 was

impacted by changes in the valuation allowances against certain U.S. and foreign deferred tax assets, certain

minimum taxes and foreign withholding taxes. The Company’s income tax provision for fiscal 2023 and fiscal

2022 was also impacted by charges for interest on uncertain tax benefits and additional uncertain tax benefits

related to state income taxes identified during state audits, and benefited from the release of uncertain tax

benefits due to the close of audits or expiration of statutory limitations. The Company’s income tax provision for

fiscal 2021 included a benefit from the release of uncertain tax benefits due to the close of audits or expiration of

statutory limitations and additional settlements with tax authorities.

The Company’s income tax provision can be affected by many factors, including the overall level of pre-tax

income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates,

changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, changes in

valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other

discrete items.

Although the Company is incorporated under Canadian law, the majority of its global operations are

currently subject to tax in the U.S. As a result, the Company believes it is more appropriate to use the U.S.

Federal statutory rate in its reconciliation of the statutory rate to its reported income tax rate.

The differences between income taxes expected at U.S. statutory income tax rates and the income tax

provision are as set forth below:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Income taxes computed at Federal statutory rate .............................. $(419.5) $(37.2) $ (3.7)

Foreign affiliate dividends ........................................... (35.4) (35.2) (35.2)

Foreign operations subject to different income tax rates .................... 48.2 50.0 47.4

State income tax ................................................... (0.5) 8.1 5.2

Nondeductible goodwill impairment ................................... 304.3 — —

Gain on sale of Pantaya ............................................. — — 13.8

Remeasurements of originating deferred tax assets and liabilities ............ 13.6 (1.3) 4.2

Permanent differences .............................................. 2.3 0.8 0.9

Nondeductible share based compensation ............................... 2.3 (3.3) 27.1

Nondeductible officers compensation .................................. 9.8 5.6 7.3

F-52

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Non-controlling interest in partnerships ................................... 1.8 3.7 3.3

Nondeductible interest expense ......................................... — — 3.5

Uncertain tax benefits ................................................. 5.3 3.6 0.6

Other .............................................................. 1.9 1.2 (0.3)

Changes in valuation allowance ......................................... 87.2 32.4 (57.0)

Total provision for income taxes .................................... $21.3 $28.4 $ 17.1

For the fiscal years ended March 31, 2023, 2022 and 2021, our total provision for income taxes includes

certain foreign affiliate dividends that can be received in our Canadian jurisdiction without being subject to tax

under local tax law. As a result of an internal capital restructuring during the year ended March 31, 2019, the

Company generated a net operating loss carryforward under local law in another foreign jurisdiction which was

offset by a valuation allowance based on the Company’s assessment and which is being absorbed by taxable

income annually.

The income tax effects of temporary differences between the book value and tax basis of assets and

liabilities are as follows:

March 31,

2023

March 31,

2022

(Amounts in millions)

Deferred tax assets:

Net operating losses .......................... $450.4 $ 496.9

Foreign tax credits ............................ 73.0 76.8

Investment in film and television programs ........ 67.1 14.5

Accrued compensation ........................ 63.2 56.7

Operating leases — liabilities ................... 41.4 39.2

Other assets ................................. 22.6 19.6

Reserves ................................... 9.0 10.2

Interest ..................................... 104.6 10.6

Total deferred tax assets ................... 831.3 724.5

Valuation allowance .............................. (455.7) (362.8)

Deferred tax assets, net of valuation allowance ......... 375.6 361.7

Deferred tax liabilities:

Intangible assets ............................. (317.0) (351.9)

Operating leases — assets ...................... (34.6) (34.5)

Other ...................................... (55.8) (14.1)

Total deferred tax liabilities ................ $(407.4) $(400.5)

Net deferred tax liabilities .......................... $ (31.8) $ (38.8)

The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related

to U.S. and foreign net operating loss carryforwards and U.S. foreign tax credit carryforwards as sufficient

uncertainty exists regarding the future realization of these assets.

F-53

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At March 31, 2023, the Company had U.S. net operating loss carryforwards (“NOLs”) of approximately

$1,561.5 million available to reduce future federal income taxes, certain of which expire beginning in 2037

through 2042. At March 31, 2023, the Company had state NOLs of approximately $988.2 million available to

reduce future state income taxes which expire in varying amounts beginning in 2024. At March 31, 2023, the

Company had Canadian loss carryforwards of $2.5 million which will expire beginning in 2030. At March 31,

2023, the Company had Luxembourg loss carryforwards of $235.1 million which will expire beginning in 2036.

At March 31, 2023, the Company had other foreign jurisdiction loss carryforwards of $18.1 million which will

expire beginning in 2028. In addition, at March 31, 2023, the Company had U.S. credit carryforwards related to

foreign taxes paid of approximately $73.0 million to offset future federal income taxes that will expire beginning

in 2024.

The following table summarizes the changes to the gross unrecognized tax benefits, exclusive of interest and

penalties, for the years ended March 31, 2023, 2022, and 2021:

Amounts

in millions

Gross unrecognized tax benefits at March 31, 2020 (liability as of

March 31, 2020) .........................................

$11.5

Increases related to current year tax position ................. 60.7

Increases related to prior year tax positions .................. 3.1

Decreases related to prior year tax positions ................. —

Settlements ........................................... (1.9)

Lapse in statute of limitations ............................. (5.4)

Gross unrecognized tax benefits at March 31, 2021 (liability as of

March 31, 2021) .........................................

68.0

Increases related to current year tax position ................. —

Increases related to prior year tax positions .................. 2.6

Decreases related to prior year tax positions ................. —

Settlements ........................................... —

Lapse in statute of limitations ............................. (0.4)

Gross unrecognized tax benefits at March 31, 2022 (liability as of

March 31, 2022) .........................................

70.2

Increases related to current year tax position ................. —

Increases related to prior year tax positions .................. 0.2

Decreases related to prior year tax positions ................. —

Settlements ........................................... (4.3)

Lapse in statute of limitations ............................. (1.2)

Gross unrecognized tax benefits at March 31, 2023 (liability as of

March 31, 2023) .........................................

$64.9

The Company records interest and penalties on unrecognized tax benefits as part of its income tax provision.

For the years ended March 31, 2023, 2022, and 2021, the Company recognized as a charge or (benefit) to the tax

provision net interest and penalties related to uncertain tax positions of $5.0 million, $6.0 million, and

$1.2 million, respectively. The liability for accrued interest amounted to $16.7 million and $13.2 million as of

March 31, 2023 and 2022, respectively. The total amount of unrecognized tax benefits as of March 31, 2023 that,

if recognized, would benefit the Company’s tax provision are $81.6 million. The Company estimates that it is

reasonably possible that the liability for unrecognized tax benefits will decrease in the next twelve months by

$79.7 million as a result of projected audit settlements in certain jurisdictions.

F-54

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company is subject to taxation in the U.S. and various state, local, and foreign jurisdictions. To the

extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were

generated and carried forward and make adjustments up to the amount of the NOLs. Currently, audits are

occurring in various state and local tax jurisdictions for tax years ended in 2012 through 2020. Additionally,

positions taken by the Company in certain amended filings are subject to current review. The Company’s

Canadian tax returns are also under examination for the years ended March 31, 2018 through March 31, 2019.

15. Restructuring and Other

Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and

certain unusual items, when applicable. During the years ended March 31, 2023, 2022 and 2021, the Company

also incurred certain other unusual charges, which are included in direct operating expense and distribution and

marketing expense in the consolidated statements of operations and are described below. The following table sets

forth restructuring and other and these other unusual charges or benefits and the statement of operations line

items they are included in for the years ended March 31, 2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Restructuring and other:

Content and other impairments

(1)

..................... $385.2 $ — $ —

Severance

(2)

Cash ....................................... 18.0 4.6 14.8

Accelerated vesting on equity awards (see Note

13)....................................... 4.2 — 3.5

Total severance costs ...................... 22.2 4.6 18.3

COVID-19 related charges included in restructuring and

other

(3)

........................................ 0.1 1.1 3.0

Transaction and related costs (benefits)

(4)

.............. 4.4 11.1 3.4

Total Restructuring and Other ................. 411.9 16.8 24.7

Other unusual charges not included in restructuring and

other or the Company’s operating segments:

Programming and content charges included in direct

operating expense

(5)

............................. 7.0 36.9 —

COVID-19 related charges (benefit) included in:

Direct operating expense

(6)

...................... (11.6) (3.6) 50.6

Distribution and marketing expense

(6)

............. — 0.2 16.9

Charges related to Russia’s invasion of Ukraine included

in direct operating expense

(7)

...................... — 5.9 —

Total restructuring and other and other unusual charges not

included in restructuring and other ..................... $407.3 $56.2 $92.2

(1) Media Networks Goodwill Impairment and Restructuring: For the second quarter ended September 30,

2022, due to the macro and microeconomic conditions, including the competitive environment, continued

inflationary trends and recessionary economies worldwide and its impact on the Company’s growth in

subscribers worldwide, the Company began a plan to restructure its LIONSGATE+ business (formerly

STARZPLAY International). This restructuring includes exiting the business in seven international

territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan). The Company’s Starz domestic

operations have also been impacted by these current market conditions, and the Company has revised its

F-55

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

subscriber growth and forecasted cash flow assumptions and implemented certain cost-saving measures.

These changes in forecasted cash flow resulted in an impairment of $1.475 billion of goodwill related to the

Media Networks segment in the second quarter ended September 30, 2022, as discussed in Note 1.

During the third quarter ended December 31, 2022, due to the continuing macro and microeconomic

conditions which led to the LIONSGATE+ restructuring, the Company expanded its restructuring plan

discussed above to identify additional cost-saving initiatives, which included a strategic review of content

performance across Starz’s domestic and international platforms, resulting in certain programming being

removed from those platforms and written down to fair value.

As a result of these restructuring initiatives, the Company recorded content impairment charges associated

with impairment of programming related to the territories being exited and individual content abandonment

upon removal of certain titles from the Starz platforms related to the Media Networks segment in the fiscal

year ended March 31, 2023 of $379.3 million.

The Company is substantially complete with executing its LIONSGATE+ restructuring plan including

exiting the territories discussed above, negotiating certain content related contractual commitments and

performing its strategic review of content performance for consideration of removal from the Company’s

various platforms. As of March 31, 2023, a portion of the territories had been exited, with the remaining

territories fully exited in May 2023. The Company estimates it will incur additional charges ranging from

approximately $20 million to $50 million related to certain contractual content commitments or

programming content impairment charges, among other items, as the Company fully implements the plan.

Of these total estimated future charges, the net future cash outlay is estimated to range from approximately

$20 million to $50 million, which includes content commitments on content in territories being exited and

estimates of payments on content that may be abandoned as part of the ongoing strategic review, as well as

the incremental cost related to the restructuring. Of the content impairment charges recorded in the fiscal

year ended March 31, 2023, approximately $90 million reflects the future cash to be paid for the remaining

amounts payable for this content. As the Company continues to fully implement the plan, including further

strategic review of content performance, the Company may incur additional content impairment charges

beyond these estimates. The Company expects the restructuring plan to be substantially completed by

June 30, 2023, however, certain settlements of contractual commitments could extend beyond that date.

Other Impairments: Amounts in the fiscal year ended March 31, 2023 also include an impairment of an

operating lease right-of-use asset related to the Studio business and corporate facilities amounting to

$5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company. The

impairment reflects a decline in market conditions since the inception of the lease impacting potential

sublease opportunities, and represents the difference between the estimated fair value, which was

determined based on the expected discounted future cash flows of the lease asset, and the carrying value.

(2) Severance costs in the fiscal years ended March 31, 2023, 2022 and 2021 were primarily related to the

restructuring activities and other cost-saving initiatives.

(3) Amounts represent certain incremental general and administrative costs associated with the COVID-19

global pandemic, such as costs related to transitioning the Company to a remote-work environment, costs

associated with return-to-office safety protocols, and other incremental general and administrative costs

associated with the COVID-19 global pandemic.

(4) Transaction and other costs in the fiscal years ended March 31, 2023, 2022 and 2021 reflect transaction,

integration and legal costs associated with certain strategic transactions, and restructuring activities and also

include costs and benefits associated with legal matters. In the fiscal year ended March 31, 2023, these amounts

include a benefit of $11.0 million for a settlement of a legal matter related to the Media Networks segment.

(5) Amounts represent certain unusual programming and content charges. In the fiscal year ended March 31,

2023, the amounts represent development costs written off as a result of changes in strategy across the

F-56

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company’s theatrical slate in connection with certain management changes and changes in the theatrical

marketplace in the Motion Picture segment. In the fiscal year ended March 31, 2022, the amounts represent

impairment charges recorded as a result of a strategic review of original programming on the STARZ

platform, which identified certain titles with limited viewership or strategic purpose which were removed

from the STARZ service and abandoned by the Media Networks segment (see Note 3). These charges are

excluded from segment results and included in amortization of investment in film and television programs

in direct operating expense on the consolidated statement of operations.

(6) Amounts reflected in direct operating expense include incremental costs associated with the pausing and

restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and

equipment costs resulting from circumstances associated with the COVID-19 global pandemic, net of

insurance recoveries of $14.1 million, $22.1 million and immaterial amounts in fiscal 2023, 2022 and 2021,

respectively. In fiscal 2021, these charges also included film impairment due to changes in performance

expectations resulting from circumstances associated with the COVID-19 global pandemic. In the fiscal

years ended March 31, 2023 and 2022, insurance recoveries exceeded the incremental costs expensed in the

year, resulting in a net benefit included in direct operating expense. The costs included in distribution and

marketing expense primarily consist of contractual marketing spends for film releases and events that have

been canceled or delayed and will provide no economic benefit. The Company is in the process of seeking

additional insurance recovery for some of these costs. The ultimate amount of insurance recovery cannot be

estimated at this time.

(7) Amounts represent charges related to Russia’s invasion of Ukraine, primarily related to bad debt reserves

for accounts receivable from customers in Russia, included in direct operating expense in the consolidated

statements of operations.

Changes in the restructuring and other severance liability were as follows for the years ended March 31,

2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Severance liability

Beginning balance ................................ $ 1.5 $5.7 $11.1

Accruals ........................................ 18.0 4.6 14.8

Severance payments ............................... (10.8) (8.8) (20.2)

Ending balance

(1)

................................. $ 8.7 $1.5 $ 5.7

(1) As of March 31, 2023, the remaining severance liability of approximately $8.7 million is expected to be

paid in the next 12 months.

16. Segment Information

The Company’s reportable segments have been determined based on the distinct nature of their operations,

the Company’s internal management structure, and the financial information that is evaluated regularly by the

Company’s chief operating decision maker.

The Company has three reportable business segments: (1) Motion Picture, (2) Television Production and

(3) Media Networks. We refer to our Motion Picture and Television Production segments collectively as our

Studio Business.

F-57

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Studio Business:

Motion Picture. Motion Picture consists of the development and production of feature films, acquisition of

North American and worldwide distribution rights, North American theatrical, home entertainment and television

distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature

films produced and acquired.

Television Production. Television Production consists of the development, production and worldwide

distribution of television productions including television series, television movies and mini-series, and

non-fiction programming. Television Production includes the licensing of Starz original series productions to

Starz Networks and LIONSGATE+, and the ancillary market distribution of Starz original productions and

licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts

Entertainment.

Media Networks Business:

Media Networks. Media Networks consists of the following product lines (i) Starz Networks, which includes

the domestic distribution of STARZ branded premium subscription video services through OTT platforms, on a

direct-to-consumer basis through the Starz App, and through Distributors (ii) LIONSGATE+, which represents

revenues primarily from the OTT distribution of the Company’s STARZ branded premium subscription video

services outside of the U.S. Through March 31, 2021, Media Networks also included Other Streaming Services,

which represented primarily the Company’s formerly majority owned premium Spanish language streaming

services business, Pantaya. The Company sold its interest in Pantaya on March 31, 2021 (see Note 2).

In the ordinary course of business, the Company’s reportable segments enter into transactions with one

another. The most common types of intersegment transactions include licensing motion pictures or television

programming (including Starz original productions) from the Motion Picture and Television Production segments

to the Media Networks segment. While intersegment transactions are treated like third-party transactions to

determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by

the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not

affect consolidated results.

Segment information is presented in the table below:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Segment revenues

Studio Business:

Motion Picture ......................... $1,323.7 $1,185.3 $1,081.1

Television Production ................... 1,760.1 1,531.0 831.8

Total Studio Business ............... 3,083.8 2,716.3 1,912.9

Media Networks ........................... 1,546.5 1,536.2 1,562.7

Intersegment eliminations .................... (775.5) (648.2) (204.1)

$3,854.8 $3,604.3 $3,271.5

Intersegment revenues

Studio Business:

Motion Picture ......................... $ 44.2 $ 38.0 $ 19.8

F-58

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Television Production ....................... 731.3 610.2 184.3

Total Studio Business .................... 775.5 648.2 204.1

Media Networks ................................ — — —

$775.5 $648.2 $204.1

Gross contribution

Studio Business:

Motion Picture ............................. $386.3 $356.0 $401.8

Television Production ....................... 185.3 124.1 126.3

Total Studio Business .................... 571.6 480.1 528.1

Media Networks ................................ 203.2 243.2 383.4

Intersegment eliminations ........................ (35.7) (2.7) (14.1)

$739.1 $720.6 $897.4

Segment general and administration

Studio Business:

Motion Picture ............................. $109.8 $ 93.1 $106.2

Television Production ....................... 51.9 40.2 42.7

Total Studio Business .................... 161.7 133.3 148.9

Media Networks ............................ 96.4 88.0 93.9

$258.1 $221.3 $242.8

Segment profit

Studio Business:

Motion Picture ............................. $276.5 $262.9 $295.6

Television Production ....................... 133.4 83.9 83.6

Total Studio Business .................... 409.9 346.8 379.2

Media Networks ................................ 106.8 155.2 289.5

Intersegment eliminations ........................ (35.7) (2.7) (14.1)

$481.0 $499.3 $654.6

The Company’s primary measure of segment performance is segment profit. Segment profit is defined as

gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general

and administration expenses. Segment profit excludes, when applicable, corporate general and administrative

expense, restructuring and other costs, share-based compensation, certain programming and content charges as a

result of changes in management and/or programming and content strategy, certain charges related to the

COVID-19 global pandemic, charges related to Russia’s invasion of Ukraine, and purchase accounting and

related adjustments. The Company believes the presentation of segment profit is relevant and useful for investors

because it allows investors to view segment performance in a manner similar to the primary method used by the

Company’s management and enables them to understand the fundamental performance of the Company’s

businesses.

F-59

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The reconciliation of total segment profit to the Company’s loss before income taxes is as follows:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Company’s total segment profit .................... $ 481.0 $ 499.3 $ 654.6

Corporate general and administrative expenses

(1)

. . . (122.9) (97.1) (113.7)

Gain on sale of Pantaya ....................... — — 44.1

Adjusted depreciation and amortization

(2)

......... (40.2) (43.0) (44.3)

Restructuring and other ....................... (411.9) (16.8) (24.7)

Goodwill impairment ........................ (1,475.0) — —

COVID-19 related benefit (charges) included in

direct operating expense and distribution and

marketing expense

(3)

....................... 11.6 3.4 (67.5)

Programming and content charges

(4)

............. (7.0) (36.9) —

Charges related to Russia’s invasion of

Ukraine

(5)

................................ — (5.9) —

Adjusted share-based compensation expense

(6)

.... (97.8) (100.0) (85.5)

Purchase accounting and related adjustments

(7)

.... (195.5) (194.0) (192.4)

Operating income (loss) .......................... (1,857.7) 9.0 170.6

Interest expense ............................. (221.2) (176.0) (181.5)

Interest and other income ..................... 6.4 30.8 5.8

Other expense .............................. (26.9) (10.9) (6.7)

Gain (loss) on extinguishment of debt ........... 57.4 (28.2) —

Gain on investments ......................... 44.0 1.3 0.5

Equity interests income (loss) .................. 0.5 (3.0) (6.1)

Loss before income taxes ......................... $(1,997.5) $(177.0) $ (17.4)

(1) The types of amounts included in corporate general and administrative expenses include certain corporate

executive expense (such as salaries and wages for the office of the Chief Executive Officer, Chief Financial

Officer, General Counsel and other corporate officers), investor relations costs, costs of maintaining

corporate facilities, and other unallocated common administrative support functions, including corporate

accounting, finance and financial reporting, internal and external audit and tax costs, corporate and other

legal support functions, and certain information technology and human resources expense.

(2) Adjusted depreciation and amortization represents depreciation and amortization as presented on our

consolidated statements of operations less the depreciation and amortization related to the non-cash fair

value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are

included in the purchase accounting and related adjustments line item above, as shown in the table below:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Depreciation and amortization ............................... $180.3 $ 177.9 $ 188.5

Less: Amount included in purchase accounting and related

adjustments ............................................ (140.1) (134.9) (144.2)

Adjusted depreciation and amortization ........................ $ 40.2 $ 43.0 $ 44.3

(3) Amounts represent the incremental costs included in direct operating expense and distribution and

marketing expense resulting from circumstances associated with the COVID-19 global pandemic, net of

F-60

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

insurance recoveries. During the fiscal years ended March 31, 2023 and 2022, the Company has incurred a

net benefit in direct operating expense due to insurance recoveries in excess of the incremental costs

expensed in the period (see Note 15). These charges (benefits) are excluded from segment operating results.

(4) Programming and content charges represent certain charges included in direct operating expense in the

consolidated statements of operations, and excluded from segment operating results (see Note 3 and Note 15

for further information).

(5) Amounts represent charges related to Russia’s invasion of Ukraine, primarily related to bad debt reserves

for accounts receivable from customers in Russia, included in direct operating expense in the consolidated

statements of operations, and excluded from segment operating results.

(6) The following table reconciles total share-based compensation expense to adjusted share-based

compensation expense:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Total share-based compensation expense ......................... $102.0 $100.0 $89.0

Less:

Amount included in restructuring and other

(i)

.................. (4.2) — (3.5)

Adjusted share-based compensation ............................. $ 97.8 $100.0 $85.5

(i) Represents share-based compensation expense included in restructuring and other expenses reflecting

the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance

arrangements.

(7) Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value

adjustments to certain assets acquired in recent acquisitions. The following sets forth the amounts included

in each line item in the financial statements:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Purchase accounting and related adjustments:

Direct operating ........................................ $ 0.7 $ 0.4 $ 1.0

General and administrative expense

(i)

....................... 54.7 58.7 47.2

Depreciation and amortization ............................. 140.1 134.9 144.2

$195.5 $194.0 $192.4

(i) These adjustments include the non-cash charge for the accretion of the noncontrolling interest discount

related to Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge for the amortization of

the recoupable portion of the purchase price and the expense associated with the noncontrolling equity

interests in the distributable earnings related to 3 Arts Entertainment, all of which are accounted for as

compensation and are included in general and administrative expense, as presented in the table below.

The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as

an expense rather than noncontrolling interest in the consolidated statement of operations due to the

relationship to continued employment.

F-61

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended March 31,

2023 2022 2021

Amortization of recoupable portion of the purchase price ............... $ 7.7 $ 7.7 $ 7.7

Noncontrolling interest discount amortization ........................ 13.2 22.7 22.7

Noncontrolling equity interest in distributable earnings ................ 33.8 28.3 16.8

$54.7 $58.7 $47.2

See Note 12 for revenues by media or product line as broken down by segment for the fiscal years ended

March 31, 2023, 2022, and 2021.

The following table reconciles segment general and administration to the Company’s total consolidated

general and administration expense:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

General and administration

Segment general and administrative expenses ................. $258.1 $221.3 $242.8

Corporate general and administrative expenses ................ 122.9 97.1 113.7

Share-based compensation expense included in general and

administrative expense ................................. 95.4 98.3 82.9

Purchase accounting and related adjustments ................. 54.7 58.7 47.2

$531.1 $475.4 $486.6

The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:

March 31,

2023

March 31,

2022

(Amounts in millions)

Assets

Motion Picture ............................... $1,759.4 $1,622.6

Television Production ......................... 1,949.1 1,978.9

Media Networks ............................. 3,120.8 4,706.7

Other unallocated assets

(1)

...................... 596.9 683.0

$7,426.2 $8,991.2

(1) Other unallocated assets primarily consist of cash, other assets and investments.

F-62

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth acquisition of investment in films and television programs and program rights,

as broken down by segment for the years ended March 31, 2023, 2022 and 2021:

Year Ended

March 31,

2023 2022 2021

(Amounts in millions)

Acquisition of investment in films and television programs and program rights

Motion Picture ................................................ $ 483.6 $ 465.0 $ 339.8

Television Production .......................................... 1,082.0 1,287.0 856.1

Media Networks .............................................. 1,173.0 1,134.6 625.1

Intersegment eliminations ....................................... (759.4) (674.9) (204.3)

$1,979.2 $2,211.7 $1,616.7

The following table sets forth capital expenditures, as broken down by segment for the years ended

March 31, 2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Capital expenditures

Motion Picture .................................... $— $— $—

Television Production .............................. 0.3 0.4 0.4

Media Networks ................................... 42.5 27.0 24.9

Corporate

(1)

....................................... 6.2 5.7 9.7

$49.0 $33.1 $35.0

(1) Represents unallocated capital expenditures primarily related to the Company’s corporate headquarters.

Revenue by geographic location, based on the location of the customers, with no other foreign country

individually comprising greater than 10% of total revenue, is as follows:

Year Ended

March 31,

2023 2022 2021

(Amounts in millions)

Revenue

Canada ................................... $ 63.1 $ 56.8 $ 43.3

United States .............................. 3,129.8 3,016.8 2,863.3

Other foreign .............................. 661.9 530.7 364.9

$3,854.8 $3,604.3 $3,271.5

Long-lived assets by geographic location are as follows:

March 31,

2023

March 31,

2022

(Amounts in millions)

Long-lived assets

(1)

United States ................................ $3,023.5 $3,101.3

Other foreign ................................ 182.9 164.2

$3,206.4 $3,265.5

F-63

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) Long-lived assets represents total assets less the following: current assets, investments, long-term

receivables, interest rate swaps, intangible assets, goodwill and deferred tax assets.

For the year ended March 31, 2023, the Company had revenue from one individual customer which

represented greater than 10% of consolidated revenues, amounting to $766.6 million, primarily related to the

Company’s Media Networks and Motion Picture segments (2022 — revenue from one individual customer

which represented greater than 10% of consolidated revenues, amounting to $639.2 million, primarily related to

the Company’s Media Networks and Motion Picture segments; 2021 — revenue from one individual customer

which represented greater than 10% of consolidated revenues, amounting to $638.8 million, primarily related to

the Company’s Media Networks and Motion Picture segments).

As of March 31, 2023 and 2022, the Company did not have any accounts receivable due from customers

which individually represented greater than 10% of total consolidated accounts receivable.

17. Commitments and Contingencies

Commitments

The following table sets forth our future annual repayment of contractual commitments as of March 31,

2023:

Year Ending March 31,

2024 2025 2026 2027 2028 Thereafter Total

(Amounts in millions)

Contractual commitments by expected

repayment date (off-balance sheet

arrangements)

Film related obligations

commitments

(1)

.................. $450.0 $314.9 $ 32.5 $12.8 $ 2.5 $ 5.3 $ 818.0

Interest payments on corporate debt

(2)

. . . 96.6 93.6 66.6 44.0 44.0 54.9 399.7

Other contractual obligations ......... 119.0 66.4 50.2 40.6 36.9 138.0 451.1

Total future commitments under

contractual obligations

(3)

.............. $665.6 $474.9 $149.3 $97.4 $83.4 $198.2 $1,668.8

(1) Film related obligations commitments are not reflected on the consolidated balance sheets as they did not

then meet the criteria for recognition and include the following items:

(i) Distribution and marketing commitments represent contractual commitments for future expenditures

associated with distribution and marketing of films which we will distribute. The payment dates of

these amounts are primarily based on the anticipated release date of the film.

(ii) Minimum guarantee commitments represent contractual commitments related to the purchase of film

rights for pictures to be delivered in the future.

(iii) Program rights commitments represent contractual commitments under programming license

agreements related to films that are not available for exhibition until some future date (see below for

further details).

(iv) Production loan commitments represent amounts committed for future film production and

development to be funded through production financing and recorded as a production loan liability

F-64

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

when incurred. Future payments under these commitments are based on anticipated delivery or release

dates of the related film or contractual due dates of the commitment. The amounts include estimated

future interest payments associated with the commitment.

(2) Includes cash interest payments on the Company’s corporate debt, excluding the interest payments on the

revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and

interest rates.

(3) Not included in the amounts above are $343.6 million of redeemable noncontrolling interest, as future

amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently

reliable estimations of future payments (see Note 11).

The Company has an exclusive multiyear post pay-one output licensing agreement with Universal for live-

action films theatrically released in the U.S. starting January 1, 2022. The Universal agreement provides the

Company with rights to exhibit these films immediately following their pay-one windows. The Company is

unable to estimate the amounts to be paid under the Universal agreement for films that have not yet been released

in theaters, however, such amounts are expected to be significant.

Multiemployer Benefit Plans. The Company contributes to various multiemployer pension plans under the

terms of collective bargaining agreements that cover its union-represented employees. The Company makes

periodic contributions to these plans in accordance with the terms of applicable collective bargaining agreements

and laws but does not sponsor or administer these plans. The risks of participating in these multiemployer

pension plans are different from single-employer pension plans such that (i) contributions made by the Company

to the multiemployer pension plans may be used to provide benefits to employees of other participating

employers; (ii) if the Company chooses to stop participating in certain of these multiemployer pension plans, it

may be required to pay those plans an amount based on the underfunded status of the plan, which is referred to as

a withdrawal liability; and (iii) actions taken by a participating employer that lead to a deterioration of the

financial health of a multiemployer pension plan may result in the unfunded obligations of the multiemployer

pension plan to be borne by its remaining participating employers.

The Company does not participate in any multiemployer benefit plans that are considered to be individually

significant to the Company, and as of March 31, 2023, all except two of the largest plans in which the Company

participates were funded at a level of 80% or greater. The other two plans, the Motion Picture Industry Pension

Plan and the Screen Actors Guild — Producers Pension Plan were funded at 69.80% and 78.95%, respectively

for the 2022 plan year, but neither of these plans were considered to be in endangered, critical, or critical and

declining status in the 2022 plan year. Total contributions made by the Company to multiemployer pension and

other benefit plans for the years ended March 31, 2023, 2022 and 2021 were $102.0 million, $98.3 million, and

$73.8 million, respectively.

If the Company ceases to be obligated to make contributions or otherwise withdraws from participation in

any of these plans, applicable law requires the Company to fund its allocable share of the unfunded vested

benefits, which is known as a withdrawal liability. In addition, actions taken by other participating employers

may lead to adverse changes in the financial condition of one of these plans, which could result in an increase in

the Company’s withdrawal liability.

Contingencies

From time to time, the Company is involved in certain claims and legal proceedings arising in the normal

course of business.

F-65

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company establishes an accrued liability for claims and legal proceedings when the Company

determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established,

accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss

ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than

the amounts accrued for such matters.

As of March 31, 2023, the Company is not a party to any material pending claims or legal proceeding and is

not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse

effect on the Company’s financial position, results of operations or cash flows.

Insurance Litigation

During the fiscal year ended March 31, 2022, the Company settled with all of the insurers in its previous

lawsuits related to insurance reimbursements associated with its previous Starz shareholder litigation settlement,

which resulted in a net settlement amount received by the Company of $22.7 million in the fiscal year ended

March 31, 2022, which is included in the “interest and other income” line item on the consolidated statement of

operations.

18. Financial Instruments

(a) Credit Risk

Concentration of credit risk with the Company’s customers is limited due to the Company’s customer base

and the diversity of its sales throughout the world. The Company performs ongoing credit evaluations and

maintains a provision for potential credit losses. The Company generally does not require collateral for its trade

accounts receivable.

(b) Derivative Instruments and Hedging Activities

Forward Foreign Exchange Contracts

The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on

future production expenses and tax credit receivables denominated in various foreign currencies (i.e., cash flow

hedges). The Company also enters into forward foreign exchange contracts that economically hedge certain of its

foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge

accounting. The Company monitors its positions with, and the credit quality of, the financial institutions that are

party to its financial transactions. Changes in the fair value of the foreign exchange contracts that are designated

as hedges are reflected in accumulated other comprehensive income (loss), and changes in the fair value of

foreign exchange contracts that are not designated as hedges and do not qualify for hedge accounting are

recorded in direct operating expense. Gains and losses realized upon settlement of the foreign exchange contracts

that are designated as hedges are amortized to direct operating expense on the same basis as the production

expenses being hedged.

F-66

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of March 31, 2023, the Company had the following outstanding forward foreign exchange contracts (all

outstanding contracts have maturities of less than 30 months from March 31, 2023):

March 31, 2023

Foreign Currency

Amount

US Dollar

Amount

Weighted Average

Exchange Rate

Per $1 USD

(Amounts in

millions)

(Amounts in

millions)

British Pound Sterling ....... 3.1GBP inexchange for $ 2.3 1.33 GBP

Czech Koruna ............. 180.0 CZK in exchange for $ 8.6 20.88 CZK

Euro ..................... 11.0 EUR in exchange for $10.0 1.10 EUR

Canadian Dollar ............ 5.1CAD inexchange for $ 3.6 1.42 CAD

Polish Zloty ............... 8.0PLN inexchange for $ 1.8 4.33 PLN

Mexican Peso .............. 237.8 MXN in exchange for $12.6 18.86 MXN

Interest Rate Swaps

The Company is exposed to the impact of interest rate changes primarily through its borrowing activities.

The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows. The

Company primarily uses pay-fixed interest rate swaps to facilitate its interest rate risk management activities,

which the Company generally designates as cash flow hedges of interest payments on floating-rate borrowings.

Pay-fixed swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or

losses from these designated cash flow hedges are deferred in accumulated other comprehensive income (loss)

and recognized in interest expense as the interest payments occur. Changes in the fair value of interest rate swaps

that are not designated as hedges are recorded in interest expense (see further explanation below).

Cash settlements related to interest rate contracts are generally classified as operating activities on the

consolidated statements of cash flows. However, due to a financing component (debt host) on a portion of our

previously outstanding interest rate swaps (see Designated Cash Flow Hedges at March 31, 2022 table below),

the cash flows related to these contracts were classified as financing activities through the date of termination.

Outstanding at March 31, 2022. As of March 31, 2022, the Company had the following designated cash

flow hedge pay-fixed interest rate swaps outstanding, and the following not designated pay-fixed receive-variable

and offsetting pay-variable receive-fixed interest rate swaps outstanding (related to the Company’s LIBOR-based

debt, see Note 7 and Note 8).

Designated Cash Flow Hedges at March 31, 2022:

Effective Date

Notional

Amount

(in millions) Fixed Rate Paid Maturity Date

(1)

May 23, 2018 $ 300.0 2.915% March 24, 2025

May 19, 2020 $ 700.0 1.923% March 23, 2030

(2)(3)

May 19, 2020 $ 350.0 2.531% March 23, 2027

(2)(3)

June 15, 2020 $ 150.0 2.343% March 23, 2027

(2)(3)

August 14, 2020 $ 200.0 1.840% March 23, 2030

(2)(3)

Total $1,700.0

(1) Subject to a mandatory early termination date of March 23, 2025.

F-67

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) These pay-fixed interest rate swaps were considered hybrid instruments with a financing component (debt

host) and an embedded at-market derivative that was designated as a cash flow hedge.

(3) Terminated in May 2022, see May 2022 Transactions description below.

Not Designated Cash Flow Hedges at March 31, 2022:

Pay-Fixed Receive-Variable

(1)

Offsetting Pay-Variable Receive-Fixed

(1)

Effective Date

Notional

Amount

Fixed Rate

Paid Effective Date

Notional

Amount

Fixed Rate

Received Maturity Date

(in millions) (in millions)

May 23, 2018 $ 700.0 2.915%

(3)

May 19, 2020 $ 700.0 2.915%

(2)

March 24, 2025

June 25, 2018 $ 200.0 2.723%

(3)

August 14, 2020 $ 200.0 2.723%

(2)

March 23, 2025

July 31, 2018 $ 300.0 2.885%

(3)

May 19, 2020 $ 300.0 2.885%

(2)

March 23, 2025

December 24, 2018 $ 50.0 2.744%

(3)

May 19, 2020 $ 50.0 2.744%

(2)

March 23, 2025

December 24, 2018 $ 100.0 2.808%

(3)

June 15, 2020 $ 100.0 2.808%

(2)

March 23, 2025

December 24, 2018 $ 50.0 2.728%

(3)

June 15, 2020 $ 50.0 2.728%

(2)

March 23, 2025

Total $1,400.0 Total $1,400.0

(1) During the fiscal year ended March 31, 2021, the Company completed a series of transactions to amend and

extend certain interest rate swap agreements, and as part of these transactions, the $1.4 billion pay-fixed

receive-variable interest rate swaps presented in the table above were de-designated, and the Company

entered into $1.4 billion of pay-variable receive-fixed interest rate swaps, as presented in the table above,

which are designed to offset the terms of the $1.4 billion of pay-fixed receive-variable swaps in the table

above. At the time of the de-designation of the above $1.4 billion in pay-fixed receive-variable interest rate

swaps, there was approximately $163.0 million of unrealized losses recorded in accumulated other

comprehensive income (loss). This amount is being amortized to interest expense through the remaining

term of the de-designated swaps unless it becomes probable that the cash flows originally hedged will not

occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time.

The $1.4 billion of pay-fixed receive-variable interest rate swaps de-designated as cash flow hedges and the

$1.4 billion of offsetting pay-variable receive-fixed swaps were marked to market with changes in fair value

recognized, along with the fixed and variable payments on these swaps, in interest expense, which netted to

an immaterial amount

(2) Terminated in May 2022, see May 2022 Transactions description below.

(3) Re-designated in May 2022, see May 2022 Transactions description below.

May 2022 Transactions: In May 2022, the Company terminated certain of its interest rate swap contracts

with effective dates of May 19, 2020, June 15, 2020 and August 14, 2020, (the “Terminated Swaps”), as

presented in the tables above. As a result of the terminations, the Company received approximately

$56.4 million. Simultaneously with the termination of the Terminated Swaps, the Company re-designated all

other swaps previously not designated (i.e., swaps with effective dates of May 23, 2018, June 25, 2018, July 31,

2018 and December 24, 2018 (the “Re-designated Swaps”)) as cash flow hedges of variable rate debt with an

aggregate notional amount of $1.4 billion. In addition to the $1.4 billion Re-designated Swaps, the Company also

has $300.0 million of other interest rate swaps designated as cash flow hedges as of March 31, 2023.

Accordingly, at March 31, 2023, the Company has a total of $1.7 billion of interest rate swaps designated as cash

flow hedges (see Designated Cash Flow Hedges at March 31, 2023 table below).

The receipt of approximately $56.4 million as a result of the termination was recorded as a reduction of the

asset values of the derivatives amounting to $188.7 million and a reduction of the financing component

(debt host) of the Terminated Swaps amounting to $131.3 million. At the time of the termination of the

F-68

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Terminated Swaps, there was approximately $180.4 million of unrealized gains recorded in accumulated other

comprehensive income (loss) related to these Terminated Swaps. This amount will be amortized as a reduction of

interest expense through the remaining term of the swaps unless it becomes probable that the cash flows

originally hedged will not occur, in which case the proportionate amount of the gain will be recorded as a

reduction to interest expense at that time. In addition, the liability amount of $6.8 million for the Re-designated

Swaps (see Designated Cash Flow Hedges at March 31, 2023 table below) at the re-designation date will be

amortized as a reduction of interest expense throughout the remaining term of the Re-designated Swaps, unless it

becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of

the loss will be recorded to interest expense at that time.

The receipt of approximately $56.4 million was classified in the consolidated statement of cash flows as

cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion

of the termination of swaps, and a use of cash in financing activities of $134.5 million reflecting the pay down of

the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the

termination date amounting to $3.2 million).

Outstanding at March 31, 2023. As of March 31, 2023, the Company had the following pay-fixed interest

rate swaps which have been designated as cash flow hedges outstanding (all related to the Company’s LIBOR-

based debt, see Note 7 and Note 8):

Designated Cash Flow Hedges at March 31, 2023:

Effective Date

Notional

Amount

(in millions) Fixed Rate Paid Maturity Date

May 23, 2018 $ 300.0 2.915% March 24, 2025

May 23, 2018 $ 700.0 2.915% March 24, 2025

(1)

June 25, 2018 $ 200.0 2.723% March 23, 2025

(1)

July 31, 2018 $ 300.0 2.885% March 23, 2025

(1)

December 24, 2018 $ 50.0 2.744% March 23, 2025

(1)

December 24, 2018 $ 100.0 2.808% March 23, 2025

(1)

December 24, 2018 $ 50.0 2.728% March 23, 2025

(1)

Total $1,700.0

(1) Represents the Re-designated Swaps as described in the May 2022 Transactions section above that were

previously not designated cash flow hedges at March 31, 2022.

F-69

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Statement Effect of Derivatives

Consolidated statement of operations and comprehensive income (loss): The following table presents the

pre-tax effect of the Company’s derivatives on the accompanying consolidated statements of operations and

comprehensive income (loss) for the years ended March 31, 2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Derivatives designated as cash flow hedges:

Forward exchange contracts

Gain (loss) recognized in accumulated other comprehensive income

(loss) ................................................. $ 1.7 $ 1.7 $ (1.0)

Gain (loss) reclassified from accumulated other comprehensive

income (loss) into direct operating expense ................... (0.3) (0.2) 0.2

Interest rate swaps

Gain recognized in accumulated other comprehensive income

(loss) ................................................. $ 81.1 $ 66.5 $ 72.0

Gain (loss) reclassified from accumulated other comprehensive

income (loss) into interest expense .......................... 1.4 (15.0) (20.0)

Derivatives not designated as cash flow hedges:

Forward exchange contracts

Gain recognized in direct operating expense .................... $—$—$ 0.3

Interest rate swaps

Loss reclassified from accumulated other comprehensive income

(loss) into interest expense ................................ $ (11.8) $ (33.8) $ (28.3)

Total direct operating expense on consolidated statements of operations . . . $2,312.5 $2,064.2 $1,725.9

Total interest expense on consolidated statements of operations .......... $ 221.2 $ 176.0 $ 181.5

Consolidated balance sheets: The Company classifies its forward foreign exchange contracts and interest

rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable

data of similar instruments (see Note 10). The portion of the swaps reflecting the financing component (debt

host) of the hybrid instrument discussed above is recorded at amortized cost and reduced over time based on

payments. Pursuant to the Company’s accounting policy to offset the fair value amounts recognized for

derivative instruments, the Company presents the asset or liability position of the swaps that are with the same

counterparty under a master netting arrangement net as either an asset or liability in its consolidated balance

sheets. As of March 31, 2023, there were no swaps outstanding that were subject to a master netting arrangement.

As of March 31, 2022, the gross amount of swaps in an asset and liability position that were subject to a master

netting arrangement was $169.6 million and $147.3 million, respectively, resulting in an asset recorded in other

assets — non-current of $32.0 million and a liability recorded in other liabilities — non-current of $9.8 million.

F-70

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of March 31, 2023 and 2022, the Company had the following amounts recorded in the accompanying

consolidated balance sheets related to the Company’s use of derivatives:

March 31, 2023

Other

Current

Assets

Other

Non-Current

Assets

Other

Accrued

Liabilities

Other

Non-Current

Liabilities

(Amounts in millions)

Derivatives designated as cash flow hedges:

Forward exchange contracts .......................... $2.9 $— $0.1 $—

Interest rate swaps ................................. — 41.1 — —

Fair value of derivatives ......................... $2.9 $41.1 $ 0.1 $—

March 31, 2022

Other

Current

Assets

Other

Non-Current

Assets

Other

Accrued

Liabilities

Other

Non-Current

Liabilities

(Amounts in millions)

Derivatives designated as cash flow hedges:

Forward exchange contracts .......................... $3.5 $ — $2.8 $ —

Interest rate swaps ................................. — 109.1 — (39.4)

Derivatives not designated as cash flow hedges:

Interest rate swaps

(1)

................................ — (77.1) — 56.8

Fair value of derivatives ......................... $3.5 $ 32.0 $ 2.8 $ 17.4

(1) Includes $88.1 million and $46.0 million included in other non-current assets and other non-current

liabilities, respectively, representing the financing element (debt host) of certain hybrid instruments, which

was offset by the pay-variable receive-fixed interest rate swaps outstanding at March 31, 2022.

As of March 31, 2023, based on the current release schedule, the Company estimates approximately

$2.9 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other

comprehensive income (loss) will be reclassified into earnings during the one-year period ending March 31,

2024.

As of March 31, 2023, the Company estimates approximately $23.5 million of gains recorded in

accumulated other comprehensive income (loss) associated with interest rate swap agreement cash flow hedges

will be reclassified into interest expense during the one-year period ending March 31, 2024.

19. Additional Financial Information

The following tables present supplemental information related to the consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

Cash equivalents consist of investments that are readily convertible into cash. Cash equivalents are carried

at cost, which approximates fair value. The Company classifies its cash equivalents within Level 1 of the fair

value hierarchy because the Company uses quoted market prices to measure the fair value of these investments

(see Note 10). The Company monitors concentrations of credit risk with respect to cash and cash equivalents by

placing such balances with higher quality financial institutions or investing such amounts in liquid, short-term,

highly-rated instruments or investment funds holding similar instruments. As of March 31, 2023, the majority of

the Company’s cash and cash equivalents were held in bank depository accounts.

F-71

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the

consolidated balance sheet to the total amounts reported in the consolidated statement of cash flows at March 31,

2023. At March 31, 2023, restricted cash included in other current assets represents primarily amounts related to

required cash reserves for interest payments associated with the Production Tax Credit Facility, IP Credit Facility

and Backlog Facility.

March 31,

2023

March 31,

2022

(Amounts in

millions)

Cash and cash equivalents .......................... $272.1 $371.2

Restricted cash included in other current assets ......... 27.9 13.4

Restricted cash included in other non-current assets ..... 13.0 —

Total cash, cash equivalents and restricted cash ..... $313.0 $384.6

Accounts Receivable Monetization

Under the Company’s accounts receivable monetization programs, the Company has entered into

(1) individual agreements to monetize certain of its trade accounts receivable directly with third-party purchasers

and (2) a revolving agreement to monetize designated pools of trade accounts receivable with various financial

institutions, as further described below. Under these programs, the Company transfers receivables to purchasers

in exchange for cash proceeds, and the Company continues to service the receivables for the purchasers. The

Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of

the receivables from its balance sheets and classifies the proceeds received as cash flows from operating

activities in the statements of cash flows. The Company records a loss on the sale of these receivables reflecting

the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables

transferred. The loss is reflected in the “other expense” line item on the consolidated statements of operations.

The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair

value of the services and were immaterial for the years ended March 31, 2023, 2022 and 2021.

Individual Monetization Agreements. The Company enters into individual agreements to monetize trade

accounts receivable. The third-party purchasers have no recourse to other assets of the Company in the event of

non-payment by the customers. The following table sets forth a summary of the receivables transferred under

individual agreements or purchases during the years ended March 31, 2023, 2022 and 2021:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Carrying value of receivables transferred and derecognized ..... $1,405.9 $1,400.2 $1,377.2

Net cash proceeds received ............................... 1,382.7 1,391.2 1,371.3

Loss recorded related to transfers of receivables .............. 23.2 9.0 5.9

At March 31, 2023, the outstanding amount of receivables derecognized from the Company’s consolidated

balance sheets, but which the Company continues to service, related to the Company’s individual agreements to

monetize trade accounts receivable was $520.4 million (March 31, 2022 — $460.5 million).

Pooled Monetization Agreement. In December 2019, the Company entered into a revolving agreement, as

amended in September 2022, to transfer up to $150.0 million of certain receivables to various financial

institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which expires

F-72

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

July 31, 2023. As customers pay their balances, the Company transfers additional receivables into the program.

The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the

Company, which holds additional receivables in the amount of $61.8 million as of March 31, 2023 that are

pledged as collateral under this agreement. The third-party purchasers have no recourse to other assets of the

Company in the event of non-payment by the customers.

The following table sets forth a summary of the receivables transferred under the pooled monetization

agreement during the years ended March 31, 2023, 2022 and 2021:

Year Ended

March 31,

2023 2022 2021

(Amounts in millions)

Gross cash proceeds received for receivables transferred

and derecognized ................................ $167.0 $ 155.5 $ 173.1

Less amounts from collections reinvested under revolving

agreement ...................................... (94.3) (102.7) (138.7)

Proceeds from new transfers ......................... 72.7 52.8 34.4

Collections not reinvested and remitted or to be remitted . . . (66.6) (46.8) (27.9)

Net cash proceeds received (paid or to be paid)

(1)

......... $ 6.1 $ 6.0 $ 6.5

Carrying value of receivables transferred and

derecognized

(2)

.................................. $164.8 $ 154.5 $ 172.0

Obligations recorded ............................... $ 5.9 $ 2.9 $ 1.9

Loss recorded related to transfers of receivables ......... $ 3.7 $ 1.9 $ 0.8

(1) In addition, during the years ended March 31, 2023 and 2022, the Company repurchased $27.4 million and

$25.5 million, respectively, of receivables previously transferred, as separately agreed upon with the third-

party purchasers, in order to monetize such receivables under the individual monetization program discussed

above without being subject to the collateral requirements under the pooled monetization program.

(2) Receivables net of unamortized discounts on long-term, non-interest bearing receivables.

At March 31, 2023, the outstanding amount of receivables derecognized from the Company’s consolidated

balance sheet, but which the Company continues to service, related to the pooled monetization agreement was

approximately $52.3 million (March 31, 2022 — $79.5 million).

Other Assets

The composition of the Company’s other assets is as follows as of March 31, 2023 and March 31, 2022:

March 31,

2023

March 31,

2022

(Amounts in millions)

Other current assets

Prepaid expenses and other

(1)

................................... $ 43.3 $ 62.5

Restricted cash .............................................. 27.9 13.4

Contract assets ............................................... 63.5 40.5

Tax credits receivable ......................................... 129.5 128.3

$264.2 $244.7

F-73

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31,

2023

March 31,

2022

(Amounts in millions)

Other non-current assets

Prepaid expenses and other ..................................... $ 8.4 $ 10.5

Restricted cash .............................................. 13.0 —

Accounts receivable

(2)

......................................... 37.8 39.0

Contract assets

(2)

............................................. 5.1 9.3

Tax credits receivable ......................................... 341.7 316.1

Operating lease right-of-use assets ............................... 169.0 170.7

Interest rate swap assets ....................................... 41.1 32.0

$616.1 $577.6

(1) Includes home entertainment product inventory which consists of Packaged Media and is stated at the lower

of cost or market value (first-in, first-out method). Costs of Packaged Media sales, including shipping and

handling costs, are included in distribution and marketing expenses.

(2) Unamortized discounts on long-term, non-interest bearing receivables were $3.5 million and $1.8 million at

March 31, 2023 and 2022, respectively, and unamortized discounts on contract assets were $0.5 million and

$0.5 million at March 31, 2023 and 2022.

Content related payables

Content related payables include minimum guarantees and accrued licensed program rights obligations,

which represent amounts payable for film or television rights that the Company has acquired or licensed.

Other Accrued Liabilities

Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and

wages) of $128.7 million and $73.1 million at March 31, 2023 and 2022, respectively.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the components of accumulated other comprehensive

income (loss), net of tax. During the years ended March 31, 2023, 2022 and 2021, there was no income tax

expense or benefit reflected in other comprehensive income (loss) due to the income tax impact being offset by

changes in the Company’s deferred tax valuation allowance.

Foreign currency

translation

adjustments

Net unrealized gain

(loss) on cash flow

hedges

Total

(Amounts in millions)

March 31, 2020 ............................. $(18.8) $(187.2) $(206.0)

Other comprehensive loss ...................... 3.7 70.9 74.6

Reclassifications to net loss

(1)

................... — 48.1 48.1

March 31, 2021 ............................. (15.1) (68.2) (83.3)

Other comprehensive income ................... (4.6) 68.2 63.6

Reclassifications to net loss

(1)

................... — 49.0 49.0

March 31, 2022 ............................. (19.7) 49.0 29.3

Other comprehensive income (loss) .............. (1.9) 82.8 80.9

Reclassifications to net loss

(1)

................... — 10.7 10.7

March 31, 2023 ............................. $(21.6) $ 142.5 $ 120.9

F-74

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) Represents a loss of $0.3 million included in direct operating expense and a loss of $10.4 million included in

interest expense on the consolidated statement of operations in the year ended March 31, 2023 (2022 — loss

of $0.2 million included in direct operating expense and loss of $48.8 million included in interest expense;

2021 — gain of $0.2 million included in direct operating expense and loss of $48.3 million included in

interest expense) (see Note 18).

Supplemental Cash Flow Information

Interest paid during the fiscal year ended March 31, 2023 amounted to $196.7 million (2022 —

$135.0 million; 2021 — $149.7 million).

Income taxes paid (refunded) during the fiscal year ended March 31, 2023 amounted to net tax paid of

$29.1 million (2022 — net tax paid of $16.9 million; 2021 — net tax refunds received of $54.0 million).

Significant non-cash transactions during the fiscal years ended March 31, 2023, 2022 and 2021 include

certain interest rate swap agreements, which are discussed in Note 18, “Financial Instruments”.

The supplemental schedule of non-cash investing and financing activities is presented below:

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Non-cash investing activities:

Accrued equity method investment ................................ $— $19.0 $ —

Cash consideration receivable for sale of Pantaya (see Note 2) .......... $— $— $123.6

Decrease in finance lease right-of-use asset due to a reassessment

event

(1)

.................................................... n/a n/a $(42.0)

Non-cash financing activities:

Decrease in finance lease liability due to a reassessment event

(1)

........ n/a n/a $(48.6)

(1) During the year ended March 31, 2021, the Company reassessed the lease term of the Starz commercial

building, which resulted in a change in classification of this lease from a finance lease to an operating lease.

Supplemental cash flow information related to leases was as follows:

Year Ended

March 31,

2023 2022 2021

(Amounts in millions)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases .................................. $42.3 $57.0 $48.8

Operating cash flows for finance leases .................................... $— $— $ 1.6

Financing cash flows for finance leases .................................... $— $— $ 2.6

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases ...................................................... $12.4 $67.8 $25.0

Increase in right-of-use assets and lease liability due to a reassessment event:

Operating leases — increase in right-of-use assets ........................... $33.0 $27.5 $ 6.0

Operating leases — increase in lease liability ............................... $33.0 $27.5 $12.6

F-75

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

20. Related Party Transactions

In April 2004, a wholly-owned subsidiary of the Company entered into agreements (as amended) with

Ignite, LLC (“Ignite”) for distribution rights to certain films. Michael Burns, the Vice Chair and a director of the

Company, owns a 65.45% interest in Ignite, and Hardwick Simmons, a director of the Company, owns a 24.24%

interest in Ignite. During the year ended March 31, 2023, $0.4 million was paid to Ignite under these agreements.

In the year ended March 31, 2021, the Company paid less than $0.1 million to MLC Strategies, LLC (“MLC

Strategies”) for certain consulting services. No amounts were paid in the years ended March 31, 2023 and 2022.

Mignon Clyburn, a director of the Company, is the President of MLC Strategies.

Transactions with Equity Method Investees

Equity Method Investees. In the ordinary course of business, we are involved in related party transactions

with equity method investees. These related party transactions primarily relate to the licensing and distribution of

the Company’s films and television programs and the lease of a studio facility owned by an equity-method

investee, for which the impact on the Company’s consolidated balance sheets and consolidated statements of

operations is as follows (see Note 1 and Note 5):

March 31,

2023 2022

(Amounts in millions)

Consolidated Balance Sheets

Accounts receivable ............................ $14.8 $13.1

Investment in films and television programs

(1)

........ 7.9 1.6

Other assets, noncurrent

(1)(2)

...................... 45.8 44.2

Total due from related parties ................. $68.5 $58.9

Accounts payable

(3)

............................. $16.8 $17.0

Other accrued liabilities

(1)

........................ 6.7 5.2

Participations and residuals, current ................ 7.5 5.9

Participations and residuals, noncurrent ............. 2.0 1.1

Other liabilities

(1)

.............................. 41.4 38.3

Total due to related parties ................... $74.4 $67.5

Year Ended March 31,

2023 2022 2021

(Amounts in millions)

Consolidated Statements of Operations

Revenues .................................. $6.1 $4.1 $ 7.2

Direct operating expense ...................... $8.3 $6.5 $10.8

Distribution and marketing expense .............. $0.4 $0.2 $ 0.2

Interest and other income ...................... $1.7 $3.1 $ 2.9

(1) During the year ended March 31, 2022, the Company entered into certain operating leases related to a studio

facility owned by an equity-method investee. Amounts related to these leases are included in investment in

films and television programs, other assets — noncurrent, other accrued liabilities and other liabilities in the

consolidated balance sheets at March 31, 2023 and 2022.

(2) During the years ended March 31, 2022, and 2021, the Company made loans (including accrued interest) of

$3.0 million and $2.9 million, respectively, to certain of its equity method investees (2023 — none). As of

F-76

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2023 and 2022, no amounts are included in other assets, noncurrent in the Company’s

consolidated balance sheets related to these loans (net of equity interests losses applied against such loans).

(3) Amounts primarily represent production related advances due to certain of its equity method investees.

In addition, as of March 31, 2023, the Company has entered into certain leases that have not yet commenced

primarily related to studio facilities owned by an equity-method investee, for which construction has not yet been

completed. See Note 9 for further information.

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