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LIONS GATE ENTERTAINMENT CORP /CN/ (LGF-A)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 was weak: revenue $948.6M, operating loss $(88.6)M, GAAP diluted EPS $(0.68), and adjusted diluted EPS $(0.43); adjusted OIBDA loss $(17.7)M, driven by the underperformance of Borderlands and softer results from other theatrical releases, plus lingering strike impacts in TV .
  • Management lowered Lionsgate Studios FY2025 Adjusted OIBDA outlook to $300–$320M and maintained Starz North America at ~$200M, citing revision tied to Motion Picture headwinds and delayed TV recovery; leverage targeted by year-end at ~4.5x (Studios) and ~3x (Starz) .
  • Starz executed a $1 price increase in September; ARPU uplift offset subscriber declines (North America OTT 12.4M at quarter-end, down 800K sequentially), with management expecting a return to sequential OTT growth in December quarter .
  • Strategic catalysts: separation financing advanced with IP-backed facilities (> $1B, SOFR+225 bps) and full Term Loan B payoff; tentpole pipeline (Michael, Ballerina, Now You See Me III; next Hunger Games) and Runway AI partnership to support longer-term content productivity and IP monetization .

What Went Well and What Went Wrong

  • What Went Well

    • Library remains a ballast: trailing-12-month library revenue reached $892M (+3% YoY), underpinning cash generation and stability .
    • Separation financing progressed: closed $340M eOne IP facility and $455M Lionsgate library facility at SOFR+225 bps; added $265M to fully retire Term Loan B, building >$1B of 5-year asset-backed borrowings .
    • Price action at Starz: successful $1 price increase execution with ARPU uplift, and management anticipates resuming sequential OTT growth in the December quarter .
    • Quote: “Our performance underscores the need to adhere even more rigorously to the risk mitigated business models, slate diversification and strict financial discipline…” — CEO Jon Feltheimer .

  • What Went Wrong

    • Motion Picture headwinds: Borderlands “sat on the shelf… reshoots and rising interest rates” pushed it outside strict financial models; quarter’s other wide releases were soft, compressing segment profit to $2.6M .
    • TV production recovery lagged: segment profit fell to $24.4M despite revenue +6% YoY, reflecting lingering strike impacts in a heavily backloaded year .
    • Starz subscriber pressure: North America OTT down 800K sequentially after price increase; total North America subs 20.15M at quarter-end .
    • Non-GAAP deterioration: adjusted diluted EPS turned negative $(0.43) versus Q1’s $0.09, and adjusted OIBDA swung to a $(17.7)M loss .

Financial Results

MetricQ2 2024Q1 2025Q2 2025Consensus (Q2 2025)
Revenue ($USD Millions)$1,015.5 $834.7 $948.6 N/A (consensus unavailable via S&P Global)
Operating Income (Loss) ($USD Millions)$(817.5) $18.8 $(88.6) N/A
Net Loss Attributable to LGF Shareholders ($USD Millions)$(886.2) $(59.4) $(163.3) N/A
Diluted EPS ($USD)$(3.79) $(0.25) $(0.68) N/A
Adjusted Diluted EPS ($USD)$0.21 $0.09 $(0.43) N/A
Adjusted OIBDA ($USD Millions)$140.7 $104.5 $(17.7) N/A

Segment Breakdown

MetricQ2 2024Q1 2025Q2 2025
Motion Picture Revenue ($USD M)$395.9 $347.3 $407.1
Motion Picture Segment Profit ($USD M)$67.5 $86.1 $2.6
Television Production Revenue ($USD M)$393.9 $241.1 $416.6
Television Production Segment Profit ($USD M)$63.2 $10.7 $24.4
Media Networks Revenue ($USD M)$416.5 $350.1 $346.9
Media Networks Segment Profit ($USD M)$66.6 $57.5 $27.2

KPIs

KPIQ4 2024Q1 2025Q2 2025
Library TTM Revenue ($USD M)$886 $882 $892
Starz North America OTT Subs (M)13.38 (as of 3/31/24) 13.20 (as of 6/30/24) 12.40 (as of 9/30/24)
Starz North America Linear Subs (M)8.42 8.10 7.75
Starz North America Total Subs (M)21.80 21.30 20.15
Total Global Subs excl. exited (M)27.54 27.17 25.66

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Lionsgate Studios Adjusted OIBDA ($USD M)FY 2025N/A (prior figure not disclosed in filings)$300–$320 Lowered (per CFO revision)
Starz North America Adjusted OIBDA ($USD M)FY 2025N/A (prior figure not disclosed in filings)~$200 Maintained (management “continue to anticipate”)
Starz North America OTT subs trajectoryQ3 FY2025N/AExpect return to sequential OTT growth Positive
Leverage (Studios / Starz)FY 2025 year-endN/A~4.5x (Studios), ~3x (Starz) Target set

Notes: CFO indicated the Studios outlook was revised down given MP headwinds and TV recovery pacing . The Q2 8-K provides formal forward-looking Adjusted OIBDA ranges .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
Theatrical slate & tentpolesFY2024: strong year; MP GP segment profit highest in 10 years; Q1: MP segment profit +24% YoY with efficient P&A Borderlands underperformance; slate recalibration; pipeline: Michael (shift to late fall), Ballerina (June), Now You See Me III (Nov), additional titles (Good Fortune, American Psycho reimagining), leveraging major franchises Near-term caution; medium-term strengthening
TV production marketsQ4: post-strike deliveries boosted segment; Q1: backloaded year; eOne integration Buyers ordering fewer shows; consolidating labels; >40 scripted projects sold since start of year; pace improving Recovery delayed, green shoots emerging
Starz pricing & subscribersQ1: notified $1 rate increase; OTT growth YoY, sequential decline $1 increase executed; ARPU up; OTT subs down sequentially; mgmt expects sequential growth in Dec quarter ARPU-driven revenue; subs stabilize ahead
Separation & financingQ4: launched LION; separation prep; carve-outs Closed >$1B IP facilities; Term Loan B repaid; capital structures nearing completion Progressing toward full separation
AI/technology initiativesN/ARunway AI partnership to train models on selected library titles; framed within talent-friendly guardrails Emerging capability with long-term potential

Management Commentary

  • “In a transitional, disrupted and difficult year for our industry, we reported disappointing financial results in the quarter.” — CEO Jon Feltheimer .
  • “On Borderlands, nearly everything that could go wrong did go wrong… reshoots and rising interest rates took it outside the safety zone of our usual strict financial models.” — CEO Jon Feltheimer .
  • “We now forecast Lionsgate Studios will generate between $300 million to $320 million of adjusted OIBDA this fiscal year… [Starz] North American business will generate $200 million or more.” — CFO James Barge .
  • “We are confident that our go-forward processes will help reduce the likelihood of a similar outcome [in wide theatrical] in the future.” — CFO James Barge .
  • “We believe that AI harnessed within the appropriate guardrails can be a valuable tool to serve our talent… it will have a positive transformational impact on our business.” — CEO Jon Feltheimer .

Q&A Highlights

  • Film approach: leadership emphasized stricter creative and production discipline while leaning into franchises (John Wick, Hunger Games, Saw, Highlander) and deeper integration across production, marketing, and distribution .
  • Workforce streamlining: ~8% of eligible U.S. employees accepted voluntary separation/early retirement as part of rightsizing amid industry trough; nonfiction overhead noted .
  • Starz churn and cash conversion: $1 price increase churn tracked to expectations; baseline ~$200M Adjusted OIBDA with unlevered FCF conversion trending ~70% over time post international shutdown tail .
  • Financing for separation: oversubscribed IP facilities; in-process Starz Term Loan A and Studios borrowing base; confidence in near-term completion .
  • Tentpole timing: Michael moved to late fall corridor (maximize format/trailer runway); Ballerina on track for June; Now You See Me III wrapped slightly under budget .
  • Marketing: focus more on film selection/price discipline than spend levels; recent non-tentpole outcomes show no linearity between P&A and performance .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 FY2025 was unavailable due to a Capital IQ mapping issue for LGF-A; therefore, estimate comparisons are not included. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Near-term caution: Motion Picture performance and TV recovery pacing drove a negative adjusted EPS and OIBDA in Q2; management revised Studios FY2025 Adjusted OIBDA to $300–$320M .
  • Starz execution: price increase raises ARPU; mgmt expects sequential OTT growth in December quarter; FY2025 North America Adjusted OIBDA baseline ~$200M remains intact .
  • Balance sheet resiliency: >$1B IP-backed financing (SOFR+225 bps) and repayment of Term Loan B materially de-risk post-separation capital structures; leverage expected ~4.5x (Studios) and ~3x (Starz) by year-end .
  • Library strength persists: $892M TTM revenue continues to underpin cash flows and offsets volatility in new release performance .
  • Slate recalibration: expect a stronger FY2026 slate with measured tentpoles and disciplined greenlighting; updates on Michael, Ballerina, Now You See Me III point to improving theatrical catalysts .
  • AI optionality: Runway partnership may enhance content workflows and monetization while maintaining talent guardrails; early positive reception noted .
  • Trading implications: stock likely sensitive to tentpole execution and December OTT trajectory; financing milestones toward separation are supportive, while any further theatrical misfires or delays could pressure sentiment .