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Lionsgate Studios Corp. (LION)·Q3 2025 Earnings Summary

Executive Summary

  • Solid rebound at the Studio: Lionsgate Studios (LION) delivered revenue of $713.8M (+3% y/y), operating income of $49.6M, Adjusted OIBDA of $112.0M (+45% y/y vs. $77.4M), and returned to positive EPS ($0.02) with Adjusted EPS of $0.22, underpinned by strong TV deliveries and mid-budget film profitability .
  • Library monetization remains an anchor: trailing 12‑month library revenue hit a record $954M (+22% y/y), reinforcing the cash and earnings durability of IP as the business normalizes post‐strikes .
  • Outlook and separation: Management reiterated FY25 Studio Adjusted OIBDA guidance of $300–$320M and Starz North America Adj. OIBDA of ~$200M; separation timetable shifted to a mid–late April shareholder meeting with separation shortly thereafter; capital structures for both entities are now set with committed facilities .
  • Stock-relevant catalysts: Q4 is “very strong” with heavy back-half weighting (TV deliveries, carryover from films), plus the newly announced Starz/Amazon stacked pay-window deal expected to materially lift pay-TV window economics starting with 2026–2028 slates (longer dated) .

What Went Well and What Went Wrong

What Went Well

  • Television Production surge: TV revenue +63% y/y to $404.6M and segment profit up to $60.9M, driven by episodic deliveries, library licensing, and rebound from last year’s strikes .
  • Mid-budget films converting: CEO highlighted last three mid-budget films converted to “significant profitability”; cited Best Christmas Pageant Ever, Den of Thieves 2, and Flight Risk, with broader slate quality for FY26 (Ballerina, Now You See Me 3, Michael) .
  • Record library monetization: Trailing 12‑month library revenue reached $954M (+22% y/y), underscoring IP monetization resilience across windows .

What Went Wrong

  • Motion Picture comps: Segment revenue fell to $309.2M and segment profit to $83.6M on tough comps vs. prior year Hunger Games and Saw X theatricals .
  • Restructuring costs: $40.9M of restructuring/other at the Studio (severance, transaction costs, content/asset impairments), reflecting ongoing footprint rationalization and eOne integration .
  • Prior quarter underperformance lingering in narrative: Q2’s “disappointing results” tied to Borderlands underperformance still featured in investor focus; management outlined tightened greenlight/execution processes going forward .

Financial Results

Consolidated Studio (LION) – Quarterly Progression

MetricQ1 FY2025Q2 FY2025Q3 FY2025
Revenue ($M)$588.4 $823.7 $713.8
Operating Income ($M)$15.6 $(34.8) $49.6
Net Income to LION Shareholders ($M)$(43.5) $(113.4) $6.4
Diluted EPS ($)$(0.16) $(0.39) $0.02
Adjusted OIBDA ($M)$58.3 $(6.3) $112.0
Adjusted Diluted EPS ($)$(0.01) $(0.31) $0.22

Commentary: Q3 showed sequential improvement vs. Q2 across profitability metrics and a marked y/y rebound in Adjusted OIBDA; EPS flipped positive as TV deliveries accelerated and mid-budget films converted.

Segment Breakdown (LION)

SegmentQ1 FY2025Q2 FY2025Q3 FY2025
Motion Picture Revenue ($M)$347.3 $407.1 $309.2
Motion Picture Segment Profit ($M)$86.1 $2.6 $83.6
Television Production Revenue ($M)$241.1 $416.6 $404.6
Television Production Segment Profit ($M)$10.7 $24.4 $60.9

Commentary: Q3 motion picture profit normalized after Q2 slate headwinds; TV production remained elevated on deliveries and licensing uplift.

KPIs and Cash Metrics

KPIQ1 FY2025Q2 FY2025Q3 FY2025
Trailing 12-Month Library Revenue ($M)$882 $892 $954
Starz N. America OTT Subs (M, period-end)13.20 (6/30/24) 12.40 (9/30/24) 12.57 (12/31/24)
Adjusted Free Cash Flow – LION ($M)$(107.0) $(156.8) $(46.0)

Note: Starz metrics included for ecosystem context discussed on the call; LION is the Studio business.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Studio Adjusted OIBDAFY2025$300–$320M $300–$320M (reiterated) Maintained
Starz North America Adjusted OIBDAFY2025~$200M ~$200M (reiterated) Maintained
Separation Timing2025“By calendar year-end 2024” (subject to approvals) Mid–late April shareholder meeting; separation shortly thereafter Delayed vs. initial target
Capital Structure (post-separation)Upon separationN/AStudio: $800M asset-backed revolver; Starz: $300M Term Loan A + $150M revolver; proceeds to retire remaining bank debt New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Mid-budget film modelQ1: Motion Picture profit +24% on efficient P&A and HE; Q2: Borderlands underperformance weighed on profits .“Last three mid-budget films converted to significant profitability” (Best Christmas Pageant Ever, Den of Thieves 2, Flight Risk) .Improving execution; more slate discipline.
TV production normalizationQ1: Heavily backloaded year; strike overhang . Q2: Backloaded TV year impacted profit .TV revenue +63% y/y; segment profit up to $60.9M on deliveries and library licensing .Rebound underway.
Library monetizationQ1 TTM library $882M; Q2 $892M .Record $954M (+22% y/y), strategy: new buyers, windowing, tech .Strengthening.
Distribution/windowingOutput deal foundation with Starz ongoing; Q2 indicated separation prep .Extended Starz Pay-1 through 2028 and added Amazon Prime Video early window (material uplift longer term) .Positive long-dated economics.
Streaming/bundlingQ1: Starz price action; Q2: OTT subs pressured by price increase .Starz domestic OTT +170K q/q; multiple new bundles; linear erosion continues .OTT momentum improving; linear declines persist.
SeparationQ1/Q2: On track by year-end 2024 .Timetable updated to mid–late April meeting; facilities committed .Slight delay; financing secured.
Experiences/gamesGrowing pipeline alluded to [Q1/2].John Wick Las Vegas experience opening; AAA game progressing; Broadway/West End slate advancing .Building ancillary EBITDA option value.
Cost actionsQ1 restructuring, eOne facility impairments .Voluntary severance (8% eligible U.S. employees); $26.1M program, $14.6M recognized in Q3 .Ongoing cost optimization.

Management Commentary

  • “Our motion picture business is back on track converting our last three mid budget films to significant profitability... Our television business continues to fight its way through the market correction... our library turned in another stellar performance with a record $954,000,000 in trailing twelve month revenue” — CEO Jon Feltheimer .
  • On windowing: “We announced the extension through calendar year 2028 of our exclusive pay one deal with Starz and a new exclusive pay deal with Amazon Prime Video immediately following the Starz window… The combination… will significantly increase the contribution from our pay television window” — CEO Jon Feltheimer .
  • Outlook reiterated: “We are reiterating our fiscal 2025 outlook… Lionsgate Studios will generate between $300,000,000 to $320,000,000 of adjusted OIBDA this fiscal year, while Starz North American business is expected to generate approximately $200,000,000 of adjusted OIBDA” — CFO Jimmy Barge .
  • On separation timing: “We expect… a shareholder meeting in mid to late April with separation shortly thereafter” — CEO Jon Feltheimer and CFO Jimmy Barge .
  • On capital structure: “We have obtained bank commitments for an $800,000,000 asset backed revolver at the studio, as well as a $300,000,000 Term Loan A and $150,000,000 revolver at Starz… poised to fund upon separation” — CFO Jimmy Barge .

Q&A Highlights

  • Q4 cadence and drivers: Back-half weighted FY with “very strong” Q4 across films (carryover from mid-sized titles), TV deliveries (Ghosts, The Rookie, Acapulco S4, Hunting Wives, Spartacus, Yellowjackets S3), and Starz (OTT growth, price increase impact) .
  • Leverage/Net debt path: Consolidated net debt ~$2.4B (Studio ~$1.8B; Starz ~$568M); expect natural deleveraging with strong Q4 and improved free cash in FY26; separation leverage ~5.5x Studio, ~3.0x Starz targeted .
  • Amazon/Starz stacked window economics: Amazon takes four 2025 slate films (with flexibility) and full 2026–2028 slates post-Starz; characterized as a “win‑win‑win” for Starz, Studio, and Amazon .
  • Ancillary monetization: Experiences and AAA gaming (e.g., John Wick) structured with licensing plus optional equity investments to enhance returns; seen as incremental EBITDA contributors .
  • Cost discipline and learnings: More rational production decisions and deal structures (back-end participation, tax incentives), and tighter greenlight/execution post-Borderlands experience .

Estimates Context

  • S&P Global (Capital IQ) Wall Street consensus for Q3 FY2025 EPS and revenue was unavailable in this session due to data access limits. As a result, we cannot quantify beat/miss vs. consensus for Q3 FY2025; investors should cross-check with their S&P Global feed to assess variance to Street. Values retrieved from S&P Global were not available due to request limit in this session.

Key Takeaways for Investors

  • Execution improved: Q3 underscores mid-budget film unit economics and robust TV deliveries, translating into positive EPS and strong Adjusted OIBDA; Q4 remains the pivotal catalyst given back-half weighting .
  • Library strength is strategic: Record $954M TTM library revenue provides recurring monetization and downside protection into FY26–27 .
  • Structural upside in pay-TV window: Extended Starz Pay‑1 and new Amazon early window should lift film economics beginning with 2026–2028 slates; while longer-dated, it supports medium‑term cash flow visibility .
  • Separation nearer with financing set: Committed facilities at both entities and an April meeting timeline reduce execution risk; monitor final SEC clearance and cadence to close .
  • Watch restructuring spend and cash conversion: Q3 Studio Adjusted Free Cash Flow remained negative (−$46M), though improving vs. prior quarters; trajectory into Q4/FY26 is key for deleveraging .
  • STARZ ecosystem matters: Domestic OTT growth resumed (+170k q/q), bundling strategy is scaling, but linear declines persist; overall, a constructive backdrop for content licensing and scale post separation .
  • Trading setup: Near-term focus on Q4 delivery/EBITDA conversion and separation milestones; medium-term thesis leans on improved slate economics, library monetization, and the stacked pay-window uplift .

Appendix: Additional Context (Parent vs. Studio)

  • Consolidated (parent) Q3: Revenue $970.5M; Operating income $35.8M; Adjusted OIBDA $144.2M; Adjusted EPS $0.28; Starz domestic OTT +170k q/q; Media Networks segment profit $24.9M .
  • Non‑GAAP definitions: Adjusted OIBDA/EPS exclude purchase accounting, restructuring, adjusted SBC, COVID‑related items, and other unusuals (see reconciliations in press release) .

All data and quotations are sourced from Lionsgate/Lionsgate Studios’ Q3 FY2025 8‑K/press release and earnings call transcript unless otherwise noted: and earnings call , plus prior quarters Q1/Q2 for trend analysis .