ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This section of this Form 10-K includes a discussion and analysis of our financial condition and results of operations for the fiscal years ended March 31, 2026 and 2025 and year-to-year comparisons between fiscal 2026 and 2025. Discussions of 2025 items and year-to-year comparisons between fiscal 2025 and 2024 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of exhibit 99.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
Overview
Lionsgate Studios Corp. (NYSE: LION) (the “Company,” “Lionsgate,” “New Lionsgate,” “we,” “us” or “our”) is one of the world’s leading standalone, pure play content companies. It brings together diversified motion picture and television production and distribution businesses, a world-class portfolio of valuable brands and franchises, a talent management and production powerhouse and a more than 20,000-title film and television library, all driven by Lionsgate’s bold and entrepreneurial culture.
Prior to the Starz Separation, as further discussed below, Lions Gate Entertainment Corp. (formerly listed on the New York Stock Exchange (“NYSE”): LGF.A, LGF.B) (“Old Lionsgate”) encompassed the motion picture and television studio operations (formerly referred to as the “Studio Business”) and the STARZ premium global subscription platform. Following the Studio Separation, as discussed in Note 3 to our consolidated financial statements, Lionsgate Studios Corp. (formerly listed on the NASDAQ Global Select Market (“NASDAQ”): LION) (“Legacy Lionsgate Studios”) comprised the Studio Business and the STARZ business remained with Lions Gate Entertainment Corp.
We classify our continuing operations through two reportable segments: Motion Picture and Television Production (see further discussion below).
Starz Separation
On May 6, 2025, through a series of transactions contemplated by a certain arrangement agreement, dated as of January 29, 2025, as amended by an amending agreement, dated as of March 12, 2025 (collectively, the “Arrangement Agreement”), the separation of the businesses of Legacy Lionsgate Studios, of which Old Lionsgate owned approximately 87.8%, and the Starz Business (the “Starz Separation”) was completed. As a result of the Arrangement Agreement, the pre-transaction shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate (see Note 2 to our consolidated financial statements).
Notwithstanding the legal form of the Starz Separation, for accounting and financial reporting purposes, in accordance with United States generally accepted accounting principles (“U.S. GAAP”), due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Old Lionsgate’s senior management with the Company following the completion of the Starz Separation, Old Lionsgate is considered the accounting spinnor or divesting entity and Starz is considered the accounting spinnee or divested entity. As a result, Old Lionsgate is the accounting predecessor to the Company, and the pro rata distribution of the Starz Business has been recorded through equity with no gain or loss recorded. Accordingly, the historical financial statements reflect the financial position and results of operations of Old Lionsgate with the Starz Business presented as discontinued operations in the financial statements. See Note 2 to our consolidated financial statements for further information.
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Business Combination
On May 13, 2024, Old Lionsgate consummated the business combination agreement (the “Business Combination Agreement”) with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Old Lionsgate (“Studio HoldCo”), LG Orion Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Old Lionsgate (“StudioCo”) and other affiliates of SEAC (the “Closing”). Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business was combined with SEAC through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”). In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “Legacy Lionsgate Studios”) and continued the existing business operations of StudioCo, which consisted of the Studio Business of Old Lionsgate. Legacy Lionsgate Studios became a separate publicly-traded company, and its common shares commenced trading on NASDAQ under the symbol “LION” on May 14, 2024.
In connection with and prior to the Business Combination, Old Lionsgate and StudioCo entered into a separation agreement pursuant to which the assets and liabilities of the Studio Business were transferred to StudioCo such that StudioCo held, directly or indirectly, all of the assets and liabilities of the Studio Business (the “Studio Separation”).
Immediately following the Business Combination through immediately prior to the Starz Separation, approximately 87.8% of the total shares of Legacy Lionsgate Studios were held by Old Lionsgate, while 12.2% were owned by former SEAC public shareholders, SEAC founders and common equity financing investors. In addition to establishing Legacy Lionsgate Studios as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to Old Lionsgate. Net proceeds of $278.2 million, inclusive of transaction costs that remained accrued at March 31, 2025 and which were paid during the year ended March 31, 2026 totaling $3.5 million were used to partially pay down amounts outstanding under Old Lionsgate's corporate debt. See Note 8 to our consolidated financial statements for further detail.
The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Legacy Lionsgate Studios represented a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing stock for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio Business equity. The historical net assets of SEAC were stated at fair value, which approximated historical cost, with no goodwill or other intangible assets recorded. Prior to the Starz Separation, the Studio Business was a consolidated subsidiary of Old Lionsgate.
Components of Results of Operations
Revenues
Our revenues are derived from the Motion Picture and Television Production segments, as described below. As mentioned above, 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, 2026, 2025 and 2024.
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. Theatrical revenues also include revenues from certain licenses to direct-to-platform customers where the initial license of a motion picture is to a direct-to-platform customer.
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• 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 also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform. 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.
• 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.
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, 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.
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General and administration expenses include salaries and other overhead costs. Corporate general and administrative expenses include certain corporate executive expenses (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. Corporate general and administrative expenses also include costs that were previously incurred in support of the Media Networks segment (that is part of the Starz Business) but are not directly attributable to it and thus were not recorded in discontinued operations, see Note 2 to our consolidated financial statements for further details.
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 U.S. GAAP 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.
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), television, and international marketplaces.
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 is 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 commissions is recognized as such services are provided.
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Film and Television Costs. Capitalized costs for films or television programs are predominantly monetized individually.
Amortization. Film cost amortization as well as 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 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 is released, 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 series is not reordered), and based upon our review, we revise our estimates as needed and perform an impairment assessment if indicators are present.
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.
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 unaudited condensed consolidated statements of operations. See further discussion under Impairment Assessment below.
Impairment Assessment. An 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 television program is less than its unamortized cost. Pre-release impairment assessments require significant judgment, including estimated box office performance and downstream licensing revenues. 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.
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Estimate of Fair Value. 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 and 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. 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.
Valuation Assumptions. The discounted cash flow analysis includes cash flow estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 9 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. 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.
Income Taxes. We are subject to income taxes in Canada and the U.S., in addition to several other 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 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 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 benefit (provision). As of March 31, 2026, we had a valuation allowance of $1,478.5 million certain Canadian, U.S. and other foreign deferred tax assets that may not be realized on a more-likely-than-not basis.
Our effective tax rates differ from the Canadian federal statutory income tax rate and is affected by many factors, including the overall level of income (loss) before taxes and its mix across the jurisdictions in which we conduct operations, changes in tax laws and regulations, changes in valuation allowances against our deferred tax assets, changes in unrecognized tax benefits, 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 2026 Compared to Fiscal 2025
Consolidated Results of Operations
The following table presents our consolidated results from continuing operations for the fiscal years ended March 31, 2026 and 2025:
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Year Ended March 31,
Change
Amount
Percent
(Amounts in millions)
Revenues
Studio Business
Motion Picture (1)
Television Production
Total Studio Business
Intersegment eliminations
Total revenues
Expenses:
Direct operating
Distribution and marketing
General and administration
Depreciation and amortization
Restructuring and other
Total expenses
Operating income (loss)
Interest expense
Interest and other income
Other loss, net
Loss on extinguishment of debt
Gain on investments, net
Equity interests income (loss)
Loss from continuing operations before income taxes
Income tax provision
Net loss from continuing operations, net of income taxes
Net loss from discontinued operations, net of income taxes
Less: Net (income) loss from continuing operations attributable to noncontrolling interest
Net loss attributable to Lionsgate Studios Corp. shareholders
nm - Percentage not meaningful.
(1) During the first quarter of fiscal 2026, we began reflecting the results of operations of the streaming platform in India within the Motion Picture segment as such operations are not a part of the disposal group of the Starz Business. Accordingly, revenue of $8.9 million was reclassified from the former Media Networks segment to the Motion Picture segment in the year ended March 31, 2025 to conform to the current period presentation. Additionally, we sold our streaming platform in India in December 2025, see Note 16 to our consolidated financial statements.
Revenues. Consolidated revenues increased $47.1 million in fiscal 2026, reflecting an increase of $18.5 million from Motion Picture revenue and lower intersegment revenue eliminations of $589.8 million recorded in fiscal 2026, offset by a decrease of $561.2 million from Television Production revenue. Intersegment eliminations relate to the licensing of products from our Studio Business to the former Media Networks segment prior to the Starz Separation. Following the Starz Separation, revenue from licenses to Starz are not eliminated from our consolidated results from continuing operations. See further discussion in the Segment Results of Operations section below.
Motion Picture revenue increased $18.5 million in fiscal 2026 due to an increase in home entertainment, international, other and theatrical revenue primarily due to revenue from The Housemaid, partially offset by a decrease in television revenue.
Television Production revenue decreased $561.2 million due to a decrease in domestic television revenue, home entertainment revenue and other revenue primarily due to significantly lower number of episodic deliveries, offset by an increase in international revenue.
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The decrease in intersegment eliminations of $589.8 million is due to lower Motion Picture and Television Production eliminations from licenses of motion pictures and original series to the former Media Networks segment prior to the Starz Separation as discussed above. Following the Starz Separation, revenue from licenses to Starz are not eliminated from the consolidated results from continuing operations.
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, 2026 and 2025:
Year Ended March 31,
Change
Amount
% of Segment Revenues
Amount
% of Segment Revenues
Amount
Percent
(Amounts in millions, except percentages)
Direct operating expenses
Studio Business
Motion Picture (1)
Television Production
Total Studio Business
Other
Intersegment eliminations
Total direct operating expenses
nm - Percentage not meaningful.
(1) Direct operating expenses for Motion Picture in the year ended March 31, 2025 reflect the reclassification of $6.5 million from the former Media Networks segment to conform to the current period presentation.
Direct operating expenses decreased in fiscal 2026 due to lower direct operating expenses of the Television Production segment due to decreased revenue from Television Production and lower direct operating expenses as a percentage of revenue of the Motion Picture segment driven by the performance and costs of the titles released during the fiscal year, in particular, The Housemaid , which resulted in lower direct operating cost in relation to revenue. These decreases were partially offset by lower intersegment eliminations due to there being no Motion Picture and Television Production intersegment revenue from licenses of motion pictures and original series to the former Media Networks segment following the Starz Separation, as discussed above. See further discussion in the Segment Results of Operations section below.
Other. Other direct operating expense in fiscal 2026 and 2025 primarily consist of rent costs for production facilities that were unutilized due to lower demand following the industry strikes amounting to $27.3 million and $18.6 million, respectively, which was not allocated to the segments, and is included in direct operating expense. In addition, other direct operating costs in fiscal 2025 include a benefit from insurance recoveries on COVID related charges.
Distribution and Marketing Expenses. Distribution and marketing expenses by segment were as follows for the fiscal years ended March 31, 2026 and 2025:
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Year Ended March 31,
Change
Amount
Percent
(Amounts in millions)
Distribution and marketing expenses
Studio Business
Motion Picture (1)
Television Production
Total Studio Business
U.S. theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense
(1) Motion Picture distribution and marketing expense in the year ended March 31, 2025 reflect the reclassification of $2.7 million from the former Media Networks segment to conform to the current period presentation.
Distribution and marketing expenses increased in fiscal 2026, primarily due to higher theatrical distribution and marketing expenses in the Motion Picture segment. 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, 2026 and 2025:
Year Ended March 31,
Change
% of Revenues
% of Revenues
Amount
Percent
(Amounts in millions, except percentages))
General and administrative expenses
Studio Business
Motion Picture (1)
Television Production
Total Studio Business
Corporate
Share-based compensation expense
Purchase accounting and related adjustments
Total general and administrative expenses
(1) Motion Picture general and administrative expenses in the year ended March 31, 2025 reflect the reclassification of $3.0 million from the former Media Networks segment to conform to the current period presentation.
General and administrative expenses increased in fiscal 2026, primarily due to an increase in share-based compensation expense and increases in Studio Business and corporate general and administrative expenses primarily due to an increase in incentive-based compensation.
The increase in share-based compensation expense included in general and administrative expense in fiscal 2026, as compared to fiscal 2025 was primarily due to share-based bonuses granted in the current year period, with no similar grants in the prior year period. The following table presents share-based compensation expense by financial statement line item for the fiscal years ended March 31, 2026 and 2025:
Year Ended March 31,
(Amounts in millions)
Share-based compensation expense by expense category
General and administrative expense
Restructuring and other (1)
Total share-based compensation expense
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(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.
Restructuring and Other. Restructuring and other decreased $37.4 million in fiscal 2026 as compared to fiscal 2025. See Note 16 to our consolidated financial statements. Restructuring and other was as follows for the fiscal years ended March 31, 2026 and 2025:
Year Ended March 31,
Change
Amount
Percent
(Amounts in millions)
Restructuring and other
Content and other impairments (1)
Severance (2)
Transaction and other costs (3)
Total restructuring and other
(1) Content and other impairments primarily reflect $13.2 million in development cost write-offs recorded during the year ended March 31, 2026 for write-downs in connection with the restructuring of the Motion Picture and Television Production businesses. In addition, the amounts in the year ended March 31, 2026 and 2025 include impairment charges related to certain operating lease right-of-use assets and leasehold improvements within the Television Production segment. These impairments were recognized as a result of facilities that are no longer expected to be utilized by the Company, primarily related to the integration of eOne. In the fiscal year ended March 31, 2025, content and other impairments also included content impairments of $7.7 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories.
(2) Severance costs were primarily related to workforce reduction actions undertaken in connection with restructuring and acquisition integration activities, as well as other cost-reduction initiatives and are not reflective of our ongoing operating structure.
(3) Transaction and other costs primarily relate to transaction, integration and legal costs incurred in connection with certain strategic transactions and restructuring activities, as well as costs associated with certain legal matters. For the year ended March 31, 2026, transaction costs associated with the Starz Separation are excluded, as such amounts are classified within discontinued operations. The year ended March 31, 2026 includes a gain of $2.6 million from the sale of our streaming platform in India.
Interest Expense. Interest expense of $259.7 million in fiscal 2026 decreased $2.0 million from fiscal 2025. The following table presents the components of interest expense for the fiscal years ended March 31, 2026 and 2025:
Year Ended March 31,
(Amounts in millions)
Interest Expense
Revolving credit facility
Term loans
Senior Notes
IP credit facilities (1)
Other (2)
Total interest expense
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(1) IP credit facility interest expense includes interest expense associated with the eOne IP Credit Facility and the LG IP Credit Facility.
(2) Other interest expense includes payments associated with certain film related obligations (Production loans, Production Tax Credit Facility, Film Library Facility, Backlog Facility and other, see Note 9 to our consolidated financial statements), interest expense associated with our 3 Arts Entertainment Credit Facility, payments and receipts associated with interest rate swaps along with the noncash amortization of unrealized gains in accumulated other comprehensive income related to dedesignated interest rate swaps which are being amortized to interest expense (Note 19 to our consolidated financial statements).
Interest and Other Income. Interest and other income of $17.9 million for the year ended March 31, 2026 increased as compared to interest and other income of $15.0 million for the year ended March 31, 2025, due to an increase in interest income.
Other Loss, net. Other loss, net of $19.6 million for fiscal 2026 increased as compared to other losses, net of $11.9 million for fiscal 2025. The increase was due to losses incurred related to foreign currency transactions during fiscal year 2026 as compared to gains related to foreign currency transactions during the fiscal year 2025, offset by a lower loss related to our accounts receivable monetization programs in fiscal 2026 as compared to fiscal 2025 (see Note 20 to our consolidated financial statements).
Loss on Extinguishment of Debt. Loss on extinguishment of debt of $2.2 million for fiscal 2026 related to the write-off of debt issuance costs following the termination and then modification of our revolving credit facility as part of the Starz Separation. The loss on extinguishment of debt of $4.9 million for fiscal 2025 related to the write-off of debt issuance costs associated with the voluntary prepayment of Term Loan A and Term Loan B and the 5.5% Senior Notes exchange. See Note 8 to our consolidated financial statements.
Gain on Investments, net. Gain on investments, net of $10.5 million for fiscal 2026, primarily represented a gain on the sale of our equity method ownership interest in Spyglass which we sold in April 2025 and other investments. There was no comparable gain in fiscal 2025.
Equity Interests Income (Loss). Equity interests loss of $3.3 million in fiscal 2026 compared to equity interests income of $4.3 million in fiscal 2025.
Income Tax Provision. We had an income tax provision of $16.2 million in fiscal 2026, compared to $17.2 million in fiscal 2025. Our income tax provision differs from the Canadian federal statutory income tax rate of 15% multiplied by loss before taxes due to the mix of our earnings across the various jurisdictions in which our operations are conducted, changes in valuation allowances against our deferred tax assets, and certain minimum income and foreign withholding taxes.
As of March 31, 2026, we had Canadian NOLs of $380.6 million which will expire beginning in 2030, U.S. federal NOLs of approximately $1,203.0 million available to reduce future U.S. federal income taxes, certain of which expire in 2037 and 2038, state NOLs of approximately $831.5 million available to reduce future state income taxes which expire in varying amounts beginning in 2027, Luxembourg NOLs of $3,352.8 million which will expire beginning in 2036, U.K. NOLs of $28.5 million with no expiration and other foreign jurisdiction NOLs of $19.6 million which will expire beginning in 2028. In addition, as of March 31, 2026, we had U.S. federal credit carryforwards related to foreign taxes paid of approximately $33.8 million to offset future U.S federal income taxes that will expire beginning in 2027.
Net Loss Attributable to Lionsgate Studios Corp. Shareholders. Net loss attributable to our shareholders for fiscal 2026 was $198.3 million, or basic and diluted net loss per common share of $0.70 on 285.4 million weighted average common shares outstanding. This compares to net loss attributable to our shareholders for the fiscal year ended March 31, 2025 of $362.0 million, or basic and diluted net loss per common share of $1.43 on 248.9 million weighted average common shares outstanding.
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Segment Results of Operations and Non-GAAP Measures
Our primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (segment revenues, less segment direct operating and segment distribution and marketing expense) less segment general and administration expenses. Segment profit and total segment profit exclude, when applicable, corporate general and administrative expense, restructuring and other costs, share-based compensation, certain content charges as a result of changes in management and/or content strategy, certain benefits or expenses related to the COVID-19 global pandemic, unallocated rent cost and purchase accounting and related adjustments. Segment profit is a U.S. 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. Total 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 U.S. GAAP. We use this non-GAAP measure, among other measures, to evaluate the aggregate operating performance of our business.
We believe the presentation of total 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 our management and enables them to understand the fundamental performance of our businesses before non-operating items. Total segment profit is considered an important measure of the Company’s performance because it reflects the aggregate profit contribution from the Company’s segments and represent a measure, consistent with our segment profit, that eliminates amounts that, in management’s opinion, do not necessarily reflect the fundamental performance of our 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 as defined by our management and similarly titled measures presented by other companies may not be comparable due to differences in the methods of calculation and excluded items.
The following table reconciles the operating income (loss), which is the most comparable U.S. GAAP measure to the total segment profit non-GAAP measure for the years ended March 31, 2026 and 2025. Refer to the preceding section discussing our consolidated results of operations for the reconciliations of segment direct operating expense and general and administrative expense to the respective line items presented in the GAAP-based consolidated statement of operations. In addition, refer to Note 17 of our consolidated financial statements for the reconciliations of adjusted depreciation and amortization and adjusted share-based compensation, as presented in the line items below, to U.S. GAAP depreciation and expense and share-based compensation expense.
Year Ended March 31,
Change
Amount
Percent
(Amounts in millions)
Operating income (loss)
Corporate general and administrative expenses
Adjusted depreciation and amortization
Restructuring and other
COVID-19 related expense (benefit)
Unallocated rent cost included in direct operating expense
Adjusted share-based compensation expense
Purchase accounting and related adjustments
Total segment profit
nm - Percentage not meaningful
We refer to our Motion Picture and Television Production segments collectively as our Studio Business. The table below presents the revenues and segment profit of our collective Studio Business for the fiscal years ended March 31, 2026 and 2025:
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Year Ended March 31,
Change
Amount
Percent
(Amounts in millions)
Revenue
Studio Business
Motion Picture (1)
Television Production
Total Studio Business
Intersegment eliminations
Segment Profit
Studio Business
Motion Picture (1)
Television Production
Total Studio Business
Intersegment eliminations
nm - Percentage not meaningful
(1) During the first quarter of fiscal 2026, the Company began reflecting the results of operations of its streaming platform in India within the Motion Picture segment as such operations are not a part of the disposal group of the Starz Business. Accordingly, the following amounts were reclassified from the former Media Networks segment to the Motion Picture segment in the year ended March 31, 2025 to conform to the current period presentation: (i) revenue of $8.9 million; (ii) direct operating expense of $6.5 million; (iii) distribution and marketing expense of $2.7 million; and (iv) general and administration expense of $3.0 million, which resulted in gross contribution loss of $0.3 million and segment loss of $3.3 million. Additionally, the Company sold its streaming platform in India in December 2025, see Note 17 to our consolidated financial statements.
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 presents the Motion Picture gross contribution and segment profit for the fiscal years ended March 31, 2026 and 2025:
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Year Ended March 31,
Change
Amount
Percent
(Amounts in millions, except percentages)
Motion Picture Segment:
Revenue
Expenses:
Direct operating expense
Distribution & marketing expense
Gross contribution
General and administrative expenses
Segment profit
U.S. theatrical P&A and Premium VOD expense included in distribution and marketing expense
Direct operating expense as a percentage of revenue
Gross contribution as a percentage of revenue
Revenue. The table below presents Motion Picture revenue by media and product category for the fiscal years ended March 31, 2026 and 2025:
Year Ended March 31,
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
Home Entertainment
Digital Media
Packaged Media
Total Home Entertainment
Television
International (3)
Other
Total Motion Picture revenue
(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.
(3) International revenue in the year ended March 31, 2025 reflects the reclassification of $8.9 million from the former Media Networks segment to conform to the current period presentation.
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Theatrical revenue increased $22.8 million, or 14.8%, in fiscal 2026, as compared to fiscal 2025, primarily due to higher revenue from Lionsgate Original Releases of $19.7 million driven by the theatrical releases of The Housemaid , Now You See Me: Now You Don’t, Ballerina: From the World of John Wick and The Long Walk in the current fiscal year as compared to the prior fiscal year theatrical releases. The increase in Lionsgate Original Releases was partially offset by a decrease in direct-to-platform releases in the current fiscal year, compared to the prior fiscal year.
Home entertainment revenue increased $55.2 million, or 8.4%, in fiscal 2026, as compared to fiscal 2025, due to increased digital media revenue, primarily due to increases from Lionsgate Original Releases of $74.0 million. The increase was driven by higher revenue in fiscal 2026 from our direct-to-platform releases of $52.0 million, primarily from War Machine, and higher revenue from our theatrical releases of $32.3 million driven by the releases of The Housemaid and Ballerina: From the World of John Wick. The increase was primarily offset by decreased revenue generated from our multi-platform releases.
Television revenue decreased $120.4 million, or 34.7%, in fiscal 2026, as compared to fiscal 2025, primarily due to lower revenue generated from Lionsgate Original Releases of $111.4 million from the fiscal years 2025 and 2026 theatrical slate titles with television windows opening in the current fiscal year, as compared to the fiscal years 2025 and 2024 theatrical slate titles with television windows opening during the prior fiscal year, which included significant revenue from The Hunger Games: The Ballad of Songbirds and Snakes. In addition, lower revenue was generated from our multi-platform releases.
International revenue increased $46.7 million, or 11.4%, in fiscal 2026, as compared to fiscal 2025, primarily due to $48.0 million of higher revenue generated from Lionsgate Original Releases. The increase in Lionsgate Original Releases was primarily due to the theatrical releases of Now You See Me: Now You Don’t, The Housemaid and Ballerina: From the World of John Wick during the current fiscal year, as compared to Borderlands and The Killers’ Game in the prior fiscal year.
Direct Operating Expense. The decrease in direct operating expenses is due to a lower direct operating expenses as a percentage of revenue driven by the performance and costs of the titles released during fiscal 2026, in particular, The Housemaid, which resulted in lower direct operating cost in relation to revenue. In fiscal 2026, a write-down of $0.8 million was recorded for investments in film included in the Motion Picture segment direct operating expense, as compared to $19.7 million in fiscal 2025.
Distribution and Marketing Expense. The increase in distribution and marketing expense in fiscal 2026 was primarily due to higher theatrical distribution and marketing expense. In the year ended March 31, 2026, approximately $31.4 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $24.1 million in the year ended March 31, 2025.
Gross Contribution. Gross contribution of the Motion Picture segment for fiscal 2026 decreased as compared to fiscal 2025 due to increased distribution and marketing expenses, offset by lower direct operating expenses and higher revenue generated in the Motion Picture segment.
General and Administrative Expense. General and administrative expenses of the Motion Picture segment increased $10.0 million, or 9.7%, primarily due to an increase in incentive-based compensation, partially offset by a decrease in salaries and related expenses.
Television Production
The table below presents the Television Production gross contribution and segment profit for the fiscal years ended March 31, 2026 and 2025:
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Year Ended March 31,
Change
Amount
Percent
(Amounts in millions, except percentages)
Television Production Segment:
Revenue
Expenses:
Direct operating expense
Distribution & marketing expense
Gross contribution
General and administrative expenses
Segment profit
Direct operating expense as a percentage of revenue
Gross contribution as a percentage of revenue
Revenue. The table below presents the Television Production revenue and changes in revenue by media for the fiscal years ended March 31, 2026 and 2025:
Year Ended March 31,
Change
Amount
Percent
(Amounts in millions)
Television Production Revenue
Television
International
Home Entertainment
Digital
Packaged Media
Total Home Entertainment
Other
Total Television Production revenue
The primary component of Television Production revenue is domestic television revenue. Domestic television revenue decreased $552.2 million, or 51.6% in fiscal 2026 as compared to fiscal 2025 due to a significantly lower number of television episodes delivered in the current fiscal year.
International revenue in fiscal 2026 increased $13.7 million, or 5.5%, as compared to fiscal 2025 , due to higher revenue generated internationally from episodes delivered in the current fiscal year, as compared to episodes delivered in the prior fiscal year.
Home entertainment revenue in fiscal 2026 decreased $13.5 million, or 7.2% as compared to fiscal 2025, primarily due to digital media revenues.
Other revenue in fiscal 2026 decreased $9.2 million, or 9.2% as compared to fiscal 2025, primarily due to decreased revenue from 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 2026 decreased $568.1 million, or 41.5%, due to a decrease in Television Production revenues. Direct operating expenses as a percentage of television production revenue decreased primarily due to the mix of titles generating revenue in fiscal 2026 as compared to fiscal 2025.
Gross Contribution. Gross contribution of the Television Production segment for fiscal 2026 decreased by $11.3 million as compared to fiscal 2025 due to lower Television Production revenue and higher distribution and marketing expense, partially offset by lower direct operating expenses as a percentage of television production revenue.
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General and Administrative Expense. General and administrative expenses of the Television Production segment were comparable to fiscal 2025.
Liquidity and Capital Resources
Sources of Cash
Our liquidity and capital requirements in fiscal 2026 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, 2026, we had cash and cash equivalents of $341.5 million.
Starz Separation. As discussed in “Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview” above, on May 6, 2025 the Starz Separation was completed and as a result the pre-transaction shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” (and is referred to as “Lionsgate”) and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate.
In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under Old Lionsgate's credit and guarantee agreement dated December 8, 2016, as amended (the “Old Credit Agreement”), were repaid in full and all commitments thereunder were terminated. We entered into a new credit agreement (the “Credit Agreement”) which provides for an $800.0 million senior secured revolving credit facility. We also assumed senior notes (the “Senior Notes”) pursuant to a Supplemental Indenture. Under the Supplemental Indenture, we became the primary obligor under the Senior Notes and assumed all obligations of the original issuer. The initial issuer was released and discharged from all obligations under the Senior Notes.
Business Combination. As discussed in “Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview,” on May 13, 2024, we closed the Business Combination Agreement, and Legacy Lionsgate Studios became a separate publicly traded company and its common shares commenced trading on Nasdaq under the symbol “LION” on May 14, 2024. Following the transaction, approximately 87.8% of the total shares of Legacy Lionsgate Studios were held by Old Lionsgate, while former SEAC public shareholders and founders and common equity financing investors own approximately 12.2% of Legacy Lionsgate Studios. In addition to establishing Legacy Lionsgate Studios as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to the Company, including $254.3 million in PIPE financing. The net proceeds were used to partially pay down amounts outstanding under the Term Loan A and Term Loan B pursuant to the Old Credit Agreement (see Note 8 to our consolidated financial statements).
Corporate Debt
Our corporate debt as of March 31, 2026, excluding film related obligations discussed further below, consisted of the following:
• Credit Agreement. We have an $800.0 million revolving credit facility (with no outstanding balance as of March 31, 2026), which may be increased to a total amount not in excess of $1,200.0 million, subject to the terms and conditions set forth therein. 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.
• Senior Notes: We have $389.9 million outstanding of 6.0% senior notes due 2030 (the “Senior Notes”).
• eOne IP Credit Facility. As amended in July 2024 and March 2026, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the “eOne IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles acquired as part of the eOne acquisition. The maximum principal amount of the eOne IP Credit Facility is $371.3 million as of March 31, 2026, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries. As of March 31, 2026, $371.3 million was outstanding and there was no available borrowing capacity under the eOne IP Credit Facility. The eOne IP Credit Facility matures on July 3, 2029.
• LG IP Credit Facility. As amended in November 2024, December 2024, March 2025 and September 2025, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the “LG IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles. The maximum principal amount of the LG IP Credit Facility is $1.25 billion as of March 31, 2026, subject to the amount of
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collateral available, which is based on the valuation of unsold rights from the libraries. As of March 31, 2026, $1,187.5 million was outstanding and there was no available borrowing capacity under the LG IP Credit Facility. The LG IP Credit Facility matures on September 30, 2029.
• 3 Arts Credit Facility . On May 29, 2025 in preparation for the A & A purchase (see Note 3 to our consolidated financial statements), 3 Arts entered into a $50.0 million senior secured credit facility (the “3 Arts Credit Facility”) based on and secured by a security interest in substantially all of the assets of 3 Arts and guarantors as defined in the 3 Arts Credit Facility, subject to certain exceptions. As of March 31, 2026, $30.7 million was outstanding under the 3 Arts Credit Facility. As of March 31, 2026, there was $19.3 million available under the 3 Arts Credit Facility. Advances under the 3 Arts Credit Facility are payable at maturity, which is on May 29, 2029.
See Note 8 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 as of March 31, 2026 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. As of March 31, 2026, there was $1,283.9 million outstanding of production loans.
• Production Tax Credit Facility. In May 2025, the Company entered into a non-recourse senior secured revolving credit facility due January 2028 based on collateral consisting solely of certain of the Company’s tax credit receivables (the “Production Tax Credit Facility”). As of March 31, 2026, tax credit receivables amounting to $443.1 million represented collateral related to the Production Tax Credit Facility. Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility. As of March 31, 2026, there was $368.0 million outstanding under the Production Tax Credit Facility.
• Backlog Facility and Other:
◦ Backlog Facility. In March 2022, as amended in June 2025, 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 as of March 31, 2026 is $175.0 million, subject to the amount of eligible collateral contributed to the facility. The Backlog Facility revolving period ends on May 30, 2028, 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 28, 2030. As of March 31, 2026, there was $175.0 million outstanding under the Backlog Facility.
◦ Other. The Company has other loans, which are secured by accounts receivable and contracted receivables which are not yet recognized as revenue under certain licensing agreements. Outstanding loan balances under these “other” 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, 2026, there was $132.2 million outstanding under the “other” loans, with remaining contractual repayment dates in April 2026, July 2026 and December 2027. As of March 31, 2026, accounts receivable amounting to $80.2 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at March 31, 2026 amounting to $73.4 million represented collateral related to the “other” loans.
See Note 9 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.
In addition, we utilize governmental incentives, programs and other structures from states and foreign countries (e.g., sales tax refunds, transferable or refundable tax credits, direct subsidies or cash rebates, calculated based on qualifying expenditures incurred in the particular jurisdiction in connection with the production) to fund our film and television productions and reduce financial risk.
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See Note 20 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.
In addition, the Company has a redeemable noncontrolling interest balance of $114.1 million as of March 31, 2026 related to 3 Arts Entertainment, A & A Management and other and $88.9 million included in “accrued expenses and other current liabilities” representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest, which may require the use of cash in the event the holders of the noncontrolling interests require us to repurchase their interests (see Note 12 to our consolidated financial statements).
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. In addition to the cash requirements of any potential future redemption of our noncontrolling interests as discussed above, which we may fund with a combination of cash on hand, borrowings under our line of credit and/or new financing arrangements, we have other anticipated cash requirements outside of our normal operations.
In the short-term, we currently expect that our cash requirements for productions will be consistent, and our marketing spend will increase in fiscal 2027 as compared to fiscal 2026.
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 from other financing obligations and available production or intellectual property 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 rights acquisitions and theatrical and home entertainment release schedules, and future equity method or other investment funding requirements. 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, eOne IP Credit Facility, LG IP Credit Facility, 3 Arts Credit Facility, production loans, government incentive programs, the monetization of trade accounts receivable, our Production Tax Credit Facility, our Backlog Facility, and other obligations. In addition, we 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 inflation and rising interest rates and ongoing disruptions in financial markets and in commercial activity generally related to changes in monetary and fiscal policy, tariffs, United States political developments, geopolitical events and other sources of instability, could make financing more difficult and/or expensive, and we may not be to obtain such financing. We may also 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.
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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, including our IP Facilities and film related obligations. The following table presents our significant contractual and other obligations as of March 31, 2026 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, 2026 (on-balance sheet arrangements)
Corporate debt (1) :
Revolving credit facility
Senior Notes
eOne IP Credit Facility
LG IP Credit Facility
3 Arts Credit Facility
Film related obligations (2)
Content related payables (3)
Operating lease obligations
Contractual commitments by expected repayment date (off-balance sheet arrangements)
Film related obligations commitments (4)
Interest payments (5)
Other contractual obligations
Total future repayment of debt and other commitments under contractual obligations (6)
(1) See Note 8 to our consolidated financial statements for further information on our corporate debt.
(2) See Note 9 to our consolidated financial statements for further information on our film related obligations.
(3) Content related payables include minimum guarantees included on our consolidated balance sheet, which represent amounts payable for film or television rights that we have acquired or licensed.
(4) 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 meet the criteria for recognition.
(5) Includes cash interest payments on our corporate debt and film related obligations, based on the applicable SOFR interest rates at March 31, 2026, net of payments and receipts from the Company’s interest rate swaps, and excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.
(6) Not included in the amounts above are $88.9 million included in accrued expenses and other current liabilities representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest and $114.1 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 12 to our consolidated financial statements).
For additional details of commitments and contingencies, see Note 18 to our consolidated financial statements.
Covenants. The Credit Agreement contains customary affirmative and negative covenants that, subject to certain significant exceptions, limit the ability of the Company and its restricted subsidiaries to incur additional indebtedness or liens, make investments, engage in mergers, consolidations, asset sales or acquisitions, pay dividends or other restricted payments and enter into certain affiliate transactions. In addition, the Credit Agreement requires us to maintain a Liquidity Ratio (as defined in the Credit Agreement) of no less than 1.10 to 1.00 as of the last day of each fiscal quarter. As of March 31, 2026, we were in compliance with all applicable covenants.
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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, 2026, the capacity to pay dividends under the Credit Agreement 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 $175.5 million and accumulated deficit of $3,732.9 million were deemed free of restrictions from paying dividends at March 31, 2026.
Discussion of Operating, Investing and Financing Cash Flows
Cash, cash equivalents and restricted cash increased by $126.9 million for the fiscal year ended March 31, 2026 and decreased by $74.8 million for the fiscal year ended March 31, 2025, before foreign exchange effects on cash. Components of these changes are discussed below in more detail.
Operating Activities. Cash flows used in operating activities attributable to continuing operations for the fiscal years ended March 31, 2026 and 2025 were as follows:
Year Ended March 31,
Net Change
(Amounts in millions)
Net Cash Flows Used In Operating Activities - Continuing Operations
Cash flows used in operating activities attributable to continuing operations for the fiscal years ended March 31, 2026 and March 31, 2025 were $53.0 million and $102.2 million, respectively. The decrease in cash used in operating activities is primarily due to lower cash flows used as a result of changes in operating assets and liabilities, which included decreases in cash used for other assets and increases in participations and residuals and accounts payable and accrued liabilities, partially offset by lower proceeds from accounts receivable and lower increases in deferred revenue. These decreases were offset by lower cash flows generated from operating activities before changes in operating assets and liabilities.
Investing Activities. Cash flows used in investing activities attributable to continuing operations for the fiscal years ended March 31, 2026 and 2025 were as follows:
Year Ended March 31,
(Amounts in millions)
Acquisition of businesses, net of cash required
Net proceeds from purchase price adjustments for eOne acquisition
Proceeds from the sale of equity method investments
Investments in equity method investees and other
Asset acquisition (film library and related assets)
Capital expenditures
Repayment of loans receivable, net
Net Cash Flows Used In Investing Activities - Continuing Operations
Cash flows used in investing activities attributable to continuing operations for the fiscal years ended March 31, 2026 and March 31, 2025 were $7.2 million and $35.4 million, respectively. The decrease was primarily due to proceeds from the sale of our equity method investment in Spyglass, partially offset by cash used for the acquisition of A&A in the current period, as compared to the cash used for the acquisition of a film library and related assets, partially offset by proceeds from the settlement of certain working capital items pursuant to the Purchase Agreement for eOne in the prior year period.
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Financing Activities. Cash flows provided by financing activities attributable to continuing operations for the fiscal years ended March 31, 2026 and 2025 were as follows:
Year Ended March 31,
(Amounts in millions)
Debt - borrowings, net of debt issuance and redemption costs
Debt - repurchases and repayments
Net repayments of debt
Film related obligations - borrowings
Film related obligations - repayments
Net borrowings from (repayments) of film related obligations
Cash settlement in connection with Starz Separation refinancing
Sale of noncontrolling interest in Legacy Lionsgate Studios Corp.
Purchase of noncontrolling interest
Distributions to noncontrolling interests
Exercise of stock options
Tax withholding required on equity awards
Net Cash Flows Provided By Financing Activities
Cash flows provided by financing activities attributable to continuing operations for the fiscal years ended March 31, 2026 and March 31, 2025 were $133.1 million and $53.6 million, respectively.
Cash flows provided by financing activities attributable to continuing operations for the fiscal year ended March 31, 2026 primarily reflect a net cash settlement received in connection with the Starz Separation refinancing of $262.8 million, partially offset by total net repayments of $105.4 million related to debt and film obligations and $14.0 million related to tax withholdings required on equity awards.
Cash flows provided by financing activities attributable to continuing operations for the fiscal year ended March 31, 2025 primarily reflect the net proceeds from the sale of a noncontrolling interest in Legacy Lionsgate Studios of $281.7 million, offset by total net repayments of $182.0 million related to debt and film obligations and $29.1 million related to tax withholdings required on equity awards.
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 13 to our consolidated financial statements, remaining performance obligations were $1.8 billion at March 31, 2026 (March 31, 2025 - $1.5 billion). The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was $1.3 billion at March 31, 2026 (March 31, 2025 - $1.1 billion).
