Yeah. Okay, great. I am Doug Creutz, Senior Media and Entertainment Analyst here at TD Cowen. As a PSA, I'm sure you've seen there are Vote TD Cowen and Extel, and I would really appreciate your vote in the media sector. With that, very pleased to have with us here today, Jimmy Barge, CFO of Lionsgate. Welcome. Great to be back, Doug. Appreciate it. Let's just start by talking a little bit about the overall health of theatrical window. It's been a pretty good year so far, in part thanks to one of your films. We've been still kind of stuck well below pre-COVID levels now for several years. The market, I would say, continues to seem very barbell-shaped. I would say the top 20, 25 movies every year are still doing as well as they did pre-COVID. Down the market, it's been a little bit tougher. Can you talk about, you're a studio that tends not to make a lot of expensive movies. How do you compete and prosper in the current theatrical environment? Well, look, we are glad to see the market coming back with for the right films and the right entertainment. I think we're up in mid-teens year to date, and we're certainly proud to be playing our part of that. I think, again, the right genre, bringing people back to the theater. You look at The Housemaid, it just killed it, no pun intended. It's a $55 million film that did $400 million in global box office. It was based off of books and by the way, three books, so at least three films, right? We've already greenlit the second one. It's a new franchise. It predominantly played to women audience, and this was before The Devil Wears Prada two, which by the way, Michael beat out and then displaced again as the number one. That did great. You knew that was going to play, it was also nice for Housemaid right prior to that and around the holiday season and just did fantastic. Look, I think our models, eight- 12 wide releases, we're just as happy with eight as 12. It depends on what's in the development pipeline and what's ready. There'll be two or three tent poles in that. Then the rest is going to have a specific audience we're targeting, specific genres. We do a lot of horror, faith-based, action, and as you know, we have a de-risk model and pre-license internationally. That's our bread and butter. I think we fare pretty well in a market like this, and we're very happy to be part of bringing the market back. You mentioned both The Housemaid and Michael, which have been two of your biggest hits in a while. Obviously both films that weren't necessarily the action market or the kids market, right? Right. It was sort of hitting some areas of the market that maybe have been underserved for a while. Can you talk about, obviously, there's the box office, but then I know there's benefits for you from a hit film like that for several years. Can you talk about how that impacts the earnings power of the company, both for those films themselves and then, as you said, potential for follow-ups down the road? Yeah. Look, kudos to Adam Fogelson and his team, Erin Wasterman, Manny Kozlowski, seeing these properties come through and realizing that something like "Housemaid" can come from largely unknown to something so significantly popular. The same thing with "Michael," having the conviction to serve the fan base, right, and deliver the right kind of movie. It drives earnings power significantly, and you can see it. "Housemaid" was the number 1 Pay-One movie ever on Starz, okay? It was also the number 1 highest ever PVOD title for any film that was $150 million or less of domestic box office. It did $126, okay, $400 worldwide. Those downstream windows, and then there's a split Pay-One window, right? The first window was Q4 that goes to Starz. There's a second window coming to HBO. Okay? Then "Michael," same thing. You see the success of that, you know that, first of all, it's still holding incredibly well. I think it was down 29%, like on the fifth weekend, down. That's not counting the Memorial Day weekend. That's really three days against three days. Really going to play right on into the summer in a huge ancillary. That's a Pay-One split window as well. Starz first, no pun intended, it'll kill it on Starz. You've got a split window there and a split window there. We start our new Pay-One split deal, as you probably know, with Amazon, starting with calendar year 2026, which is why we're making the shift, if you will, in that Pay-One window. Really nice. Look, we'll have sequels on both of those. We've not announced a date on "Michael 2," I'm not here to announce a date, but there's going to be one. Okay. "Housemaid 2's" already moving into production later this year, and the date is December 17th. Mark your calendar. How did you get the rights to Michael? You would think that maybe Sony, who distributes his music, would have been all over putting out a biopic about one of their biggest stars, and yet you wound up with it. Well, look, I'm not going to trash talk a competitor. Yeah, of course. our partners in the industry. Look, I'll go back to our conviction of our team and the competitiveness in Jon as our CEO and supporting. I think we've always been a very astute and scrappy when it comes to projects. Look at "John Wick." I mean, "John Wick" didn't have distribution, came to us. We said, "We can make that happen. We can make it happen fast. We can get that in the summer," where the window and there wasn't a lot of time to do that. There was born the "John Wick" franchise. "The Hunger Games," I mean, famously that was passed by everybody. Who can take this kids killing kids in a game? Look at "The Long Walk," R.L. Stine book property. Nobody else thought we could possibly do this movie. Adam Fogelson and his team, they did it, and it was very successful. I think that you look at "Michael," a lot of people pass on it by just some of the things that the critics were pointing to, we said, "We can make this happen. It's going to be entertaining. We're going to entertain the fans, and here's what we're going to do." It wasn't critically acclaimed, but the fan base spoke. We're in the entertainment business, and that's what we do, we entertain. With a potential second "Michael" film, will you have a chance to have a new set of international distribution deals with that film? Well, Universal's our partner on the first film. Yep. I would think they're going to be our partner on the second film, but I would just say there's huge demand for that property and interest in that property. Yeah. Okay. Let that play out. I am looking forward to it, though. Okay. I know one of the really important parts of the business is the library. Obviously. Can you talk about the revenue and the cash flow generation of the library, how important that is to sustainability of the overall business? Can you talk about having a healthy slate of new content supports the health of a library? Right. Well, look, always replenishing your library is great. That's what we're in. I have to say, Jon and Michael started this business 20 years ago, focused on content. You've heard the story, right? Let's don't bet on the technology. That's going to change the delivery capability. Let's entertain, let's build content, and let's retain those rights. That's what we've been doing for 20 years. You don't end up with a library like this unless you've been at it a long time. It's a scarce asset. It's irreplaceable. Okay. One of a kind. It's fresh. 85% of our titles are produced within from 2000 on and current. It's a fresh library. It is being replenished. If you look at it, we're getting significant portion of our revenues are coming from titles that are outside the top 50 titles. Okay? It's very deep, and so it's a consistent theme and contributor, right? We've had three quarters now at $1 billion. Okay. We've been setting records on trailing 12 months. This is about 50% plus cash margins. Very incredibly valuable asset. Every time you have another "John Wick" or a spinoff or another "Hunger Games," it just refreshes all the other titles. While most people are looking at the profitability on a title by title, and we look at it that way too, it's also the tide that raises all ships. Yep. It refreshes your library, and it brings it back. There's been some interesting developments in the theatrical window. Amazon has become much more active. I think they have 11 films this year. Previously they'd had two, three, or four a year. Paramount is talking about going to a 30-film slate if the Warner merger is approved, which is a lot of movies. I always think, it's one thing to have the capital to make 30 films. It's another thing to have 30 good ideas, right? Right. Does that level of extra industry output or potential industry output, does that concern you at all? Do you feel like that makes it harder to stand out in the theatrical window, or do you feel like you're doing your own thing, and you'll be okay? No, I think we have our own model. We're doing our own thing. I think the more strong films you have out there and bringing the audience back, right, getting back to those pre-COVID levels, okay, because you're running trailers. You're going to the theater is a bit habitual. Okay? There's people who haven't gone since COVID. Okay? There's people who are back, and then all of a sudden they see the trailer, and they say, "Well, I want to go see this, and I want to go see that." All of a sudden, you're back a little in the habit of going out to the theater, and still a great form of entertainment. A great night out. Not that expensive relative to live events. I think we're very good there, and I think the more that you can draw people back into the theater is going to serve us very well. Again, we're going to stick to our focus model on certain genres, and then tentpoles that have some known IP with a marketing hook, the right director, the right cast. This is exactly what Adam would say. That's what we're looking for. We really aren't competing head to head with $250 million tentpole films. Doesn't mean we don't have tentpole films, okay, but we're not competing head to head with those. I think we're in a good position. I think people may not be aware of this, but before COVID, your theatrical margins tended to be in the 10% range. Since COVID, they've been closer to 20%. Right. Which is a pretty big inflection. Can you talk about what's driven that margin expansion and the sustainability of it and where you think things can go in the future? Well, look, I think the pre-COVID era was maybe a little lower margin than I would typically anticipate. I think 2019, 20% margins is more kind of traditional, what's very achievable. I will say the downstream windows have become even more profitable, and at that point, you've recouped all your P&A, so you're into the higher margin. Certainly our library, we talked about the high margins in our library and replenishment of the library, so it's deeper and deeper and deeper, which helps our, obviously, about 70% of our titles, our revenue is coming through motion picture, the other 33% or so going through TV. Those high margins help as well. The longer you've built that, the more your margin's going to naturally rise as that mix changes. I'd also say, PVOD, the same person who hasn't been back to the theater, okay, since COVID, all right, they're paying $20 to rent it and watch it prior to Pay-One window, right after the theatrical. That's a great window for us, and that's very high margin. I think those downstream windows have gotten better and better, and we've seen the, let's just say not only, as you referenced earlier, Amazon's focus on some theatrical releases. That's a validation of the importance of theatrical releases in general, but also the zeitgeist of the broader P&A value, which spills over into library, and they bid very aggressively with us, and we're very happy to have a Pay-One window split window with Amazon. I think, again, that's another example of improved margins and visibility in that downstream market, which we didn't necessarily have pre-COVID. Has AVOD been an important factor too, especially with maybe some of the deep library titles? It has been, absolutely. Library, and we could talk forever about library because there's so many good things happening there, including using AI and actually mining our deeper catalog with self-directed channels that where we're taking ad share, not just your traditional AVOD channels, which obviously have grown significantly, but even our self-directed channels where we take a cut of the advertising or a cut of the subscription fees. A lot of this is being done with deep catalog that might not otherwise have found a place or licensed on its own. When you can monetize it that way on effectively most of it free advertising-based channels take a piece, some might be very lower cost, SVOD-branded channels, okay, and take a piece of that, it doesn't cannibalize your licensing, your traditional licensing. That's becoming also a major margin improvement in library in general, which then goes back to both TV and motion picture, depending upon the product you're licensing. If you want to talk about the film slate going forward for the next couple of years, what are you most excited about and where do you think there might be some more franchise opportunities? Wow. That's a tough one because there's a lot to be excited about. Look, just laying out the sequels that we've already talked about. "Housemaid," super excited. By the way, my wife's read all three books. She says the second one is the best one. There's a lot of twists and turns coming. If you've seen the first movie, it had a lot of twists and turns. There's definitely some big twists and turns coming in the future films in that series. Of course, "Michael," super anticipated. "Resurrection Part One and Two," this is a sequel to Mel Gibson's "Passion of the Christ," which did $370 million domestic box office, $600 and something million dollars worldwide global 24 years ago. As Adam would say. Can't wait to see how the story ends. Yeah. You know what? I bet a lot of people will be catching up on "The Passion of the Christ" too before "The Resurrection of the Christ" comes out, and you got two parts. That's in our fiscal 2028 and fiscal 2029. When you look at that visibility. More near-term, we have "Rambo" coming up, super excited about that. We have rebooting the "Saw" franchise, as well as we got "Blair Witch" working with Blumhouse and James Wan on that. Really, a lot of things to look forward to. We got "Power Ballad" coming out, narrow release this weekend and broader release the weekend after. That's got Nick Jonas and Paul Rudd. It's screening great, so very excited about that. Yeah, it's hard to say. You know what? You love it when you have these films that maybe aren't as big a tent pole, but then can then find their way to break out. That's all exciting. Are we going to see John Wick again? Oh, yes. Well, definitely excited about that. "Caine" is a spinoff. Donnie Yen, who plays the blind Asian assassin, super excited about that. Look, in development with Chad Stahelski, the director of the "John Wick," as well as Keanu Reeves are working on "Chapter five." That's in development, excited about that. Believe it or not, there's an animated prequel for TV that's being worked on. Then we have the, "Hey, if you're in Las Vegas, go see the John Wick Experience." That's doing nice. A video game coming too, right? We've got a video game, AAA video game in development. Yeah. That's exciting. Let's talk about TV for a bit. You had, in fiscal 2026, you sold fewer episodes, new episodes than you normally do. Can you talk about what drove that and how that potentially impacts downstream revenue for television? Yeah. Well, look, I would say 2026 was a reset year across the board, even on the film side rebuilding the pipeline, both in TV and motion picture, but particularly in TV, right? There were some self-inflicted wounds, as an industry, right? All of us. In the context of the strikes and rebuilding and bouncing, it took longer to bounce back. You had a lot of consolidation happening in the industry, so there was a lot of uncertainty with some of the streaming buyers, right? Particularly as they shifted from market share to profitability, which is a smart move. Okay. There was that uncertainty in budgets, and so we're starting to see that come back. A lot of that has resolved itself, and we're seeing more than just green shoots, and that's why we had 12 of our 13 scripted series renewed. That's just a huge percentage. Okay. The 13th, by the way, may well happen. Okay? That's not out of the cards to have perfect batting score on renewals, and that's scripted series. That's where your money is, and you go into these sophomore seasons, et cetera. Helps drive your margins, helps drive that value, replenishes library, season one becomes worth more. TV feels really good coming back, and we said we'd double the episodic deliveries. I commented on our earnings call that 90% of those deliver in Q2, three, and four. It's just coming out and moving upward in the right direction, and really feels good. Kevin and his team have done a fantastic job with that development pipeline. Again, it took a while because the industry's going through this. We're not the only one experiencing that in fiscal end of 2025 and into fiscal 2026. It's good to see it coming back strong with a lot more buyers and a lot higher demand. If Warner and Paramount do merge, do you think that affects both on the demand side for your shows, but then also on the supply side? If they're big television producers- Mm-hmm. Absolutely. does that create opportunities? I think it does create opportunity. I think it's a net positive. First of all, there's some uncertainty that is kind of all of a sudden budgets free up. Everybody knows their objectives. Look, Skydance isn't moving into this with Paramount and acquire Warner to do anything other than grow, and if you talk about the investment cycle to make that happen. Generally, people have the walled garden doesn't work 100%, right? You need to fill that pipeline, and we're that agnostic arms dealer, so to speak, in the content world. I think it just opens up, one, I think they'll be a better buyer, and then secondly, you got everybody else who has to compete with that, and obviously they're competing with Netflix and ABC, Hulu, and everybody else. As viewership, and I think that competition is just excellent for a pure-play content company like us, who not only on the film side we talked a lot about, but particularly on the TV, right, with scripted series. The ability to do cost plus, the ability to take back end and play the long-term rights, and the ability to develop, whether it be $10 million an episode or whether it be $1 million an episode. Be able to provide that right programming. Kevin and his team do it day in and day out. They're the best. If we look at the TV segment, the margins have historically been around ±10%, depending on what the mix is of new content. Yeah versus sales of older content, which tend to be much higher margin. Is earnings growth in the TV segment just a function of revenue growth and episode delivery, or are there opportunities to expand margins there in other ways? I think it's more the mix, right? You don't produce a first-year show. You may be doing broadcast. We don't usually do that without a partner. That's deficit financing. You're going to lose a little bit of money the first year. With a partner and the right partner, you've got a really strong chance, but not guaranteed, for season two and three renewals, right? At any time, season one's just less profitable than the subsequent series. You get into season seven, it can turn around a little bit, right? You get back some of that margin because it gets too expensive. That's why "Friends" didn't go on and on and on. One, the cast decides they want to do more, secondly, they want more, and they deserve more. Can the network pay for it or not? Up to a certain point, you can. Economics take into effect. I think it's that mix and getting in, that's what I really love about the 12 of 13. Okay, by definition, they're all sophomores or deeper. Like, well, "The Rookie" is in season nine. Yeah. Which is fantastic. We acquired that and picked it up through eOne, and it was in season five. That's been great, a procedural. There's no reason to think "The Hunting Wives" and "The Studio" don't go on and on and on. We're excited about that. We got "Robin Hood" picked up for season two on MGM+. We've got "The Rainmaker" on USA. They've gotten back into the scripted game. Those are some of those kind of green shoots, and I think those things, as they go deeper, and more importantly, as they work, it's not just about working for Lionsgate. It's about working for the platform. That's what I think the team's really great at doing because we're in this together. When you see something working the way "Robin Hood" worked, the way "The Rainmaker" worked, the way "The Rookie's" working, then you build that relationship with your suppliers and your platforms that go much further and serves everybody well. That's our model. You've been separated from Starz for a year, but obviously, that's a really important partnership. What, is it already a year? It's been a year. It is a great partnership. Love Jeffrey Hirsch and the team over there, Scott Macdonald and Ali. It's a great team. I think strategically the separation has been good for Starz and good for Lionsgate as a pure play standalone content company, but also the opportunity it unlocks for Starz. You can see the stock prices on both companies, shareholders have been rewarded for that. We're glad that's worked very well. Yeah, they're a very important buyer. The Powerverse, we've got Origins out there, which is great. Renewed for 18 episodes, that's a big order. There's a lot more of the Powerverse stories to be told. Stay tuned, there's a lot to happen there. No, they're great partners, they're managing their way through very successfully in their first year as a standalone public company. It's exciting to see. I get questions from investors about leverage. Yes You talk a little bit about your current leverage situation, what the path is going forward, and maybe talk a little about t3 Arts and how that might or might not fit into that. Yeah. Down, down leverage. We're de-levering. Look, we said on earlier earnings calls this year, when you looked at the shape of our earnings and performance in fiscal 2026, that the third quarter would be the peak. We naturally de-levered. We're 6.1. We want to be lower levered than that, and it'll just happen. A lot of it's just math, right. We got more visibility than ever into the pipeline. Okay. Where we're going in significant growth going into 2027 and 2028. Okay. Kind of really stack the deck with regards to visibility in our pipeline, TV and motion picture. Okay. When you look at that, what I've said on our earnings calls, I'd look to be four and a half times leverage. Call it mid fours, mid to low four, by mid fiscal 2027. That's our September or December quarter. We're just naturally de-levering this in the trailing 12 months. Is the powerful and the free cash flow generation of going from an investment year into a cash producing year. You can just see, you can see it in Q4. I mean, you can see those revenues turning into cash and coming in the door. Which is why we de-levered in the fourth quarter by more than a full turn. Don't expect that next quarter. That's the earnings power and capability, and the cash flow generation power once you've replenished the pipeline and you start to get that visibility. It's that visibility that I'm talking about when I say, "Hey, we're talking about low to mid fours." Then I think we get into fiscal 2028, it's more three and a half times. We can stop talking about leverage maybe. Which is okay, I don't mind talking about it. Actually, I'm glad you asked because I think it's appropriate to explain. I think when people understand the dynamics, they feel a lot more comfortable. Not to say we're real comfortable, I am, but still, we want to move that down, and that will happen. 3 Arts, look, we're in a position of power. We're de-levering with or without a three Arts. It's always been about what's right for the 3 Arts business. We love the business. We love our partners. We both all want to grow that and diversify that. We did it. We moved in and had some niche acquisitions in sports, and in news. Some nice smaller acquisitions. The three Arts is, if you don't know, it's a preeminent talent management company, bar none. We own 76%. There's a put for the other 24%. If that's put to us, we're fine with that. That's $185 million. It's in our SEC documents. You can see it. That's about a half turn. Okay, fine, we're at four and a half times, and we bump back to four and a half and five times in Q4. That's fine. Okay. We'll just naturally de-lever from there because, again, it's that trailing 12 months earnings coming through in addition to the positive cash flow. That, again, a lot of visibility to kind of stay the course, do the right thing for the business. I get this question from people too. Can you talk a little bit about why film financing is different from bank debt bonds? Right? Great question. Right? Yeah. You know what? This is working capital management. It's interesting. In our business, right, we're famous for cash out upfront and you recoup forever and cash long tails to it. We're in 12 - 18-month production cycles of cash out before even a theatrical release or episodic deliveries, which is generally when the cash starts to come in. Bridging that gap with a production loan is just ideal to keep your revolver dry. It's really working capital management. You're lining up the cash flows. To keep in mind, you got an asset, by definition, we're profitable. We're always profitable. Doesn't mean every project's profitable. On a portfolio basis, we're profitable. Nicely profitable. Okay? By definition, those assets being produced are worth a lot more than you spent on them. What you spent on them is really the production cost. Okay? By definition, on your balance sheet, you've got an obligation that will be repaid. I don't think of it as debt because it's not a reduction of enterprise value, okay? This is the kind of thing you should always do and manage your working capital. When I was at Viacom, prior to that I was a senior executive at Time Warner. If your investment grade rating, your A1/P1 to borrowing commercial paper at 25 basis points, maybe you don't have to manage your working capital as tightly. Doesn't mean it's not smart. Anybody ever been in school and they suggest that managing working capital wasn't a good idea? When you're not investment grade, okay, and with our capital structure, managing working capital is more important than ever. You see us do that, and I think we're very good at it. That's something that's sustainable and continuous, and I think is best practice. The way that you manage risk around your films, I think it plays a part in that too. Well, exactly. Yeah. You know what? If you look at it, we don't green light any TV project until we already have what I call our anchor tenant. All right? Somebody's already contracted to pay 80% plus, maybe it's even 100% plus. Okay? We don't start production till then. We may start, and we do start writer's rooms and development, but that's small dollars. Okay? Then on the television side, you have the, or film side, you have the Pay-One window again, where you have the pre-licensing international. You got tax credits on both film and TV. You have a lot of visibility into those cash flows in the context of not putting anything at risk. Okay. Well, we're out of time. Thank you so much. Wow. Thank you very much. Yeah. Appreciate it. Thanks everybody.