UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2019~~September 30, 2020



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File No.: 1-14880

Lions Gate Entertainment Corp.

(Exact name of registrant as specified in its charter)



British Columbia, Canada						N/A
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

250 Howe Street,, 20th Floor

Vancouver,, British ColumbiaV6C 3R8

and

2700 Colorado Avenue

Santa Monica,, California90404

(Address of principal executive offices)

(~~877~~) (877) 848-3866

(Registrant’s telephone number, including area code)

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

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Class A Voting Common Shares, no par value per share

LGF.A

New York Stock Exchange

Class B Non-Voting Common Shares, no par value per share

LGF.B

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.



Title of Each Class						Outstanding at ~~February 3,~~November 2, 2020
Class A Voting Common Shares, no par value per share						~~83,697,458~~83,011,590 shares
Class B Non-Voting Common Shares, no par value per share						~~136,401,981~~137,773,091 shares

Table of Contents

FORWARD-LOOKING STATEMENTS

This report includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “potential,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “forecasts,” “may,” “will,” “could,” “would” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those discussed under Part I, Item 1A. “Risk Factors” found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on May ~~23, 2019,~~27, 2020, which risk factors are incorporated herein by reference, as updated by the risk factors found under Part II, Item 1A. "Risk Factors" herein. These risk factors should not be construed as exhaustive and should be read with the other cautionary statements and information in our Annual Report on Form 10-K, and this report. These factors may also be increased or intensified as a result of events related to the coronavirus (COVID-19 global pandemic), including as a result of the resurgence of the COVID-19 global pandemic due to the increasing rates of infection. The extent to which the COVID-19 global pandemic ultimately impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

We caution you that forward-looking statements made in this report or anywhere else are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially and adversely from those made in or suggested by the forward-looking statements contained in this report as a result of various important factors, including, but not limited to: the potential effects of the COVID-19 global pandemic on the Company, economic and business conditions; the substantial investment of capital required to produce and market films and television series; budget overruns; limitations imposed by our credit facilities and notes; unpredictability of the commercial success of our motion pictures and television programming; risks related to acquisition and integration of acquired businesses; the effects of dispositions of businesses or assets, including individual films or libraries; the cost of defending our intellectual property; technological changes and other trends affecting the entertainment industry; potential adverse reactions or changes to business or employee relationships; and the other risks and uncertainties discussed under Part I, Item 1A. “Risk Factors” found in our Annual Report on Form 10-K filed with the SEC on May ~~23, 2019,~~27, 2020, which risk factors are incorporated herein by reference, as updated by the risk factors found under Part II, Item 1A. "Risk Factors" herein. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

Any forward-looking statements, which we make in this report, speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

This Quarterly Report on Form 10-Q may contain references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company.

Unless otherwise indicated or the context requires, all references to the “Company,” “Lionsgate,” “we,” “us,” and “our” refer to Lions Gate Entertainment Corp., a corporation organized under the laws of the province of British Columbia, Canada, and its direct and indirect subsidiaries.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


	December 31, 2019			March 31, 2019				September 30, 2020		March 31, 2020
	(Amounts in millions)							(Amounts in millions)
ASSETS							ASSETS
Cash and cash equivalents	$	195.5		$	184.3		Cash and cash equivalents	$	463.7	$	318.2

Accounts receivable, net	597.7			647.2			Accounts receivable, net	376.7		522.0
Program rights	243.4			295.7			Program rights	0		310.5
Other current assets	173.5			267.2			Other current assets	163.8		157.4
Total current assets	1,210.1			1,394.4			Total current assets	1,004.2		1,308.1
Investment in films and television programs and program rights, net	1,536.3			1,672.0			Investment in films and television programs and program rights, net	1,763.2		1,517.3
Property and equipment, net	145.0			155.3			Property and equipment, net	94.8		140.9
Investments	31.8			26.2			Investments	32.1		40.3
Intangible assets	1,763.2			1,871.6			Intangible assets	1,645.3		1,719.6
Goodwill	2,833.5			2,833.5			Goodwill	2,833.5		2,833.5
Other assets	439.8			436.1			Other assets	373.4		391.5
Deferred tax assets	—			19.8

Total assets	$	7,959.7		$	8,408.9		Total assets	$	7,746.5	$	7,951.2
LIABILITIES							LIABILITIES
Accounts payable and accrued liabilities	$	509.8		$	531.2		Accounts payable and accrued liabilities	$	451.1	$	526.9
Participations and residuals	418.0			408.5			Participations and residuals	453.0		441.9
Film obligations and production loans	286.8			512.6			Film obligations and production loans	309.6		353.7
Debt - short term portion	65.0			53.6			Debt - short term portion	77.3		68.6
Deferred revenue	141.4			146.5			Deferred revenue	123.2		116.6
Total current liabilities	1,421.0			1,652.4			Total current liabilities	1,414.2		1,507.7
Debt	2,710.8			2,850.8			Debt	2,580.6		2,664.4
Participations and residuals	406.6			479.8			Participations and residuals	325.6		421.6
Film obligations and production loans	110.4			143.1			Film obligations and production loans	95.6		96.9
Other liabilities	266.6			114.0			Other liabilities	343.8		334.9
Deferred revenue	60.4			62.8			Deferred revenue	53.5		61.3
Deferred tax liabilities	37.5			56.5			Deferred tax liabilities	36.6		36.6
Redeemable noncontrolling interest	150.1			127.6
Commitments and contingencies (Note 16)
Redeemable noncontrolling interests							Redeemable noncontrolling interests	182.3		167.8
Commitments and contingencies (Note 15)							Commitments and contingencies (Note 15)
EQUITY							EQUITY
Class A voting common shares, no par value, 500.0 shares authorized, 83.7 shares issued (March 31, 2019 - 82.5 shares issued)	661.9			649.7
Class B non-voting common shares, no par value, 500.0 shares authorized, 136.3 shares issued (March 31, 2019 - 133.5 shares issued)	2,211.2			2,140.6
Retained earnings	44.5			208.7
Class A voting common shares, no par value, 500.0 shares authorized, 82.9 shares issued (March 31, 2020 - 83.0 shares issued)							Class A voting common shares, no par value, 500.0 shares authorized, 82.9 shares issued (March 31, 2020 - 83.0 shares issued)	660.8		659.2
Class B non-voting common shares, no par value, 500.0 shares authorized, 137.6 shares issued (March 31, 2020 - 136.4 shares issued)							Class B non-voting common shares, no par value, 500.0 shares authorized, 137.6 shares issued (March 31, 2020 - 136.4 shares issued)	2,254.4		2,221.7
Retained earnings (accumulated deficit)							Retained earnings (accumulated deficit)	2.4		(16.9)
Accumulated other comprehensive loss	(123.5		)	(80.3		)	Accumulated other comprehensive loss	(205.5)		(206.0)
Total Lions Gate Entertainment Corp. shareholders' equity	2,794.1			2,918.7			Total Lions Gate Entertainment Corp. shareholders' equity	2,712.1		2,658.0
Noncontrolling interests	2.2			3.2			Noncontrolling interests	2.2		2.0
Total equity	2,796.3			2,921.9			Total equity	2,714.3		2,660.0
Total liabilities and equity	$	7,959.7		$	8,408.9		Total liabilities and equity	$	7,746.5	$	7,951.2

See accompanying notes.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
	December 31,						December 31,							September 30,				September 30,
	2019			2018			2019			2018				2020		2019		2020		2019
	(Amounts in millions, except per share amounts)													(Amounts in millions, except per share amounts)
Revenues	$	998.5		$	933.2		$	2,945.7		$	2,766.9		Revenues	$	745.0	$	983.5	$	1,558.7	$	1,947.1
Expenses													Expenses
Direct operating	594.6			502.0			1,662.0			1,495.2			Direct operating	366.8		499.4		789.8		1,067.4
Distribution and marketing	279.1			176.9			791.7			608.3			Distribution and marketing	166.7		262.1		308.5		512.6
General and administration	108.7			110.0			317.3			335.2			General and administration	118.8		105.9		227.8		208.5
Depreciation and amortization	51.9			41.0			143.0			122.1			Depreciation and amortization	49.6		50.9		97.1		91.2
Restructuring and other	3.7			16.5			16.8			42.1			Restructuring and other	13.4		7.6		16.4		13.1
Total expenses	1,038.0			846.4			2,930.8			2,602.9			Total expenses	715.3		925.9		1,439.6		1,892.8
Operating income (loss)	(39.5		)	86.8			14.9			164.0
Operating income													Operating income	29.7		57.6		119.1		54.3
Interest expense													Interest expense	(45.7)		(48.0)		(90.2)		(97.0)
Interest expense	(48.7		)	(42.7		)	(145.7		)	(116.9		)
Interest on dissenting shareholders' liability	—			(2.6		)	—			(35.3		)
Total interest expense	(48.7		)	(45.3		)	(145.7		)	(152.2		)
Shareholder litigation settlements	—			—			—			(114.1		)
Interest and other income	2.0			2.9			7.0			9.0			Interest and other income	0.1		2.2		1.8		5.0
Other expense	(3.6		)	(1.8		)	(9.7		)	(1.8		)	Other expense	(0.7)		(3.8)		(2.3)		(6.1)
Loss on extinguishment of debt	(1.4		)	—			(1.4		)	—
Loss on investments	—			(6.2		)	(0.3		)	(43.2		)

Gain (loss) on investments													Gain (loss) on investments	(4.7)		(0.4)		0.4		(0.3)
Equity interests loss	(4.6		)	(11.0		)	(15.7		)	(28.8		)	Equity interests loss	(1.9)		(3.2)		(4.5)		(11.1)
Income (loss) before income taxes	(95.8		)	25.4			(150.9		)	(167.1		)	Income (loss) before income taxes	(23.2)		4.4		24.3		(55.2)
Income tax benefit (provision)	(2.0		)	(5.3		)	(6.5		)	26.6			Income tax benefit (provision)	1.5		(5.6)		0.2		(4.5)
Net income (loss)	(97.8		)	20.1			(157.4		)	(140.5		)	Net income (loss)	(21.7)		(1.2)		24.5		(59.7)
Less: Net loss attributable to noncontrolling interests	6.6			2.8			14.0			11.5			Less: Net loss attributable to noncontrolling interests	3.3		3.0		8.2		7.5
Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	(91.2	)	$	22.9		$	(143.4	)	$	(129.0	)	Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	(18.4)	$	1.8	$	32.7	$	(52.2)

Per share information attributable to Lions Gate Entertainment Corp. shareholders:													Per share information attributable to Lions Gate Entertainment Corp. shareholders:
Basic net income (loss) per common share	$	(0.42	)	$	0.11		$	(0.66	)	$	(0.61	)	Basic net income (loss) per common share	$	(0.08)	$	0.01	$	0.15	$	(0.24)
Diluted net income (loss) per common share	$	(0.42	)	$	0.10		$	(0.66	)	$	(0.61	)	Diluted net income (loss) per common share	$	(0.08)	$	0.01	$	0.15	$	(0.24)

Weighted average number of common shares outstanding:													Weighted average number of common shares outstanding:
Basic	218.0			214.2			217.2			213.2			Basic	220.4		217.5		220.0		216.8
Diluted	218.0			220.8			217.2			213.2			Diluted	220.4		219.8		220.6		216.8

Dividends declared per common share	$	—		$	—		$	—		$	0.18

See accompanying notes.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~INCOME (LOSS)


	Three Months Ended						Nine Months Ended							Three Months Ended				Six Months Ended
	December 31,						December 31,							September 30,				September 30,
	2019			2018			2019			2018				2020		2019		2020		2019
	(Amounts in millions)													(Amounts in millions)
Net income (loss)	$	(97.8	)	$	20.1		$	(157.4	)	$	(140.5	)	Net income (loss)	$	(21.7)	$	(1.2)	$	24.5	$	(59.7)
Foreign currency translation adjustments, net of tax	(0.9		)	0.7			0.5			(7.2		)	Foreign currency translation adjustments, net of tax	0.5		0.5		0.8		1.4
Net unrealized gain (loss) on cash flow hedges, net of tax	23.1			(29.5		)	(43.7		)	(24.9		)	Net unrealized gain (loss) on cash flow hedges, net of tax	6.7		(20.8)		(0.3)		(66.7)
Comprehensive loss	(75.6		)	(8.7		)	(200.6		)	(172.6		)
Comprehensive income (loss)													Comprehensive income (loss)	(14.5)		(21.5)		25.0		(125.0)
Less: Comprehensive loss attributable to noncontrolling interests	6.6			2.8			14.0			11.5			Less: Comprehensive loss attributable to noncontrolling interests	3.3		3.0		8.2		7.5
Comprehensive loss attributable to Lions Gate Entertainment Corp. shareholders	$	(69.0	)	$	(5.9	)	$	(186.6	)	$	(161.1	)
Comprehensive income (loss) attributable to Lions Gate Entertainment Corp. shareholders													Comprehensive income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	(11.2)	$	(18.5)	$	33.2	$	(117.5)

See accompanying notes.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY


																												Three Months Ended
	Three Months Ended																											Class A Voting						Class B Non-Voting			Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Loss			Lions Gate Entertainment Corp. Shareholders' Equity			Noncontrolling Interests (a)			Total Equity
	Class A Voting Common Shares			Class B Non-Voting Common Shares			Retained Earnings				Accumulated Other Comprehensive Loss				Lions Gate Entertainment Corp. Shareholders' Equity				Noncontrolling Interests (a)				Total Equity					Common Shares						Common Shares
	Number	Amount		Number	Amount													Number								Amount				Number			Amount
	(Amounts in millions)																											(Amounts in millions)
Balance at September 30, 2019	82.7	$	652.3	135.2	$	2,189.0				$	143.7			$		(145.6	)				$	2,839.4					$	2.9	$	2,842.3
Balance at June 30, 2020																										Balance at June 30, 2020		82.9			$	659.3		136.9	$	2,232.4			$	28.3				$	(212.6)		$	2,707.4		$	2.1		$	2,709.5

Share-based compensation, net																										Share-based compensation, net		0			1.5			0.7	22.0				—				—			23.5			—			23.5

Net income (loss)																										Net income (loss)		—			—			—	—		(18.4)				—			(18.4)			0.1			(18.3)
Other comprehensive income																										Other comprehensive income		—			—			—	—		0				7.1			7.1			—			7.1
Redeemable noncontrolling interests adjustments to redemption value																										Redeemable noncontrolling interests adjustments to redemption value		—			—			—	—		(7.5)				—			(7.5)			—			(7.5)
Balance at September 30, 2020																										Balance at September 30, 2020		82.9			$	660.8		137.6	$	2,254.4	$	2.4			$	(205.5)		$	2,712.1		$	2.2		$	2,714.3

Balance at June 30, 2019																										Balance at June 30, 2019		82.6			$	651.2		135.0	$	2,176.9	$	149.2			$	(125.3)		$	2,852.0		$	3.0		$	2,855.0

Share-based compensation, net	0.1	1.2		0.3	13.7		—				—				14.9				—				14.9			Share-based compensation, net		0.1			1.0			0.2	12.0		—				—			13.0			—			13.0
Issuance of common shares	0.9	8.4		0.8	8.5		—				—				16.9				—				16.9			Issuance of common shares		0			0.1			0	0.1		—				—			0.2			—			0.2
Noncontrolling interests	—	—		—	—		—				—				—				(0.9		)		(0.9		)	Noncontrolling interests		—			—			—	—		—				—			—			0.1			0.1
Net income (loss)	—	—		—	—		(91.2		)		—				(91.2		)		0.2				(91.0		)
Other comprehensive loss	—	—		—	—		—				22.1				22.1				—				22.1
Redeemable noncontrolling interests adjustments to redemption value	—	—		—	—		(8.0		)		—				(8.0		)		—				(8.0		)
Balance at December 31, 2019	83.7	$	661.9	136.3	$	2,211.2	$	44.5			$	(123.5	)		$	2,794.1			$	2.2			$	2,796.3

Balance at September 30, 2018	82.0	$	638.3	132.1	$	2,095.0	$	332.3			$	(15.6	)		$	3,050.0			$	2.2			$	3,052.2
Exercise of stock options	—	0.2		0.1	0.2		—				—				0.4				—				0.4
Share-based compensation, net	0.1	1.0		0.1	10.5		—				—				11.5				—				11.5
Issuance of common shares	0.4	8.4		0.6	11.8		—				—				20.2				—				20.2
Noncontrolling interests	—	—		—	—		—				—				—				(0.3		)		(0.3		)
Dividends declared	—	—		—	—		0.2				—				0.2				—				0.2
Net income	—	—		—	—		22.9				—				22.9				1.4				24.3			Net income		—			—			—	—		1.8				—			1.8			(0.2)			1.6
Other comprehensive loss	—	—		—	—		—				(28.8		)		(28.8		)		—				(28.8		)	Other comprehensive loss		—			—			—	—		0				(20.3)			(20.3)			—			(20.3)
Redeemable noncontrolling interests adjustments to redemption value	—	—		—	—		(9.4		)		—				(9.4		)		—				(9.4		)	Redeemable noncontrolling interests adjustments to redemption value		—			—			—	—		(7.3)				—			(7.3)			—			(7.3)
Balance at December 31, 2018	82.5	$	647.9	132.9	$	2,117.5	$	346.0			$	(44.4	)		$	3,067.0			$	3.3			$	3,070.3
Balance at September 30, 2019																										Balance at September 30, 2019		82.7			$	652.3		135.2	$	2,189.0	$	143.7			$	(145.6)		$	2,839.4		$	2.9		$	2,842.3

_____________________


~~(a)~~	~~Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 9).~~

(a)Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 8).

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY


																												Six Months Ended
	Nine Months Ended																											Class A Voting							Class B Non-Voting						Retained Earnings (Accumulated Deficit)					Accumulated Other Comprehensive Loss				Lions Gate Entertainment Corp. Shareholders' Equity				Noncontrolling Interests (a)				Total Equity
	Class A Voting Common Shares			Class B Non-Voting Common Shares			Retained Earnings				Accumulated Other Comprehensive Loss				Lions Gate Entertainment Corp. Shareholders' Equity				Noncontrolling Interests (a)				Total Equity					Common Shares							Common Shares
	Number	Amount		Number	Amount													Number								Amount				Number				Amount
	(Amounts in millions)																											(Amounts in millions)
Balance at March 31, 2020																										Balance at March 31, 2020		83.0			$	659.2			136.4			$	2,221.7					$	(16.9)					$	(206.0)			$	2,658.0			$	2.0			$	2,660.0

Share-based compensation, net																										Share-based compensation, net		0.1			2.5				1.2			32.6						—					—				35.1				—				35.1
Issuance of common shares																										Issuance of common shares		0			0.1				0			0.1			—					—				0.2				—				0.2
Repurchase of common shares																										Repurchase of common shares		(0.2)			(1.0)				0			0			—					—				(1.0)				—				(1.0)
Noncontrolling interests																										Noncontrolling interests		—			—				—			—			—					—				—				0.1				0.1
Net income																										Net income		—			—				—			—			32.7					—				32.7				0.1				32.8
Other comprehensive income																										Other comprehensive income		—			—				—			—			0					0.5				0.5				—				0.5
Redeemable noncontrolling interests adjustments to redemption value																										Redeemable noncontrolling interests adjustments to redemption value		—			—				—			—			(13.4)					—				(13.4)				—				(13.4)
Balance at September 30, 2020																										Balance at September 30, 2020		82.9			$	660.8			137.6			$	2,254.4		$	2.4				$	(205.5)			$	2,712.1			$	2.2			$	2,714.3

Balance at March 31, 2019	82.5	$	649.7	133.5	$	2,140.6				$	208.7			$		(80.3	)				$	2,918.7					$	3.2	$	2,921.9	Balance at March 31, 2019		82.5			$	649.7			133.5			$	2,140.6				$	208.7			$	(80.3)			$	2,918.7			$	3.2			$	2,921.9

Exercise of stock options	—	—		0.1	0.5		—				—				0.5				—				0.5			Exercise of stock options		0			0				0.1			0.5			—					—				0.5				—				0.5
Share-based compensation, net	0.3	3.7		0.6	33.4		—				—				37.1				—				37.1			Share-based compensation, net		0.2			2.5				0.3			19.7			—					—				22.2				—				22.2
Issuance of common shares related to acquisitions and other	0.9	8.5		2.1	36.7		—				—				45.2				—				45.2
Issuance of common shares																										Issuance of common shares		0			0.1				1.3			28.2			—					—				28.3				—				28.3
Noncontrolling interests	—	—		—	—		—				—				—				(1.1		)		(1.1		)	Noncontrolling interests					—							—			—					—				—				(0.2)				(0.2)
Net income (loss)	—	—		—	—		(143.4		)		—				(143.4		)		0.1				(143.3		)
Net loss																										Net loss		—			—				—			—			(52.2)					—				(52.2)				(0.1)				(52.3)
Other comprehensive loss	—	—		—	—		—				(43.2		)		(43.2		)		—				(43.2		)	Other comprehensive loss		—			—				—			—			0					(65.3)				(65.3)				—				(65.3)
Redeemable noncontrolling interests adjustments to redemption value	—	—		—	—		(20.8		)		—				(20.8		)		—				(20.8		)	Redeemable noncontrolling interests adjustments to redemption value		—			—				—			—			(12.8)					—				(12.8)				—				(12.8)
Balance at December 31, 2019	83.7	$	661.9	136.3	$	2,211.2	$	44.5			$	(123.5	)		$	2,794.1			$	2.2			$	2,796.3

Balance at March 31, 2018	81.8	$	628.7	129.3	$	2,020.3	$	516.6			$	(9.7	)		$	3,155.9			$	1.0			$	3,156.9
Cumulative effect of accounting changes	—	—		—	—		21.3				(2.6		)		18.7				—				18.7
Exercise of stock options	—	0.6		0.2	2.1		—				—				2.7				—				2.7
Share-based compensation, net	0.3	10.1		0.3	27.6		—				—				37.7				—				37.7
Issuance of common shares related to acquisitions and other	0.4	8.5		3.1	67.5		—				—				76.0				—				76.0
Noncontrolling interests		—			—		—				—				—				2.2				2.2
Dividends declared	—	—		—	—		(38.5		)		—				(38.5		)		—				(38.5		)
Net income (loss)	—	—		—	—		(129.0		)		—				(129.0		)		0.1				(128.9		)
Other comprehensive loss	—	—		—	—		—				(32.1		)		(32.1		)		—				(32.1		)
Redeemable noncontrolling interests adjustments to redemption value	—	—		—	—		(24.4		)		—				(24.4		)		—				(24.4		)
Balance at December 31, 2018	82.5	$	647.9	132.9	$	2,117.5	$	346.0			$	(44.4	)		$	3,067.0			$	3.3			$	3,070.3
Balance at September 30, 2019																										Balance at September 30, 2019		82.7			$	652.3			135.2			$	2,189.0		$	143.7				$	(145.6)			$	2,839.4			$	2.9			$	2,842.3

_____________________


~~(a)~~	~~Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 9).~~

(a)Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 8).

See accompanying notes.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	September 30,
	2020		2019
	(Amounts in millions)
Operating Activities:
Net income (loss)	$	24.5	$	(59.7)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	97.1		91.2
Amortization of films and television programs and program rights	531.4		855.2
Amortization of debt financing costs and other non-cash interest	18.5		7.5
Non-cash share-based compensation	40.1		24.1
Other amortization	32.2		21.8



Equity interests loss	4.5		11.1
Loss (gain) on investments	(0.4)		0.3
Deferred income taxes	0		0.6
Changes in operating assets and liabilities:

Accounts receivable, net and other assets	150.6		123.7
Investment in films and television programs and program rights, net	(467.1)		(765.1)

Accounts payable and accrued liabilities	(94.9)		(22.4)
Participations and residuals	(85.1)		(45.8)
Film obligations	(46.7)		0.6

Deferred revenue	(1.2)		(24.6)
Net Cash Flows Provided By Operating Activities	203.5		218.5
Investing Activities:
Proceeds from the sale of other investments	5.1		0
Investment in equity method investees and other	(0.2)		(4.9)



Capital expenditures	(17.1)		(16.9)
Net Cash Flows Used In Investing Activities	(12.2)		(21.8)
Financing Activities:
Debt - borrowings	75.0		302.0
Debt - repayments	(109.1)		(328.5)
Production loans - borrowings	47.8		51.8
Production loans - repayments	(44.1)		(168.2)
Interest rate swap settlement payments	(8.5)		0
Repurchase of common shares	(2.2)		0

Distributions to noncontrolling interest	(2.0)		(3.6)
Exercise of stock options	0		0.5
Tax withholding required on equity awards	(5.4)		(1.8)
Net Cash Flows Used In Financing Activities	(48.5)		(147.8)
Net Change In Cash and Cash Equivalents	142.8		48.9
Foreign Exchange Effects on Cash and Cash Equivalents	2.7		(0.6)
Cash and Cash Equivalents - Beginning Of Period	318.2		184.3
Cash and Cash Equivalents - End Of Period	$	463.7	$	232.6

Nine Months Ended
December 31,
2019 2018
(Amounts in millions)
Operating Activities:
Net loss $ (157.4 ) $ (140.5 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 143.0
122.1
Amortization of films and television programs and program rights 1,306.0
1,105.3
Interest on dissenting shareholders' liability —
(72.0 )
Amortization of debt financing costs 11.2
9.0
Non-cash share-based compensation 41.4
43.7
Other non-cash items 46.1
20.5
Distributions from equity method investee —
1.8
Loss on extinguishment of debt 1.4
—
Equity interests loss 15.7
28.8
Loss on investments 0.3
43.2
Deferred income taxes (benefit) 0.8
(36.3 )
Changes in operating assets and liabilities:
Accounts receivable, net and other assets 271.0
308.5
Investment in films and television programs and program rights, net (1,136.1 ) (1,073.5 )
Accounts payable and accrued liabilities (33.8 ) (66.8 )
Participations and residuals (63.8 ) (17.1 )
Film obligations (3.8 ) (10.3 )
Deferred revenue (7.6 ) (10.7 )
Net Cash Flows Provided By Operating Activities 434.4
255.7
Investing Activities:
Investment in equity method investees (14.8 ) (39.6 )
Business acquisitions, net of cash acquired of $5.5 (see Note 2) —
(77.3 )
Capital expenditures (24.0 ) (28.9 )
Net Cash Flows Used In Investing Activities (38.8 ) (145.8 )
Financing Activities:
Debt - borrowings 597.1
2,909.5
Debt - repayments (738.6 ) (2,468.8 )
Production loans - borrowings 54.0
246.9
Production loans - repayments (290.9 ) (208.2 )
Payment of dissenter liability accrued at acquisition —
(797.3 )
Dividends paid —
(57.4 )
Distributions to noncontrolling interest (4.5 ) (2.3 )
Exercise of stock options 0.5
4.2
Tax withholding required on equity awards (3.1 ) (6.9 )
Net Cash Flows Used In Financing Activities (385.5 ) (380.3 )
Net Change In Cash and Cash Equivalents 10.1
(270.4 )
Foreign Exchange Effects on Cash and Cash Equivalents 1.1
(1.5 )
Cash and Cash Equivalents - Beginning Of Period 184.3
378.1
Cash and Cash Equivalents - End Of Period $ 195.5
$ 106.2

See accompanying notes.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General

Nature of Operations

Combining the STARZ premium global subscription platform with world-class motion picture and television studio operations, Lions Gate Entertainment Corp. ~~(“Lionsgate,~~(the “Company,” ~~the “Company,~~“Lionsgate,” "Lions Gate," “we,” “us” or “our”) isbrings a ~~global content leader whose films, television series, digital products~~unique and ~~linear and over-the-top platforms reach next generation audiences~~varied portfolio of entertainment to consumers around the world. ~~In addition to our filmed entertainment leadership, Lionsgate content drives a growing presence in interactive~~Its film, television, subscription and location-based entertainment ~~video games, esports and other new entertainment technologies. Lionsgate's content initiatives~~businesses are backed by a ~~nearly~~ 17,000-title library and the largest collection of film and television ~~library~~franchises in the independent media space. A digital age company driven by its entrepreneurial culture and ~~delivered through a global sales and licensing infrastructure.~~commitment to innovation, the Lionsgate brand is synonymous with bold, original, relatable entertainment for the audiences it serves worldwide.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Lionsgate and all of its majority-owned and controlled subsidiaries.

The unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to quarterly report on Form 10-Q under the Securities Exchange Act of 1934, as amended, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these unaudited condensed consolidated financial statements. Operating results for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, ~~2020.~~2021. The balance sheet at March 31, ~~2019~~2020 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, ~~2019~~.2020.

Certain amounts presented in prior periods have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, including the potential impacts arising from the COVID-19 global pandemic, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs used for the amortization of investment in films and television programs; estimates of sales returns and other allowances and provisions for doubtful accounts; estimates related to the revenue recognition of sales or usage-based royalties; fair value of equity-based compensation; fair value of assets and liabilities for allocation of the purchase price of companies acquired; income taxes including the assessment of valuation allowances for deferred tax assets; accruals for contingent liabilities; and impairment assessments for investment in films and television programs, property and equipment, equity investments, goodwill and intangible assets. Actual results could differ from such estimates.

~~Change in Estimate~~

The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each reporting period for indicators of possible impairments or a change in the useful life or method of amortization of our finite-lived intangible assets. At December 31, 2019, the Company had $1.5 billion of finite live intangible assets related to customer relationships associated with U.S. MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"). Due to changes in the industry related to the migration from linear to OTT and direct-to-consumer consumption, in the quarter ended September 30, 2019, the Company changed its pattern of amortization of its Traditional Affiliate customer relationship intangible assets from the straight line method over 17 years to an accelerated amortization method which reflects amortization in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset. This change in amortization method resulted in an increase to amortization expense of $12.2 million and $23.5 million during the three and nine months ended December 31, 2019, respectively, with a corresponding reduction of income before income taxes, net income, and net income attributable to Lions Gate Entertainment Corp. shareholders. This change in amortization method decreased basic and diluted net income per share for the three months ended December 31, 2019 by $0.06 per share and $0.06 per share, respectively, and decreased basic and

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

diluted net income per share for the nine months ended December 31, 2019 by $0.11 per share and $0.11 per share, respectively. There was no tax benefit from the change due to changes in the Company’s valuation allowance on deferred taxes.

Recent Accounting Pronouncements

Accounting Guidance Adopted in Fiscal ~~2020~~

~~Accounting for Leases~~: In February 2016, the Financial Accounting Standards Board ("FASB") issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The new guidance also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. The Company adopted the new standard on April 1, 2019 utilizing the modified retrospective approach, and therefore, results for reporting periods beginning after April 1, 2019 are presented under the new guidance, while prior periods have not been adjusted. Additionally, the Company elected to apply practical expedients allowing it to not reassess (1) whether any expired or existing contracts previously assessed as not containing leases are, or contain, leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing leases. The Company also elected the practical expedient to not separate lease components from non-lease components for equipment. Instead, for this lease class, each separate lease component and non-lease component is accounted for as a single lease component.

Upon adoption of the new guidance, the Company recognized lease liabilities on the Company's consolidated balance sheet for its operating leases of approximately $187.2 million, with a corresponding right-of-use assets balance of $157.4 million, net of existing lease incentives of $29.8 million which were previously classified in accounts payable and accrued liabilities and other liabilities. The adoption had no material impact on the Company's consolidated statement of operations. See Note 6 for further information regarding the impact of the adoption of the new guidance on accounting for leases on the Company's financial statements.

~~Accounting Guidance Not Yet Adopted~~

2021

Fair Value Measurement - Changes to Disclosure Requirements: In August 2018, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. This guidance eliminates the requirement that entities disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but requires public companies to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements, among other changes. ~~This~~The Company adopted this guidance ~~is effective for the Company's fiscal year beginning~~on April 1, 2020, with ~~early adoption permitted. The Company does not expect that the adoption of this guidance will have a~~no material ~~effect on~~impact to its consolidated financial statements.

Improvements to Accounting for Costs of Films and License Agreements for Program Materials: ~~In March 2019,~~On April 1, 2020, the Company adopted, on a prospective basis, FASB ~~issued~~ guidance ~~that~~on the accounting for costs of films and episodic television series

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

which aligns the accounting for capitalizing production costs of an episodic television series with guidance for films. The following reflects some of the ~~accounting~~more significant changes under the new guidance:

•Classification in balance sheet: Allows for ~~production costs~~the classification of ~~films by removing~~licensed program rights as long-term assets. Previously, the ~~content distinction~~Company reported a portion of these rights in current assets. After adoption, the Company now classifies licensed program rights as long-term assets. Accordingly, as of April 1, 2020, the Company has classified $310.5 million of these rights as non-current assets in the balance sheet.

•Removes capitalization constraint for ~~capitalization. Accordingly, the~~episodic television: The capitalization of production costs for episodic television series is no longer constrained until persuasive evidence of secondary market revenues exists. ~~In addition, under~~Previously, theatrical content production costs could be fully capitalized while episodic television production costs were generally limited to the ~~new guidance,~~amount of contracted revenues.

•Monetization strategy: Requires the determination of a ~~company will need~~titles' monetization strategy for purposes of amortization and testing impairment as follows:

◦Monetized individually - lifetime value is predominantly derived from third-party revenues that are directly attributable to ~~determine at~~ the ~~outset of production whether a~~specific film or television ~~program is primarily monetized on its own~~title (e.g., theatrical revenues or ~~within~~sales to third-party television programmers).

◦Monetized as a film ~~group.~~group - lifetime value is predominantly derived from third-party revenues that are attributable only to a bundle of titles, which is referred to as a "film group" in the updated guidance. A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements. ~~In addition, under previous~~

The determination of the monetization strategy is made at commencement of production on a consolidated basis. Because the new accounting guidance ~~film and television programs accounted~~is applied prospectively, the predominant monetization strategy for ~~under~~content released prior to the ~~broadcasting accounting standard were carried~~beginning of fiscal 2021 is determined based on the ~~balance sheet at~~expected means of monetization over the ~~lower~~remaining life of ~~cost~~the content. The classification of content as individually monetized or ~~net realizable value.~~ monetized as part of a film group only changes if there is a significant change to the title's monetization strategy relative to its initial assessment.

For these accounting purposes, the Company generally classifies content that is initially intended for use on the Company's Media Networks services (including its linear television networks, OTT services and direct-to-consumer services) as content monetized as a film group. Content initially intended for theatrical release, home entertainment distribution, or for license to third parties, is generally classified as content monetized individually.

•Impairment testing: The new guidance requires that an entity test a film or television program for impairment, when impairment indicators are present, at a film group level when the film or license agreement is predominantly monetized with other films and/or license ~~agreements. The~~agreements or individually for titles monetized individually. An impairment ~~would be measured as~~results when the ~~difference between the carrying~~fair value of the film or film group is less than its carrying value. Under previous guidance, film and ~~its fair~~television programs accounted for under the broadcasting accounting standard (i.e., licensed product in the Company's Media Networks segment) were carried on the balance sheet at the lower of cost or net realizable value rather than ~~its net realizable~~fair value. This guidance requires that an entity provide new disclosures about content that is either produced or licensed, and classify cash flows for licensed content as cash flows from operating activities in the statement of cash flows. This guidance is effective for the Company's fiscal year beginning April 1, 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.

See Note 2 for further information.

Financial Instruments - Credit Losses: In June 2016, the FASB issued guidance, as amended, that changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, from the incurred loss methodology under current U.S. GAAP to a new, forward-looking current expected credit loss model that would generally result in the earlier recognition of credit losses. ~~This~~The Company adopted this guidance ~~is effective for the Company’s fiscal year beginning~~on April 1, 2020 ~~with early adoption permitted. Adoption of the standard will be applied~~ using a modified

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

retrospective approach, ~~through a cumulative-effect adjustment~~with no material impact to ~~retained earnings as of the effective date to align our credit loss methodology with the new standard. The Company is currently evaluating the impact of this standard on~~ its consolidated financial ~~statements, including accounting policies, processes, and systems.~~statements.

Accounting Guidance Not Yet Adopted

Simplifying the Accounting for Income Taxes: In December 2019, the FASB issued guidance that simplifies the accounting for income taxes. The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. It also reduces complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. The guidance is effective for the Company's fiscal year beginning April 1, 2021, with early adoption ~~permitted. The Company is currently evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.~~

~~2. Acquisitions~~

~~3 Arts Entertainment~~

On May 29, 2018, the Company purchased a 51% membership interest in 3 Arts Entertainment LLC, a talent management and television/film production company. The purchase price was approximately $166.6 million, of which 50% was paid in cash at closing, 32.5% was paid in the Company's Class B non-voting common shares at closing, and 17.5% was paid in the Company's Class B non-voting common shares on the one-year anniversary of closing. The number of shares issued was determined by dividing the dollar value of the portion of the purchase price to be paid by the daily weighted average closing price of the Company's Class B non-voting common shares on the New York Stock Exchange for the twenty (20) consecutive trading days immediately preceding the closing date. A portion of the purchase price, up to $38.3 million, may be recoupable for a five-year period commencing on the acquisition date of May 29, 2018, contingent upon the continued employment of certain employees, or the achievement of certain EBITDA targets, as defined in the 3 Arts Entertainment acquisition and related agreements. Accordingly, $38.3 million was initially recorded as a deferred compensation arrangement within other current and non-current assets and is being amortized in general and administrative expenses over a five-year period.

The acquisition was accounted for as a purchase, with the results of operations of 3 Arts Entertainment included in the Company's consolidated results from May 29, 2018. Based on the purchase price allocation, $92.7 million was allocated to goodwill, $47.0 million was allocated to the fair value of finite-lived intangible assets and $38.3 million was allocated to deferred compensation arrangements, as discussed above. The remainder of the purchase price was primarily allocated to cash and cash equivalents, accounts receivable, other assets, and accounts payable and accrued liabilities, and $15.8 million was recorded as a redeemable noncontrolling interest, representing the noncontrolling interest holders' 49% equity interest in 3 Arts Entertainment (see Note 9). The acquired finite-lived intangible assets primarily represent customer relationships and are being amortized over a weighted average estimated useful life of 12 years.

The Company used discounted cash flows ("DCF") analyses, which represent Level 3 fair value measurements, to assess certain components of its purchase price allocation, including acquired intangible assets and the redeemable noncontrolling interest. The acquisition goodwill arises from the opportunity for synergies of the combined companies to grow and strengthen the Company's television operations by expanding the Company's talent relationships, and improving the Company's television production capabilities. The goodwill recorded as part of this acquisition is included in the Television Production segment. The goodwill is not amortized for financial reporting purposes, but is deductible for federal tax purposes.

1211

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

permitted. The Company does not expect that the adoption of this guidance will have a material effect on its consolidated financial statements.

2. Investment in Films and Television Programs and Licensed Program Rights

Investment in Films and Television Programs

December 31,
2019 March 31,
2019
(Amounts in millions)
Motion Picture Segment - Theatrical and Non-Theatrical Films
Released, net of accumulated amortization $ 375.5
$ 376.7
Acquired libraries, net of accumulated amortization 0.9
1.8
Completed and not released 7.4
80.6
In progress 136.5
250.4
In development 55.1
45.0
575.4
754.5
Television Production Segment - Direct-to-Television Programs
Released, net of accumulated amortization 172.2
186.1
In progress 326.7
295.6
In development 16.5
17.6
515.4
499.3
Media Networks Segment
Released program rights, net of accumulated amortization 616.0
591.0
In progress 73.0
106.8
In development 37.4
56.2
726.4
754.0

Intersegment eliminations (37.5 ) (40.1 )

Investment in films and television programs and program rights, net 1,779.7
1,967.7
Less current portion of program rights (243.4 ) (295.7 )
Non-current portion $ 1,536.3
$ 1,672.0

General. Investment in films and television programs includes the unamortized costs of films and television programs, a portion of which are monetized individually (i.e., through domestic theatrical, home entertainment, television, international or other ancillary-market distribution), and a portion of which are monetized as part of a film group (i.e., primarily content internally produced by our Television Production segment for our Media Networks segment).

~~During the three~~Recording Cost. Costs of acquiring and ~~nine months ended December 31, 2019~~producing films and ~~2018,~~television programs and of acquired libraries are capitalized when incurred. For films and television programs produced by the Company, ~~performed fair value measurements related~~capitalized costs include all direct production and financing costs, capitalized interest and production overhead. For acquired films and television programs, capitalized costs consist of minimum guarantee payments to acquire the distribution rights.

Amortization. Costs of acquiring and producing films ~~having indicators~~and television programs and of ~~impairment. In determining~~acquired libraries that are monetized individually are amortized using the individual-film-forecast method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films or television programs.

For investment in films and television programs monetized as a group, see further discussion below under Licensed Program Rights, Amortization for a description of amortization of costs monetized as a group.

Ultimate Revenue. Ultimate revenue includes estimates over a period not to exceed 10 years following the date of initial release of the motion picture. For an episodic television series, the period over which ultimate revenues are estimated cannot exceed 10 years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition.

Development. Films and television programs in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and, upon commencement of production, are transferred to production costs. Projects in development are written off at the earlier of the date they are determined not to be recoverable or when abandoned, or three years from the date of the initial investment unless the fair value of the project exceeds its carrying cost.

Licensed Program Rights

General. Licensed program rights include content licensed from third parties that is monetized as part of a film group for distribution on Media Networks distribution platforms. Licensed content is comprised of films or series that have been previously produced by third parties and the Company ~~employs~~retains specified airing rights over a ~~DCF methodology that includes cash flow estimates~~contractual term. Program licenses typically have fixed terms and require payments during the term of ~~a film’s ultimate revenue~~the license.

Recording Cost. The cost of licensed content is capitalized when the cost is known or reasonably determinable, the license period for programs has commenced, the program materials have been accepted by the Company in accordance with the license agreements, and ~~costs as well as a discount rate. The discount rate utilized~~the programs are available for the first showing. Licensed programming rights may include rights to more than one exploitation window under the Company's output and library agreements. For films with multiple windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of each window which generally results in the ~~DCF analysis~~majority of the cost allocated to the first window on newer releases. Certain license agreements may include additional ancillary rights in addition to the pay television rights. The cost of the Media Networks’ third-party licensed content is allocated between the pay television market distributed by the Media Networks’ segment and the ancillary revenue markets (e.g., home video, digital platforms, international television, etc.) based on the ~~Company’s weighted average cost~~estimated relative fair values of ~~capital plus a risk premium representing the risk associated with producing a particular film. As the primary determination~~these markets. Our estimates of fair value for the pay television and ancillary markets and windows of exploitation involve uncertainty and management judgment.

Amortization. The cost of program rights for films and television programs (including original series) exhibited by the Media Networks segment are generally amortized on an accelerated or straight-line basis based on the anticipated number of exhibitions or expected and historical viewership patterns or the license period on a title-by-title or episode-by-episode basis. The number of exhibitions is ~~determined using a DCF model,~~estimated based on the ~~resulting fair value is considered a Level 3 measurement (see Note 8). During~~number of exhibitions allowed in the ~~three~~agreement (if specified) and ~~nine months ended December 31, 2019,~~ the ~~Company recorded $37.2 million~~expected usage of the content. Participations and ~~$38.8 million, respectively,~~residuals are expensed in line with the amortization of ~~fair value film write-downs (2018 - $10.5 million and $17.4 million, respectively).~~

production costs.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in management’s estimate of the anticipated exhibitions and viewership patterns of films and original series on our networks could result in the earlier recognition of our programming costs than anticipated. Conversely, scheduled exhibitions and expected viewership patterns may not capture the appropriate usage of the program rights in current periods which would lead to the write-off of additional program rights in future periods and may have a significant impact on our future results of operations and our financial position.

4.Impairment Assessment for Investment in Films and Television Programs and Licensed Program Rights

General. A film group or individual film or television program is evaluated for impairment when an event or change in circumstances indicates that the fair value of an individual film or film group is less than its unamortized cost. A film group represents the unit of account for impairment testing for a film or license agreement for program material when the film or license agreement is expected to be predominantly monetized with other films and/or license agreements instead of being predominantly monetized on its own. A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements.

Content Monetized Individually. For content that is predominantly monetized individually (primarily investment in film and television programs related to the Motion Picture and Television Production segments), the unamortized costs of the individual film are compared to the estimated fair value of the individual film. The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. To the extent the unamortized costs exceed the fair value, an impairment charge is recorded for the excess.

Content Monetized as a Group. For content that is predominantly monetized as a group (primarily licensed program rights in the Media Networks segment and internally produced programming, as discussed above), the aggregate unamortized costs of the group are compared to the present value of the discounted cash flows of the group using the lowest level for which identifiable cash flows are independent of other produced and licensed content. The Company's film groups are generally aligned along the Company's networks and digital content offerings domestically (i.e., Starz Networks and Other Streaming Services) and by territory or groups of territories internationally, wherein content assets are shared across the various territories and therefore, the territory or group of territories is the film group. If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group.

Valuation Assumptions. The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 7). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program or film group. The fair value of any film costs associated with a film or television program that management plans to abandon is zero. 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.

Impairments. Investment in films and television programs and licensed program rights includes write-downs to fair value, which are included in direct operating expense on the unaudited condensed consolidated statements of operations, and represented the following amounts by segment for the three and six months ended September 30, 2020 and 2019:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Impairments by segment:
Motion Picture	$	0.3	$	0.1	$	0.9	$	1.6
Television Production	2.8		0.1		2.8		0.7

Impairments not included in segment operating results(1)	15.4		0		15.4		0

	$	18.5	$	0.2	$	19.1	$	2.3

________________________

(1)Impairments not included in segment operating results in the three and six months ended September 30, 2020 represent a charge due to changes in performance expectations resulting from circumstances associated with the COVID-19 global pandemic.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total investment in films and television programs and licensed program rights by predominant monetization strategy is as follows:


	September 30, 2020
	(Amounts in millions)
Investment in Films and Television Programs:
Individual Monetization
Released, net of accumulated amortization	$	395.9
Completed and not released	133.4
In progress	133.3
In development	91.0
	753.6
Film Group Monetization
Released, net of accumulated amortization	$	284.6
Completed and not released	0
In progress	191.4
In development	40.2
	516.2
Licensed program rights, net of accumulated amortization	$	493.4
Investment in films and television programs and program rights, net	$	1,763.2

Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows for the three and six months ended September 30, 2020, and was included in direct operating expense in the unaudited condensed consolidated statement of operations:


	Three Months Ended		Six Months Ended
	September 30,		September 30,
	2020			2020
	(Amounts in millions)
Amortization expense:
Individual monetization	$	106.3		$	228.8
Film group monetization	66.4			114.6
Licensed program rights	77.5			188.0
	$	250.2		$	531.4

Amortization of investment in film and television programs and licensed program rights for the three and six months ended September 30, 2019 was $418.6 million and $855.2 million, respectively.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below summarizes estimated future amortization expense for the Company's investment in film and television programs and licensed program rights as of September 30, 2020:


	Twelve Months Ended
	June 30,
	2021		2022		2023
	(Amounts in millions)
Estimated future amortization expense:
Released investment in films and television programs:
Individual monetization	$	144.3	$	80.3	$	70.7
Film group monetization	$	106.8	$	53.0	$	18.1
Licensed program rights	$	276.9	$	92.7	$	54.2

Completed and not released investment in films and television programs:
Individual monetization	$	103.3	n/a		n/a
Film group monetization	$	0	n/a		n/a

3. Investments

The Company's investments consisted of the following:


	September 30, 2020		March 31, 2020
	(Amounts in millions)
Investments in equity method investees	$	30.7	$	34.3
Other investments(1)	1.4		6.0
	$	32.1	$	40.3

December 31,
2019 March 31,
2019
(Amounts in millions)
Investments in equity method investees $ 30.5
$ 24.5
Other investments 1.3
1.7
$ 31.8
$ 26.2
________________

(1)Includes investments in equity securities without readily determinable fair values of NaN and $5.4 million at September 30, 2020 and March 31, 2020, respectively.

Equity Method Investments:

The Company has investments in various equity method investees with ownership percentages ranging from approximately ~~11%~~9% to 49%. These investments include:

STARZPLAY Arabia. STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online subscription video-on-demand service in the Middle East and North Africa.

Roadside Attractions. Roadside Attractions is an independent theatrical distribution company.

Pantelion Films. Pantelion Films is a joint venture with Videocine, an affiliate of Televisa, which produces, acquires and distributes a slate of English and Spanish language feature films that target Hispanic moviegoers in the U.S.

Atom Tickets. Atom Tickets is the first-of-its-kind theatrical mobile ticketing platform and app.

Great Point Opportunity Fund. Great Point Opportunity Fund is a partnership to make investments in an operating company that will operate a studio facility in Yonkers, New York.

Other. In addition to the equity method investments discussed above, the Company holds ownership interests in other immaterial equity method investees.

~~Summarized Financial Information.~~ ~~Summarized financial information for the Company's equity method investees owned at December 31, 2019 and March 31, 2019, respectively, is set forth below:~~

December 31,
2019 March 31,
2019
(Amounts in millions)
Current assets $ 155.6
$ 189.8
Non-current assets $ 132.9
$ 55.7
Current liabilities $ 168.0
$ 167.8
Non-current liabilities $ 117.5
$ 46.7
15

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Revenues $ 27.2
$ 31.5
$ 91.7
$ 85.0
Gross profit $ 11.6
$ 8.1
$ 38.4
$ 27.7
Net loss $ (21.2 ) $ (26.5 ) $ (37.7 ) $ (81.8 )

~~Pop.~~ Pop was the Company's joint venture with CBS. On March 15, 2019, the Company sold its 50.0% interest in Pop to CBS. Prior to the sale of its interest in Pop, the Company had accounted for such interest as an equity method investment.

~~Pop Financial Information:~~

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The following table presents the summarized statements of operations~~Summarized Financial Information. Summarized financial information for the ~~three and nine months ended December 31, 2018 for Pop and a reconciliation of the net loss reported by Pop to~~Company's equity ~~interest loss recorded by the Company:~~method investees on an aggregate basis is set forth below:


	September 30, 2020		March 31, 2020
	(Amounts in millions)
Current assets	$	146.6	$	138.3
Non-current assets	$	188.0	$	162.0
Current liabilities	$	180.6	$	167.3
Non-current liabilities	$	104.6	$	102.2

Three Months Ended Nine Months Ended
December 31, December 31,
2018 2018

Revenues $ 24.3
$ 75.8
Expenses:
Cost of services 17.9
43.4
Selling, marketing, and general and administration 11.6
35.1
Depreciation and amortization 1.9
5.9
Operating loss (7.1 ) (8.6 )
Interest expense, net 0.7
1.6
Accretion of redeemable preferred stock units⁽¹⁾
24.3
68.6
Total interest expense, net 25.0
70.2
Net loss $ (32.1 ) $ (78.8 )
Reconciliation of net loss reported by Pop to equity interest loss:
Net loss reported by Pop $ (32.1 ) $ (78.8 )
Ownership interest in Pop 50 % 50 %
The Company's share of net loss (16.1 ) (39.4 )
Accretion of dividend and interest income on redeemable preferred stock units⁽¹⁾
12.1
34.3
Elimination of the Company's share of profits on licensing sales to Pop —
(0.2 )
Realization of the Company’s share of profits on licensing sales to Pop 0.4
0.6
Total equity interest loss recorded $ (3.6 ) $ (4.7 )


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Revenues	$	22.3	$	47.0	$	46.8	$	77.2
Gross profit	$	7.1	$	16.2	$	13.8	$	24.3
Net loss	$	(16.1)	$	(8.6)	$	(33.8)	$	(31.0)

~~___________________~~

~~(1)~~

Accretion of mandatorily redeemable preferred stock units represents Pop's 10% dividend and the amortization of discount on its mandatorily redeemable preferred stock units previously held by the Company and the other interest holder. The Company recorded its share of this expense as income from the accretion of dividend and discount on mandatorily redeemable preferred stock units within equity interest loss.

~~Loss~~

Gain (Loss) on Investments:

The following table summarizes the components of the ~~loss~~gain (loss) on investments:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Unrealized gains (losses) on equity securities held as of September 30, 2020 and 2019, respectively	$	0.3	$	(0.4)	$	0.8	$	(0.3)
Impairments of other investments(1)	(5.0)		0		(5.0)		0
Gain on sale of other investments	0		0		4.6		0
	$	(4.7)	$	(0.4)	$	0.4	$	(0.3)

________________________

(1)Impairments of other investments represents impairments of equity securities without readily determinable fair values that were written down to their estimated fair value.

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Impairments of investments⁽¹⁾
$ —
$ (2.6 ) $ —
$ (36.8 )
Unrealized losses on equity securities held as of December 31, 2019 and 2018, respectively —
(3.6 ) (0.3 ) (6.4 )
$ —
$ (6.2 ) $ (0.3 ) $ (43.2 )

~~___________________~~

~~(1)~~

In the three and nine months ended December 31, 2018, amounts represent impairments of equity method investments, and the nine months ended December 31, 2018 also includes other-than-temporary impairments of $34.2 million on investments in equity securities without readily determinable fair values and notes receivable (previously included in other assets), which were written down to their estimated fair value.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.4. Debt

Total debt of the Company, excluding film obligations and production loans, was as follows as of ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019:~~2020:


	September 30, 2020		March 31, 2020
	(Amounts in millions)
Corporate debt:
Revolving Credit Facility	$	0	$	0
Term Loan A	686.3		712.5
Term Loan B	958.9		965.1
5.875% Senior Notes	518.7		518.7
6.375% Senior Notes	545.6		545.6
Total corporate debt	2,709.5		2,741.9
Finance lease obligations(1)	1.0		42.4
Total debt	2,710.5		2,784.3
Unamortized debt issuance costs, net of fair value adjustment on finance lease obligations	(52.6)		(51.3)
Total debt, net	2,657.9		2,733.0
Less current portion	(77.3)		(68.6)
Non-current portion of debt	$	2,580.6	$	2,664.4

________________________

December 31,
2019 March 31,
2019
(Amounts in millions)
Corporate debt:
Revolving Credit Facility $ —
$ —
Term Loan A⁽¹⁾
721.9
750.0
Term Loan B⁽¹⁾
996.3
1,107.5
5.875% Senior Notes 520.0
520.0
6.375% Senior Notes 550.0
550.0
Total corporate debt 2,788.2
2,927.5
Finance lease obligations 43.2
45.4
Total debt 2,831.4
2,972.9
Unamortized debt issuance costs, net of fair value adjustment on finance lease obligations (55.6 ) (68.5 )
Total debt, net 2,775.8
2,904.4
Less current portion (65.0 ) (53.6 )
Non-current portion of debt $ 2,710.8
$ 2,850.8
(1)During the three months ended September 30, 2020, the Company reassessed the lease term of the Starz commercial building, which resulted in a change in classification of this lease from a finance lease to an operating lease (see Note 5 for further information).

~~_____________________~~


~~(1)~~	To manage interest rate risk on certain of its LIBOR-based floating-rate debt, as of December 31, 2019, the Company has entered into interest rate swaps to effectively convert the floating interest rates to fixed interest rates on a $1.7 billion notional amount, which as of December 31, 2019 converts the effective rate on our LIBOR-based debt to 4.899% (see Note 17 for further information).

Senior Credit Facilities (Revolving Credit Facility, Term Loan A and Term Loan B)

Revolving Credit Facility Availability of Funds & Commitment Fee. The revolving credit facility provides for borrowings and letters of credit up to an aggregate of $1.5 billion, and at ~~December 31, 2019~~September 30, 2020 there was $1.5 billion available. However, borrowing levels are subject to certain financial covenants as discussed below. There were 0 letters of credit outstanding at ~~December 31, 2019.~~September 30, 2020. The Company is required to pay a quarterly commitment fee on the revolving credit facility of 0.250% to 0.375% per annum, depending on the achievement of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended (the ~~"Amended Credit~~"Credit Agreement"), on the total revolving credit facility of $1.5 billion less the amount drawn.

Maturity Date:

•Revolving Credit Facility & Term Loan A: March 22, 2023.

•Term Loan B: March 24, 2025.

Interest:

•

•Revolving Credit Facility & Term Loan A: The Revolving Credit Facility and Term Loan A bear interest at a rate per annum equal to LIBOR plus 1.75% (or an alternative base rate plus 0.75%) margin, with a LIBOR floor of 0. The margin is subject to potential increases of up to 50 basis points (2 (2) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Credit Agreement (effective interest rate of 1.90% as of September 30, 2020, before the impact of interest rate swaps).

•Term Loan B: The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25% margin, with a LIBOR floor of 0 (or an alternative base rate plus 1.25% margin) (effective interest rate of 2.40% as of September 30, 2020, before the impact of interest rate swaps).

Required Principal Payments:

•Term Loan A: Quarterly principal payments, at quarterly rates of 1.25% beginning June 30, 2019, 1.75% beginning June 30, 2020, and 2.50% beginning June 30, 2021 through December 31, 2022, with the balance payable at maturity.

•Term Loan B: Quarterly principal payments at a quarterly rate of 0.25%, with the balance payable at maturity.The Revolving Credit Facility and Term Loan A bear interest at a rate per annum equal to LIBOR plus 1.75% (or an alternative base rate plus 0.75%) margin, with a LIBOR floor of 0. The margin is subject to potential increases of up to 50 basis points (2 (2) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Amended Credit Agreement (effective interest rate of 3.51% as of December 31, 2019, before the impact of interest rate swaps).


•	~~Term Loan B:~~ The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25% margin, with a LIBOR floor of 0 (or an alternative base rate plus 1.25% margin) (effective interest rate of 4.01% as of December 31, 2019, before the impact of interest rate swaps).

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Required Principal Payments:~~


•	~~Term Loan A:~~ Quarterly principal payments, at quarterly rates of 1.25% beginning June 30, 2019, 1.75% beginning June 30, 2020, and 2.50% beginning June 30, 2021 through December 31, 2022, with the balance payable at maturity.


•	~~Term Loan B:~~ ~~Quarterly principal payments at a quarterly rate of 0.25%, with the balance payable at maturity.~~

The Term Loan A and Term Loan B also require mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, and the Term Loan B is subject to additional mandatory repayment from specified percentages of excess cash flow, as defined in the ~~Amended~~ Credit Agreement.

Optional Prepayment:


•	•Revolving Credit Facility & Term Loan A: The Company may voluntarily prepay the Revolving Credit Facility and Term Loan A at any time without premium or penalty. •~~The Company may voluntarily prepay the Revolving Credit Facility and Term Loan A at any time without premium or penalty.~~


•	Term Loan B: The Company may voluntarily prepay the Term Loan B at any time.

Security. The Senior Credit Facilities are guaranteed by the Guarantors (as defined in the ~~Amended~~ Credit Agreement) and are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in the ~~Amended~~ Credit Agreement), subject to certain exceptions.

Covenants. The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly. As of ~~December 31, 2019,~~September 30, 2020, the Company was in compliance with all applicable covenants.

Change in Control. The Company may also be subject to an event of default upon a change in control (as defined in the ~~Amended~~ Credit Agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50% of the Company’s common shares.

Potential Impact of LIBOR Transition. The Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate, or LIBOR, has announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. That announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Moreover, it is possible that LIBOR will be discontinued or modified prior to 2021.

Under the terms of the Company's Credit Agreement, in the event of the discontinuance of the LIBOR Rate, a mutually agreed-upon alternate benchmark rate will be established to replace the LIBOR Rate. The Company and Lenders (as defined in the Credit Agreement) shall, in good faith, endeavor to establish an alternate benchmark rate that gives due consideration to prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and which places the Lenders and the Company in the same economic position that existed immediately prior to the discontinuation of the LIBOR Rate. The Company does not anticipate that the discontinuance or modification of the LIBOR Rate will materially impact its liquidity or financial position.

5.875% Senior Notes and 6.375% Senior Notes

Interest:


•	•5.875% Senior Notes: Bears interest at 5.875% annually (payable semi-annually on May and November 1 of each year). •6.375% Senior Notes: Bears interest at 6.375% annually (payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2019). ~~Bears interest at 5.875% annually (payable semi-annually on May and November 1 of each year).~~


•	~~6.375% Senior Notes:~~ ~~Bears interest at 6.375% annually (payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2019).~~

Maturity Date:


•	•5.875% Senior Notes: November 1, 2024. •6.375% Senior Notes: February 1, 2024. ~~November 1, 2024.~~


•	~~6.375% Senior Notes:~~ ~~February 1, 2024.~~

Optional Redemption:

•5.875% Senior Notes:

~~(i)~~

(i)Redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the redemption date: (i) on or after November 1, 2019 - 104.406%; (ii) on or after November 1, 2020 - 102.938%; (iii) on or after November 1, 2021 - 101.439%; and (iv) on or after November 1, 2022 - 100%.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•6.375% Senior Notes:

(i)Prior to February 1, 2021, the 6.375% Senior Notes are redeemable by the Company under certain circumstances (as defined in the indenture governing the 6.375% Senior Notes), in whole at any time, or in part from time to time, at a price equal to 100% of the principal amount of the notes to be redeemed plus the Applicable Premium. The Applicable Premium is the greater of (i) 1.0% of the principal amount redeemed and (ii) the excess of the present value of the redemption amount at February 1, 2021 (see redemption prices below) of the notes redeemed plus interest through February 1, 2021 (discounted at the treasury rate on the redemption date plus 50 basis points) over the principal amount of the notes redeemed on the redemption date.

(ii)On and after February 1, 2021, redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the ~~redemption date: (i) on or after November 1, 2019 - 104.406%; (ii) on or after November 1, 2020 - 102.938%; (iii) on or after November 1, 2021 - 101.439%; and (iv) on or after November 1, 2022 - 100%.~~

~~6.375% Senior Notes:~~

~~(i)~~

Prior to February 1, 2021, the 6.375% Senior Notes are redeemable by the Company under certain circumstances (as defined in the indenture governing the 6.375% Senior Notes), in whole at any time, or in part from time to time, at a price equal to 100% of the principal amount of the Notes to be redeemed plus the Applicable Premium. The Applicable Premium is the greater of (i) 1.0% of the principal amount redeemed and (ii) the excess of the present value of the redemption amount at February 1, 2021 (see redemption prices below) of the notes redeemed plus interest through February 1, 2021 (discounted at the treasury rate on the redemption date plus 50 basis points) over the principal amount of the notes redeemed on the redemption date.


~~(ii)~~	On and after February 1, 2021, redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

redemption date: (i) on or after February 1, 2021 - 103.188%; (ii) on or after February 1, 2022 - 101.594%; (iii) on or after February 1, 2023 - 100%.

Security. The 5.875% Senior Notes and 6.375% Senior Notes are unsubordinated, unsecured obligations of the Company.

Covenants. The 5.875% Senior Notes and 6.375% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations. As of ~~December 31, 2019,~~September 30, 2020, the Company was in compliance with all applicable covenants.

Change in Control. The occurrence of a change of control will be a triggering event requiring the Company to offer to purchase from holders all of the 5.875% Senior Notes and 6.375% Senior Notes, at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. In addition, certain asset dispositions will be triggering events that may require the Company to use the excess proceeds from such dispositions to make an offer to purchase the 5.875% Senior Notes and 6.375% Senior Notes at 100% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

Capacity to Pay Dividends

At ~~December 31, 2019,~~September 30, 2020, the capacity to pay dividends under the Senior Credit Facilities and the 5.875% Senior Notes and the 6.375% Senior Notes significantly exceeded the amount of the Company's retained earnings or net ~~loss,~~income, and therefore the Company's net ~~loss~~income of ~~$157.4~~$24.5 million and retained earnings of ~~$44.5~~$2.4 million were deemed free of restrictions from paying dividends at ~~December 31, 2019.~~

~~Loss on Extinguishment of Debt~~

During the three and nine months ended December 31, 2019, the Company recorded a loss on extinguishment of debt of $1.4 million related to early repayments of $101.9 million in principal outstanding on the Term Loan B.

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~September 30, 2020.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

6.5. Leases

The Company has operating leases primarily for office space, studio facilities, and other equipment. The Company also has a finance ~~leases~~lease for a satellite transponder, and through the quarter ended June 30, 2020 the Company had classified its lease for the Starz commercial ~~building.~~building as a finance lease. During the three months ended September 30, 2020, due to a change in the expected lease term of the Starz commercial building, the Company reassessed the lease classification of the Starz commercial building, which resulted in a change in classification of this lease from a finance lease to an operating lease. As a result, the right-of-use assets and lease liabilities (including the fair value adjustment) under finance leases decreased by $42.0 million and $48.6 million, respectively, and the right-of-use assets and lease liabilities under operating leases increased by $6.0 million and $12.6 million, respectively. The Company's leases have remaining lease terms of up to approximately 10 years, and the Starz commercial building lease includes 4 successive five-year renewal periods at the Company's option. Most leases are not cancelable prior to their expiration. The expected term of the lease used for computing the lease liability and right-of-use ("ROU") asset and determining the classification of the lease as operating or financing may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company determines if an arrangement is a lease at its inception.years.

~~Operating Leases.~~ Operating lease ROU assets, representing the Company's right to use the underlying asset for the lease term, are included in the "Other assets - non-current" line item in the Company's December 31, 2019 unaudited condensed consolidated balance sheet. Operating lease liabilities, representing the present value of the Company's obligation to make payments over the lease term, are included in the “Accounts payable and accrued liabilities” and “Other liabilities - non-current” line items in the Company's December 31, 2019 unaudited condensed consolidated balance sheet. The Company has entered into various short-term operating leases which have an initial term of 12 months or less. These short-term leases are not recorded on the Company's unaudited condensed consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

~~Finance Leases.~~ Finance lease ROU assets are included in "Property and equipment, net" and finance lease liabilities are included in the “Debt - short-term portion” and “Debt - non-current” line items in the Company's December 31, 2019 unaudited condensed consolidated balance sheet. For finance leases, the Company recognizes interest expense on lease liabilities using the effective interest method and amortization of ROU assets on a straight-line basis over the lease term.

The present value of the lease payments is calculated using a rate implicit in the lease, when readily determinable. However, as most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of the lease payments for the majority of its leases.

Variable lease payments that are based on an index or rate are included in the measurement of ROU assets and lease liabilities at lease inception. All other variable lease payments are expensed as incurred and are not included in the measurement of ROU assets and lease liabilities.

~~The components of lease cost were as follows:~~

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2019
(Amounts in millions)
Operating lease cost⁽¹⁾
$ 8.6
$ 25.5

Finance lease cost
Amortization of right-of-use assets 0.8
2.3
Interest on lease liabilities 0.8
2.6
Total finance lease cost 1.6
4.9

Short-term lease cost⁽¹⁾⁽²⁾
24.0
74.8
Total lease cost $ 34.2
$ 105.2

~~___________________~~


~~(1)~~	Amounts include costs capitalized during the period for leased assets used in the production of film and television programs. Operating lease cost amounts primarily represent the amortization of right-of-use assets and are included in the “other non-cash items” line of the unaudited condensed consolidated statement of cash flows.


~~(2)~~	~~Short-term lease cost primarily consists of leases of facilities and equipment associated with film and television productions.~~

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Supplemental cash flow information related to leases was as follows:~~

Nine Months Ended
December 31,
2019
(Amounts in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 27.4
Financing cash flows from financing leases 2.2

Right-of-use assets obtained in exchange for new lease obligations:
Operating leases 2.1

Supplemental balance sheet information related to leases was as follows:


Category	Balance Sheet Location	September 30, 2020		March 31, 2020
Operating Leases		(Amounts in millions)
Right-of-use assets	Other assets - non-current	$	134.3	136.9

Lease liabilities (current)	Accounts payable and accrued liabilities	$	39.5	35.3
Lease liabilities (non-current)	Other liabilities - non-current	130.2		129.6
		$	169.7	164.9
Finance Leases
Right-of-use assets	Property and equipment, net	$	1.2	46.4

Lease liabilities (current)	Debt - short-term portion	$	1.0	3.0
Lease liabilities (non-current)	Debt - non-current	0		39.4
		$	1.0	42.4

Category Balance Sheet Location December 31,
2019
Operating Leases (Amounts in millions)
Right-of-use assets Other assets - non-current $ 140.3

Lease liabilities (current) Accounts payable and accrued liabilities $ 29.5
Lease liabilities (non-current) Other liabilities - non-current 137.9
$ 167.4
Finance Leases
Right-of-use assets Property and equipment, net $ 47.9

Lease liabilities (current) Debt - short-term portion $ 3.1
Lease liabilities (non-current) Debt - non-current 40.1
$ 43.2



	December 31, 2019
~~Weighted average remaining lease term (in years):~~
~~Operating leases~~	~~6.4~~
~~Finance leases~~	~~21.6~~

~~Weighted average discount rate:~~
~~Operating leases~~	~~4.12~~	%
~~Finance leases~~	~~6.41~~	%


	September 30, 2020		March 31, 2020
Weighted average remaining lease term (in years):
Operating leases	5.5		6.1
Finance leases	0.4		21.6

Weighted average discount rate:
Operating leases	3.91	%	4.10	%
Finance leases	7.00	%	6.40	%

The expected future payments relating to the Company's operating and finance lease liabilities at September 30, 2020 are as follows:


	Operating Leases		Finance Leases
	(Amounts in millions)
Six months ending March 31, 2021	$	24.8	$	1.0
Year ending March 31,
2022	38.7		0
2023	37.4		0
2024	25.2		0
2025	14.9		0
Thereafter	49.0		0
Total lease payments	190.0		1.0
Less imputed interest	(20.3)		0
Total	$	169.7	$	1.0

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The expected future payments relating to the Company's operating and finance lease liabilities at December 31, 2019 are as follows:~~

Operating Leases
Finance
Leases
(Amounts in millions)
Three months ending March 31, 2020 $ 8.8
$ 1.6
Year ending March 31,
2021 35.9
6.2
2022 33.2
3.9
2023 32.5
3.9
2024 20.4
3.9
Thereafter 60.4
73.5
Total lease payments 191.2
93.0
Less imputed interest (23.8 ) (49.8 )
Total $ 167.4
$ 43.2

7.6. Film Obligations and Production Loans

December 31,
2019 March 31,
2019
(Amounts in millions)
Film obligations $ 248.1
$ 270.3
Production loans 149.3
386.4
Total film obligations and production loans 397.4
656.7
Unamortized debt issuance costs (0.2 ) (1.0 )
Total film obligations and production loans, net 397.2
655.7
Less current portion (286.8 ) (512.6 )
Total non-current film obligations and production loans $ 110.4
$ 143.1


	September 30, 2020		March 31, 2020
	(Amounts in millions)
Film obligations	$	250.0	$	299.3
Production loans	155.3		151.4
Total film obligations and production loans	405.3		450.7
Unamortized debt issuance costs	(0.1)		(0.1)
Total film obligations and production loans, net	405.2		450.6
Less current portion	(309.6)		(353.7)
Total non-current film obligations and production loans	$	95.6	$	96.9

Film Obligations

Film obligations include minimum guarantees and accrued licensed program rights obligations, which represent amounts payable for film rights that the Company has acquired and certain theatrical marketing obligations for amounts received from third parties that are contractually committed for theatrical marketing expenditures associated with specific titles.

Production Loans

Production loans represent individual loans for the production of film and television programs that the Company produces. The majority of production loans have contractual repayment dates either at or near the expected completion date, with the exception of certain loans containing repayment dates on a longer term basis, and incur LIBOR-based interest at rates ranging from ~~3.90%~~2.46% to ~~4.56%~~2.96% (before the impact of interest rate swaps, see Note 16 for interest rate swaps).

8.7. Fair Value Measurements

Fair Value

Accounting guidance and standards about fair value define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

Fair Value Hierarchy

Fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The accounting guidance and standards establish three levels of inputs that may be used to measure fair value:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019:~~2020:

December 31, 2019 March 31, 2019
Level 1 Level 2 Total Level 1 Level 2 Total
Assets: (Amounts in millions)
Available-for-sale equity securities $ 0.8
$ —
$ 0.8
$ 1.2
$ —
$ 1.2
Forward exchange contracts (see Note 17) —
1.4
1.4
—
1.5
1.5

Liabilities:
Forward exchange contracts (see Note 17) —
(0.7 ) (0.7 ) —
(0.6 ) (0.6 )
Interest rate swaps (see Note 17) —
(107.0 ) (107.0 ) —
(63.6 ) (63.6 )

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	September 30, 2020						March 31, 2020
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:	(Amounts in millions)
Available-for-sale equity securities	$	1.4	$	0	$	1.4	$	0.6	$	0	$	0.6
Forward exchange contracts (see Note 16)	0		0.4		0.4		0		0.6		0.6


Liabilities:
Forward exchange contracts (see Note 16)	0		(0.7)		(0.7)		0		(0.9)		(0.9)
Interest rate swaps (see Note 16)	0		(31.1)		(31.1)		0		(187.9)		(187.9)

The following table sets forth the carrying values and fair values of the Company’s outstanding debt at ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~:2020:

December 31, 2019 March 31, 2019
(Amounts in millions)

Carrying
Value
Fair Value Carrying Value Fair Value
(Level 2) (Level 2)
Liabilities⁽¹⁾:

Term Loan A $ 708.2
$ 714.7
$ 733.3
$ 742.5
Term Loan B 983.1
990.0
1,091.2
1,088.1
5.875% Senior Notes 504.7
527.8
502.8
534.3
6.375% Senior Notes 543.2
569.3
541.4
576.1
Production loans 149.2
149.3
385.4
386.4


	September 30, 2020				March 31, 2020
	(Amounts in millions)
	Carrying Value		Fair Value		Carrying Value		Fair Value
			(Level 2)				(Level 2)
Liabilities(1):
Term Loan A	$	675.6	$	651.9	$	699.8	$	637.7
Term Loan B	947.8		934.9		952.9		845.7
5.875% Senior Notes	505.4		496.7		504.0		430.5
6.375% Senior Notes	540.0		538.8		539.2		452.9
Production loans	155.2		155.2		151.3		151.3
Financing component of interest rate swaps	161.5		161.3		0		0

________________


~~(1)~~	The Company measures the fair value of its outstanding debt using discounted cash flow techniques that use observable market inputs, such as LIBOR-based yield curves, swap rates, and credit ratings (Level 2 measurements).

(1)The Company measures the fair value of its outstanding debt using discounted cash flow techniques that use observable market inputs, such as LIBOR-based yield curves, swap rates, and credit ratings (Level 2 measurements).

The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, other liabilities, borrowings under the Revolving Credit Facility, if any, and finance lease obligations. The carrying values of these financial instruments approximated the fair values at ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019.~~2020.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9.8. Noncontrolling Interests

Redeemable Noncontrolling Interests

The table below presents the reconciliation of changes in redeemable noncontrolling interests:


	Six Months Ended
	September 30,
	2020		2019
	(Amounts in millions)
Beginning balance	$	167.8	$	127.7

Net loss attributable to redeemable noncontrolling interests	(8.4)		(7.4)
Noncontrolling interests discount accretion	11.5		12.7
Adjustments to redemption value	13.4		12.8
Cash distributions	(2.0)		(3.4)
Ending balance	$	182.3	$	142.4

Nine Months Ended
December 31,
2019 2018
(Amounts in millions)
Beginning balance $ 127.6
$ 101.8
Initial fair value of redeemable noncontrolling interest of 3 Arts Entertainment —
15.8
Net loss attributable to redeemable noncontrolling interests (14.1 ) (11.6 )
Noncontrolling interests discount accretion 19.1
15.7
Adjustments to redemption value 20.8
24.4
Cash distributions (3.3 ) (1.8 )
Ending balance $ 150.1
$ 144.3

Redeemable noncontrolling interests (included in temporary equity on the unaudited condensed consolidated balance sheets) relate to the November 12, 2015 acquisition of a controlling interest in Pilgrim Media Group and the May 29, 2018 acquisition of a controlling interest in 3 Arts Entertainment.

3 Arts Entertainment. The noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable at five years after the acquisition date of May 29, 2018, for a 60 day period. Beginning 30 days after the expiration of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period.

Pilgrim Media Group. The noncontrolling interest holder has a right to put and the Company has a right to call a portion of the noncontrolling interest, equal to 17.5% of Pilgrim Media Group, at fair value, exercisable at five years after the acquisition date of November 12, 2015. In addition, the noncontrolling interest holder has a right to put and the Company has a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable at seven years after the acquisition date of November 12, 2015.

Redeemable noncontrolling interests are measured at the greater of (i) the redemption amount that would be paid if settlement occurred at the balance sheet date less the amount attributed to unamortized noncontrolling interest discount if applicable, or (ii) the historical value resulting from the original acquisition date value plus or minus any earnings or loss attribution, plus the amount of amortized noncontrolling interest discount, less the amount of cash distributions that are not accounted for as compensation, if any. The amount of the redemption value in excess of the historical values of the noncontrolling interest, if any, is recognized as an increase to redeemable noncontrolling interest and a charge to retained earnings.

Other Noncontrolling Interests

The Company has other noncontrolling interests that are not redeemable. These noncontrolling interests primarily relate to Pantaya (a joint venture between the Company and Hemisphere Media Group), a premium Spanish-language streaming service in which the Company owns a controlling interest.

~~10.~~9. Revenue

The Company's Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places. The Company's Media Networks segment generates revenue primarily from the distribution of the Company's STARZ branded premium subscription video services and, to a lesser extent, other direct-to-consumer content streaming ~~services.~~services and other distribution revenue.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue by Segment, Market or Product Line

The table below presents revenues by segment, market or product line for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Revenue by Type:
Motion Picture
Theatrical $ 109.0
$ 28.5
$ 316.5
$ 147.9
Home Entertainment
Digital Media 115.5
81.7
312.1
253.0
Packaged Media 75.4
68.0
197.0
209.0
Total Home Entertainment 190.9
149.7
509.1
462.0
Television 74.5
74.8
177.7
207.6
International 96.1
104.7
256.6
254.3
Other 3.4
4.9
17.7
35.1
Total Motion Picture revenues $ 473.9
$ 362.6
1,277.6
1,106.9

Television Production
Television 144.2
151.5
526.4
454.4
International 17.4
35.9
113.3
94.7
Home Entertainment
Digital Media 10.0
10.9
47.6
54.1
Packaged Media 0.6
2.5
2.2
5.9
Total Home Entertainment 10.6
13.4
49.8
60.0
Other 17.2
15.7
53.7
39.0
Total Television Production revenues 189.4
216.5
743.2
648.1

Media Networks - Programming Revenues

Domestic⁽¹⁾
376.3
366.2
1,115.2
1,098.1
International 6.1
0.6
13.6
0.9
382.4
366.8
1,128.8
1,099.0

Intersegment eliminations (47.2 ) (12.7 ) (203.9 ) (87.1 )
Total revenues $ 998.5
$ 933.2
$ 2,945.7
$ 2,766.9


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Revenue by Type:
Motion Picture
Theatrical	$	0	$	85.7	$	0.3	$	207.5
Home Entertainment
Digital Media	116.1		113.3		243.9		196.6
Packaged Media	33.9		65.2		73.5		121.6
Total Home Entertainment	150.0		178.5		317.4		318.2
Television	59.1		38.3		117.6		103.1
International	45.5		93.2		97.9		160.6
Other	3.0		10.1		5.1		14.2
Total Motion Picture revenues	257.6		405.8		538.3		803.6

Television Production
Television	116.7		185.5		212.6		382.3
International	47.9		39.0		94.3		95.8
Home Entertainment
Digital Media	15.9		31.7		61.8		37.5
Packaged Media	1.1		0.2		1.8		1.6
Total Home Entertainment	17.0		31.9		63.6		39.1
Other	15.6		17.6		22.4		36.6
Total Television Production revenues	197.2		274.0		392.9		553.8

Media Networks - Programming Revenues
Domestic(1)	374.1		369.6		731.3		738.9
International	14.2		4.4		24.2		7.5
	388.3		374.0		755.5		746.4

Intersegment eliminations	(98.1)		(70.3)		(128.0)		(156.7)
Total revenues	$	745.0	$	983.5	$	1,558.7	$	1,947.1

___________________


~~(1)~~	Media Networks domestic revenues include revenue from the Company's legacy Streaming Services product line of $8.7 million and $22.8 million in the three and nine months ended December 31, 2019, respectively (2018 - $4.7 million and $12.0 million).

(1)Media Networks domestic revenues include revenue from the Company's Other Streaming Services product line of $13.3 million and $24.8 million, respectively, in the three and six months ended September 30, 2020 (2019 - $7.7 million and $14.1 million, respectively).

Remaining Performance Obligations

Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog). Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at ~~December 31, 2019~~September 30, 2020 are as follows:

Rest of Year Ending March 31, 2020 Year Ending March 31,
2021 2022 Thereafter Total
(Amounts in millions)
Remaining Performance Obligations $ 445.5
$ 691.7
$ 274.2
$ 254.3
$ 1,665.7

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Rest of Year Ending March 31, 2021		Year Ending March 31,
			2022		2023		Thereafter		Total
	(Amounts in millions)
Remaining Performance Obligations	$	752.0	$	520.2	$	193.6	$	204.8	$	1,670.6

The above table does not include estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licenses of intellectual property. The revenues included in the above table include all fixed fee contracts regardless of duration.

Revenues of ~~$39.7~~$63.2 million and ~~$154.7~~$159.3 million, respectively, including variable and fixed fee arrangements, were recognized during the three and ~~nine~~six months ended ~~December 31, 2019,~~September 30, 2020, respectively, from performance obligations satisfied prior to March 31, ~~2019.~~2020. These revenues were primarily associated with the distribution of television and theatrical product in electronic sell-through and video-on-demand formats, and to a lesser extent, the distribution of theatrical product in the domestic and international markets related to films initially released in prior periods.

Accounts Receivable, Contract Assets and Deferred Revenue

The timing of revenue recognition, billings and cash collections affects the recognition of accounts receivable, contract assets and deferred revenue. At ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019,~~2020, accounts receivable, contract assets and deferred revenue are as follows:


Item	Balance Sheet Location	December 31, 2019		March 31, 2019		Addition (Reduction)			Item	Balance Sheet Location	September 30, 2020		March 31, 2020		Addition (Reduction)
		(Amounts in millions)									(Amounts in millions)
Accounts receivable, net - current	Accounts receivable, net	$	597.7	$	647.2	$	(49.5	)	Accounts receivable, net - current	Accounts receivable, net	$	376.7	$	522.0	$	(145.3)
Accounts receivable, net - non-current	Other assets - non-current	82.3		176.1		(93.8		)	Accounts receivable, net - non-current	Other assets - non-current	37.2		53.6		(16.4)
Contract asset - current	Other assets - current⁽¹⁾	12.4		97.3		(84.9		)	Contract asset - current	Other assets - current(1)	23.0		18.8		4.2
Contract asset - non-current	Other assets - non-current⁽¹⁾	9.2		72.1		(62.9		)	Contract asset - non-current	Other assets - non-current(1)	4.9		10.5		(5.6)
Deferred revenue - current	Deferred revenue - current	141.4		146.5		(5.1		)	Deferred revenue - current	Deferred revenue - current	123.2		116.6		6.6
Deferred revenue - non-current	Deferred revenue - non-current	60.4		62.8		(2.4		)	Deferred revenue - non-current	Deferred revenue - non-current	53.5		61.3		(7.8)

__________________


~~(1)~~	~~Included in prepaid expenses and other.~~

(1)Included in prepaid expenses and other (see Note 17).

Accounts Receivable. Accounts receivable are presented net of a provision for doubtful accounts. The Company estimates provisions for accounts receivable based on historical experience for the respective risk categories and current and future expected economic conditions. To assess collectibility, the Company analyzes market trends, economic conditions, the aging of receivables and customer specific risks, and records a provision for estimated credit losses expected over the lifetime of the receivables in direct operating expense.

The Company performs ongoing credit evaluations and monitors its credit exposure through active review of customers' financial condition, aging of receivable balances, historical collection trends, and expectations about relevant future events that may significantly affect collectibility. The Company generally does not require collateral for its trade accounts receivable.

Changes in the provision for doubtful accounts consisted of the following:


	March 31, 2020		(Benefit) provision for doubtful accounts(1)		Uncollectible accounts written-off		September 30, 2020
	(Amounts in millions)
Trade accounts receivable	$	9.3	$	(1.9)	$	(0.1)	$	7.3

_______________________

(1)Represents collections on accounts receivable previously reserved.

Contract Assets. Contract assets relate to the Company’s conditional right to consideration for completed performance under the contract (e.g., unbilled receivables). Amounts relate primarily to contractual payment holdbacks in cases in which the

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company is required to deliver additional episodes or seasons of television content in order to receive payment, complete certain administrative activities, such as guild filings, or allow the Company's customers' audit rights to expire. The change in the balance of contract assets is primarily due to the satisfaction of the condition related to payment holdbacks.

Deferred Revenue. Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation. Revenues of ~~$29.0~~$9.6 million and ~~$128.7~~$58.2 million were recognized during the three and ~~nine~~six months ended ~~December 31, 2019,~~September 30, 2020, respectively, related to the balance of deferred revenue at March 31, ~~2019.~~

~~Table of Contents~~2020.

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

~~11.~~10. Net Income (Loss) Per Share

Basic net income (loss) per share is calculated based on the weighted average common shares outstanding for the period. Basic net income (loss) per share for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2020 and 2019 ~~and~~ ~~2018~~ is presented below:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions, except per share amounts)
Basic Net Income (Loss) Per Common Share:
Numerator:
Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	(18.4)	$	1.8	$	32.7	$	(52.2)
Denominator:
Weighted average common shares outstanding	220.4		217.5		220.0		216.8
Basic net income (loss) per common share	$	(0.08)	$	0.01	$	0.15	$	(0.24)

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions, except per share amounts)
Basic Net Income (Loss) Per Common Share:
Numerator:
Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders $ (91.2 ) $ 22.9
$ (143.4 ) $ (129.0 )
Denominator:
Weighted average common shares outstanding 218.0
214.2
217.2
213.2
Basic net income (loss) per common share $ (0.42 ) $ 0.11
$ (0.66 ) $ (0.61 )

Diluted net income (loss) per common share reflects share purchase options, including ~~equity-settled~~ share appreciation rights ("SARs"), restricted share units ("RSUs") and restricted stock using the treasury stock method when dilutive, and any contingently issuable shares when dilutive. Diluted net income (loss) per common share for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ is presented below:

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions, except per share amounts)
Diluted Net Income (Loss) Per Common Share:
Numerator:
Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders $ (91.2 ) $ 22.9
$ (143.4 ) $ (129.0 )
Denominator:
Weighted average common shares outstanding 218.0
214.2
217.2
213.2
Effect of dilutive securities:
Share purchase options —
3.3
—
—
Restricted share units and restricted stock —
0.2
—
—
Contingently issuable shares —
3.1
—
—
Adjusted weighted average common shares outstanding 218.0
220.8
217.2
213.2
Diluted net income (loss) per common share $ (0.42 ) $ 0.10
$ (0.66 ) $ (0.61 )


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions, except per share amounts)
Diluted Net Income (Loss) Per Common Share:
Numerator:
Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	(18.4)	$	1.8	$	32.7	$	(52.2)




Denominator:
Weighted average common shares outstanding	220.4		217.5		220.0		216.8
Effect of dilutive securities:

Share purchase options	0		0.3		0		0
Restricted share units and restricted stock	0		0.2		0.6		0
Contingently issuable shares	0		1.8		0		0
Adjusted weighted average common shares outstanding	220.4		219.8		220.6		216.8
Diluted net income (loss) per common share	$	(0.08)	$	0.01	$	0.15	$	(0.24)

As a result of the net loss in the three ~~and nine~~ months ended ~~December 31, 2019~~September 30, 2020 and the ~~nine~~six months ended ~~December 31, 2018,~~September 30, 2019, the dilutive effect of the share purchase options, restricted share units and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share. The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the three and nine months ended December 31, 2019 totaled 1.9 million and 2.8 million, respectively (nine months ended December 31, 2018 - 7.9 million).

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

excluded from the calculation due to the net loss for the three months ended September 30, 2020 totaled 0.9 million (six months ended September 30, 2019 - 3.2 million).

Additionally, for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018,~~ the outstanding common shares issuable presented below were excluded from diluted net income (loss) per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.


	Three Months Ended		Six Months Ended
	September 30,		September 30,
	2020	2019	2020	2019
	(Amounts in millions)
Anti-dilutive shares issuable

Share purchase options	28.2	31.1	28.0	30.2
Restricted share units	1.4	3.3	2.0	2.4
Other issuable shares	2.6	3.9	3.8	3.0
Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share	32.2	38.3	33.8	35.6

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Anti-dilutive shares issuable
Share purchase options 33.7
21.9
31.4
20.3
Restricted share units 2.5
1.3
2.4
0.9
Other issuable shares 5.2
1.5
3.7
1.3
Total weighted average anti-dilutive shares issuable excluded from diluted net income (loss) per common share 41.4
24.7
37.5
22.5

~~12.~~11. Capital Stock

(a) Common Shares

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~.2020. The table below outlines common shares reserved for future issuance:


	September 30, 2020	March 31, 2020
	(Amounts in millions)
Stock options and SARs outstanding	25.6	35.7
Restricted stock and restricted share units — unvested	9.6	3.7
Common shares available for future issuance	16.4	11.5
Shares reserved for future issuance	51.6	50.9

December 31,
2019 March 31,
2019
(Amounts in millions)
Stock options and equity-settled SARs outstanding 36.7
34.6
Restricted stock and restricted share units — unvested 3.9
2.0
Common shares available for future issuance 10.5
6.7
Shares reserved for future issuance 51.1
43.3

(b) Share-based Compensation

On September 15, 2020, the Company’s shareholders approved an amendment to the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan (the “2019 Plan”) previously adopted by the Board of Directors of the Company to increase the maximum number of the Company’s common shares that may be issued or transferred pursuant to awards under the 2019 Plan by an additional 10.0 million shares so that the new aggregate share limit under the 2019 Plan is 16.1 million common shares (not including shares that were originally approved for issuance under the Company’s prior stock incentive plans that have become available for issuance under the 2019 Plan pursuant to the terms of the 2019 Plan).

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~(b) Share-based Compensation~~

The Company recognized the following share-based compensation expense during the three and ~~nine~~six months ended ~~December 31, 2019,~~September 30, 2020 and ~~2018:~~2019:

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Compensation Expense:
Stock options $ 5.5
$ 4.7
$ 14.3
$ 18.2
Restricted share units and other share-based compensation 9.8
5.9
23.1
19.8
Share appreciation rights 1.9
0.5
3.6
3.3
17.2
11.1
41.0
41.3
Impact of accelerated vesting on equity awards⁽¹⁾
—
2.4
0.3
2.4
Total share-based compensation expense $ 17.2
$ 13.5
$ 41.3
$ 43.7

Tax impact⁽²⁾
(3.6 ) (3.2 ) (8.7 ) (10.1 )
Reduction in net income $ 13.6
$ 10.3
$ 32.6
$ 33.6


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Compensation Expense:
Stock options	$	5.0	$	5.2	$	9.3	$	8.8
Restricted share units and other share-based compensation	14.4		8.5		23.3		13.3
Share appreciation rights	3.4		0.8		4.6		1.7
	22.8		14.5		37.2		23.8

Impact of accelerated vesting on equity awards(1)	2.8		0		2.8		0.3
Total share-based compensation expense	$	25.6	$	14.5	$	40.0	$	24.1

Tax impact(2)	(5.3)		(3.1)		(8.2)		(5.1)
Reduction in net income	$	20.3	$	11.4	$	31.8	$	19.0

___________________


~~(1)~~	~~Represents the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.~~


~~(2)~~	~~Represents the income tax benefit recognized in the unaudited condensed consolidated statements of operations for share-based compensation arrangements.~~

(1)Represents the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(2)Represents the income tax benefit recognized in the unaudited condensed consolidated statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance.

Share-based compensation expense, by expense category, consisted of the following:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Share-Based Compensation Expense:
Direct operating	$	0.5	$	0.3	$	0.9	$	0.4
Distribution and marketing	0.2		0.1		0.3		0.2
General and administration	22.1		14.1		36.0		23.2
Restructuring and other	2.8		0		2.8		0.3
	$	25.6	$	14.5	$	40.0	$	24.1

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Share-Based Compensation Expense:
Direct operating $ 0.7
$ 0.4
$ 1.1
$ 0.8
Distribution and marketing 0.2
0.2
0.4
0.3
General and administration 16.3
10.5
39.5
40.2
Restructuring and other —
2.4
0.3
2.4
$ 17.2
$ 13.5
$ 41.3
$ 43.7

~~The following table sets forth the stock option, equity-settled SARs, cash-settled SARs, restricted stock and restricted share unit activity during the~~ ~~nine months endedDecember 31, 2019~~:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options, Equity-settled and Cash-settled SARs Restricted Stock and Restricted Share Units
Class A Voting Shares Class B Non-Voting Shares Class A Voting Shares Class B Non-Voting Shares
Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Exercise Price Number of Shares Weighted-Average Grant-Date Fair Value Number of Shares Weighted-Average Grant-Date Fair Value
(Number of shares in millions)
Outstanding at March 31, 2019 8.4
$26.70 26.2
$20.72 0.1
$25.68 1.9
$24.24
Granted —
—
7.5
⁽²⁾
$12.71 —
⁽¹⁾
$11.01 3.1
$12.03
Options exercised or restricted stock or RSUs vested —
—
(0.1 ) $10.50 (0.1 ) $25.93 (0.7 ) $24.22
Forfeited or expired (1.1 ) $29.94 (4.2 ) $17.82 —
⁽¹⁾
$18.90 (0.3 ) $20.86
Outstanding at December 31, 2019 7.3
$26.22 29.4
$19.06 —
⁽¹⁾
$14.89 4.0
$15.10

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the six months ended September 30, 2020:


	Stock Options and SARs					Restricted Stock and Restricted Share Units
	Class A Voting Shares		Class B Non-Voting Shares			Class A Voting Shares			Class B Non-Voting Shares
	Number of Shares	Weighted-Average Exercise Price	Number of Shares		Weighted-Average Exercise Price	Number of Shares		Weighted-Average Grant-Date Fair Value	Number of Shares	Weighted-Average Grant-Date Fair Value
	(Number of shares in millions)
Outstanding at March 31, 2020	7.2	$26.21	28.5		$19.03	0	(1)	$14.89	3.8	$14.63
Granted	0	0	3.3	(2)	$8.71	0	(1)	$9.87	7.8	$7.77
Options exercised or restricted stock or RSUs vested	0	0	0		0	0	(1)	$16.57	(1.9)	$14.04
Awards canceled in exchange program	(1.1)	$31.56	(4.1)		$26.49	0		0	0	0
Awards issued in exchange program	0.1	$7.70	0.8		$7.13	0		0	0	0
Forfeited or expired	(0.7)	$31.54	(8.4)		$16.48	0		0	(0.1)	$10.83
Outstanding at September 30, 2020	5.5	$24.19	20.1		$16.41	0	(1)	$11.10	9.6	$9.17

__________________


~~(1)~~	(1)Represents less than 0.1 million shares.


~~(2)~~	~~During the~~ ~~nine months ended~~ December 31, 2019, the Company granted 3.3 million cash-settled share-appreciation rights ("CSARs"). The CSARs are revalued each reporting period until settlement using a closed-form option pricing model (Black Scholes).

~~(c) Other~~(2)During the six months ended September 30, 2020, the Company granted 2.1 million SARs.

Exchange Program

~~In connection~~

On January 10, 2020, the Company’s Board of Directors authorized, and on April 2, 2020, the Company’s shareholders approved, a stock option and share appreciation rights exchange program (the “Exchange Program”) that permitted certain current employees to exchange certain outstanding stock options and share appreciation rights with ~~an amendment of an affiliation agreement with a customer and effective upon~~exercise prices substantially above the ~~close~~current market price of the ~~Starz merger (December 8, 2016), Lionsgate has issued to~~Company’s Class A voting shares and the ~~customer 3 $16.67 million annual installments~~Company’s Class B non-voting shares for a lesser number of ~~equity (or cash at~~stock options and share appreciation rights that have a fair value that is lower than the ~~Company's election). The total~~fair value of the ~~contract~~“out of ~~$50~~the money” stock options and share appreciation rights. The program began on April 9, 2020 and was completed on May 7, 2020. As a result of this program 1.1 million ~~was amortized as a reduction~~outstanding eligible stock options and share appreciation rights of ~~revenue over~~Class A voting shares were exchanged for 0.1 million new stock options and share appreciation rights at an exercise price of $7.70 per share and 4.3 million outstanding eligible stock options and share appreciation rights of Class B non-voting shares were exchanged for 0.8 million new stock options and share appreciation rights at an exercise price of $7.13.

During the ~~period from December 8, 2016 to August 31, 2019.~~three months ended September 30, 2020, the Company did not repurchase any common shares. During the six months ended September 30, 2020, the Company repurchased 0.2 million of its Class A voting shares for an aggregate cost of $1.0 million, with an average repurchase price per share of $5.75. During the three and six months ended September 30, 2019 the Company did not repurchase any common shares. To date, approximately $288.1 million common shares have been repurchased, leaving approximately $179.9 million of authorized potential purchases.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~13.~~12. Income Taxes

The income tax benefit (provision) for the three and six months ended September 30, 2020 is calculated by estimating the Company's annual effective tax rate (estimated annual tax provision divided by estimated annual income before income taxes), and then applying the effective tax rate to income before income taxes for the period, plus or minus the tax effects of items that relate discretely to the period, if any.

For the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019, ~~and 2018,~~ the Company determined that a small change in its estimated pretax results for the ~~years~~year ending March 31, 2020 ~~and 2019, respectively,~~ would create a large change in its expected annual effective rate. Accordingly, it was determined that a reliable estimate of the expected annual effective tax rate could not be made. As a result, for the three and six months ended September 30, 2019, the Company computed its tax benefit (provision) using the cut-off method, which reflects the actual taxes attributable to year-to-date earnings or losses.

The Company's income tax benefit (provision) differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of the Company's pre-tax income (loss) generated across the various jurisdictions in which the Company operates, ~~and~~ changes in the valuation allowance against the Company's deferred tax ~~assets. In addition, the~~assets, and certain minimum taxes and foreign withholding taxes. The Company's income tax ~~expense~~benefit (provision) for the three and six months ended September 30, 2020 was also impacted by ~~certain minimum taxes imposed by~~ the ~~Tax Cuts and Jobs Act (the "Tax Act").~~release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

The Company's income tax benefit (provision) can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, further interpretation and legislative guidance regarding the ~~Tax~~new Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), changes in valuation allowances ~~against~~on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

~~14.~~13. Restructuring and Other

Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when ~~applicable,~~applicable. During the three and ~~were as follows~~six months ended September 30, 2020, the Company also incurred certain other unusual charges related to the COVID-19 global pandemic, which are included in direct operating and distribution and marketing expense in the unaudited consolidated statement of operations. The following table sets forth restructuring and other and these COVID-19 related charges and the statement of operations line items they are included in for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Three Months Ended				Nine Months Ended					Three Months Ended						Six Months Ended
	December 31,				December 31,					September 30,						September 30,
	2019		2018		2019		2018			2020			2019			2020			2019
	(Amounts in millions)									(Amounts in millions)
Restructuring and other:									Restructuring and other:
Severance⁽¹⁾									Severance(1)
Cash	$	1.8	$	13.3	$	7.7	$	17.0	Cash	$	8.5		$	2.2		$	10.6		$	5.9
Accelerated vesting on equity awards (see Note 12)	—		2.4		0.3		2.4
Accelerated vesting on equity awards (see Note 11)									Accelerated vesting on equity awards (see Note 11)	2.8			0			2.8			0.3
Total severance costs	1.8		15.7		8.0		19.4		Total severance costs	11.3			2.2			13.4			6.2
COVID-19 related costs included in restructuring and other(2)									COVID-19 related costs included in restructuring and other(2)	0.3			0			0.8			0
Transaction and related costs⁽²⁾⁽³⁾	1.9		0.8		8.8		22.7		1.8			5.4			2.2			6.9
Total restructuring and other	3.7		16.5		16.8		42.1
Programming and content charges⁽³⁾	74.0		—		74.0		—
Total restructuring and other and programming and content charges	$	77.7	$	16.5	$	90.8	$	42.1

Total Restructuring and Other									Total Restructuring and Other	13.4			7.6			16.4			13.1

COVID-19 related charges included in:									COVID-19 related charges included in:

Direct operating expense(4)									Direct operating expense(4)	22.3			0			28.1			0
Distribution and marketing expense(4)									Distribution and marketing expense(4)	6.1			0			10.7			0
Total restructuring and other and COVID-19 related costs									Total restructuring and other and COVID-19 related costs	$	41.8		$	7.6		$	55.2		$	13.1

_______________________


~~(1)~~	Severance costs in the three and nine months ended December 31, 2019 and 2018 were primarily related to restructuring activities in connection with recent acquisitions, and other cost-saving initiatives.

~~(2)~~

Transaction and related costs in the three and nine months ended December 31, 2019 and 2018 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters. In the three and nine months ended December 31, 2018, these costs were primarily related to the legal fees associated with the Starz class action lawsuits and other matters, and to a lesser extent, costs related to the acquisition of 3 Arts Entertainment and other strategic transactions.

~~(3)~~

During the three months ended December 31, 2019, in connection with recent management changes, the Company implemented changes to its programming and broadcasting strategy including programming acquired or produced under prior management. As a result, the Company recorded certain programming and content charges of $74.0 million in the three and nine months ended December 31, 2019, which are included in direct operating expense in the unaudited condensed consolidated statement of operations.

(1)Severance costs in the three and six months ended September 30, 2020 and 2019 were primarily related to restructuring activities in connection with cost-saving initiatives and recent acquisitions.

(2)During the three and six months ended September 30, 2020, the Company has incurred certain costs including costs primarily related to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic.

(3)Transaction and related costs in the three and six months ended September 30, 2020 and 2019 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

(4)In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, including the worldwide closure of theaters, international travel restrictions and the pausing of motion picture and television productions, during the three and six months ended September 30, 2020 the Company incurred certain incremental costs which were expensed in the period. The costs included in direct operating expense primarily represent incremental costs associated with film impairment due to changes in performance expectations, the pausing and restarting of productions including certain cast and crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic. In addition, the costs included in distribution and marketing expense primarily consist of contractual marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit. The Company is in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in the consolidated financial statements.

Changes in the restructuring and other severance liability were as follows for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~

2019:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Nine Months Ended							Six Months Ended
	December 31,							September 30,
	2019			2018				2020		2019
	(Amounts in millions)							(Amounts in millions)
Severance liability							Severance liability
Beginning balance	$	21.2		$	14.7		Beginning balance	$	11.1	$	21.2
Accruals	7.7			17.0			Accruals	10.6		5.9
Severance payments	(21.3		)	(13.0		)	Severance payments	(10.8)		(18.8)

Ending balance⁽¹⁾	$	7.6		$	18.7		Ending balance(1)	$	10.9	$	8.3

_______________________


~~(1)~~	~~As of December 31, 2019, the remaining severance liability of approximately $7.6 million is expected to be paid in the next 12 months.~~

(1)As of September 30, 2020, the remaining severance liability of approximately $10.9 million is expected to be paid in the next 12 months.

~~15.~~

14. Segment Information

The Company’s reportable segments have been determined based on the distinct nature of their operations, the Company's

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

internal management structure, and the financial information that is evaluated regularly by the Company's chief operating decision maker.

The Company has 3 reportable business segments: (1) Motion Picture, (2) Television Production and (3) Media Networks.

Motion Picture. Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired.

Television Production. Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and non-fiction programming. Television Production includes the licensing of Starz original series productions to Starz Networks and STARZPLAY International, and the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts ~~Entertainment is included in the Television Production segment from the acquisition date of May 29, 2018 (see Note 2).~~Entertainment.

Media Networks. Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic licensing of premium subscription video programming to distributors, and on a direct-to-consumer basis (ii) STARZPLAY International, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services internationally and (iii) Other Streaming Services, which represents ~~the Lionsgate legacy start-up direct to consumer~~primarily our majority owned premium Spanish language streaming services ~~on its SVOD platforms.~~business, Pantaya.

In the ordinary course of business, the Company's reportable segments enter into transactions with one another. The most common types of intersegment transactions include licensing motion pictures or television programming (including Starz original productions) from the Motion Picture and Television Production segments to the Media Networks segment. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Segment information is presented in the table below:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Segment revenues
Motion Picture	$	257.6	$	405.8	$	538.3	$	803.6
Television Production	197.2		274.0		392.9		553.8
Media Networks	388.3		374.0		755.5		746.4
Intersegment eliminations	(98.1)		(70.3)		(128.0)		(156.7)
	$	745.0	$	983.5	$	1,558.7	$	1,947.1
Intersegment revenues
Motion Picture	$	7.1	$	5.7	$	10.2	$	10.1
Television Production	91.0		64.0		117.8		145.4
Media Networks	0		0.6		0		1.2
	$	98.1	$	70.3	$	128.0	$	156.7
Gross contribution
Motion Picture	$	107.8	$	76.8	$	237.6	$	109.7
Television Production	21.2		19.7		66.9		54.4
Media Networks	114.9		124.7		207.2		205.6
Intersegment eliminations	(2.7)		2.2		(10.4)		0.5
	$	241.2	$	223.4	$	501.3	$	370.2
Segment general and administration
Motion Picture	$	24.8	$	25.8	$	53.6	$	51.1
Television Production	11.3		7.1		22.0		16.8
Media Networks	22.0		20.1		42.5		40.4
	$	58.1	$	53.0	$	118.1	$	108.3
Segment profit
Motion Picture	$	83.0	$	51.0	$	184.0	$	58.6
Television Production	9.9		12.6		44.9		37.6
Media Networks	92.9		104.6		164.7		165.2
Intersegment eliminations	(2.7)		2.2		(10.4)		0.5
	$	183.1	$	170.4	$	383.2	$	261.9

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Segment revenues
Motion Picture $ 473.9
$ 362.6
$ 1,277.6
$ 1,106.9
Television Production 189.4
216.5
743.2
648.1
Media Networks 382.4
366.8
1,128.8
1,099.0
Intersegment eliminations (47.2 ) (12.7 ) (203.9 ) (87.1 )
$ 998.5
$ 933.2
$ 2,945.7
$ 2,766.9
Intersegment revenues
Motion Picture $ 3.8
$ 3.2
$ 13.9
$ 7.6
Television Production 42.8
9.5
188.2
79.4
Media Networks 0.6
—
1.8
0.1
$ 47.2
$ 12.7
$ 203.9
$ 87.1
Gross contribution
Motion Picture $ 74.0
$ 69.2
$ 183.7
$ 186.3
Television Production 4.4
32.6
58.8
79.4
Media Networks 124.4
157.2
330.0
418.7
Intersegment eliminations 2.0
(1.2 ) 2.6
(3.4 )
$ 204.8
$ 257.8
$ 575.1
$ 681.0
Segment general and administration
Motion Picture $ 25.0
$ 25.7
$ 76.1
$ 78.6
Television Production 10.1
11.4
26.9
32.9
Media Networks 22.3
23.1
62.7
73.3
$ 57.4
$ 60.2
$ 165.7
$ 184.8
Segment profit
Motion Picture $ 49.0
$ 43.5
$ 107.6
$ 107.7
Television Production (5.7 ) 21.2
31.9
46.5
Media Networks 102.1
134.1
267.3
345.4
Intersegment eliminations 2.0
(1.2 ) 2.6
(3.4 )
$ 147.4
$ 197.6
$ 409.4
$ 496.2

The Company's primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration expenses. Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation, ~~other than annual bonuses granted in immediately vested stock awards when applicable,~~ certain programming and content charges as a result of changes in management and associated programming and content strategy, and, when applicable, certain costs related to the COVID-19 global pandemic and purchase accounting and related ~~adjustments, when applicable.~~adjustments. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses. Media Networks gross contribution and segment profit for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019 includes a benefit of ~~$4.6~~$43.7 million and ~~$41.3~~$36.7 million, respectively, in direct operating expenses associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates.

The reconciliation of total segment profit to the Company’s income (loss) before income taxes is as follows:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Company’s total segment profit $ 147.4
$ 197.6
$ 409.4
$ 496.2
Corporate general and administrative expenses (23.4 ) (26.2 ) (73.0 ) (79.2 )
Adjusted depreciation and amortization⁽¹⁾
(10.5 ) (10.1 ) (31.5 ) (30.4 )
Restructuring and other⁽²⁾
(3.7 ) (16.5 ) (16.8 ) (42.1 )
Programming and content charges⁽³⁾
(74.0 ) —
(74.0 ) —
Adjusted share-based compensation expense⁽⁴⁾
(17.2 ) (11.1 ) (41.0 ) (41.3 )
Purchase accounting and related adjustments⁽⁵⁾
(58.1 ) (46.9 ) (158.2 ) (139.2 )
Operating income (loss) (39.5 ) 86.8
14.9
164.0
Interest expense (48.7 ) (45.3 ) (145.7 ) (152.2 )
Shareholder litigation settlements⁽⁶⁾
—
—
—
(114.1 )
Interest and other income 2.0
2.9
7.0
9.0
Other expense (3.6 ) (1.8 ) (9.7 ) (1.8 )
Loss on extinguishment of debt (1.4 ) —
(1.4 ) —
Loss on investments —
(6.2 ) (0.3 ) (43.2 )
Equity interests loss (4.6 ) (11.0 ) (15.7 ) (28.8 )
Income (loss) before income taxes $ (95.8 ) $ 25.4
$ (150.9 ) $ (167.1 )

~~___________________~~

~~(1)~~

Adjusted depreciation and amortization represents depreciation and amortization as presented on our unaudited condensed consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Depreciation and amortization $ 51.9
$ 41.0
$ 143.0
$ 122.1
Less: Amount included in purchase accounting and related adjustments (41.4 ) (30.9 ) (111.5 ) (91.7 )
Adjusted depreciation and amortization $ 10.5
$ 10.1
$ 31.5
$ 30.4


~~(2)~~	~~Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 14).~~

~~(3)~~

During the three months ended December 31, 2019, in connection with recent management changes, the Company implemented changes to its programming and broadcasting strategy including programming acquired or produced under prior management. As a result, the Company recorded certain programming and content charges of $74.0 million in the three and nine months ended December 31, 2019 (representing $66.2 million related to the Media Networks segment, and $7.8 million related to the Television Production segment), which are included in direct operating expense in the unaudited condensed consolidated statement of operations.


~~(4)~~	~~The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:~~


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Company’s total segment profit	$	183.1	$	170.4	$	383.2	$	261.9
Corporate general and administrative expenses	(27.1)		(25.4)		(53.5)		(49.5)
Adjusted depreciation and amortization(1)	(12.1)		(10.2)		(22.1)		(21.1)
Restructuring and other(2)	(13.4)		(7.6)		(16.4)		(13.1)
COVID-19 related costs included in direct operating expense and distribution and marketing expense(3)	(28.4)		0		(38.8)		0

Adjusted share-based compensation expense(4)	(22.8)		(14.5)		(37.2)		(23.8)
Purchase accounting and related adjustments(5)	(49.6)		(55.1)		(96.1)		(100.1)
Operating income	29.7		57.6		119.1		54.3
Interest expense	(45.7)		(48.0)		(90.2)		(97.0)
Interest and other income	0.1		2.2		1.8		5.0
Other expense	(0.7)		(3.8)		(2.3)		(6.1)

Gain (loss) on investments	(4.7)		(0.4)		0.4		(0.3)
Equity interests loss	(1.9)		(3.2)		(4.5)		(11.1)
Income (loss) before income taxes	$	(23.2)	$	4.4	$	24.3	$	(55.2)

___________________

(1)Adjusted depreciation and amortization represents depreciation and amortization as presented on our unaudited condensed consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Depreciation and amortization	$	49.6	$	50.9	$	97.1	$	91.2
Less: Amount included in purchase accounting and related adjustments	(37.5)		(40.7)		(75.0)		(70.1)
Adjusted depreciation and amortization	$	12.1	$	10.2	$	22.1	$	21.1

(2)Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 13).

(3)In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, during the three and six months ended September 30, 2020 the Company has incurred $28.4 million and $38.8 million, respectively, in incremental direct operating and distribution and marketing expense (see Note 13). These charges are excluded from segment operating results.

(4)The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
					(Amounts in millions)
Total share-based compensation expense	$	25.6	$	14.5	$	40.0	$	24.1
Less:

Amount included in restructuring and other(i)	(2.8)		0		(2.8)		(0.3)
Adjusted share-based compensation	$	22.8	$	14.5	$	37.2	$	23.8

(i)Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Total share-based compensation expense $ 17.2
$ 13.5
$ 41.3
$ 43.7
Less:
Amount included in restructuring and other⁽ⁱ⁾
—
(2.4 ) (0.3 ) (2.4 )
Adjusted share-based compensation $ 17.2
$ 11.1
$ 41.0
$ 41.3


~~(i)~~	Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

~~(5)~~

Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions. These adjustments include the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with the earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense. The following sets forth the amounts included in each line item in the financial statements:

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Purchase accounting and related adjustments:
Direct operating $ 5.1
$ 2.9
$ 7.6
$ 16.5
General and administrative expense 11.6
13.1
39.1
31.0
Depreciation and amortization 41.4
30.9
111.5
91.7
$ 58.1
$ 46.9
$ 158.2
$ 139.2

~~(6)~~

Shareholder litigation settlements of $114.1 million in the nine months ended December 31, 2018 includes the following: (i) $54.8 million for the net expense recorded for the settlement of the Fiduciary Litigation (representing the settlement amount of $92.5 million, net of aggregate insurance reimbursement of $37.8 million (see Note 16) and (ii) $59.3 million related to the Appraisal Litigation, representing the amount by which the settlement amount of approximately $964 million exceeded the previously accrued (at date of acquisition) dissenting shareholders' liability plus interest through the date agreed in the settlement.

(5)Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions. These adjustments include the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with the earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense. The following sets forth the amounts included in each line item in the financial statements:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Purchase accounting and related adjustments:
Direct operating	$	0.6	$	1.0	$	0.9	$	2.5
General and administrative expense	11.5		13.4		20.2		27.5
Depreciation and amortization	37.5		40.7		75.0		70.1
	$	49.6	$	55.1	$	96.1	$	100.1

See Note 109 for revenues by media or product line as broken down by segment for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019.

The following table reconciles segment general and administration expense to the Company's total consolidated general and administration expense:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
General and administration
Segment general and administrative expenses	$	58.1	$	53.0	$	118.1	$	108.3
Corporate general and administrative expenses	27.1		25.4		53.5		49.5
Share-based compensation expense included in general and administrative expense	22.1		14.1		36.0		23.2
Purchase accounting and related adjustments	11.5		13.4		20.2		27.5
	$	118.8	$	105.9	$	227.8	$	208.5

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
General and administration
Segment general and administrative expenses $ 57.4
$ 60.2
$ 165.7
$ 184.8
Corporate general and administrative expenses 23.4
26.2
73.0
79.2
Share-based compensation expense included in general and administrative expense 16.3
10.5
39.5
40.2
Purchase accounting and related adjustments 11.6
13.1
39.1
31.0
$ 108.7
$ 110.0
$ 317.3
$ 335.2

The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:


	September 30, 2020		March 31, 2020
	(Amounts in millions)
Assets
Motion Picture	$	1,170.7	$	1,266.9
Television Production	1,238.5		1,414.8
Media Networks	4,617.2		4,671.4
Other unallocated assets(1)	720.1		598.1
	$	7,746.5	$	7,951.2

_____________________

(1)Other unallocated assets primarily consist of cash, other assets and investments.

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:~~

December 31,
2019 March 31,
2019
(Amounts in millions)
Assets
Motion Picture $ 1,557.7
$ 1,694.5
Television Production 1,336.0
1,394.2
Media Networks 4,613.7
4,850.3
Other unallocated assets⁽¹⁾
452.3
469.9
$ 7,959.7
$ 8,408.9

~~_____________________~~


~~(1)~~	~~Other unallocated assets primarily consist of cash, other assets and investments.~~

~~16.~~15. Contingencies

From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business.

The Company establishes an accrued liability for claims and legal proceedings when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

Due to the inherent difficulty of predicting the outcome of claims and legal proceedings, the Company often cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, if any, related to each pending matter may be. Accordingly, at this time, the Company has determined a loss related to these matters in excess of accrued liabilities is reasonably possible, however a reasonable estimate of the possible loss or range of loss cannot be made at this time.

Insurance Litigation

Between July 19, 2016 and August 30, 2016, 7 putative class action complaints were filed by purported Starz stockholders in the Court of Chancery of the State of Delaware (the "Fiduciary Litigation"). On August 22, 2018, the parties to the Fiduciary Litigation reached an agreement in principle providing for the settlement of the Fiduciary Litigation on the terms and conditions set forth in an executed term sheet. On October 9, 2018, the parties to the Litigation executed a stipulation of settlement, which was filed with the court (the "Stipulation"). The Stipulation provided for, among other things, the final dismissal of the Fiduciary Litigation in exchange for a settlement payment made in the amount of $92.5 million, of which $37.8 million was reimbursed by insurance. The Fiduciary Litigation settlement was approved by the Court of Chancery of the State of Delaware and the settlement amount and insurance reimbursement discussed above were paid during the quarter ended December 31, 2018. The Company is continuing to seek additional insurance reimbursement, including pursuant to a lawsuit ~~submitted~~filed by the Company on November 7, 2018 against certain insurers.

On November 5, 2018, an insurer that entered into an agreement and contributed $10.0 million to the Company's aggregate insurance reimbursement filed a lawsuit seeking declaratory judgment for reimbursement of its agreed upon payment. The Company believes the lawsuit to be without merit and intends to vigorously defend it.

~~17.~~16. Derivative Instruments and Hedging Activities

Forward Foreign Exchange Contracts

The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses and tax credit receivables denominated in various foreign currencies (i.e., cash flow hedges). The Company also enters into forward foreign exchange contracts that economically hedge certain of its foreign currency risks, even though hedge

~~Table of Contents~~

~~LIONS GATE ENTERTAINMENT CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ — ~~(Continued)~~

accounting does not apply or the Company elects not to apply hedge accounting. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions. Changes in the fair value of the foreign exchange contracts that are designated as hedges are reflected in accumulated other comprehensive income (loss), and changes in the fair value of foreign exchange contracts that are not designated as hedges and do not qualify for hedge accounting are recorded in direct operating expense. Gains and losses realized upon settlement of the foreign exchange contracts that are designated as hedges are amortized to direct operating expense on the same basis as the production expenses being hedged.

As of ~~December 31, 2019,~~September 30, 2020, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 1912 months from ~~December 31, 2019)~~September 30, 2020):

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~December 31, 2019~~September 30, 2020

Foreign Currency

Foreign Currency Amount

US Dollar Amount

Weighted Average Exchange Rate Per $1 USD

(Amounts in millions)

British Pound Sterling

£3.8

~~£11.7~~

in exchange for

$5.1

~~$16.0~~

£~~0.73~~0.81

~~Canadian Dollar~~Hungarian Forint

HUF 274.1

~~C$9.5~~

in exchange for

$1.0

~~$7.7~~

~~C$1.24~~HUF 281.68

~~Australian Dollar~~Euro

€1.0

~~A$3.5~~

in exchange for

$1.2

~~$2.8~~

€0.80

Canadian Dollar

~~A$1.25~~

C$2.8

in exchange for

$2.0

C$1.42

Croatian Kuna

HRK2.5

in exchange for

$0.4

HRK6.32

Interest Rate Swaps

The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows. The Company primarily uses pay-fixed interest rate swaps to facilitate its interest rate risk management activities, which the Company generally designates as cash flow hedges of interest payments on floating-rate borrowings. Pay-fixed swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or losses from these designated cash flow hedges are deferred in accumulated other comprehensive income (loss) and recognized in interest expense as the interest payments occur. Changes in the fair value of interest rate swaps that are not designated as hedges are recorded in interest expense (see further explanation below).

As of ~~December 31, 2019 and~~ March 31, ~~2019,~~2020, the ~~total notional amount of~~Company had the ~~Company’s~~following pay-fixed interest rate swaps ~~was $1.7 billion.~~

~~The major terms of the Company's interest rate swap agreements as of December 31, 2019 are as follows~~outstanding (all related to the Company's LIBOR-based debt, see Note 5)4 and Note 6):


Effective Date	Notional Amount (in millions)	Fixed Rate Paid	Maturity Date
May 23, 2018	$1,000.0	2.915%	March 24, 2025
June 25, 2018	$200.0	2.723%	March 23, 2025
July 31, 2018	$300.0	2.885%	March 23, 2025
December 24, 2018	$50.0	2.744%	March 23, 2025
December 24, 2018	$100.0	2.808%	March 23, 2025
December 24, 2018	$50.0	2.728%	March 23, 2025
Total	$1,700.0

During the three and six months ended September 30, 2020, the Company completed a series of transactions to amend and extend certain interest rate swap agreements. These transactions effectively replaced $1.4 billion ($200.0 million in the three months ended September 30, 2020), of the interest rate swaps presented in the table above, and resulted in an extension of the maturity date on an aggregate of $1.4 billion of the Company's interest rate swaps by an additional 2 to 5 years, subject to mandatory early termination dates, and a decrease of the weighted average fixed pay rate from 2.870% to 2.250% per annum.

These interest rate swap transactions consisted of the following in the six months ended September 30, 2020: (i) $1.4 billion of the interest rate swaps presented in the table above were de-designated as cash flow hedges, (ii) the Company entered into $1.4 billion of pay-variable receive-fixed interest rate swaps which are designed to offset the terms of the $1.4 billion of swaps in (i) and which are not designated as cash flow hedges, and (iii) the Company entered into $1.4 billion of new pay-fixed interest rate swaps with extended maturities. These new pay-fixed interest rate swaps are considered hybrid instruments with a financing component and an embedded at-market derivative that was designated as a cash flows hedge (see discussion of cash flow presentation below).

Key terms of the new offsetting pay-variable receive-fixed interest rate swaps outstanding at September 30, 2020 are presented below (not designated as hedges):

Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Effective Date Notional Amount (in millions) Fixed Rate Paid Maturity Date
May 23, 2018
$1,000.0
2.915% March 24, 2025
June 25, 2018
$200.0
2.723% March 23, 2025
July 31, 2018
$300.0
2.885% March 23, 2025
December 24, 2018
$50.0
2.744% March 23, 2025
December 24, 2018
$100.0
2.808% March 23, 2025
December 24, 2018
$50.0
2.728% March 23, 2025


Effective Date	Notional Amount (in millions)	Fixed Rate Received	Maturity Date
May 19, 2020	$700.0	2.915%	March 24, 2025
May 19, 2020	$300.0	2.885%	March 23, 2025
May 19, 2020	$50.0	2.744%	March 23, 2025
June 15, 2020	$100.0	2.808%	March 23, 2025
June 15, 2020	$50.0	2.728%	March 23, 2025
August 14, 2020	$200.0	2.723%	March 23, 2025
Total	$1,400.0

Key terms of the new designated cash flow hedge pay-fixed interest rate swaps outstanding at September 30, 2020 are presented below:


Effective Date	Notional Amount (in millions)	Fixed Rate Paid	Maturity Date(1)
May 19, 2020	$700.0	1.923%	March 23, 2030
May 19, 2020	$350.0	2.531%	March 23, 2027
June 15, 2020	$150.0	2.343%	March 23, 2027
August 14, 2020	$200.0	1.840%	March 23, 2030
Total	$1,400.0

__________________

(1)Subject to a mandatory early termination date of March 23, 2025.

At the time of the de-designation of the above $1.4 billion in interest rate swaps, there was approximately $163.0 million of unrealized losses recorded in accumulated other comprehensive income (loss). This amount will be amortized to interest expense through the remaining term of the original de-designated swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time. The $1.4 billion of interest rate swaps de-designated as cash flow hedges and the $1.4 billion of offsetting swaps will be marked to market with changes in fair value recognized, along with the fixed and variable payments on these swaps, in interest expense, which are expected to nearly offset each other.

Cash settlements related to interest rate contracts are generally classified as operating activities on the consolidated statements of cash flows. However, due to an other-than-insignificant financing element on a portion of our interest rate swaps (see table above for new designated cash flow hedge pay-fixed interest rate swaps), the cash flows related to these contracts are classified as financing activities.

Financial Statement Effect of Derivatives

Unaudited condensed consolidated statement of operations and comprehensive loss:The following table presents the pre-tax effect of the Company's derivatives on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~

2019:

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)
Derivatives designated as cash flow hedges:
Forward exchange contracts
Gain (loss) recognized in accumulated other comprehensive loss $ (0.3 ) $ 0.8
$ (0.2 ) $ 1.2
Gain (loss) reclassified from accumulated other comprehensive loss into direct operating expense $ 0.4
$ (0.4 ) $ 1.9
$ (0.2 )

Interest rate swap agreements
Gain (loss) recognized in accumulated other comprehensive loss $ 23.3
$ (40.5 ) $ (43.4 ) $ (35.1 )
Loss reclassified from accumulated other comprehensive loss into interest expense (4.5 ) (2.3 ) (8.9 ) (6.1 )

Derivatives not designated as cash flow hedges:
Forward exchange contracts
Gain recognized in direct operating expense $ 0.1
$ 0.1
$ 0.2
$ 0.1

Total direct operating expense on consolidated statements of operations $ 594.6
$ 502.0
$ 1,662.0
$ 1,495.2
Total interest expense on consolidated statements of operations⁽¹⁾
$ 48.7
$ 42.7
$ 145.7
$ 116.9

~~________________~~


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Derivatives designated as cash flow hedges:
Forward exchange contracts
Loss recognized in accumulated other comprehensive loss	$	(0.4)	$	0.4	$	(0.6)	$	1.6
Gain (loss) reclassified from accumulated other comprehensive loss into direct operating expense	$	0	$	0.4	$	(0.1)	$	1.6
Interest rate swaps
Loss recognized in accumulated other comprehensive loss	$	(10.5)	$	(23.6)	$	(28.2)	$	(71.1)
Loss reclassified from accumulated other comprehensive loss into interest expense	$	(9.6)	$	(2.7)	$	(17.0)	$	(4.4)

Derivatives not designated as cash flow hedges:
Forward exchange contracts
Gain recognized in direct operating expense	$	0	$	0	$	0.3	$	0
Interest rate swaps
Loss reclassified from accumulated other comprehensive loss into interest expense	$	(8.0)	$	0	$	(11.4)	$	0

Total direct operating expense on consolidated statements of operations	$	366.8	$	499.4	$	789.8	$	1,067.4
Total interest expense on consolidated statements of operations	$	45.7	$	48.0	$	90.2	$	97.0

~~(1)Represents interest expense before interest on dissenting shareholders' liability.~~

Unaudited condensed consolidated balance sheets:The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 8)7). The portion of the swaps reflecting the financing component of the hybrid instrument discussed above is recorded at amortized cost and reduced over time based on payments. Pursuant to the Company's accounting policy to offset the fair value amounts recognized for derivative instruments, the Company presents the asset or liability position of the swaps that are with the same counterparty under a master netting arrangement net as either an asset or liability in its unaudited condensed consolidated balance sheets. The gross amount of swaps in an asset and liability position that were subject to a master netting arrangement was $161.3 million and $276.4 million, respectively, resulting in a net liability recorded in other liabilities - non-current of $115.1 million as of September 30, 2020.

As of ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019,~~2020, the Company had the following amounts recorded in the accompanying unaudited condensed consolidated balance sheets related to the Company's use of derivatives:

3839

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2019
Other Current Assets Accounts Payable and Accrued Liabilities Other Non-Current Liabilities
(Amounts in millions)
Derivatives designated as cash flow hedges:
Forward exchange contracts $ 1.4
$ 0.7
$ —
Interest rate swap agreements —
—
107.0
Derivatives not designated as cash flow hedges:
Forward exchange contracts 0.2
—
—
Fair value of derivatives $ 1.6
$ 0.7
$ 107.0

March 31, 2019
Other Current Assets Accounts Payable and Accrued Liabilities Other Non-Current Liabilities
(Amounts in millions)
Derivatives designated as cash flow hedges:
Forward exchange contracts $ 1.5
$ 0.6
$ —
Interest rate swap agreements —
—
63.6
Fair value of derivatives $ 1.5
$ 0.6
63.6


	September 30, 2020
	Other Current Assets		Accounts Payable and Accrued Liabilities		Other Non-Current Liabilities
	(Amounts in millions)
Derivatives designated as cash flow hedges:
Forward exchange contracts	$	0.4	$	0.7	$	0
Interest rate swaps	0		0		36.0
Derivatives not designated as cash flow hedges:

Interest rate swaps(1)	0		0		156.6
Fair value of derivatives	$	0.4	$	0.7	$	192.6

________________

(1)Includes $161.5 million representing the financing element of certain hybrid instruments, which is offset by the new pay-variable receive-fixed interest rate swaps outstanding at September 30, 2020.


	March 31, 2020
	Other Current Assets		Accounts Payable and Accrued Liabilities		Other Non-Current Liabilities
	(Amounts in millions)
Derivatives designated as cash flow hedges:
Forward exchange contracts	$	0.6	$	0.5	$	0
Interest rate swaps	0		0		187.9
Derivatives not designated as cash flow hedges:
Forward exchange contracts	0		0.4		0
Fair value of derivatives	$	0.6	$	0.9	187.9

As of ~~December 31, 2019,~~September 30, 2020, based on the current release schedule, the Company estimates approximately ~~$0.2~~$1.2 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive loss will be reclassified into earnings during the one-year period ending ~~December 31, 2020.~~September 30, 2021.

As of ~~December 31, 2019,~~September 30, 2020, the Company estimates approximately ~~$22.0~~$44.4 million of losses recorded in accumulated other comprehensive loss associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the one-year period ending ~~December 31, 2020.~~September 30, 2021.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~18.~~17. Additional Financial Information

The following tables present supplemental information related to the unaudited condensed consolidated financial statements.

Other Assets

The composition of the Company’s other assets is as follows as of ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019:~~2020:


	September 30, 2020		March 31, 2020
	(Amounts in millions)
Other current assets
Prepaid expenses and other	$	69.8	$	65.7
Product inventory(1)	17.3		13.4
Tax credits receivable	76.7		78.3
	$	163.8	$	157.4
Other non-current assets
Prepaid expenses and other	$	23.8	$	34.3
Accounts receivable	37.2		53.6
Tax credits receivable	178.1		166.7
Operating lease right-of-use assets	134.3		136.9

	$	373.4	$	391.5

December 31,
2019 March 31,
2019
(Amounts in millions)
Other current assets
Prepaid expenses and other $ 66.8
$ 150.6
Product inventory 16.2
19.9
Tax credits receivable 90.5
96.7
$ 173.5
$ 267.2
Other non-current assets
Prepaid expenses and other $ 39.0
$ 109.2
Accounts receivable 82.3
176.1
Tax credits receivable 178.2
150.8
Operating lease right-of-use assets 140.3
—
$ 439.8
$ 436.1
___________________

(1)Home entertainment product inventory consists of Packaged Media and is stated at the lower of cost or market value (first-in, first-out method). Costs of Packaged Media sales, including shipping and handling costs, are included in distribution and marketing expenses.

Accounts Receivable Monetization

Under the Company's accounts receivable monetization programs, the Company has entered into (1) individual agreements to monetize certain of its trade accounts receivable directly with third-party purchasers and (2) a revolving agreement to monetize designated pools of trade accounts receivable with various financial institutions, as further described below. Under these programs, the Company transfers receivables to purchasers in exchange for cash proceeds, and the Company continues to service the receivables for the purchasers. The Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of the receivables from its balance sheets and classifies the proceeds received as cash flows from operating activities in the statements of cash flows. The Company records a loss on the sale of these receivables reflecting the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred. The loss is reflected in the "other expense" line item on the unaudited condensed consolidated statements of operations. The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019.

Individual Monetization Agreements. The Company enters into individual agreements to monetize trade accounts receivable. The third-party purchasers have no recourse to other assets of the Company in the event of non-payment by the customers. The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(Amounts in millions)
Carrying value of receivables transferred and derecognized	$	341.8	$	455.9	$	655.0	$	830.4
Net cash proceeds received	341.2		452.1		652.9		824.3
Loss recorded related to transfers of receivables	0.6		3.8		2.1		6.1

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)

Carrying value of receivables transferred and derecognized $ 448.8
$ 132.9
$ 1,279.2
$ 132.9
Net cash proceeds received 446.5
131.1
1,270.8
131.1
Loss recorded related to transfers of receivables 2.3
1.8
8.4
1.8

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At ~~December 31, 2019,~~September 30, 2020, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheets, but which the Company continues to service, related to the Company's individual agreements to monetize trade accounts receivable was ~~$559.3~~$540.3 million (March 31, ~~2019~~2020 - ~~$350.6~~$529.8 million).

Pooled Monetization Agreement. In December 2019, the Company entered into a revolving agreement to transfer up to $150.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. As customers pay their balances, the Company transfers additional receivables into the program. The transferred receivables are fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company, which holds additional receivables in the amount of ~~$60.4~~$52.9 million as of ~~December 31, 2019~~September 30, 2020 that are pledged as collateral under this agreement. The third-party purchasers have no recourse to other assets of the Company in the event of non-payment by the customers.

The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the three and ~~nine~~six months ended ~~December 31, 2019 and 2018:~~September 30, 2020:


	Three Months Ended		Six Months Ended
	September 30,		September 30,
	2020			2020
	(Amounts in millions)
Gross cash proceeds received for receivables transferred and derecognized	$	33.7		$	86.0
Less amounts from collections reinvested under revolving agreement	(33.7)			(75.0)
Proceeds from new transfers	0			11.0
Collections not reinvested and remitted or to be remitted	(3.9)			(14.3)
Net cash proceeds received	$	(3.9)		$	(3.3)

Carrying value of receivables transferred and derecognized (1)	$	33.5		$	85.5
Obligations recorded	$	0.2		$	0.6
Loss recorded related to transfers of receivables	$	0		$	0.2

___________________

Three Months Ended Nine Months Ended
December 31, December 31,
2019 2018 2019 2018
(Amounts in millions)

Gross cash proceeds received for receivables transferred and derecognized $ 111.3
$ —
$ 111.3
$ —
Less amounts from collections reinvested under revolving agreement (19.7 ) —
(19.7 ) —
Proceeds from new transfers 91.6
—
91.6
—
Collections not reinvested and remitted or to be remitted (13.5 ) —
(13.5 ) —
Net cash proceeds received $ 78.1
$ —
$ 78.1
$ —

Carrying value of receivables transferred and derecognized ⁽¹⁾
$ 110.9
$ —
$ 110.9
$ —
Obligations recorded $ 1.6
$ —
$ 1.6
$ —
Loss recorded related to transfers of receivables $ 1.3
$ —
$ 1.3
$ —
(1)Receivables net of unamortized discounts on long-term, non-interest bearing receivables.

~~___________________~~


~~(1)~~	~~Receivables net of unamortized discounts on long-term, non-interest bearing receivables.~~

At ~~December 31, 2019,~~September 30, 2020, the outstanding amount of receivables derecognized from the Company's unaudited condensed consolidated balance sheet, but which the Company continues to service, related to the pooled monetization agreement was approximately ~~$78.1~~$89.2 million.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in the components of accumulated other comprehensive loss, net of tax:


	Foreign currency translation adjustments		Net unrealized loss on cash flow hedges		Total
	(Amounts in millions)
March 31, 2020	$	(18.8)	$	(187.2)	$	(206.0)
Other comprehensive income (loss)	0.8		(0.3)		0.5
September 30, 2020	$	(18.0)	$	(187.5)	$	(205.5)

Foreign currency translation adjustments Net unrealized loss on cash flow hedges Total
(Amounts in millions)
March 31, 2019 $ (18.2 ) $ (62.1 ) $ (80.3 )
Other comprehensive income (loss) 0.5
(43.7 ) (43.2 )
December 31, 2019 $ (17.7 ) $ (105.8 ) $ (123.5 )

Cash, Cash Equivalents and Restricted Cash

There was 0 restricted cash in the unaudited condensed consolidated balance sheets as of September 30, 2020 or March 31, 2020.

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LIONS GATE ENTERTAINMENT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Cash, Cash Equivalents and Restricted Cash~~

~~There was 0 restricted cash in the unaudited condensed consolidated balance sheets as of December 31, 2019 or March 31, 2019.~~

Supplemental Cash Flow Information

Significant non-cash transactions during the quarter include certain interest rate swap agreements, which are discussed in Note 16, "Derivative Instruments and Hedging Activities".

The supplemental schedule of non-cash investing and financing activities is presented below:


	Six Months Ended
	September 30,
	2020		2019
	(Amounts in millions)
Non-cash investing activities:
Decrease in finance lease right-of-use asset due to a reassessment event	$	(42.0)	$	0
Common shares related to business acquisitions	$	0	$	28.1

Non-cash financing activities:
Decrease in finance lease liability due to a reassessment event	$	(48.6)	$	0

Nine Months Ended
December 31,
2019 2018
(Amounts in millions)
Non-cash investing activities:
Common shares related to business acquisitions (see Note 2) $ —
$ 83.7

Supplemental cash flow information related to leases was as follows:

~~There were no significant non-cash financing activities for the nine months ended December 31, 2019 and 2018.~~


	Six Months Ended
	September 30,
		2020		2019
		(Amounts in millions)





Right-of-use assets obtained in exchange for new lease obligations:
Operating leases		$	10.4	$	2.1

Increase in right-of-use assets and lease liability due to a reassessment event:
Operating leases - increase in right-of-use assets		$	6.0	$	0
Operating leases - increase in lease liability		$	12.6	$	0

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

Combining the STARZ premium global subscription platform with world-class motion picture and television studio operations, Lions Gate Entertainment Corp. (the “Company,” “Lionsgate,” ~~“Lions~~"Lions Gate,”" “we,” “us” or “our”) isbrings a ~~global content leader whose films, television series, digital products~~unique and ~~linear and over-the-top platforms reach next generation audiences~~varied portfolio of entertainment to consumers around the world. ~~In addition to our filmed entertainment leadership, Lionsgate content drives a growing presence in interactive~~Its film, television, subscription and location-based entertainment ~~video games, esports and other new entertainment technologies. Lionsgate's content initiatives~~businesses are backed by a ~~nearly~~ 17,000-title library and the largest collection of film and television ~~library~~franchises in the independent media space. A digital age company driven by its entrepreneurial culture and ~~delivered through a global sales and licensing infrastructure.~~commitment to innovation, the Lionsgate brand is synonymous with bold, original, relatable entertainment for the audiences it serves worldwide. We classify our operations through three reporting segments: Motion Picture, Television Production, and Media Networks (see further discussion below).

Impact of COVID-19

The impacts associated with the ongoing COVID-19 global pandemic and measures to prevent its spread, and the resulting economic uncertainty, continue to affect our business in a number of ways. We continue to experience delays in theatrical distribution of our films, both domestically and internationally, as well as delays in the production of film and television content (resulting in continued changes in future release dates for some titles and series). While we have begun production on a number of film and television series this quarter, and theaters have begun to reopen in certain locations with reduced capacity, we are not able to accurately predict when theaters will re-open at scale, at what level consumers will return to movie theaters, when film production will fully resume, whether productions that have resumed will be paused again, the impact of incremental costs required to adhere to new health and safety protocols, or if and when certain of our content will be released. The full extent of impacts related to the COVID-19 global pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. See Part I, Item 1A. “Risk Factors” found in our Annual Report on Form 10-K filed with the SEC on May 27, 2020, as updated by the risk factors found under Part II, Item 1A. "Risk Factors" herein.

Conversely, television and streaming consumption around the globe continues to increase, as well as home entertainment demand. STARZ continues to achieve an increase in viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally. However, it is too early to say whether this increase is indicative of future results and whether growth may slow as governmental and other restrictions are relaxed, and as a result of the current and possible longer term negative economic impact of the pandemic. We continue, however, to adapt to these new circumstances. For instance, we have changed the release strategies of several of our theatrical films by releasing solely and/or earlier on streaming platforms, initially releasing in the premium video-on-demand ("Premium VOD") market, or by licensing directly to streaming platforms. We have also begun and completed post-production of a number of our television series and continue the development of film properties and television series.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, including the worldwide closure of most theaters, international travel restrictions and the pausing of motion picture and television productions, during the three and six months ended September 30, 2020 we have incurred $28.7 million and $39.6 million, respectively, in incremental costs which were expensed in the period. These costs include $22.3 million and $28.1 million, respectively, reflected in direct operating expense, which include incremental costs associated with film impairment due to changes in performance expectations, the pausing and restarting of productions including certain cast and crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic. In addition, these costs include $6.1 million and $10.7 million, respectively, reflected in distribution and marketing expense, which primarily consists of contractual marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit, and $0.3 million and $0.8 million in restructuring and other costs primarily due to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic during this period. We expect to incur additional incremental costs in future periods. We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in our consolidated financial statements. See further discussion in the Results of Operations section below.

The economic impact of the COVID-19 global pandemic and resulting societal changes will depend on numerous evolving factors that cannot be predicted with certainty. There are a number of ways in which these uncertainties resulting from the COVID-19 global pandemic have impacted our current results of operations and could continue to impact our future results of

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operations. These impacts include the incremental costs and losses discussed in the previous paragraph, lower revenues from the closure of movie theaters and postponement of theatrical releases, partially offset by lower theatrical production and marketing costs; increased expenses associated with new health and safety protocols on motion picture and television productions; changes in the timing of revenues for motion pictures and television productions associated with delays in production and delivery or release; and while STARZ has experienced an increase in viewership of its content, future growth could be impacted by the timing of when productions will fully resume, and whether productions that have resumed will be paused again.

We expect that the ultimate impact of these disruptions, including the extent of any adverse impact on our business, results of operations and financial condition, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions related to the COVID-19 global pandemic. All of these impacts could place limitations on our ability to execute on our business plan and materially and adversely affect our business, financial condition and results of operations. We have implemented policies, procedures and protocols to address the situation and expect to continue to adjust our current policies and procedures as more information and guidance become available. In addition, a recent resurgence of COVID-19 in certain parts of the world, including the United States and parts of Europe, has resulted in the re-imposition of certain restrictions and may lead to more restrictions being implemented again to reduce the spread of COVID-19. These measures could result in further interruptions to our operations. Due to the evolving and uncertain nature of this situation, we are not able to estimate the full extent of the impact on our operating results, cash flows and financial position, particularly over the near to medium term.

Revenues

Our revenues are derived from the Motion Picture, Television Production and Media Networks segments, as described below. 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 three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019.

Motion Picture

Our Motion Picture segment includes revenues derived from the following:

•

•Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by us directly in the U.S. and through a sub-distributor in Canada). The revenues from Canada are reported net of distribution fees and release expenses of the Canadian sub-distributor. The financial terms that we negotiate with our theatrical exhibitors in the U.S. generally provide that we receive a percentage of the box office results

•Home Entertainment. Home entertainment revenues are derived from the sale or rental of our film productions and acquired or licensed films and certain television programs (including theatrical and direct-to-video releases) on packaged media and through digital media platforms (including pay-per-view and video-on-demand platforms, electronic sell through, and digital rental). In addition, we have revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, we share in the rental or sales revenues generated by the platform on a title-by-title basis.

•Television. Television revenues are primarily derived from the licensing of our theatrical productions and acquired films to the linear pay, basic cable and free television markets.

•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.

•Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by us directly in the U.S. and through a sub-distributor in Canada). The revenues from Canada are reported net of distribution fees and release expenses of the Canadian sub-distributor. The financial terms that we negotiate with our theatrical exhibitors in the U.S. generally provide that we receive a percentage of the box office results.

•

~~Home Entertainment.~~ Home entertainment revenues are derived from the sale or rental of our film productions and acquired or licensed films and certain television programs (including theatrical and direct-to-video releases) on packaged media and through digital media platforms (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.~~


•	~~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

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programming. Television revenues include fixed fee arrangements as well as arrangements in which we earn advertising revenue from the exploitation of certain content on television networks. Television revenues also include revenue from licenses to subscription-video-on-demand ("SVOD") platforms in which the initial license of a television series is to an SVOD platform.

•International. International revenues are derived from the licensing and syndication to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming.

•Home Entertainment. Home entertainment revenues are derived from the sale or rental of television production movies or series on packaged media and through digital media platforms.

•Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of scripted and unscripted series, television movies, mini-series and non-fiction programming. Television revenues include fixed fee arrangements as well as arrangements in which the Company earns advertising revenue from the exploitation of certain content on television networks. Television revenues also include revenue from licenses to subscription-video-on-demand ("SVOD") platforms in which the initial license of a television series is to an SVOD platform.


•	~~International.~~ ~~International revenues are derived from the licensing and syndication to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming.~~


•	~~Home Entertainment.~~ ~~Home entertainment revenues are derived from the sale or rental of television production movies or series on packaged media and through digital media platforms.~~


•	Other. Other revenues are derived from, among others, the licensing of our television programs to other ancillary markets, the sales and licensing of music from the television broadcasts of our productions, and from commissions earned and executive producer fees related to talent management.

Media Networks

Our Media Networks segment includes revenues derived from the following:

•

~~Starz Networks.~~ Starz Networks’ revenues are derived from the domestic distribution of our STARZ branded premium subscription video services pursuant to affiliation agreements with U.S. multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers and telecommunications companies, and over-the-top ("OTT") (collectively, “Distributors”), and on a direct-to-consumer basis.

•Starz Networks. Starz Networks’ revenues are derived from the domestic distribution of our STARZ branded premium subscription video services through our over-the-top ("OTT") service, U.S. multichannel video programming distributors (“MVPDs”) including cable operators, satellite television providers and telecommunications companies (collectively, “Distributors”) pursuant to affiliation agreements, and on a direct-to-consumer basis through our Starz App.

•STARZPLAY International.STARZPLAY International revenues are primarily derived from OTT distribution of the Company's STARZ branded premium subscription video services internationally.

•Other Streaming Services. Other Streaming Services revenues are derived primarily from our majority owned premium Spanish language streaming services business, Pantaya, which includes subscriber based streaming revenue and other distribution revenue.


•	~~STARZPLAY International.STARZPLAY International revenues are primarily derived from OTT distribution of the Company's STARZ branded premium subscription video services internationally.~~


•	~~Streaming Services.~~ ~~Streaming services revenues are derived from the Lionsgate legacy start-up direct to consumer streaming services on SVOD platforms.~~

Expenses

Our primary operating expenses include direct operating expenses, distribution and marketing expenses and general and administration expenses.

Direct operating expenses include amortization of film and television production or acquisition costs, amortization of programming production or acquisition costs and programming related salaries, participation and residual expenses, provision for doubtful accounts, and foreign exchange gains and losses.

Participation costs represent contingent consideration payable based on the performance of the film or television program to parties associated with the film or television program, including producers, writers, directors or actors. Residuals represent amounts payable to various unions or “guilds” such as the Screen Actors Guild - American Federation of Television and Radio Artists, Directors Guild of America, and Writers Guild of America, based on the performance of the film or television program in certain ancillary markets or based on the individual’s (i.e., actor, director, writer) salary level in the television market.

Distribution and marketing expenses primarily include the costs of theatrical prints and advertising (“P&A”) and 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. DVD/Blu-ray duplication represents the cost of the DVD/Blu-ray product and the manufacturing costs associated with creating the physical products. DVD/Blu-ray marketing costs represent the cost of advertising the product at or near the time of its release or special promotional advertising. Marketing costs for Media Networks includes advertising, consumer marketing, distributor marketing support and other marketing costs. In addition, distribution and marketing costs includes our Media Networks segment operating costs for the direct-to-consumer service, transponder expenses and maintenance and repairs.

General and administration expenses include salaries and other overhead.

CRITICAL ACCOUNTING POLICIES

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates, judgments and assumptions that affect the amounts reported in the

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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. In addition, the evolving and uncertain nature of the COVID-19 global pandemic could materially impact our estimates, particularly those that require consideration of forecasted financial information, in the near to medium term. 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. For a summary of all of our accounting policies, including the accounting policies discussed below, see Note

1 to our audited consolidated financial statements in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on May ~~23, 2019.~~27, 2020.

Accounting for Films and Television Programs and Licensed Program ~~Rights.~~Rights

Investment in Films and Television Programs:

General. We capitalize costs of production and acquisition, including financing costs and production overhead, to investment in films and television ~~programs. These~~programs, a portion of which are monetized individually (i.e., through domestic theatrical, home entertainment, television, international or other ancillary-market distribution), and a portion of which are monetized as part of a film group (i.e., primarily content internally produced by our Television Production segment for our Media Networks segment).

Recording Cost. Costs of acquiring and producing films and television programs and of acquired libraries are capitalized when incurred. For films and television programs produced by the Company, capitalized costs ~~for an individual film or~~include all direct production and financing costs, capitalized interest and production overhead. For acquired films and television ~~program~~programs, capitalized costs consist of minimum guarantee payments to acquire the distribution rights.

Amortization. Costs of acquiring and producing films and television programs and of acquired libraries that are monetized individually are amortized using the individual-film-forecast method, whereby these costs are amortized and ~~participation~~participations and ~~residual~~residuals costs are accrued ~~to direct operating expenses~~ in the proportion that current year’s ~~revenues bear~~revenue bears to management’s ~~estimates~~estimate of ~~the~~ ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of ~~such film~~the films or television ~~program.~~ programs.

Ultimate Revenue. Ultimate revenue includes estimates over a period not to exceed ~~ten~~10 years following the date of initial release of the motion picture. For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ~~ten~~10 years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For ~~previously released film or television programs~~titles included in acquired ~~as part of a library,~~libraries, ultimate revenue includes estimates over a period not to exceed twenty years ~~from~~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.~~value (see below). Management estimates the ultimate revenue based on experience with similar titles or 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.

An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically results in an impairment requiring a write-down of the film cost to the title’s fair value. These write-downs are included in amortization expense within direct operating expenses in our consolidated statements of operations. See further discussion below under Impairment Assessment for Investment in ~~films~~Films and ~~television programs~~Television Programs and Licensed Program Rights.

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Licensed Program Rights:

General. Licensed program rights include content licensed from third parties that is stated at the lower of amortized cost or estimated fair value. The valuation of investment in films and television programs, whether released or unreleased, is reviewed on a title-by-title basis, when an event or change in circumstances indicates that the fair valuemonetized as part of a film group for distribution on Media Networks distribution platforms. Licensed content is comprised of films or ~~television program is less than its unamortized cost. In determining~~series that have been previously produced by third parties and the ~~fair value~~Company retains specified airing rights over a contractual term. Program licenses typically have fixed terms and require payments during the term of ~~our films and television programs, we employ a DCF methodology with assumptions for cash flows. Key inputs employed in~~ the ~~DCF methodology include estimates of a film's ultimate revenue as discussed above, and costs as well as a discount rate.~~ license.

Recording Cost. The ~~discount rate utilized in the DCF analysis is based on our weighted average~~ cost of ~~capital plus a risk premium representing~~licensed content is capitalized when the ~~risk associated with producing a particular film~~cost is known or ~~television program. The fair value of any film costs associated with a film or television~~reasonably determinable, the license period for programs has commenced, the program that we plan to abandon is zero. As the primary determination of fair value is determined using a DCF model, the resulting fair value is considered a Level 3 measurement (as defined in Note 8 to our unaudited condensed consolidated financial statements). Additional amortization is recorded in the amount by which the unamortized costs exceed the estimated fair value of the 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 our future revenue estimates.

~~Program rights for films and television programs (including original series) exhibited~~materials have been accepted by the ~~Media Networks segment are generally amortized on a title-by-title or episode-by-episode basis over~~Company in accordance with the ~~anticipated number of exhibitions or~~ license ~~period. We estimate the number of exhibitions based on the number of exhibitions allowed in the agreement~~agreements, and the ~~expected usage of~~programs are available for the ~~content. Certain other program rights are amortized to expense on a straight-line basis over the respective lives of the agreements. Programming~~first showing. Licensed programming rights may include rights to more than one exploitation window under the Company's output and library agreements. For films with multiple windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of each window which generally results in the majority of the cost allocated to the first window on newer releases. ~~Programming costs vary due~~Certain license agreements may include additional ancillary rights in addition to ~~the number of airings and cost of our original series, the number of films licensed and the cost per film paid under our output and library programming agreements.~~

The cost of the Media Networks' segments produced original content generally represents the license fees charged from the Television Production segment which are eliminated in consolidation. The amount associated with the pay television ~~market is reclassified to program rights when the program is aired and the portion attributable to the ancillary markets remains in investment in films and television programs.~~rights. The cost of the Media Networks’ third-party licensed content is allocated between the pay television market distributed by the Media Networks’ segment and the ancillary revenue markets (e.g., home video, digital platforms, international television, etc.) ~~distributed by the Television Production segment~~ based on the estimated relative

fair values of these markets. ~~Estimates~~Our estimates of fair value for the pay television and ancillary markets and windows of exploitation involve uncertainty ~~as well as estimates~~and management judgment. Programming costs vary due to the number of ~~ultimate revenue. All~~airings and cost of our original series, the ~~costs~~number of films licensed and the cost per film paid under our output and library programming ~~produced by the Television Production segment are included in investment in~~agreements.

Amortization. The cost of program rights for films and television programs (including original series) exhibited by the Media Networks segment are generally amortized on an accelerated or straight-line basis based on the anticipated number of exhibitions or expected and ~~program rights, net~~historical viewership patterns or the license period on a title-by-title or episode-by-episode basis. The number of exhibitions is estimated based on the number of exhibitions allowed in the agreement (if specified) and the expected usage of the content. Participations and residuals are ~~classified as long term. Amounts included~~expensed in ~~program rights, other than internally produced programming, that are expected to be amortized within a year from~~line with the ~~balance sheet date are classified as short-term.~~

amortization of production costs.

Impairment Assessment for Investment in Films and Television Programs and Licensed Program Rights:

Valuation Assumptions. The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 7 to our unaudited condensed consolidated financial statements). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program or film group. The fair value of any film costs associated with a film or television program that management plans to abandon is zero. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of

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investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.

Revenue Recognition. Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places. Our Media Networks segment generates revenue primarily from the distribution of our STARZ branded premium subscription video services and ~~to a lesser extent, direct-to-consumer content~~from our majority owned premium Spanish language streaming ~~services.~~services business, Pantaya, which includes subscriber based streaming revenue and other distribution revenue.

Our content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties. Our fixed fee or minimum guarantee licensing arrangements in the television, digital media and international markets may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.

Sales or usage based royalties represent amounts due to us based on the “sale” or “usage” of our content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated has been satisfied (or partially satisfied). Generally, when we license completed content (with standalone functionality, such as a movie, or television show), our performance obligation will be satisfied prior to the sale or usage. When we license intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), our performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to us under these arrangements are generally not reported to us until after the close of the reporting period. We record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from our customers, historical experience with similar titles in that market or territory, the performance of the title in other markets and/or available data in the industry. While we believe these estimates are reasonable estimates of the amounts due under these arrangements, such estimated amounts could differ from the actual amounts to be subsequently reported by the customer, which could be higher or lower than our estimates, and could result in an adjustment to revenues in future periods.

Revenue from the theatrical release of feature films are treated as sales or usage-based royalties and recognized starting at the exhibition date and based on our participation in box office receipts of the theatrical ~~exhibitor.~~exhibitor.

Digital media revenue sharing arrangements are recognized as sales or usage based royalties.

Revenue from the sale of physical discs (DVDs, Blu-ray or 4K Ultra HD), referred to as "Packaged Media", in the retail market, net of an allowance for estimated returns and other allowances, is recognized on the later of receipt by the customer or “street date” (when it is available for sale by the customer).

Revenue from commissions are recognized as such services are provided.

Media Networks revenues may be based on a fixed fee, subject to nominal annual escalations, or a variable fee (i.e., a fee based on number of subscribers who receive our networks or other factors). Media Networks programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor. The variable distribution fee arrangements represent sales or usage based royalties and are recognized over the period of such sales or usage by the Company's distributor, which is the same period that the content is provided to the distributor. Payments to distributors for marketing support costs for which Starz receives a discrete benefit are recorded as distribution and marketing ~~costs.~~

~~Sales Returns Allowance.~~ ~~Revenues~~costs, and payments to distributors for which Starz receives no discrete benefit are recorded ~~net~~as a reduction of estimated returns and other allowances. We estimate reserves for Packaged Media returns based on previous returns experience, point-of-sale data available from certain retailers, current economic trends, and projected future sales of the title to the consumer based on the actual performance of similar titles on a

title-by-title basis in each of the Packaged Media businesses. Factors affecting actual returns include, among other factors, limited retail shelf space at various times of the year, success of advertising or other sales promotions, and the near term release of competing titles. We believe that our estimates have been materially accurate in the past; however, due to the judgment involved in establishing reserves, we may have adjustments to our historical estimates in the future. Our estimate of future returns affects reported revenue and operating income. If we underestimate the impact of future returns in a particular period, then we may record less revenue in later periods when returns exceed the estimated amounts. If we overestimate the impact of future returns in a particular period, then we may record additional revenue in later periods when returns are less than estimated. An incremental change of 1% in our estimated sales returns rate (i.e., provisions for returns divided by gross sales of related product) for home entertainment products would have had an impact of approximately $1.1 million and $2.7 million on our total revenue in the three and nine months ended December 31, 2019, respectively (2018 - $1.2 million and $3.3 million, respectively).

~~Provisions for Accounts Receivable.~~ We estimate provisions for accounts receivable based on historical experience and relevant facts and information regarding the collectability of the accounts receivable. In performing this evaluation, significant judgments and estimates are involved, including an analysis of specific risks on a customer-by-customer basis for our larger customers and an analysis of the length of time receivables have been past due. The financial condition of a given customer and its ability to pay may change over time or could be better or worse than anticipated and could result in an increase or decrease to our allowance for doubtful accounts, which is recorded in direct operating expenses.

~~Income Taxes.~~ We are subject to federal and state income taxes in the U.S., and in several foreign jurisdictions. We record deferred tax assets related to net operating loss carryforwards and certain temporary differences, net of applicable reserves in these jurisdictions. We recognize a future tax benefit to the extent that realization of such benefit is more likely than not on a jurisdiction by jurisdiction basis; otherwise a valuation allowance is applied. In order to realize the benefit of our deferred tax assets, we will need to generate sufficient taxable income in the future in each of the jurisdictions which have these deferred tax assets. However, the assessment as to whether there will be sufficient taxable income in a jurisdiction to realize our net deferred tax assets in that jurisdiction is an estimate which could change in the future depending primarily upon the actual performance of our Company. We will be required to continually evaluate the more likely than not assessment that our net deferred tax assets will be realized, and if operating results deteriorate in a particular jurisdiction, we may need to record a valuation allowance for all or a portion of our deferred tax assets through a charge to our income tax provision. As of December 31, 2019, we have a valuation allowance of $410.8 million against certain U.S. and foreign deferred tax assets that may not be realized on a more likely than not basis.

Our quarterly income tax benefit (provision) and our corresponding annual effective tax rate are based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. For interim financial reporting, except in circumstances as described in the following paragraph, we estimate the annual effective tax rate based on projected taxable income for the full year and record a quarterly tax benefit (provision) in accordance with the expected annual effective tax rate. As the year progresses, we refine the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to our expected annual effective tax rate for the year. When this occurs, we adjust our income tax benefit (provision) during the quarter in which the change in estimate occurs so that the year-to-date income tax benefit (provision) reflects the expected annual effective tax rate. Significant judgment is required in determining our expected annual effective tax rate and in evaluating our tax positions.

When a small change in our estimated pretax results would create a large change in our expected annual effective rate such that a reliable estimate of the expected annual effective tax rate cannot be made, as was the case for the quarters ended December 31, 2019 and 2018, we calculate the income tax benefit (provision) using the cut-off method.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law, making significant changes to the taxation of U.S. business entities. The Tax Act reduced the U.S. corporate income tax rate from 35% to 21%, imposed a one-time transition tax in connection with the move from a worldwide tax system to a territorial tax system, provided for accelerated deductions for certain U.S. film production costs, imposed limitations on certain tax deductions such as executive compensation in future periods, and included numerous other provisions.

Our effective tax rates differ from the federal statutory rate and are affected by many factors, including the overall level of pre-tax income (loss), mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in tax laws and regulations in those jurisdictions, further interpretation and legislative guidance regarding the new Tax Act, changes in valuation allowances against our deferred tax assets, tax planning strategies available to us, and other discrete items.revenue.

Goodwill and Indefinite-Lived Intangibles. At ~~December 31, 2019,~~September 30, 2020, the carrying value of goodwill and indefinite-lived intangible assets was $2.8 billion and $250.0 million, respectively. Our indefinite-lived intangible assets consist of trade names

primarily representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016. Goodwill is allocated to our reporting units, which are our operating segments or one level below our operating segments (component level). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share similar economic characteristics. Our reporting units for purposes of goodwill impairment testing, along with their respective goodwill balances at ~~December 31, 2019 and March 31, 2019,~~September 30, 2020, were Motion Picture (goodwill of $394 million),

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Media Networks (goodwill of $2.04 billion), and ~~each of~~ our Television (goodwill of $309 million) and ~~talent management~~Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.

Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value. We perform our annual impairment test as of January 1 in each fiscal year. A goodwill or indefinite-lived intangible asset impairment loss would be recognized for the amount that the carrying amount of a reporting unit, including goodwill or an indefinite-lived intangible asset, exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill or indefinite-lived intangible asset impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which impact the fair value of the reporting unit or indefinite-lived intangible asset, of whether or not it is more-likely-than-not that the fair value is less than the carrying value of the reporting unit or indefinite-lived intangible asset. If we believe that as a result of our qualitative assessment it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company. A quantitative assessment requires determining the fair value of our reporting units or indefinite-lived intangible assets. The determination of fair value requires considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates.

~~For fiscal 2019, we performed~~In performing a ~~qualitative impairment~~quantitative assessment of goodwill, we determine the fair value of our ~~indefinite-lived trade names,~~reporting units by using a combination of discounted cash flow ("DCF") analyses and market-based valuation methodologies. The models rely on significant judgments and assumptions surrounding general market and economic conditions, short-term and long-term growth rates, discount rates, income tax rates, and detailed management forecasts of future cash flow and operating margin projections, and other assumptions, all of which are based on our internal forecasts of future performance as well as historical trends. The market-based valuation method utilizes EBITDA multiples from guideline public companies operating in similar industries and a control premium. The results of these valuation methodologies are weighted as to their relative importance and a single fair value is determined. The fair value of our reporting units is reconciled to the market value of our equity, determined based on the average prices of our common shares just prior to the period end. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment tests will prove to be an accurate prediction of the future.

Goodwill Impairment Assessment:

For our annual goodwill impairment test for fiscal 2020, due ~~primarily~~ to the decline in the market price of our common shares in the fourth quarter ended March 31, 2020, which was significantly impacted by the economic uncertainty and market volatility resulting from the COVID-19 global pandemic, we ~~performed a~~updated our quantitative ~~goodwill~~ impairment assessment for all of our reporting ~~units.~~units as of March 31, 2020. The DCF analysis of fair values were determined primarily by discounting estimated future cash flows, which included perpetual nominal growth rates ranging from 1.5% to 4.0%, at a weighted average cost of capital (discount rate) ranging from 11.5% to 15%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole. Based on our annual quantitative impairment assessment for fiscal 2020, we determined that two of our reporting units (Television and Media Networks) were at risk for impairment.

We evaluated the sensitivity of our most critical assumptions used in the fair value analysis of our Television and Media Networks reporting units, including the discount rate, perpetual nominal growth rate and annual revenue growth rates. For our Television business reporting unit, we determined that an increase in the discount rate of up to 3.3% would not have impacted the test results, assuming no changes to other factors. For our Media Networks reporting unit, we determined that an increase in the discount rate of up to 0.7% or a reduction of the perpetual nominal growth rate of up to 1.33% would not have impacted the test results, assuming no changes to other factors. We also performed a sensitivity analysis on annual revenue growth. We determined that a decrease in annual revenue growth by 0.5% for our Television business reporting unit and 0.3% for our Media Networks reporting unit, and holding film cost spend and amortization the same and maintaining other expenses at the same percentage of revenue, the results would have triggered an impairment.

During the three and six months ended September 30, 2020, there were no events or circumstances that have changed that would have resulted in changes to the underlying key assumptions and judgments used in our goodwill impairment test, or that would indicate that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value.

Management will continue to monitor all of its reporting units for changes in the business environment that could impact the recoverability of goodwill in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair

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value of our reporting units may include the duration of the COVID-19 global pandemic, its impact on the global economy and the creation and consumption of our content, and the timing of when remaining production can resume and remaining theaters can re-open; adverse macroeconomic conditions; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; the commercial success of our television programming and our motion pictures; our continual contractual relationships with our customers; including our affiliate agreements of our Media Networks business; our subscriber growth rates domestically and internationally across our traditional and OTT platforms and changes in consumer behavior. While historical performance and current expectations have resulted in fair values of our reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.

Indefinite-Lived Intangibles Other Than Goodwill Impairment Assessment:

For fiscal 2020, we performed a qualitative impairment assessment of our indefinite-lived trade names. Based on the qualitative impairment assessment of our trade names, we concluded that it is more-likely-than-not that the fair value of our trade names was more than its carrying amount, and therefore our trade names were not considered at risk of impairment. This qualitative analysis considered the relative impact of market-specific and macroeconomic factors. The market-specific factors considered included recent projections of revenues and growth in OTT subscribers, both domestic and internationally, associated with the STARZ brand name. The Company also considered the macroeconomic impact including the uncertainty around the COVID-19 global pandemic, and the resulting uncertain long-term economic impact on discount rates and growth rates, as well as the impact from ~~recent~~ tax law ~~changes. For fiscal 2019, our quantitative goodwill impairment analysis~~changes inclusive of ~~our reporting units indicated that~~ the goodwill for three of our reporting units exceeded their respective carrying values by more than 20%, and the fair value of our Television business reporting unit exceeded its carrying value by just under 20%.

For the quarter ended September 30, 2019, due primarily to the sustained decline in the market price of our common shares, we updated our quantitative impairment assessment for three (Television, Media Networks and Motion Picture) of our reporting units.

In performing the quantitative assessments, the Company determined the fair value of its reporting units by using a combination of discounted cash flow ("DCF") analyses and market-based valuation methodologies. The models relied on significant judgments and assumptions surrounding general market and economic conditions, short-term and long-term growth rates, discount rates, income tax rates, and detailed management forecasts of future cash flow and operating margin projections, and other assumptions, all of which were based on our internal forecasts of future performance as well as historical trends. The DCF analysis of fair values were determined primarily by discounting estimated future cash flows, which included perpetual nominal growth rates ranging from 1.5% to 4.0%, at a weighted average cost of capital (discount rate) ranging from 10% to 14%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole. The market-based valuation method utilized EBITDA multiples from guideline public companies operating in similar industries and a control premium. The results of these valuation methodologies were weighted as to their relative importance and a single fair value was determined. The fair value of our reporting units were reconciled to the market value of our equity, determined based on the average prices of our common shares just prior to September 30, 2019. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be an accurate prediction of the future.

Based on our quantitative impairment assessment for the quarter ended September 30, 2019, we determined that two of our reporting units (Television and Media Networks) were at risk for impairment since their estimated fair values exceeded their respective carrying values by less than 20%. We evaluated the sensitivity of our most critical assumptions used in the fair value analysis of our Television and Media Networks reporting units, including the discount rate and perpetual nominal growth rate.

~~Based on the sensitivity analysis on the fair value of our Television business reporting unit, we determined that an increase in the discount rate of up to 1.29% or a~~ reduction of the ~~perpetual nominal growth~~federal tax rate since the acquisition of up to 2.77% would not have impacted the test results, assuming no changes to other factors. Based on the sensitivity analysis on the fair value of our Media Networks reporting unit, we determined that an increase in the discount rate of up to 1.22% or a reduction of the perpetual nominal growth rate of up to 2.87% would not have impacted the test results, assuming no changes to other factors.Starz.

During the three and six months ended ~~December 31, 2019,~~September 30, 2020, there were no events or circumstances that have changed that would have resulted in changes to the underlying key assumptions and judgments used in our ~~goodwill~~ impairment ~~tests,~~assessment of our indefinite-lived trade names, or that would indicate that it is more-likely-than-not that the fair value of ~~a reporting unit~~our indefinite-lived trade names is less than its carrying value.

Management will continue to monitor all of its reporting units for changes in the business environment that could impact recoverability in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include adverse macroeconomic conditions; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; the commercial success of our television programming and our motion pictures; our continual contractual relationships with our customers including our affiliate agreements of our Media Networks business; our subscriber growth rates domestically and internationally across our traditional and OTT platforms and changes in consumer behavior. While historical performance and current expectations have resulted in fair values of our reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.

Finite-Lived Intangible Assets. At ~~December 31, 2019,~~September 30, 2020, the carrying value of our finite-lived intangible assets was approximately ~~$1.51~~$1.40 billion. Our finite-lived intangible assets primarily relate to customer relationships associated with U.S. MVPDs, including cable operators, satellite television providers and telecommunications companies ("Traditional Affiliate"), which amounted to ~~$1.50~~$1.38 billion. The amount of our customer relationship asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization recorded since the date of the Starz acquisition. Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 17 years. Through the quarter ended June 30, 2019, we amortized the Starz Traditional Affiliate customer relationships ~~discussed above~~ on a straight-line basis over 17 years.

Amortizable intangible assets are tested for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset. The impairment test is performed at the lowest level of cash flows associated with the asset. If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value.

During the fiscal year ended March 31, 2020, due to industry factors discussed in the preceding paragraph and the economic uncertainty from the COVID-19 global pandemic, we performed an impairment analysis of our ~~unaudited condensed consolidated financial statements under~~amortizable intangible assets. The impairment analysis requires a comparison of undiscounted future cash flows expected to be generated over the ~~Change In Estimate~~ ~~section for further details.~~useful life of an asset to the carrying value of the asset. Based on our impairment analysis, the estimated undiscounted cash flows exceeded the carrying amount of the assets and therefore no impairment charge was required.

During the three and six months ended ~~December 31, 2019,~~September 30, 2020, there were no events or ~~changes in circumstance~~circumstances that have changed that would indicate that the carrying amount of our finite-lived intangible assets may not be recoverable.

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Determining whether an intangible asset is recoverable or impaired requires various estimates and assumptions, including whether events or circumstances indicate that the carrying amount of the asset may not be recoverable, determining estimates of future cash flows for the assets involved and, when applicable, the assumptions applied in determining fair value, including discount rates, growth rates, market risk premiums and other assumptions about the economic environment. Should the revenues from our Traditional Affiliate relationships decline more than the assumed attrition rates used in our current estimates, either as a result of decreases in subscriber rates or changes of the terms of our renewals of our Traditional Affiliate contracts, we may have indicators of impairment which could result in an impairment of our customer relationships intangible assets, or

we may need to further shorten the useful life or adopt a more accelerated method of amortization both of which would increase the amount of amortization expense we record.

Sales Returns Allowance.Revenues are recorded net of estimated returns and other allowances. We estimate reserves for Packaged Media returns based on previous returns experience, point-of-sale data available from certain retailers, current economic trends, and projected future sales of the title to the consumer based on the actual performance of similar titles on a title-by-title basis in each of the Packaged Media businesses. Factors affecting actual returns include, among other factors, limited retail shelf space at various times of the year, success of advertising or other sales promotions, and the near term release of competing titles. We believe that our estimates have been materially accurate in the past; however, due to the judgment involved in establishing reserves, we may have adjustments to our historical estimates in the future. Our estimate of future returns affects reported revenue and operating income. If we underestimate the impact of future returns in a particular period, then we may record less revenue in later periods when returns exceed the estimated amounts. If we overestimate the impact of future returns in a particular period, then we may record additional revenue in later periods when returns are less than estimated. An incremental change of 1% in our estimated sales returns rate (i.e., provisions for returns divided by gross sales of related product) for home entertainment products would have had an impact of approximately $0.5 million and $1.0 million on our total revenue in the three and six months ended September 30, 2020, respectively (2019 - $0.9 million and $1.7 million, respectively).

Income Taxes. We are subject to federal and state income taxes in the U.S., and in several foreign jurisdictions. We record deferred tax assets related to net operating loss carryforwards and certain temporary differences, net of applicable reserves in these jurisdictions. We recognize a future tax benefit to the extent that realization of such benefit is more likely than not on a jurisdiction-by-jurisdiction basis; otherwise, a valuation allowance is applied. In order to realize the benefit of our deferred tax assets, we will need to generate sufficient taxable income in the future in each of the jurisdictions which have these deferred tax assets. However, the assessment as to whether there will be sufficient taxable income in a jurisdiction to realize our net deferred tax assets in that jurisdiction is an estimate which could change in the future depending primarily upon the actual performance of our Company. We will be required to continually evaluate the more likely than not assessment that our net deferred tax assets will be realized, and if operating results deteriorate in a particular jurisdiction, we may need to record a valuation allowance for all or a portion of our deferred tax assets through a charge to our income tax provision. As of March 31, 2020, we had a valuation allowance of $435.8 million against certain U.S. and foreign deferred tax assets that may not be realized on a more likely than not basis.

When a small change in our estimated pretax results would create a large change in our expected annual effective rate such that a reliable estimate of the expected annual effective tax rate cannot be made, as was the case for the quarter ended September 30, 2019, we calculate the income tax benefit (provision) using the cut-off method.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, and has resulted in significant changes to the U.S. federal corporate tax law. Additionally, several state jurisdictions have enacted legislation to comply with federal changes and some foreign jurisdictions have enacted similar tax incentive legislation. The impact of the CARES Act to our current and deferred income tax expense as of September 30, 2020 was immaterial, however we are continuing to analyze the impact of these tax law changes to future periods.

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Our effective tax rates differ from the federal statutory rate and are affected by many factors, including the overall level of pre-tax income (loss), the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, any changes in tax laws and regulations in those jurisdictions, changes in uncertain tax positions, further interpretation and legislative guidance regarding the new CARES Act, changes in valuation allowances against our deferred tax assets, tax planning strategies available to us and other discrete items.

Consolidation and Other Investments. We consolidate entities in which we own more than 50% of the voting common stock and control operations and also variable interest entities for which we are the primary beneficiary. Investments in nonconsolidated affiliates in which we own more than 20% of the voting common stock or otherwise exercise significant influence over operating and financial policies, but not control of the nonconsolidated affiliate, are accounted for using the equity method of accounting. Investments in nonconsolidated affiliates in which we own less than 20% of the voting common stock, or do not exercise significant influence over operating and financial policies, are recorded at fair value using quoted market prices if the investment has a readily determinable fair value. If an equity investment's fair value is not readily determinable, we will recognize it at cost less any impairment, adjusted for observable price changes in orderly transactions in the investees' securities that are identical or similar to our investments in the investee. The unrealized gains and losses and the adjustments related to the observable price changes are recognized in net income (loss).

We regularly review our investments for impairment, including when the carrying value of an investment exceeds its market value and whether the decline in value is other-than-temporary. For investments accounted for using the equity method of accounting or equity investments without a readily determinable fair value, we evaluate information available (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of our investment. The estimation of fair value and whether an other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions. As of September 30, 2020, our investments included investments in equity method investees of $30.7 million, and other investments of $1.4 million.

If we determine that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings. Factors that are considered by us in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis, (ii) the financial condition of the investee, and (iii) our intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

Business Combinations. We account for our business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

Recent Accounting Pronouncements

See Note 1 to the accompanying unaudited condensed consolidated financial statements for a discussion of recent accounting guidance.

RESULTS OF OPERATIONS

Three Months Ended ~~December 31, 2019~~September 30, 2020 Compared to Three Months Ended ~~December 31, 2018~~September 30, 2019

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~

2019:

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	Three Months Ended												Three Months Ended
	December 31,						Increase (Decrease)						September 30,				Increase (Decrease)
	2019			2018			Amount			Percent			2020		2019		Amount		Percent
	(Amounts in millions)												(Amounts in millions)
Revenues												Revenues
Motion Picture	$	473.9		$	362.6		$	111.3		30.7	%	Motion Picture	$	257.6	$	405.8	$	(148.2)	(36.5)	%
Television Production	189.4			216.5			(27.1		)	(12.5	)%	Television Production	197.2		274.0		(76.8)		(28.0)	%
Media Networks	382.4			366.8			15.6			4.3	%	Media Networks	388.3		374.0		14.3		3.8	%
Intersegment eliminations	(47.2		)	(12.7		)	(34.5		)	271.7	%	Intersegment eliminations	(98.1)		(70.3)		(27.8)		39.5	%
Total revenues	998.5			933.2			65.3			7.0	%	Total revenues	745.0		983.5		(238.5)		(24.3)	%
Expenses:												Expenses:
Direct operating	594.6			502.0			92.6			18.4	%	Direct operating	366.8		499.4		(132.6)		(26.6)	%
Distribution and marketing	279.1			176.9			102.2			57.8	%	Distribution and marketing	166.7		262.1		(95.4)		(36.4)	%
General and administration	108.7			110.0			(1.3		)	(1.2	)%	General and administration	118.8		105.9		12.9		12.2	%
Depreciation and amortization	51.9			41.0			10.9			26.6	%	Depreciation and amortization	49.6		50.9		(1.3)		(2.6)	%
Restructuring and other	3.7			16.5			(12.8		)	(77.6	)%	Restructuring and other	13.4		7.6		5.8		76.3	%
Total expenses	1,038.0			846.4			191.6			22.6	%	Total expenses	715.3		925.9		(210.6)		(22.7)	%
Operating income (loss)	(39.5		)	86.8			(126.3		)	(145.5	)%
Operating income												Operating income	29.7		57.6		(27.9)		(48.4)	%
Interest expense	(48.7		)	(45.3		)	(3.4		)	7.5	%	Interest expense	(45.7)		(48.0)		2.3		(4.8)	%

Interest and other income	2.0			2.9			(0.9		)	(31.0	)%	Interest and other income	0.1		2.2		(2.1)		(95.5)	%
Other expense	(3.6		)	(1.8		)	(1.8		)	100.0	%	Other expense	(0.7)		(3.8)		3.1		(81.6)	%
Loss on extinguishment of debt	(1.4		)	—			(1.4		)	n/a

Loss on investments	—			(6.2		)	6.2			(100.0	)%	Loss on investments	(4.7)		(0.4)		(4.3)		nm
Equity interests loss	(4.6		)	(11.0		)	6.4			(58.2	)%	Equity interests loss	(1.9)		(3.2)		1.3		(40.6)	%
Income (loss) before income taxes	(95.8		)	25.4			(121.2		)	(477.2	)%	Income (loss) before income taxes	(23.2)		4.4		(27.6)		nm
Income tax provision	(2.0		)	(5.3		)	3.3			(62.3	)%
Net income (loss)	(97.8		)	20.1			(117.9		)	(586.6	)%
Income tax benefit (provision)												Income tax benefit (provision)	1.5		(5.6)		7.1		(126.8)	%
Net loss												Net loss	(21.7)		(1.2)		(20.5)		nm
Less: Net loss attributable to noncontrolling interest	6.6			2.8			3.8			135.7	%	Less: Net loss attributable to noncontrolling interest	3.3		3.0		0.3		10.0	%
Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	(91.2	)	$	22.9		$	(114.1	)	(498.3	)%	Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	(18.4)	$	1.8	$	(20.2)	nm

_______________________

nm - Percentage not meaningful.

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Revenues. Consolidated revenues ~~increased~~decreased in the three months ended ~~December 31, 2019~~September 30, 2020 primarily due to ~~increases~~decreases in Motion Picture and Television Production revenues, which were negatively impacted by the COVID-19 global pandemic, partially offset by increased Media Networks revenues. Intersegment eliminations increased in the quarter (primarily related to Television Production revenue) for licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.

With theaters closed during the quarter due to circumstances associated with the COVID-19 global pandemic, Motion Picture revenue decreased primarily due to lower theatrical and international revenue. The decrease was also, to a lesser extent, ~~Media Networks revenues.~~due to lower home entertainment revenue due to fewer home entertainment releases in the quarter, and lower other revenue. These ~~increases~~decreases were partially offset by ~~lower third-party Television Production revenue (a substantial portion of intersegment eliminations relates to Television Production revenue). Motion Picture revenue~~ increased ~~due to higher theatrical and home entertainment revenue driven by the performance of our Fiscal 2020 Theatrical Slate~~, ~~offset partially by lower international~~television revenue. ~~Media Networks revenue increased due to increased revenue across Starz Networks, STARZPLAY International, and Streaming Services.~~

Television Production revenue decreased due to lower ~~international and~~ domestic television revenue ~~as compared~~with fewer television episodes delivered, largely because of the pausing of productions associated with the COVID-19 global pandemic. The decrease was also, to ~~the prior year's quarter, which included significant~~a lesser extent, due to lower home entertainment revenue. These decreases were partially offset by an increase in international revenue.

The increase in Media Networks revenue was due to increased revenue across STARZPLAY International and Other Streaming Services, partially offset by a decrease from ~~Orange Is the New Black~~ ~~Season 7.~~Starz Networks. See further discussion in the Segment Results of Operations section below.

Direct Operating Expenses. Direct operating expenses by segment were as follows for the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Three Months Ended																Three Months Ended
	December 31,																September 30,
	2019					2018					Increase (Decrease)						2020				2019				Increase (Decrease)
	Amount			% of Segment Revenues		Amount			% of Segment Revenues		Amount			Percent			Amount		% of Segment Revenues		Amount		% of Segment Revenues		Amount		Percent
	(Amounts in millions)																(Amounts in millions)
Direct operating expenses																Direct operating expenses
Motion Picture	$	222.9		47.0	%	$	195.7		54.0	%	$	27.2		13.9	%	Motion Picture	$	108.6	42.2	%	$	182.7	45.0	%	$	(74.1)	(40.6)	%
Television Production	178.3			94.1		174.4			80.6		3.9			2.2	%	Television Production	168.6		85.5		245.5		89.6		(76.9)		(31.3)	%
Media Networks	162.8			42.6		140.1			38.2		22.7			16.2	%	Media Networks	161.5		41.6		142.4		38.1		19.1		13.4	%
COVID-19 related costs																COVID-19 related costs	22.3		nm		—		nm		22.3		n/a
Other	79.8			nm		3.3			nm		76.5			nm		Other	1.2		nm		1.3		nm		(0.1)		(7.7)	%
Intersegment eliminations	(49.2		)	nm		(11.5		)	nm		(37.7		)	nm		Intersegment eliminations	(95.4)		nm		(72.5)		nm		(22.9)		31.6	%
	$	594.6		59.5	%	$	502.0		53.8	%	$	92.6		18.4	%		$	366.8	49.2	%	$	499.4	50.8%		$	(132.6)	(26.6)	%

_______________________

nm - Percentage not meaningful.

Direct operating expenses ~~increased~~decreased in the three months ended ~~December 31, 2019,~~September 30, 2020, primarily due to ~~higher~~lower Motion Picture ~~direct operating expense, Media Networks~~ and ~~other direct operating expense (as further described below), which~~Television Production revenue. These decreases were partially offset by ~~lower direct operating expense for Television Production net of intersegment eliminations (a substantial portion of intersegment eliminations relates to Television Production)~~an increase from Media Networks and COVID-19 related costs (as further described below). Motion Picture direct operating expense increased due to increased Motion Picture revenue and higher investment-in-film write-downs, which were partially offset by lower Motion Picture direct operating expense as a percentage of revenue, driven by the lower amortization rate of the Fiscal 2020 Theatrical SlateThe increase in ~~the current quarter as compared to the amortization rate of the Fiscal 2019 Theatrical Slate in the prior year's quarter.~~ Media Networks direct operating expense ~~increased primarily~~was due to ~~higher~~a benefit in the prior year's quarter at Starz Networks of $43.7 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates, which was offset by lower programming ~~cost~~ amortization at Starz Networks and STARZPLAY ~~International. Direct operating expense for Television Production net of~~International in the current year's quarter. In addition, intersegment eliminations ~~decreased~~increased in the quarter, ~~due~~primarily related to ~~lower~~ Television Production ~~revenue.~~direct operating costs associated with licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment. See further discussion in the Segment Results of Operations section below.

~~During~~

COVID-19 Related Costs.In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, during the three months ended ~~December 31, 2019, in connection with recent management changes,~~September 30, 2020 we implemented changes to our programming and broadcasting strategy including programming acquired or produced under prior management. As a result, we recorded certain programming and content charges of $74.0have incurred $22.3 million in incremental costs which were expensed in the ~~current quarter (representing $66.2 million related to the Media Networks segment, and $7.8 million related to the Television Production segment),~~period which are included in consolidated direct operating expense and are excluded from segment direct operating expense. These costs include incremental costs associated with film impairment due to changes in performance expectations, the ~~unaudited condensed consolidated statement~~pausing and restarting of ~~operations~~productions including certain cast and ~~reflected~~crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic. We expect to incur additional incremental costs in future periods. We are in

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the ~~"other" line item~~process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in ~~the table above (see Note 15 to~~ our ~~unaudited condensed~~ consolidated financial ~~statements). In addition, "other"~~statements.

Other. Other direct operating expenses in the table above includes the amortization of the non-cash fair value adjustments on film and television assets associated with the application of purchase accounting related to recent acquisitions.

Distribution and Marketing Expenses. Distribution and marketing expenses by segment were as follows for the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Three Months Ended
	September 30,				Increase (Decrease)
	2020		2019		Amount		Percent
	(Amounts in millions)
Distribution and marketing expenses
Motion Picture	$	41.2	$	146.3	$	(105.1)	(71.8)	%
Television Production	7.4		8.8		(1.4)		(15.9)	%
Media Networks	111.9		106.9		5.0		4.7	%
COVID-19 related costs	6.1		—		6.1		n/a
Other	0.1		0.1		—		—	%

	$	166.7	$	262.1	$	(95.4)	(36.4)	%

U.S. theatrical P&A expense included in Motion Picture distribution and marketing expense	$	—	$	95.2	$	(95.2)	(100.0)	%

Three Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Distribution and marketing expenses
Motion Picture $ 177.0
$ 97.7
$ 79.3
81.2 %
Television Production 6.7
9.5
(2.8 ) (29.5 )%
Media Networks 95.2
69.5
25.7
37.0 %
Other 0.2
0.2
—
— %
$ 279.1
$ 176.9
$ 102.2
57.8 %

U.S. theatrical P&A expense included in Motion Picture distribution and marketing expense $ 120.9
$ 48.6
$ 72.3
148.8 %

Distribution and marketing expenses ~~increased~~decreased in the three months ended ~~December 31, 2019,~~September 30, 2020, primarily due to ~~increased~~a decrease in Motion Picture theatrical P&A, ~~expense associated with an increased number of theatrical releases,~~partially offset by slightly increased Media Networks distribution and marketing expense ~~across Streaming Services, STARZPLAY International~~ and ~~Starz Networks, partially offset by a~~COVID-19 related costs (as further described below). The decrease in ~~Television Production~~Motion Picture theatrical P&A was primarily impacted by the COVID-19 global pandemic and associated closure of theaters. The slight increase in Media Networks distribution and marketing ~~expense.~~expense was driven by an increase at STARZPLAY International, offset by decreases at Starz Networks and Other Streaming Services. See further discussion in the Segment Results of Operations section below.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, during the three months ended September 30, 2020 we have incurred $6.1 million in costs primarily related to contractual marketing spends for film releases and events that have been canceled or delayed and thus will provide no economic benefit. These charges are excluded from segment operating results. We expect to incur additional incremental costs in future periods.

General and Administrative Expenses. General and administrative expenses by segment were as follows for the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:

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	Three Months Ended												Three Months Ended
	December 31,						Increase (Decrease)						September 30,						Increase (Decrease)
	2019		% of Revenues	2018		% of Revenues	Amount			Percent			2020		% of Revenues	2019		% of Revenues	Amount		Percent
	(Amounts in millions)												(Amounts in millions)
General and administrative expenses												General and administrative expenses
Motion Picture	$	25.0		$	25.7		$	(0.7	)	(2.7	)%	Motion Picture	$	24.8		$	25.8		$	(1.0)	(3.9)	%
Television Production	10.1			11.4			(1.3		)	(11.4	)%	Television Production	11.3			7.1			4.2		59.2	%
Media Networks	22.3			23.1			(0.8		)	(3.5	)%	Media Networks	22.0			20.1			1.9		9.5	%
Corporate	23.4			26.2			(2.8		)	(10.7	)%	Corporate	27.1			25.4			1.7		6.7	%
	80.8		8.1%	86.4		9.3%	(5.6		)	(6.5	)%		85.2		11.4%	78.4		8.0%	6.8		8.7	%
Share-based compensation expense	16.3			10.5			5.8			55.2	%	Share-based compensation expense	22.1			14.1			8.0		56.7	%

Purchase accounting and related adjustments	11.6			13.1			(1.5		)	nm		Purchase accounting and related adjustments	11.5			13.4			(1.9)		(14.2)	%

Total general and administrative expenses	$	108.7	10.9%	$	110.0	12.0%	$	(1.3	)	(1.2	)%	Total general and administrative expenses	$	118.8	15.9%	$	105.9	11.0%	$	12.9	12.2	%

~~_______________________~~

~~nm - Percentage not meaningful.~~

General and administrative expenses ~~decreased~~increased in the three months ended ~~December 31, 2019,~~September 30, 2020, resulting from ~~decreases~~increases in ~~corporate~~Television Production, Media Networks and Corporate general and administrative expenses ~~Television Production, Media Networks~~ and an increase in share-based compensation expense, partially offset by decreased Motion Picture general and administrative expenses and ~~lower~~ purchase accounting and related ~~adjustments, partially offset by increased share-based compensation expense.~~adjustments. See further discussion in the Segment Results of Operations section below.

Corporate general and administrative expenses ~~decreased $2.8~~increased $1.7 million, or ~~10.7%~~6.7%, primarily due to ~~decreases~~an increase in ~~professional fees and salaries and related expenses.~~incentive based compensation.

The increase in share-based compensation expense included in general and administrative expense in the three months ended ~~December 31, 2019,~~September 30, 2020, as compared to the three months ended ~~December 31, 2018~~September 30, 2019 is primarily due to ~~higher~~an increase in the number of share-based payment awards incurring expense in the current quarter as compared to the prior year's quarter. Additionally, the increase in share-based compensation expense ~~in the three months ended December 31, 2019~~is due to higher fair values associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved. The following table reconciles this amount to total share-based compensation expense:


	Three Months Ended					Three Months Ended
	December 31,					September 30,
	2019		2018			2020		2019
	(Amounts in millions)					(Amounts in millions)
Share-based compensation expense by expense category					Share-based compensation expense by expense category
Other general and administrative expense	$	16.3	$	10.5
General and administrative expense					General and administrative expense	$	22.1	$	14.1

Restructuring and other⁽¹⁾	—		2.4		Restructuring and other(1)	2.8		—
Direct operating expense	0.7		0.4		Direct operating expense	0.5		0.3
Distribution and marketing expense	0.2		0.2		Distribution and marketing expense	0.2		0.1
Total share-based compensation expense	$	17.2	$	13.5	Total share-based compensation expense	$	25.6	$	14.5

_______________________


~~(1)~~	Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(1)Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

Purchase accounting and related adjustments represent the charge for the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense. Purchase accounting and related adjustments decreased $1.9 million, or 14.2%, primarily due to the expense associated with the earned distributions related to 3 Arts Entertainment.

Depreciation and Amortization Expense. Depreciation and amortization of ~~$51.9~~$49.6 million in the three months ended ~~December 31, 2019 increased $10.9~~September 30, 2020 decreased $1.3 million, from ~~$41.0~~$50.9 million in the three months ended ~~December 31, 2018, due to a change in the amortization method for the Starz Traditional Affiliate customer relationships in the quarter ended~~ September 30, ~~2019, which resulted in an increase to amortization expense~~2019.

Table of ~~$12.2 million in the current quarter. See Note 1 to our unaudited condensed consolidated financial statements under the~~ Contents~~Change In Estimate~~ ~~section for further details.~~

Restructuring and Other. Restructuring and other ~~decreased $12.8~~increased $5.8 million in the three months ended ~~December 31, 2019~~September 30, 2020 as compared to the three months ended ~~December 31, 2018,~~September 30, 2019, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable. Restructuring and other costs were as follows for the three months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ (see Note 1413 to our unaudited condensed consolidated financial statements):


	Three Months Ended										Three Months Ended
	December 31,				Increase (Decrease)						September 30,						Increase (Decrease)
	2019		2018		Amount			Percent			2020			2019			Amount			Percent
	(Amounts in millions)										(Amounts in millions)
Restructuring and other:										Restructuring and other:
Severance⁽¹⁾										Severance(1)
Cash	$	1.8	$	13.3	$	(11.5	)	(86.5	)%	Cash	$	8.5		$	2.2		$	6.3		286.4	%
Accelerated vesting on equity awards (see Note 12)	—		2.4		(2.4		)	(100.0	)%
Accelerated vesting on equity awards (see Note 11)										Accelerated vesting on equity awards (see Note 11)	2.8			—			2.8			n/a
Total severance costs	1.8		15.7		(13.9		)	(88.5	)%	Total severance costs	11.3			2.2			9.1			413.6	%
COVID-19 related costs(2)										COVID-19 related costs(2)	0.3			—			0.3			n/a
Transaction and related costs⁽²⁾⁽³⁾	1.9		0.8		1.1			137.5	%	1.8			5.4			(3.6)			(66.7)	%
	$	3.7	$	16.5	$	(12.8	)	(77.6	)%
											$	13.4		$	7.6		$	5.8		76.3	%

_______________________

(1)Severance costs in the three months ended September 30, 2020 and 2019 were primarily related to restructuring activities in connection with recent acquisitions, and other cost-saving initiatives.


~~(1)~~	~~Severance costs in the three months ended December 31, 2019 and 2018 were primarily related to restructuring activities in connection with recent acquisitions, and other cost-saving initiatives.~~

~~(2)~~

Transaction and related costs in the three months ended December 31, 2019 and 2018 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters. In the three months ended December 31, 2018, these costs were primarily related to the legal fees associated with the Starz class action lawsuits and other matters, and to a lesser extent, costs related to the acquisition of 3 Arts Entertainment and other strategic transactions.

(2)During the three months ended September 30, 2020, the Company has incurred certain costs primarily related to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic.

(3)Transaction and related costs in the three months ended September 30, 2020 and 2019 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

Interest Expense. Interest expense of ~~$48.7~~$45.7 million for the three months ended ~~December 31, 2019 increased $3.4~~September 30, 2020 decreased $2.3 million, from ~~$45.3~~$48.0 million in the three months ended ~~December 31, 2018.~~September 30, 2019, due to lower interest expense on the term loans partially offset by an increase in amortization of debt financing costs and other non-cash interest. The decrease in interest expense on the term loans is primarily due to reductions of the outstanding principal amounts from required and voluntary principal payments since the prior year's quarter ended September 30, 2019, and the lower LIBOR rate in the current quarter. The increase in amortization of debt financing costs and other non-cash interest is due to the amortization of unrealized losses in accumulated other comprehensive loss related to de-designated interest rate swaps which are being amortized to interest expense (see Note 16 to our unaudited condensed consolidated financial statements). The following table sets forth the components of interest expense for the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Three Months Ended					Three Months Ended
	December 31,					September 30,
	2019		2018			2020		2019
	(Amounts in millions)					(Amounts in millions)
Interest Expense					Interest Expense
Cash Based:					Cash Based:
Revolving credit facilities	$	1.9	$	5.3	Revolving credit facilities	$	1.0	$	1.6
Term loans	18.2		22.2		Term loans	9.4		20.2
5.875% Senior Notes	7.7		7.7		5.875% Senior Notes	7.6		7.6
6.375% Senior Notes	8.9		—		6.375% Senior Notes	8.8		8.7
Other⁽¹⁾	8.3		4.5		Other(1)	6.9		6.2
	45.0		39.7			33.7		44.3
Amortization of debt financing costs	3.7		3.0
	48.7		42.7

Interest on dissenting shareholders' liability⁽²⁾	—		2.6
Amortization of debt financing costs and other non-cash interest(2)					Amortization of debt financing costs and other non-cash interest(2)	12.0		3.7
Total interest expense	$	48.7	$	45.3	Total interest expense	$	45.7	$	48.0

_______________________


~~(1)~~	~~Amounts include interest expense related to the Company's interest rate swap agreements (see Note 17 to our unaudited condensed consolidated financial statements).~~


~~(2)~~	~~Represents interest accrued in connection with the previously outstanding dissenting shareholders' liability associated with the Starz merger.~~

Table of Contents

(1)Amounts include payments associated with the Company's interest rate swaps (see Note 16 to our unaudited condensed consolidated financial statements).

(2)Amounts include the amortization of unrealized losses in accumulated other comprehensive loss related to de-designated interest rate swaps which are being amortized to interest expense (see Note 16 to our unaudited condensed consolidated financial statements).

Other Expense. Other expense of ~~$3.6~~$0.7 million for the three months ended ~~December 31, 2019~~September 30, 2020 compared to other expense of ~~$1.8~~$3.8 million for the three months ended ~~December 31, 2018,~~September 30, 2019, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 1817 to our unaudited condensed consolidated financial statements).

Loss on ~~Extinguishment of Debt.~~ Loss on extinguishment of debt for the three months ended December 31, 2019 was $1.4 million and was related to early repayments of $101.9 million in principal outstanding on the Term Loan B. There was no comparable loss in the three months ended December 31, 2018. See Note 5 to our unaudited condensed consolidated financial statements.

~~Loss on~~ Investments. Loss on investments of ~~nilfor the three months ended December 31, 2019compared to loss on investments of $6.2~~$4.7 million for the three months ended ~~December 31, 2018,~~September 30, 2020representedimpairments of equity securities without readily determinable fair values that were written down to their estimated fair value, partially offset by unrealized gains on equity securities. This compared to loss on investments of $0.4 millionfor the three months ended September 30, 2019, which ~~was primarily due to other-than-temporary impairments on our investments and unrealized~~represented losses on equity ~~securities in the prior year's quarter.~~securities.

Equity Interests Loss. Equity interests loss of ~~$4.6~~$1.9 million in the three months ended ~~December 31, 2019~~September 30, 2020 compared to equity interests loss of ~~$11.0~~$3.2 million in the three months ended ~~December 31, 2018, which included equity losses from Pop (50.0% equity interest sold in March 2019).~~September 30, 2019.

Income Tax ~~Provision.~~Benefit (Provision). We had an income tax ~~provision~~benefit of ~~$2.0~~$1.5 million in the three months ended ~~December 31, 2019,~~September 30, 2020, compared to an income tax provision of ~~$5.3~~$5.6 million in the three months ended ~~December 31, 2018.~~September 30, 2019. Our income tax provision differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and

certain minimum taxes imposed by the Tax Act. Our income tax provision for the three months ended December 31, 2018 was also impacted by the tax deductions generated by our capital structure, which included certain foreign affiliate dividends in our Canadian jurisdiction that could be received without being subject to tax under Canadian tax law.

~~Net Income (Loss) Attributable to Lions Gate Entertainment Corp. Shareholders.~~ Net loss attributable to our shareholders for the three months ended December 31, 2019 was $91.2 million, or basic and diluted net loss per common share of $0.42 on 218.0 million weighted average common shares outstanding. This compares to net income attributable to our shareholders for the three months ended December 31, 2018 of $22.9 million, or basic net income per common share of $0.11 on 214.2 million weighted average common shares outstanding and diluted net income per common share of $0.10 on 220.8 million weighted average common shares outstanding.

~~Segment Results of Operations~~

The segment results of operations presented below do not include the elimination of intersegment transactions which are eliminated when presenting consolidated results, and exclude items separately identified in the restructuring and other line item in the unaudited condensed consolidated statements of operations.

The Company's primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration expenses. Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation other than annual bonuses granted in immediately vested stock awards when applicable, certain programming and content charges as a result of changes in management and associated programming and content strategy, when applicable, and purchase accounting and related adjustments, when applicable. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses. The reconciliation of segment profit to the Company's consolidated income (loss) before income taxes is presented in Note 15 to the unaudited condensed consolidated financial statements.

~~Motion Picture~~

~~The table below sets forth Motion Picture gross contribution and segment profit for the three months ended December 31, 2019 and 2018:~~

Three Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Motion Picture Segment:
Revenue $ 473.9
$ 362.6
$ 111.3
30.7 %
Expenses:
Direct operating expense 222.9
195.7
27.2
13.9 %
Distribution & marketing expense 177.0
97.7
79.3
81.2 %
Gross contribution 74.0
69.2
4.8
6.9 %
General and administrative expenses 25.0
25.7
(0.7 ) (2.7 )%
Segment profit $ 49.0
$ 43.5
$ 5.5
12.6 %

U.S. theatrical P&A expense included in distribution and marketing expense $ 120.9
$ 48.6
$ 72.3
148.8 %

Direct operating expense as a percentage of revenue 47.0 % 54.0 %

Gross contribution as a percentage of revenue 15.6 % 19.1 %

~~Revenue.~~ ~~The table below sets forth Motion Picture revenue by media and product category for the three months ended December 31, 2019 and 2018:~~

Three Months Ended December 31,
2019 2018 Total Increase (Decrease)

Feature Film⁽¹⁾

Other Film⁽²⁾
Total
Feature Film⁽¹⁾

Other Film⁽²⁾
Total
(Amounts in millions)
Motion Picture Revenue
Theatrical $ 101.0
$ 8.0
$ 109.0
$ 27.6
$ 0.9
$ 28.5
$ 80.5
Home Entertainment
Digital Media 69.6
45.9
115.5
41.0
40.7
81.7
33.8
Packaged Media 42.4
33.0
75.4
37.9
30.1
68.0
7.4
Total Home Entertainment 112.0
78.9
190.9
78.9
70.8
149.7
41.2
Television 60.9
13.6
74.5
45.8
29.0
74.8
(0.3 )
International 68.4
27.7
96.1
89.3
15.4
104.7
(8.6 )
Other 2.1
1.3
3.4
3.4
1.5
4.9
(1.5 )
$ 344.4
$ 129.5
$ 473.9
$ 245.0
$ 117.6
$ 362.6
$ 111.3

~~____________________~~


~~(1)~~	~~Feature Film:~~ Includes theatrical releases through our Lionsgate and Summit Entertainment film labels, which includes films developed and produced in-house, films co-developed and co-produced and films acquired from third parties.


~~(2)~~	~~Other Film:~~ Includes direct-to-DVD motion pictures, acquired and licensed brands, third-party library product and ancillary-driven platform theatrical releases through our specialty films distribution labels including Lionsgate Premiere, through Good Universe, and with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.

Theatrical revenue increased $80.5 million, or 282.5%, in the three months ended December 31, 2019 as compared to the three months ended December 31, 2018, driven by the performance and greater number of Feature Films released in the current quarter, and included significant revenue from ~~Knives Out~~ ~~and~~ ~~Midway~~.

Home entertainment revenue increased $41.2 million, or 27.5%, in the three months ended December 31, 2019, as compared to the three months ended December 31, 2018, primarily driven by an increase of $33.1 million from our Feature Films due to the performance of our Fiscal 2020 Theatrical Slate. In particular, the current quarter included significant digital media revenues, and to a lesser extent, packaged media revenues from ~~Angel Has Fallen, Rambo: Last Blood, and~~ ~~John Wick: Chapter 3 - Parabellum.~~ ~~In addition, home entertainment revenue from Other Film increased $8.1 million driven by current quarter home entertainment revenue from~~ ~~The Peanut Butter Falcon~~ ~~and~~ ~~Judy~~.

International revenue decreased $8.6 million, or 8.2%, in the three months ended December 31, 2019, as compared to the three months ended December 31, 2018 due to lower revenue from our Feature Films as compared to revenue in the prior year's period, which included international revenue from ~~Sicario: Day of the Soldado.~~ ~~This decreasewas partially offset by higher international revenue from Other Film driven by UK third-party product.~~

~~Direct Operating Expense.~~The increase in direct operating expenses is due to increased Motion Picture revenue and higher investment-in-film write-downs, which were partially offset by lower Motion Picture direct operating expense as a percentage of revenue. Investment in film write-downs for the quarter increased to $37.2 million in the three months ended December 31, 2019, as compared to approximately $10.5 million in the three months ended December 31, 2018. The decrease in direct operating expense as a percentage of Motion Picture revenues was driven by the change in the mix of titles and product categories generating revenue in the current quarter as compared to the prior year's quarter, and in particular, the lower amortization rate of the Fiscal 2020 Theatrical Slate releases contributing significant revenue in the current quarter (~~Knives out, Angel Has Fallen, John Wick: Chapter 3 - Parabellum, Midway) as compared to the Fiscal 2019 Theatrical Slate releases contributing significant revenue in the prior year's quarter~~ ~~(Robin Hood, The Spy Who Dumped Me)~~.

~~Distribution and Marketing Expense.~~The increase in distribution and marketing expense in the three months ended December 31, 2019 is primarily due to higher theatrical P&A spending on a greater number of Feature Film theatrical releases in the quarter. In the three months ended December 31, 2019, approximately $7.0 million of P&A was incurred in advance for

~~films to be released in subsequent quarters, such as~~ ~~Barb and Star Go To Vista Del Mar~~ ~~and~~ ~~I Still Believe.~~ ~~In the three months ended December 31, 2018, approximately $5.9 million of P&A was incurred in advance for films to be released in subsequent quarters, such as~~ ~~Cold Pursuit, Five Feet Apart~~ ~~and~~ ~~Hellboy.~~

~~Gross Contribution.~~ Gross contribution of the Motion Picture segment for the three months ended December 31, 2019 increased as compared to the three months ended December 31, 2018, primarily due to increased Motion Picture revenue and decreased Motion Picture direct operating expense as a percentage of Motion Picture revenue, partially offset by increased Motion Picture distribution and marketing expense as a percentage of Motion Picture revenue.

~~General and Administrative Expense.~~ ~~General and administrative expenses of the Motion Picture segment decreased $0.7 million, or 2.7%, primarily due to decreases in salaries and related expenses.~~

~~Television Production~~

~~The table below sets forth Television Production gross contribution and segment profit for the three months ended December 31, 2019 and 2018:~~

Three Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Television Production Segment:
Revenue $ 189.4
$ 216.5
$ (27.1 ) (12.5 )%
Expenses:
Direct operating expense 178.3
174.4
3.9
2.2 %
Distribution & marketing expense 6.7
9.5
(2.8 ) (29.5 )%
Gross contribution 4.4
32.6
(28.2 ) (86.5 )%
General and administrative expenses 10.1
11.4
(1.3 ) (11.4 )%
Segment profit (loss) $ (5.7 ) $ 21.2
$ (26.9 ) (126.9 )%

Direct operating expense as a percentage of revenue 94.1 % 80.6 %

Gross contribution as a percentage of revenue 2.3 % 15.1 %

~~Revenue.~~ ~~The table below sets forth Television Production revenue and changes in revenue by media for the three months ended December 31, 2019 and 2018:~~

Three Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Television Production Revenue
Television $ 144.2
$ 151.5
$ (7.3 ) (4.8 )%
International 17.4
35.9
(18.5 ) (51.5 )%
Home Entertainment
Digital 10.0
10.9
(0.9 ) (8.3 )%
Packaged Media 0.6
2.5
(1.9 ) (76.0 )%
Total Home Entertainment 10.6
13.4
(2.8 ) (20.9 )%
Other 17.2
15.7
1.5
9.6 %
$ 189.4
$ 216.5
$ (27.1 ) (12.5 )%

~~________________________~~

~~nm - Percentage not meaningful.~~

The primary component of Television Production revenue is domestic television revenue. Domestic television revenue decreased in the three months ended December 31, 2019 as compared to the three months ended December 31, 2018 primarily due to a decrease in revenue from television episodes delivered, and in particular, the prior year's quarter included significant revenue from ~~Orange Is the New Black~~ ~~Season 7 and~~ ~~Step Up: High Water~~ ~~Season 2. This decrease was offset partially by higher intersegment revenues from the licensing of Starz original series (P-Valley~~ ~~and~~ ~~Power~~ ~~Season 6).~~

~~International revenue in the three months ended December 31, 2019 decreased $18.5 million, or 51.5%, due to revenue in the prior year's quarter from~~ ~~Orange Is the New Black~~ ~~Season 7~~,~~Step Up: High Water~~ ~~Season 2and~~ ~~Greenleaf~~ ~~Season 3~~, ~~which compared to revenue in the current quarter from~~ ~~Greenleaf~~ ~~Season 4.~~

~~Direct Operating Expense.~~Direct operating expense of the Television Production segment in the three months ended December 31, 2019 increased $3.9 million, or 2.2%. Direct operating expenses as a percentage of television production revenue increased primarily due to the mix of titles generating revenue in the current quarter as compared to the prior year's quarter. In particular, the prior year's quarter included significant revenue from higher margin television series such as ~~Orange Is The New Black~~ ~~and~~ ~~Step Up: High Water,~~ ~~as compared to the current year's quarter which included new television programs (Manhunt, Zoey's Extraordinary Playlist,Mythic Quest, Kevin Hart: Don't F**k This Up), which typically result in higher amortization expenses in relation to revenues initially.~~

~~Gross Contribution.~~ Gross contribution of the Television Production segment for the three months ended December 31, 2019 decreased as compared to the three months ended December 31, 2018, due to lower television production revenue and higher direct operating expenses as a percentage of television production revenue.

~~General and Administrative Expense.~~ General and administrative expenses of the Television Production segment decreased $1.3 million, or 11.4%, primarily due to decreases in salaries and related expenses, incentive compensation and professional fees.

~~Media Networks~~

~~The table below sets forth Media Networks gross contribution and segment profit for the three months ended December 31, 2019 and 2018.~~

Three Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Media Networks Segment:
Revenue $ 382.4
$ 366.8
$ 15.6
4.3 %
Expenses:
Direct operating expense 162.8
140.1
22.7
16.2 %
Distribution & marketing expense 95.2
69.5
25.7
37.0 %
Gross contribution 124.4
157.2
(32.8 ) (20.9 )%
General and administrative expenses 22.3
23.1
(0.8 ) (3.5 )%
Segment profit $ 102.1
$ 134.1
$ (32.0 ) (23.9 )%

Direct operating expense as a percentage of revenue 42.6 % 38.2 %

Gross contribution as a percentage of revenue 32.5 % 42.9 %

~~The following table sets forth the Media Networks segment profit by product line:~~

Three Months Ended Three Months Ended
December 31, 2019 December 31, 2018
Starz Networks STARZPLAY International Streaming Services Total Media Networks Starz Networks STARZPLAY International Streaming Services Total Media Networks
(Amounts in millions)
Media Networks Segment:
Revenue $ 367.6
$ 6.1
$ 8.7
$ 382.4
$ 361.5
$ 0.6
$ 4.7
$ 366.8
Expenses:
Direct operating expense 128.4
32.6
1.8
162.8
137.9
1.7
0.5
140.1
Distribution & marketing expense 70.5
9.5
15.2
95.2
63.7
1.3
4.5
69.5
Gross contribution 168.7
(36.0 ) (8.3 ) 124.4
159.9
(2.4 ) (0.3 ) 157.2
General and administrative expenses 17.1
3.7
1.5
22.3
20.0
2.0
1.1
23.1
Segment profit $ 151.6
$ (39.7 ) $ (9.8 ) $ 102.1
$ 139.9
$ (4.4 ) $ (1.4 ) $ 134.1

~~Revenue.~~ ~~The table below sets forth, for the periods presented, subscriptions to our Media Networks and STARZPLAY Arabia services:~~

December 31, December 31,
2019 2018
(Amounts in millions)
Domestic Subscribers
STARZ 23.5
25.1
Streaming Services⁽¹⁾
0.6
0.2
24.1
25.3
International Subscribers
STARZPLAY International 2.7
0.1
STARZPLAY Arabia⁽²⁾
1.7
1.0
4.4
1.1
Total Domestic and International Subscribers 28.5
26.4

Subscribers by Platform:
Linear Subscribers 19.9
21.5
OTT Subscribers⁽³⁾
8.6
4.9
Total Global Subscribers 28.5
26.4

~~___________________~~


~~(1)~~	~~Represents subscribers of our premium Spanish-language streaming service, Pantaya, which was launched in the quarter ended September 30, 2017.~~


~~(2)~~	~~Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.~~


~~(3)~~	~~OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.~~

The increase in Media Networks' revenue was driven by higher Starz Networks' revenue of $6.1 million, higher STARZPLAY International revenue of $5.5 million and increased revenue from Streaming Services of $4.0 million due to subscriber growth. The increase in Starz Networks revenue was primarily a result of higher OTT revenue resulting from increased subscriptions, which was partially offset by declines from traditional linear services. STARZPLAY International revenue increased as a result of subscriber and revenue growth in the international territories launched in the prior year's quarter, and additional territories launched since December 31, 2018. Streaming Services revenue increased due to subscriber growth.

~~During the three months ended December 31, 2019 and 2018, the following original series premiered on STARZ:~~



~~Three Months Ended December 31, 2019~~		~~Three Months Ended December 31, 2018~~
~~Dublin Murders~~		~~Outlander~~ ~~Season 4~~
~~Leavenworth~~		~~Counterpart~~ ~~Season 2~~

~~Direct Operating and Distribution and Marketing Expenses.~~ Starz Networks' and STARZPLAY International's direct operating and distribution and marketing expenses primarily represent programming cost amortization and advertising and marketing costs, respectively. The level of programing cost amortization and advertising and marketing costs and thus the gross contribution margin for the Media Networks segment can fluctuate from period to period depending on the number of new original series premiering on the network during the period. Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere. In addition, the launch of the STARZPLAY international service has and will continue to result in an increase in expenses as the service continues to expand.

The increase in Media Networks' direct operating expense is due to higher direct operating expense at STARZPLAY International, which was partially offset by lower Starz Networks' direct operating expense during the three months ended December 31, 2019. Direct operating expense at STARZPLAY International increased as a result of higher programming cost amortization related to the launch and operation of STARZPLAY in additional international territories since December 31, 2018. The decrease in direct operating expense at Starz Networks was due to a benefit of $4.6 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates, and lower programming amortization related to our Starz Originals, which was partially offset by higher programming amortization related to theatrical releases under our programming output agreement.

The increase in Media Networks distribution and marketing expense is due to higher Streaming Services, STARZPLAY International and Starz Networks distribution and marketing expense. The increase in Streaming Services was attributable to increased marketing costs in order to drive subscriber growth. Distribution and marketing expense for STARZPLAY International increased due to an increase in advertising and marketing costs in order to drive subscriber growth in the international territories launched in the prior year's quarter, and additional territories launched since December 31, 2018. Distribution and marketing expense for Starz Networks increased as a result of increased operating costs and increased marketing spend with our distributors.

~~Gross Contribution.~~ Gross contribution of the Media Networks segment for the three months ended December 31, 2019 was primarily from Starz Networks, offset partially by negative contributions from STARZPLAY International, which has continued to expand in additional territories, and negative contributions from Streaming Services. The decrease in gross contribution compared to the prior year's quarter was due to higher negative contributions from STARZPLAY International, and to a lesser extent, higher negative contributions from Streaming Services, offset partially by an increase in gross contribution from Starz Networks.

~~General and Administrative Expense.~~ General and administrative expenses of the Media Networks segment in the three months ended December 31, 2019 decreased slightly from the prior year's quarter, driven by a decrease in Starz Networks, offset by increased general and administrative expenses for STARZPLAY International. The decrease in Starz Networks resulted primarily from a decrease in payroll and related costs.

~~Nine Months Ended December 31, 2019 Compared to Nine Months Ended December 31, 2018~~

~~Consolidated Results of Operations~~

~~The following table sets forth our consolidated results of operations for the nine months ended December 31, 2019 and 2018:~~

Nine Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Revenues
Motion Picture $ 1,277.6
$ 1,106.9
$ 170.7
15.4 %
Television Production 743.2
648.1
95.1
14.7 %
Media Networks 1,128.8
1,099.0
29.8
2.7 %
Intersegment eliminations (203.9 ) (87.1 ) (116.8 ) 134.1 %
Total revenues 2,945.7
2,766.9
178.8
6.5 %
Expenses:
Direct operating 1,662.0
1,495.2
166.8
11.2 %
Distribution and marketing 791.7
608.3
183.4
30.1 %
General and administration 317.3
335.2
(17.9 ) (5.3 )%
Depreciation and amortization 143.0
122.1
20.9
17.1 %
Restructuring and other 16.8
42.1
(25.3 ) (60.1 )%
Total expenses 2,930.8
2,602.9
327.9
12.6 %
Operating income 14.9
164.0
(149.1 ) (90.9 )%
Interest expense (145.7 ) (152.2 ) 6.5
(4.3 )%
Shareholder litigation settlements —
(114.1 ) 114.1
n/a
Interest and other income 7.0
9.0
(2.0 ) (22.2 )%
Other expense (9.7 ) (1.8 ) (7.9 ) n/a
Loss on extinguishment of debt (1.4 ) —
(1.4 ) n/a
Loss on investments (0.3 ) (43.2 ) 42.9
(99.3 )%
Equity interests loss (15.7 ) (28.8 ) 13.1
(45.5 )%
Loss before income taxes (150.9 ) (167.1 ) 16.2
(9.7 )%
Income tax benefit (provision) (6.5 ) 26.6
(33.1 ) (124.4 )%
Net loss (157.4 ) (140.5 ) (16.9 ) 12.0 %
Less: Net loss attributable to noncontrolling interest 14.0
11.5
2.5
21.7 %
Net loss attributable to Lions Gate Entertainment Corp. shareholders $ (143.4 ) $ (129.0 ) $ (14.4 ) 11.2 %

~~Revenues.~~ Consolidated revenues increased in the nine months ended December 31, 2019, due to increases in Motion Picture, and to a lesser extent, Media Networks revenues, which were partially offset by lower third-party Television Production revenue (a substantial portion of intersegment eliminations relates to Television Production revenue). Motion Picture revenue increased due to higher theatrical and home entertainment revenue driven by the performance and greater number of films released from our Fiscal 2020 Theatrical Slate, offset partially by lower television and other revenue. Media Networks revenue increased due to increased revenue across STARZPLAY International, Streaming Services, and Starz Networks. See further discussion in the Segment Results of Operations section below.

~~Direct Operating Expenses.~~ ~~Direct operating expenses by segment were as follows for the nine months ended December 31, 2019 and 2018:~~

Nine Months Ended
December 31,
2019 2018 Increase (Decrease)
Amount % of Segment Revenues Amount % of Segment Revenues Amount Percent
(Amounts in millions)
Direct operating expenses
Motion Picture $ 625.1
48.9 % $ 579.4
52.3 % $ 45.7
7.9 %
Television Production 660.9
88.9
539.7
83.3
121.2
22.5 %
Media Networks 499.8
44.3
442.5
40.3
57.3
12.9 %
Other 82.7
nm
17.3
nm
65.4
378.0 %
Intersegment eliminations (206.5 ) nm
(83.7 ) nm
(122.8 ) 146.7 %
$ 1,662.0
56.4 % $ 1,495.2
54.0 % $ 166.8
11.2 %

~~_______________________~~

~~nm - Percentage not meaningful.~~

Direct operating expenses increased in the nine months ended December 31, 2019 due to increased Media Networks direct operating expense, other direct operating expense (as further described below), and Motion Picture direct operating expense, and slightly increased Television Production direct operating expense net of intersegment eliminations (a substantial portion of intersegment eliminations relates to Television Production). Media Networks direct operating expense increased due to higher programming amortization at STARZPLAY International, which was partially offset by lower direct operating expense at Starz Networks, which included a benefit of $41.3 million associated with the modification of a content licensing arrangement net of amortization for related changes in content availability and air dates. Motion Picture direct operating expense increased due to increased Motion Picture revenue and higher investment-in-film write-downs, which were partially offset by lower Motion Picture direct operating expense as a percentage of revenue, driven by the lower amortization rate of the Fiscal 2020 Theatrical Slate in the current period as compared to the amortization rate of the Fiscal 2019 Theatrical Slate in the prior year's period. See further discussion in the Segment Results of Operations section below.

During the nine months ended December 31, 2019, in connection with recent management changes, we implemented changes to our programming and broadcasting strategy including programming acquired or produced under prior management. As a result, we recorded certain programming and content charges of $74.0 million in the current period (representing $66.2 million related to the Media Networks segment, and $7.8 million related to the Television Production segment), which are included in direct operating expense in the unaudited condensed consolidated statement of operations and reflected in the "other" line item in the table above (see Note 15 to our unaudited condensed consolidated financial statements). In addition, "other" direct operating expenses in the table above includes the amortization of the non-cash fair value adjustments on film and television assets associated with the application of purchase accounting related to recent acquisitions.

~~Distribution and Marketing Expenses.~~ ~~Distribution and marketing expenses by segment were as follows for the nine months ended December 31, 2019 and 2018:~~

Nine Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Distribution and marketing expenses
Motion Picture $ 468.8
$ 341.2
$ 127.6
37.4 %
Television Production 23.5
29.0
(5.5 ) (19.0 )%
Media Networks 299.0
237.8
61.2
25.7 %
Other 0.4
0.3
0.1
n/a
$ 791.7
$ 608.3
$ 183.4
30.1 %

U.S. theatrical P&A expense included in Motion Picture distribution and marketing expense $ 318.0
$ 197.6
$ 120.4
60.9 %

Distribution and marketing expenses increased in the nine months ended December 31, 2019, due to increased Motion Picture theatrical P&A associated with an increased number of theatrical releases, and to a lesser extent, increased Media Networks distribution and marketing expense across Streaming Services, STARZPLAY International and Starz Networks, partially offset by a slight decrease in Television Production distribution and marketing expense. 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 nine months ended December 31, 2019 and 2018:~~

Nine Months Ended
December 31, Increase (Decrease)
2019 % of Revenues 2018 % of Revenues Amount Percent
(Amounts in millions)
General and administrative expenses
Motion Picture $ 76.1
$ 78.6
$ (2.5 ) (3.2 )%
Television Production 26.9
32.9
(6.0 ) (18.2 )%
Media Networks 62.7
73.3
(10.6 ) (14.5 )%
Corporate 73.0
79.2
(6.2 ) (7.8 )%
238.7
8.1% 264.0
9.5% (25.3 ) (9.6 )%
Share-based compensation expense 39.5
40.2
(0.7 ) (1.7 )%
Purchase accounting and related adjustments 39.1
31.0
8.1
26.1 %
Total general and administrative expenses $ 317.3
10.8% $ 335.2
12.1% $ (17.9 ) (5.3 )%

General and administrative expenses decreased in the nine months ended December 31, 2019, resulting from decreases in Media Networks, Corporate, Television Production, and Motion Picture general and administrative expenses and a slight decrease in share-based compensation expense, partially offset by increased purchase accounting and related adjustments. See further discussion in the Segment Results of Operations section below.

~~Corporate general and administrative expenses decreased $6.2 million, or 7.8%, primarily due to decreases in professional fees and salaries and related expenses.~~

Purchase accounting and related adjustments increased $8.1 million, or 26.1%, primarily due to the amortization of the recoupable portion of the purchase price and the expense associated with the earned distributions related to 3 Arts Entertainment, which was acquired on May 29, 2018 and thus the prior year's period included only seven months of activity.

The decrease in share-based compensation expense included in general and administrative expense in the nine months ended December 31, 2019, as compared to the nine months ended December 31, 2018 is primarily due to lower compensation

~~expense associated with the replacement of Starz share-based payment awards. The following table reconciles this amount to total share-based compensation expense:~~

Nine Months Ended
December 31,
2019 2018
(Amounts in millions)
Share-based compensation expense by expense category
Other general and administrative expense $ 39.5
$ 40.2
Restructuring and other⁽¹⁾
0.3
2.4
Direct operating expense 1.1
0.8
Distribution and marketing expense 0.4
0.3
Total share-based compensation expense $ 41.3
$ 43.7

~~_______________________~~

~~(1)~~Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

~~Depreciation and Amortization Expense.~~ Depreciation and amortization of $143.0 million for the nine months ended December 31, 2019 increased $20.9 million, from $122.1 million in the nine months ended December 31, 2018 due to a change in the amortization method for the Starz Traditional Affiliate customer relationships in the quarter ended September 30, 2019, which resulted in an increase to amortization expense of $23.5 million in the current period. See Note 1 to our unaudited condensed consolidated financial statements under the ~~Change In Estimate~~ ~~section for further details.~~

~~Restructuring and Other.~~ Restructuring and other decreased $25.3 million in the nine months ended December 31, 2019 as compared to the nine months ended December 31, 2018, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable. Restructuring and other costs were as follows for the nine months ended December 31, 2019 and 2018 (see Note 14 to our unaudited condensed consolidated financial statements):

Nine Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Restructuring and other:
Severance⁽¹⁾

Cash $ 7.7
$ 17.0
$ (9.3 ) (54.7 )%
Accelerated vesting on equity awards (see Note 12) 0.3
2.4
(2.1 ) n/a
Total severance costs 8.0
19.4
(11.4 ) (58.8 )%
Transaction and related costs⁽²⁾
8.8
22.7
(13.9 ) (61.2 )%
$ 16.8
$ 42.1
$ (25.3 ) (60.1 )%

~~_______________________~~


~~(1)~~	~~Severance costs in the nine months ended December 31, 2019 and 2018 were primarily related to restructuring activities in connection with recent acquisitions, and other cost-saving initiatives.~~

~~(2)~~

Transaction and related costs in the nine months ended December 31, 2019 and 2018 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters. In the nine months ended December 31, 2018, these costs were primarily related to the legal fees associated with the Starz class action lawsuits and other matters, and to a lesser extent, costs related to the acquisition of 3 Arts Entertainment and other strategic transactions.

~~Interest Expense.~~ Interest expense of $145.7 million in the nine months ended December 31, 2019 decreased $6.5 million from the nine months ended December 31, 2018. The following table sets forth the components of interest expense for the nine months ended December 31, 2019 and 2018:

Nine Months Ended
December 31,
2019 2018
(Amounts in millions)
Interest Expense
Cash Based:
Revolving credit facility $ 5.2
$ 7.2
Term loans 59.9
63.5
5.875% Senior Notes 22.9
22.9
6.375% Senior Notes 26.2
—
Other⁽¹⁾
20.3
14.3
134.5
107.9
Amortization of debt discount and financing costs 11.2
9.0
145.7
116.9
Interest on dissenting shareholders' liability⁽²⁾
—
35.3
Total interest expense $ 145.7
$ 152.2

~~______________________~~


~~(1)~~	~~Amounts include interest expense related to the Company's interest rate swap agreements (see Note 17 to our unaudited condensed consolidated financial statements).~~


~~(2)~~	~~Represents interest accrued in connection with the previously outstanding dissenting shareholders' liability associated with the Starz merger.~~

~~Shareholder Litigation Settlements.~~Shareholder litigation settlements of $114.1 million in the nine months ended December 31, 2018 includes the following: (i) $54.8 million for the net expense recorded for the settlement of the Fiduciary Litigation (representing the settlement amount of $92.5 million, net of aggregate insurance reimbursement of $37.8 million, and (ii) $59.3 million related to the Appraisal Litigation, representing the amount by which the settlement amount of approximately $964 million exceeded the previously accrued (at date of acquisition) dissenting shareholders' liability plus interest through the date agreed in the settlement. There were no comparable charges in the nine months ended December 31, 2019. See Note 16 to our unaudited condensed consolidated financial statements.

~~Other Expense.~~ Other expense of $9.7 million for the nine months ended December 31, 2019 compared to other expense of $1.8 million for the nine months ended December 31, 2018, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 18 to our unaudited condensed consolidated financial statements).

~~Loss on Extinguishment of Debt.~~ Loss on extinguishment of debt for the nine months ended December 31, 2019 was $1.4 million and was related to early repayments of $101.9 million in principal outstanding on the Term Loan B. There was no comparable loss in the nine months ended December 31, 2018. See Note 5 to our unaudited condensed consolidated financial statements.

~~Loss on Investments.~~ ~~Loss on investments of $0.3 millionfor the nine months ended December 31, 2019compared to loss on investments of $43.2 million~~for the nine months ended December 31, 2018, which was primarily due to other-than-temporary impairments on investments in equity securities without readily determinable fair values and notes receivable which were written down to their estimated fair value in the prior year's period, and to a lesser extent, unrealized losses on equity securities.

~~Equity Interests Loss.~~ Equity interests loss of $15.7 million in the nine months ended December 31, 2019 compared to equity interests loss of $28.8 million in the nine months ended December 31, 2018, which included equity losses from Pop (50.0% equity interest sold in March 2019).

~~Income Tax (Provision) Benefit.~~ We had an income tax provision of $6.5 million in the nine months ended December 31, 2019, compared to an income tax benefit of $26.6 million in the nine months ended December 31, 2018. Our income tax provision(provision) differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and certain minimum taxes ~~imposed by the Tax Act.~~and foreign withholding taxes. Our income tax benefit for the ~~nine~~three months ended ~~December 31, 2018~~September 30, 2020 was also impacted by the release of uncertain tax ~~deductions generated by our capital structure, which included certain foreign affiliate dividends in our Canadian jurisdiction that could be received without being subject~~benefits due to ~~tax under Canadian tax law.~~the close of audits or expiration of statutory limitations.

Net ~~Loss~~Income (Loss) Attributable to Lions Gate Entertainment Corp. Shareholders. Net loss attributable to our shareholders for the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 was ~~$143.4~~$18.4 million, or basic and diluted net loss per common share of ~~$0.66~~$0.08 on ~~217.2~~220.4 million weighted average common shares outstanding. This compares to net ~~loss~~income attributable to our shareholders for the ~~nine~~three months ended ~~December 31, 2018~~September 30, 2019 of ~~$129.0~~$1.8 million, or basic ~~and diluted~~ net ~~loss~~income per common share of ~~$0.61~~$0.01 on ~~213.2~~217.5 million weighted average common shares outstanding and diluted net income per common share of $0.01 on 219.8 million weighted average common shares outstanding.

Segment Results of Operations

The Company's primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration expenses. Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation, ~~other than annual bonuses granted in immediately vested stock awards when applicable,~~ certain programming and content charges as a result of changes in management and associated programming and content strategy, and, when applicable, certain costs related to the COVID-19 global pandemic, and purchase accounting and related ~~adjustments, when applicable.~~adjustments. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses. The reconciliation of segment profit to the Company's consolidated ~~loss~~income (loss) before income taxes is presented in Note 1514 to the unaudited condensed consolidated financial statements.

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Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Nine Months Ended												Three Months Ended
	December 31,						Increase (Decrease)						September 30,						Increase (Decrease)
	2019			2018			Amount			Percent			2020			2019			Amount		Percent
	(Amounts in millions)												(Amounts in millions)
Motion Picture Segment:												Motion Picture Segment:
Revenue	$	1,277.6		$	1,106.9		$	170.7		15.4	%	Revenue	$	257.6		$	405.8		$	(148.2)	(36.5)	%
Expenses:												Expenses:
Direct operating expense	625.1			579.4			45.7			7.9	%	Direct operating expense	108.6			182.7			(74.1)		(40.6)	%
Distribution & marketing expense	468.8			341.2			127.6			37.4	%	Distribution & marketing expense	41.2			146.3			(105.1)		(71.8)	%
Gross contribution	183.7			186.3			(2.6		)	(1.4	)%	Gross contribution	107.8			76.8			31.0		40.4	%
General and administrative expenses	76.1			78.6			(2.5		)	(3.2	)%	General and administrative expenses	24.8			25.8			(1.0)		(3.9)	%
Segment profit	$	107.6		$	107.7		$	(0.1	)	(0.1	)%	Segment profit	$	83.0		$	51.0		$	32.0	62.7	%

U.S. theatrical P&A expense included in distribution and marketing expense	$	318.0		$	197.6		$	120.4		60.9	%	U.S. theatrical P&A expense included in distribution and marketing expense	$	—		$	95.2		$	(95.2)	(100.0)	%

Direct operating expense as a percentage of revenue	48.9		%	52.3		%						Direct operating expense as a percentage of revenue	42.2		%	45.0		%

Gross contribution as a percentage of revenue	14.4		%	16.8		%						Gross contribution as a percentage of revenue	41.8		%	18.9		%

Revenue. The table below sets forth Motion Picture revenue by media and product category for the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Nine Months Ended December 31,																Three Months Ended September 30,
	2019						2018						Total Increase (Decrease)				2020						2019						Total Increase (Decrease)
	Feature Film⁽¹⁾		Other Film⁽²⁾		Total		Feature Film⁽¹⁾		Other Film⁽²⁾		Total						Feature Film(1)		Other Film(2)		Total		Feature Film(1)		Other Film(2)		Total
					(Amounts in millions)																(Amounts in millions)
Motion Picture Revenue																Motion Picture Revenue
Theatrical	$	289.2	$	27.3	$	316.5	$	101.8	$	46.1	$	147.9	$	168.6		Theatrical	$	—	$	—	$	—	$	79.7	$	6.0	$	85.7	$	(85.7)
Home Entertainment																Home Entertainment
Digital Media	188.0		124.1		312.1		109.8		143.2		253.0		59.1			Digital Media	55.6		60.5		116.1		72.9		40.4		113.3		2.8
Packaged Media	114.2		82.8		197.0		82.4		126.6		209.0		(12.0		)	Packaged Media	16.0		17.9		33.9		43.5		21.7		65.2		(31.3)
Total Home Entertainment	302.2		206.9		509.1		192.2		269.8		462.0		47.1			Total Home Entertainment	71.6		78.4		150.0		116.4		62.1		178.5		(28.5)
Television	138.4		39.3		177.7		159.4		48.2		207.6		(29.9		)	Television	47.1		12.0		59.1		29.7		8.6		38.3		20.8
International	193.4		63.2		256.6		200.8		53.5		254.3		2.3			International	27.8		17.7		45.5		73.1		20.1		93.2		(47.7)
Other	15.8		1.9		17.7		31.4		3.7		35.1		(17.4		)	Other	2.1		0.9		3.0		9.5		0.6		10.1		(7.1)
	$	939.0	$	338.6	$	1,277.6	$	685.6	$	421.3	$	1,106.9	$	170.7			$	148.6	$	109.0	$	257.6	$	308.4	$	97.4	$	405.8	$	(148.2)

____________________


~~(1)~~	~~Feature Film:~~ Includes theatrical releases through our Lionsgate and Summit Entertainment film labels, which includes films developed and produced in-house, films co-developed and co-produced and films acquired from third parties.


~~(2)~~	~~Other Film:~~ Includes direct-to-DVD motion pictures, acquired and licensed brands, third-party library product and ancillary-driven platform theatrical releases through our specialty films distribution labels including Lionsgate Premiere, through Good Universe, and with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.

~~Theatrical~~(1)Feature Film: Includes theatrical releases through our Lionsgate and Summit Entertainment film labels, which includes films developed and produced in-house, films co-developed and co-produced and films acquired from third parties.

(2)Other Film: Includes direct-to-DVD motion pictures, acquired and licensed brands, third-party library product and ancillary-driven platform theatrical releases through our specialty films distribution labels including Lionsgate Premiere, through Good Universe, and with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.

With theaters closed during the quarter due to circumstances associated with the COVID-19 global pandemic, theatrical revenue ~~increased $168.6~~decreased $85.7 million, or ~~114.0%~~100.0%, in the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 as compared to the ~~nine~~three months

Table of Contents

ended September 30, 2019. The prior year's quarter included significant revenue from Scary Stories to Tell in the Dark, Angel Has Fallen and Rambo: Last Blood.

Home entertainment revenue decreased $28.5 million, or 16.0%, in the three months ended ~~December 31, 2018,~~September 30, 2020, as compared to the three months ended September 30, 2019, primarily ~~driven by the performance and greater number~~due to a decrease of ~~the~~$44.8 million from our Feature Films ~~released~~as a result of fewer home entertainment releases from our fiscal 2021 theatrical slate, partially offset by digital media revenues from Antebellum due to a change in initial release strategy from theatrical release to Premium VOD due to circumstances associated with the ~~current period, and~~COVID-19 global pandemic. In addition, the prior year's quarter included significant revenue from John Wick: Chapter 3 - ~~Parabellum, Knives Out, Scary Stories to Tell~~Parabellum. This decrease from our Feature Films was offset by an increase of $16.3 million from Other Film from digital media revenue in the ~~Dark, Angel Has Fallen, Midway~~current quarter for The Secret: Dare to Dream and ~~Rambo: Last Blood.~~ Force of Nature~~This increase was~~.~~partially offset by a decrease from Other Film~~

Television revenue increased $20.8 million, or 54.3%, in the three months ended September 30, 2020, as compared to the three months ended September 30, 2019, due to increased revenue from our Feature Films from our fiscal 2020 theatrical slate with television windows opening in the current quarter as compared to revenue from our Feature Films from our fiscal 2019 theatrical slate in the prior year's ~~period from~~ ~~Overboard~~ ~~and~~ ~~Extinction~~.

quarter.

~~Home entertainment~~International revenue ~~increased $47.1~~decreased $47.7 million, or ~~10.2%~~51.2%, in the ~~nine~~three months ended ~~December 31, 2019,~~September 30, 2020, as compared to the ~~nine~~three months ended ~~December 31, 2018, driven by by an increase of $110.0 million~~September 30, 2019 due to lower revenue from our ~~Feature Films,~~fiscal 2021 theatrical slate in the current quarter, which ~~was partially offset by a decrease of $62.9 million from Other Film. The increase in Feature Film home entertainment revenue was~~had no new theatrical releases due to circumstances associated with the ~~performance of~~COVID-19 global pandemic, as compared to the revenue generated from our ~~Fiscal~~fiscal 2020 ~~Theatrical Slate, and~~theatrical slate in ~~particular,~~the prior year's quarter, which included significant ~~digital and packaged media revenues~~revenue from John Wick: Chapter 3 - Parabellum.~~The increase was also, to a lesser extent, due to a greater number of Feature Films released on home entertainment. The~~

We expect that Motion Picture segment revenues will decrease in ~~revenue from Other Film was primarily due to home entertainment revenue in the prior year's period from~~ ~~I Can Only Imagine, Hostiles,~~ ~~and~~ ~~Overboard~~.

~~Television revenue decreased $29.9 million, or 14.4%, in the nine months ended December 31, 2019,~~fiscal 2021 as compared to fiscal 2020 due to delays in domestic and international theatrical distribution and production as a result of the ~~nine months ended December 31, 2018~~closure of theaters and paused productions throughout the U.S., Canada, and worldwide due ~~primarily~~ to ~~fewer Feature Films from our Fiscal 2020~~circumstances associated with the COVID-19 global pandemic. The extent of the impact on Motion Picture segment revenues, will depend on, among other things, the duration and ~~2019 Theatrical Slates with television windows opening~~spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in ~~the current period as compared~~response to the ~~number~~pandemic, the effectiveness of ~~Feature Films from our Fiscal 2018 Theatrical Slate in~~actions taken to contain or mitigate the ~~prior year's period.~~

~~Other revenue decreased $17.4 million, or 49.6%, in~~outbreak, global economic conditions, the ~~nine months ended December 31, 2019 as compared~~ability for theaters to re-open at a scale to attract motion pictures and the rate of consumers' return to the ~~nine months ended December 31, 2018 due to Feature Film revenues from an other ancillary market licensing arrangement in the prior year's period.~~

theater.

Direct Operating Expense. The ~~increase~~decrease in direct operating expenses is due to ~~an increase~~a decrease in Motion Picture revenues, and higher investment-in-film write-downs, which were partially offset by decreased direct operating expenses as a percentage of motion pictures revenue. Investment in film write-downs for the period increased to $38.8 million in the nine months ended December 31, 2019, as compared to approximately $17.4 million in the nine months ended December 31, 2018.revenues. The decrease in direct operating expenses as a percentage of motion picture revenue was driven by the change in the mix of titles and product categories generating revenue in the current ~~period~~quarter as compared to the prior year's ~~period, and in~~quarter. In particular, the decrease was impacted by the lower amortization rate of the ~~Fiscal 2020 Theatrical Slate releases contributing significant~~fiscal 2019 and prior theatrical slate titles generating revenue in in the current ~~period~~ ~~(John Wick: Chapter 3 - Parabellum, Knives Out, Angel Has Fallen, Scary Stories to Tell in the Dark~~)quarter as compared to the ~~Fiscal 2019 Theatrical Slate releases contributing significant revenue~~prior year's quarter. Investment in film write-downs included in Motion Picture segment direct operating expense for the quarter were $0.3 million in the ~~prior year's period (The Spy Who Dumped Me, Robin Hood~~).three months ended September 30, 2020, as compared to $0.1 million in the three months ended September 30, 2019.

Distribution and Marketing Expense.The ~~increase~~decrease in distribution and marketing expense in the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 is ~~primarily~~ due to ~~higher~~lower theatrical P&A ~~spending on a greater number~~expense associated with the closure of ~~Feature Film theatrical releases.~~ theaters during the quarter due to circumstances associated with the COVID-19 global pandemic, partially offset by distribution and marketing expense associated with the Premium VOD release of Antebellum. In the ~~nine~~three months ended ~~December 31,~~September 30, 2019, approximately ~~$11.4~~$20.4 million of P&A was incurred in advance for films to be released in subsequent quarters, such as Knives Out, Jexi, Midway, I Still Believe, ~~Barb and Star Go to Visa Del Mar,~~ and ~~Antebellum.~~Bombshell, Inwith no comparable expense in the ~~nine months ended December 31, 2018, approximately $6.6 million of P&A was incurred~~Motion Picture segment in ~~advance for films to be released in subsequent periods, such as~~the current quarter. ~~The Commuter, Early Man~~ ~~and~~ ~~Robin Hood.~~

Gross Contribution. Gross contribution of the Motion Picture segment for the ~~nine~~three months ended ~~December 31, 2019 decreased~~September 30, 2020 increased as compared to the ~~nine~~three months ended ~~December 31, 2018,~~September 30, 2019, primarily due to ~~increased~~lower Motion Picture distribution and marketing expense as a percentage of Motion Picture revenue, ~~partially offset by increased~~and to a lesser extent, lower Motion Picture ~~revenue and lower~~ direct operating ~~expenses~~expense as a percentage of Motion Picture revenue.

Table of Contents

General and Administrative Expense. General and administrative expenses of the Motion Picture segment ~~in the nine months ended December 31, 2019~~ decreased ~~$2.5~~$1.0 million, or ~~3.2%~~3.9%, primarily due to decreases in ~~salaries~~rent and ~~related expenses.~~facility costs.

Television Production

The table below sets forth Television Production gross contribution and segment profit for the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Nine Months Ended												Three Months Ended
	December 31,						Increase (Decrease)						September 30,						Increase (Decrease)
	2019			2018			Amount			Percent			2020			2019			Amount		Percent
	(Amounts in millions)												(Amounts in millions)
Television Production Segment:												Television Production Segment:
Revenue	$	743.2		$	648.1		$	95.1		14.7	%	Revenue	$	197.2		$	274.0		$	(76.8)	(28.0)	%
Expenses:												Expenses:
Direct operating expense	660.9			539.7			121.2			22.5	%	Direct operating expense	168.6			245.5			(76.9)		(31.3)	%
Distribution & marketing expense	23.5			29.0			(5.5		)	(19.0	)%	Distribution & marketing expense	7.4			8.8			(1.4)		(15.9)	%
Gross contribution	58.8			79.4			(20.6		)	(25.9	)%	Gross contribution	21.2			19.7			1.5		7.6	%
General and administrative expenses	26.9			32.9			(6.0		)	(18.2	)%	General and administrative expenses	11.3			7.1			4.2		59.2	%
Segment profit	$	31.9		$	46.5		$	(14.6	)	(31.4	)%	Segment profit	$	9.9		$	12.6		$	(2.7)	(21.4)	%

Direct operating expense as a percentage of revenue	88.9		%	83.3		%						Direct operating expense as a percentage of revenue	85.5		%	89.6		%

Gross contribution as a percentage of revenue	7.9		%	12.3		%						Gross contribution as a percentage of revenue	10.8		%	7.2		%

Revenue. The table below sets forth Television Production revenue and changes in revenue by media for the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019:


	Three Months Ended
	September 30,				Increase (Decrease)
	2020		2019		Amount		Percent
	(Amounts in millions)
Television Production Revenue
Television	$	116.7	$	185.5	$	(68.8)	(37.1)	%
International	47.9		39.0		8.9		22.8	%
Home Entertainment
Digital	15.9		31.7		(15.8)		(49.8)	%
Packaged Media	1.1		0.2		0.9		nm
Total Home Entertainment	17.0		31.9		(14.9)		(46.7)	%
Other	15.6		17.6		(2.0)		(11.4)	%
	$	197.2	$	274.0	$	(76.8)	(28.0)	%

________________________

nm - Percentage not meaningful.

Nine Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
Television Production (Amounts in millions)
Television $ 526.4
$ 454.4
$ 72.0
15.8 %
International 113.3
94.7
18.6
19.6 %
Home Entertainment
Digital 47.6
54.1
(6.5 ) (12.0 )%
Packaged Media 2.2
5.9
(3.7 ) (62.7 )%
Total Home Entertainment 49.8
60.0
(10.2 ) (17.0 )%
Other 53.7
39.0
14.7
37.7 %
$ 743.2
$ 648.1
$ 95.1
14.7 %

Table of Contents

The primary component of Television Production revenue is domestic television revenue. Domestic television revenue ~~increased~~decreased in the ~~nine~~three months ended ~~December 31, 2019,~~September 30, 2020 as compared to the ~~nine~~three months ended ~~December 31, 2018~~September 30, 2019, due to ~~increased~~fewer television episodes delivered, and decreased revenue from reality television series, both of which were negatively impacted by disruptions associated with the COVID-19 global pandemic and the associated pausing of productions which resulted in the delay of television episodes delivered in the current quarter. These decreases were offset by a slight increase in intersegment revenues from the licensing of Starz original series, and to a lesser extent, an increase in revenue from television episodes delivered. These increases were offset slightly by decreased license fees from unscripted television programs in the current period as compared to the prior year's period.series.

International revenue in the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 increased ~~$18.6~~$8.9 million, or ~~19.6% as compared to~~22.8%, primarily driven by intersegment revenue from STARZPLAY International in the ~~nine months ended December 31, 2018~~current quarter from the Starz original series Power Book II: Ghost, P-Valley Season 1,and The Spanish Princess Season 2, ~~primarily due~~which compared to revenue in the prior year's quarter from Mythic Quest Season 1,~~Dear White People~~ ~~Season 3,~~ ~~Orange Is the New Black~~ ~~Season 7, and~~ ~~Greenleaf~~ ~~Season 4,~~ and intersegment revenue from STARZPLAY International from the Starz original series The Rook Season 1 and ~~Vida~~Sweetbitter Season 2, ~~Power~~ ~~Season 6 and~~ ~~The Spanish Princess~~ ~~Season 1 in the current period. This compared to revenue in the prior year's period from~~ ~~Orange Is the New Black~~ ~~Seasons 6 & 7,~~ ~~Step Up: High Water~~ ~~Season 2,~~ ~~Greenleaf~~ ~~Season 3, and~~ ~~Power~~ ~~Season 5.~~2.

Home entertainment revenue in the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 decreased ~~$10.2~~$14.9 million ~~or 17.0%, primarily driven by~~due to significant digital media revenue in the prior year's ~~period~~quarter for ~~the Starz original series,~~ ~~The Missing~~ ~~Season 2 and~~ ~~Black Sails~~Power Season 4.5.

Other revenue ~~increased~~decreased in the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 as compared to the ~~nine~~three months ended ~~December 31, 2018 due to revenue in the current period from~~September 30, 2019. Revenue of 3 Arts Entertainment ~~which~~was negatively impacted in the three months ended September 30, 2020 as a result of the COVID-19 global pandemic related disruptions. The extent of the future impact on other revenue of the COVID-19 global pandemic is uncertain and will depend on film and television productions and releases returning to pre COVID-19 levels.

We expect that Television Production segment revenues will decrease in fiscal 2021 as compared to ~~revenue~~fiscal 2020 due to delays in domestic and international distribution and production as a result of paused productions throughout the ~~prior year's period from~~U.S., Canada, and worldwide due to circumstances associated with the ~~acquisition date~~COVID-19 global pandemic. The extent of ~~May 29, 2018~~the impact of the COVID-19 global pandemic related disruptions on Television Production revenues, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to ~~December 31, 2018.~~be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions.

Direct Operating Expense. Direct operating expense of the Television Production segment in the ~~nine~~three months ended ~~December 31, 2019 increased $121.2~~September 30, 2020 decreased $76.9 million, or ~~22.5% due to the increase in Television Production revenues.~~31.3%. Direct operating expenses as a percentage of television production revenue ~~increased~~decreased primarily due to the mix of titles generating revenue in the current ~~period~~quarter as compared to the prior year's ~~period. In~~quarter, and in particular, ~~the prior year's period included significant revenue from higher margin television series, such as~~ ~~Orange Is The New Black,Step Up: High Water, and~~ ~~Family Feud~~ ~~as compared~~due to the COVID-19 global pandemic related disruptions, the current ~~year's period~~quarter included fewer deliveries of new shows in which ~~included new television programs~~ ~~(Manhunt, Zoey's International Playlist, Mythic Quest, Kevin Hart: Don't F**k This Up, The Rook, Ambitions), which~~direct operating expense is typically ~~result in~~ higher ~~amortization expenses in relation to revenues initially.~~as a percentage of revenue.

Gross Contribution. Gross contribution of the Television Production segment for the ~~nine~~three months ended ~~December 31, 2019 decreased~~September 30, 2020 increased as compared to the ~~nine~~three months ended ~~December 31, 2018,~~September 30, 2019, due to ~~higher~~lower direct operating expenses as a percentage of television production revenue, partially offset by ~~higher~~lower television production revenue.

General and Administrative Expense. General and administrative expenses of the Television Production segment ~~decreased $6.0~~increased $4.2 million, or ~~18.2%~~59.2%, primarily due to ~~decreases~~increases in salaries and related expenses and incentive compensation. ~~The nine months ended December 31, 2018 included general and administrative expenses~~

Table of ~~3 Arts Entertainment from the acquisition date of May 29, 2018.~~Contents

Media Networks

The table below sets forth Media Networks gross contribution and segment profit for the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018:~~2019.


	Three Months Ended
	September 30,						Increase (Decrease)
	2020			2019			Amount		Percent
	(Amounts in millions)
Media Networks Segment:
Revenue	$	388.3		$	374.0		$	14.3	3.8	%
Expenses:
Direct operating expense	161.5			142.4			19.1		13.4	%
Distribution & marketing expense	111.9			106.9			5.0		4.7	%
Gross contribution	114.9			124.7			(9.8)		(7.9)	%
General and administrative expenses	22.0			20.1			1.9		9.5	%
Segment profit	$	92.9		$	104.6		$	(11.7)	(11.2)	%

Direct operating expense as a percentage of revenue	41.6		%	38.1		%

Gross contribution as a percentage of revenue	29.6		%	33.3		%

Nine Months Ended
December 31, Increase (Decrease)
2019 2018 Amount Percent
(Amounts in millions)
Media Networks Segment:
Revenue $ 1,128.8
$ 1,099.0
$ 29.8
2.7 %
Expenses:
Direct operating expense 499.8
442.5
57.3
12.9 %
Distribution & marketing expense 299.0
237.8
61.2
25.7 %
Gross contribution 330.0
418.7
(88.7 ) (21.2 )%
General and administrative expenses 62.7
73.3
(10.6 ) (14.5 )%
Segment profit $ 267.3
$ 345.4
$ (78.1 ) (22.6 )%

Direct operating expense as a percentage of revenue 44.3 % 40.3 %

Gross contribution as a percentage of revenue 29.2 % 38.1 %

The following table sets forth the Media Networks segment profit by product line:

Nine Months Ended Nine Months Ended
December 31, 2019 December 31, 2018
Starz Networks STARZPLAY International Streaming Services Total Media Networks Starz Networks STARZPLAY International Streaming Services Total Media Networks
(Amounts in millions)
Media Networks Segment:
Revenue $ 1,092.4
$ 13.6
$ 22.8
$ 1,128.8
$ 1,086.1
$ 0.9
$ 12.0
$ 1,099.0
Expenses:
Direct operating expense 400.8
95.1
3.9
499.8
417.9
18.4
6.2
442.5
Distribution & marketing expense 248.5
21.5
29.0
299.0
223.4
2.5
11.9
237.8
Gross contribution 443.1
(103.0 ) (10.1 ) 330.0
444.8
(20.0 ) (6.1 ) 418.7
General and administrative expenses 47.5
10.6
4.6
62.7
65.2
4.7
3.4
73.3
Segment profit $ 395.6
$ (113.6 ) $ (14.7 ) $ 267.3
$ 379.6
$ (24.7 ) $ (9.5 ) $ 345.4


	Three Months Ended								Three Months Ended
	September 30, 2020								September 30, 2019
	Starz Networks		STARZPLAY International		Other Streaming Services		Total Media Networks		Starz Networks		STARZPLAY International		Other Streaming Services		Total Media Networks
	(Amounts in millions)
Media Networks Segment:
Revenue	$	360.8	$	14.2	$	13.3	$	388.3	$	361.9	$	4.4	$	7.7	$	374.0
Expenses:
Direct operating expense	140.2		18.9		2.4		161.5		115.3		25.9		1.2		142.4
Distribution & marketing expense	89.1		14.1		8.7		111.9		91.5		6.4		9.0		106.9
Gross contribution	131.5		(18.8)		2.2		114.9		155.1		(27.9)		(2.5)		124.7
General and administrative expenses	16.4		4.3		1.3		22.0		14.8		3.8		1.5		20.1
Segment profit	$	115.1	$	(23.1)	$	0.9	$	92.9	$	140.3	$	(31.7)	$	(4.0)	$	104.6

~~Revenue.~~

Subscriber Data. The number of period-end service subscribers is a key metric to evaluate a non-ad supported subscription video service as a growing or decreasing subscriber base is a key indicator of the health of the overall business. Service subscribers may impact revenue differently depending on specific distribution agreements we have with our distributors which may include fixed fees, rates per basic video household or a rate per STARZ subscriber. The table below sets forth, for the periods presented, subscriptions to our Media Networks and STARZPLAY Arabia ~~services:~~services.

The pro forma subscriber data as of September 30, 2019 reflects the number of subscribers as of September 30, 2019, adjusted to remove the estimated number of subscribers to MVPD video packages or MVPD bundles that include the Starz service for distributors who dropped or removed Starz from these highly distributed MVPD video packages or MVPD bundles. This is a key metric to show prior period subscribers on a comparable basis to September 30, 2020 quarter-end subscribers. An MVPD video package is an offering by our distributors to its customers of multiple distinct video networks or services for a single recurring price where there is no distinction of price on any one specific network. An MVPD bundle is an offering by our distributors to its customers of two or more distinct MVPD services, such as video, internet and phone, sold on a subscription

Table of Contents


			Pro Forma
	September 30,	September 30,	September 30,
	2020	2019	2019
	(Amounts in millions)
Domestic Subscribers
STARZ	20.7	24.7	18.0
Other Streaming Services(1)	0.8	0.5	0.5
	21.5	25.2	18.5
International Subscribers
STARZPLAY International	3.8	2.3	2.3
STARZPLAY Arabia(2)	1.8	1.2	1.2
	5.6	3.5	3.5
Total Domestic and International Subscribers	27.1	28.7	22.0

Subscribers by Platform:
Linear Subscribers	13.4	21.0	14.3
OTT Subscribers(3)	13.7	7.7	7.7
Total Global Subscribers	27.1	28.7	22.0

___________________


~~(1)~~	~~Represents subscribers of our premium Spanish-language streaming service, Pantaya, which was launched in the quarter ended September 30, 2017.~~


~~(2)~~	~~Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.~~


~~(3)~~	~~OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.~~

(1)Represents subscribers of our premium Spanish-language streaming service, Pantaya, which was launched in the quarter ended September 30, 2017.

(2)Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.

(3)OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.

Revenue. The increase in Media Networks' revenue was driven by ~~higher~~increased STARZPLAY International revenue of ~~$12.7~~$9.8 million and increased revenue from Other Streaming Services of ~~$10.8~~$5.6 million ~~and increased~~due to subscriber growth, which was partially offset by decreased Starz Networks' revenue of ~~$6.3~~$1.1 million. STARZPLAY International revenue increased as a result of subscriber and revenue growth in the international territories previously launched, ~~in the prior year's period,~~ and additional territories launched since ~~December 31, 2018. Streaming Services revenue increased due to subscriber growth.~~September 30, 2019. Starz Networks' revenue ~~increased~~decreased as a result of declines in revenue from traditional linear services, which was mostly offset by higher OTT revenue resulting from increased ~~subscriptions, which was mostly offset by declines~~subscriptions.

As a result of events related to the COVID-19 global pandemic, television and streaming consumption around the globe continues to increase, as well as home entertainment demand. STARZ continues to achieve an increase in ~~revenues from traditional linear services.~~viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally. This increase in subscribers is dependent upon future economic conditions, our ability to deliver original content and may vary due to changes in consumer viewing and subscription patterns. However, it is too early to say whether this increase is indicative of future results and whether growth may slow as governmental and other restrictions are relaxed, and as a result of the current and possible longer term negative economic impact of the pandemic.

During the ~~nine~~three months ended ~~December 31,~~September 30, 2020 and 2019, ~~and 2018,~~ the following original series premiered on STARZ:


Three Months Ended September 30, 2020				Three Months Ended September 30, 2019


~~Nine Months Ended December 31, 2019~~				~~Nine Months Ended December 31, 2018~~
~~First Quarter:~~				~~First Quarter:~~
~~The Spanish Princess~~				~~Howard's End~~

~~Vida~~ ~~Season 2~~			~~Sweetbitter~~P-Valley Season 1
~~The Rook~~ ~~Season 1~~			~~Vida~~ ~~Season 1~~
	~~Wrong Man~~ ~~Season 1~~
~~Second Quarter:~~	~~Second Quarter:~~
Sweetbitter Season 2
		Power Book II: Ghost~~Season 5~~
		Power Season 6
		~~America to Me~~
Power Confidential Season 1
		~~Warriors of Liberty City~~
~~Third Quarter:~~				~~Third Quarter:~~
~~Dublin Murders~~				~~Outlander~~ ~~Season 4~~
~~Leavenworth~~	~~Counterpart~~ ~~Season 2~~

Table of Contents

Direct Operating and Distribution and Marketing Expenses. ~~Starz Networks' and STARZPLAY International direct~~Direct operating and distribution and marketing expenses primarily represent programming cost amortization and advertising and marketing costs, respectively. The level of ~~programing~~programming cost amortization and advertising and marketing costs and thus the gross contribution margin for the Media Networks' segment can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during the period. Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere. In addition, the launch of the STARZPLAY international service has and will continue to result in an increase in expenses as the service continues to expand.

The increase in Media Networks direct operating expenses is due to higher direct operating expenses at ~~STARZPLAY International, which were~~Starz Networks, and to a lesser extent, Other Streaming Services, partially offset by lower Starz Networks' direct operating expenses during the nine months ended December 31, 2019. Direct operating expenses at STARZPLAY International increased as a result of higher programming cost amortization related to the launch and operation of STARZPLAY in additional international territories since December 31, 2018. The decrease in direct operating expense at STARZPLAY International in the three months ended September 30, 2020. The increase in Starz Networks direct operating expense was primarily due to a benefit in the prior year's quarter of ~~$41.3~~$43.7 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates, ~~and~~partially offset by lower programming amortization ~~related to our Starz Originals, which was partially offset by higher programming amortization related to theatrical releases under our programming output agreement,~~ and ~~higher~~ development expense related to our Starz ~~Originals.~~Originals due to fewer series premieres in the current year's quarter. Direct operating expenses at STARZPLAY International decreased as a result of write downs of programming cost in the three months ended September 30, 2019 and other quarters prior to the current quarter, which reduced the cost being amortized in the current quarter.

The increase in Media Networks distribution and marketing expense is due to ~~increases~~an increase at STARZPLAY International, partially offset by lower distribution and marketing expense at Starz Networks and ~~to a lesser extent, STARZPLAY International and~~Other Streaming Services. ~~Starz Networks' distribution and marketing expense increased due to increased operating costs and increased marketing spend with our distributors.~~ Distribution and marketing expense for STARZPLAY International increased due to an increase in advertising and marketing costs in order to drive subscriber growth in the international territories previously launched, and additional territories launched since September 30, 2019. Starz Networks' distribution and marketing expense decreased due to decreased marketing spend primarily due to fewer Starz Original series premieres during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019.

Gross Contribution. Gross contribution of the Media Networks segment for the three months ended September 30, 2020 was primarily from Starz Networks, offset partially by negative contributions from STARZPLAY International which has continued to expand in additional territories. The decrease in gross contribution of the Media Networks segment compared to the prior year's quarter was due to a decrease at Starz Networks primarily due to the benefit in direct operating expense in the prior year's quarter as discussed above, which was partially offset by lower negative contributions from STARZPLAY International and increased contributions from Other Streaming Services.

General and Administrative Expense. General and administrative expenses of the Media Networks segment in the three months ended September 30, 2020 increased slightly from the prior year's quarter, driven by increased general and administrative expenses for Starz Networks and STARZPLAY International, partially offset by a slight decrease in Other Streaming Services.

Six Months Ended September 30, 2020 Compared to Six Months Ended September 30, 2019

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the six months ended September 30, 2020 and 2019:

Table of Contents


	Six Months Ended
	September 30,				Increase (Decrease)
	2020		2019		Amount		Percent
	(Amounts in millions)
Revenues
Motion Picture	$	538.3	$	803.6	$	(265.3)	(33.0)	%
Television Production	392.9		553.8		(160.9)		(29.1)	%
Media Networks	755.5		746.4		9.1		1.2	%
Intersegment eliminations	(128.0)		(156.7)		28.7		(18.3)	%
Total revenues	1,558.7		1,947.1		(388.4)		(19.9)	%
Expenses:
Direct operating	789.8		1,067.4		(277.6)		(26.0)	%
Distribution and marketing	308.5		512.6		(204.1)		(39.8)	%
General and administration	227.8		208.5		19.3		9.3	%
Depreciation and amortization	97.1		91.2		5.9		6.5	%
Restructuring and other	16.4		13.1		3.3		25.2	%
Total expenses	1,439.6		1,892.8		(453.2)		(23.9)	%
Operating income	119.1		54.3		64.8		119.3	%
Interest expense	(90.2)		(97.0)		6.8		(7.0)	%
Interest and other income	1.8		5.0		(3.2)		(64.0)	%
Other expense	(2.3)		(6.1)		3.8		(62.3)	%

Gain (loss) on investments	0.4		(0.3)		0.7		nm
Equity interests loss	(4.5)		(11.1)		6.6		(59.5)	%
Income (loss) before income taxes	24.3		(55.2)		79.5		(144.0)	%
Income tax benefit (provision)	0.2		(4.5)		4.7		(104.4)	%
Net income (loss)	24.5		(59.7)		84.2		(141.0)	%
Less: Net loss attributable to noncontrolling interest	8.2		7.5		0.7		9.3	%
Net income (loss) attributable to Lions Gate Entertainment Corp. shareholders	$	32.7	$	(52.2)	$	84.9	(162.6)	%

_______________________

nm - Percentage not meaningful.

Revenues. Consolidated revenues decreased in the six months ended September 30, 2020, primarily due to decreases in Motion Picture and Television Production revenues, which were negatively impacted by the COVID-19 global pandemic, partially offset by increased Media Networks revenues and lower intersegment eliminations associated with lower Television Production revenues (a substantial portion of intersegment eliminations relates to Television Production revenue) for licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment.

With theaters closed during the period due to circumstances associated with the COVID-19 global pandemic, Motion Picture revenue decreased primarily due to lower theatrical and international revenue, and to a lesser extent, lower home entertainment packaged media revenue due to fewer home entertainment releases in the period, and lower other revenue, partially offset by increased television revenue.

Television Production revenue decreased due to lower domestic television revenue with fewer television episodes delivered, largely because of the pausing of productions associated with the COVID-19 global pandemic, and to a lesser extent, due to lower other revenue. These decreases were partially offset by an increase in home entertainment revenue.

The increase in Media Networks revenue was due to increased revenue across STARZPLAY International and Other Streaming Services, partially offset by decreased revenue at Starz Networks. See further discussion in the Segment Results of Operations section below.

Table of Contents

Direct Operating Expenses. Direct operating expenses by segment were as follows for the six months ended September 30, 2020 and 2019:


	Six Months Ended
	September 30,
	2020				2019				Increase (Decrease)
	Amount		% of Segment Revenues		Amount		% of Segment Revenues		Amount		Percent
	(Amounts in millions)
Direct operating expenses
Motion Picture	$	236.4	43.9	%	$	402.1	50.0	%	$	(165.7)	(41.2)	%
Television Production	311.7		79.3		482.6		87.1		(170.9)		(35.4)	%
Media Networks	329.4		43.6		337.0		45.2		(7.6)		(2.3)	%
COVID-19 related costs	28.0		nm		—		nm		28.0		n/a
Other	1.9		nm		2.9		nm		(1.0)		(34.5)	%
Intersegment eliminations	(117.6)		nm		(157.2)		nm		39.6		(25.2)	%
	$	789.8	50.7	%	$	1,067.4	54.8	%	$	(277.6)	(26.0)	%

_______________________

nm - Percentage not meaningful.

Direct operating expenses decreased in the six months ended September 30, 2020 primarily due to lower Motion Picture and Television Production revenue. The decrease was also, to a lesser extent, due to a decrease from Media Networks due to lower programming amortization at STARZPLAY International and Starz Networks, which was partially offset by a benefit in the prior year's period of $36.7 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates. The decrease in Television Production direct operating expense was partially offset by the decrease in intersegment eliminations, which primarily relate to Television Production direct operating costs associated with licenses of original series to Starz Networks and STARZPLAY International, both in the Media Networks segment. These decreases were partially offset by COVID-19 related costs (as further described below). See further discussion in the Segment Results of Operations section below.

COVID-19 Related Costs.In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, during the six months ended September 30, 2020 we have incurred $28.0 million in incremental costs which were expensed in the period which are included in consolidated direct operating expense and are excluded from segment direct operating expense. These costs include incremental costs associated with film impairment due to changes in performance expectations, the pausing and restarting of productions including certain cast and crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic. We expect to incur additional incremental costs in future periods. We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in our consolidated financial statements.

Distribution and Marketing Expenses. Distribution and marketing expenses by segment were as follows for the six months ended September 30, 2020 and 2019:

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	Six Months Ended
	September 30,				Increase (Decrease)
	2020		2019		Amount		Percent
	(Amounts in millions)
Distribution and marketing expenses
Motion Picture	$	64.3	$	291.8	$	(227.5)	(78.0)	%
Television Production	14.3		16.8		(2.5)		(14.9)	%
Media Networks	218.9		203.8		15.1		7.4	%
COVID-19 related costs	10.7		—		10.7		n/a
Other	0.3		0.2		0.1		50.0	%

	$	308.5	$	512.6	$	(204.1)	(39.8)	%

U.S. theatrical P&A expense included in Motion Picture distribution and marketing expense	$	—	$	197.2	$	(197.2)	(100.0)	%

Distribution and marketing expenses decreased in the six months ended September 30, 2020, primarily due to a decrease in Motion Picture theatrical P&A, partially offset by increased Media Networks distribution and marketing expense and COVID-19 related costs (as further described below). The decrease in Motion Picture theatrical P&A was primarily impacted by the COVID-19 global pandemic and associated closure of theaters. The increase in Media Networks distribution and marketing expense was driven by increases at STARZPLAY International and Other Streaming Services, partially offset by lower distribution and marketing expense at Starz Networks. See further discussion in the Segment Results of Operations section below.

In connection with the disruptions associated with the COVID-19 global pandemic and measures to prevent its spread and mitigate its effects both domestically and internationally, and the related economic disruption, during the six months ended September 30, 2020 we have incurred $10.7 million in costs primarily related to contractual marketing spends for film releases and events that have been canceled or delayed and thus will provide no economic benefit. These charges are excluded from segment operating results. We expect to incur additional incremental costs in future periods.

General and Administrative Expenses. General and administrative expenses by segment were as follows for the six months ended September 30, 2020 and 2019:


	Six Months Ended
	September 30,						Increase (Decrease)
	2020		% of Revenues	2019		% of Revenues	Amount		Percent
	(Amounts in millions)
General and administrative expenses
Motion Picture	$	53.6		$	51.1		$	2.5	4.9	%
Television Production	22.0			16.8			5.2		31.0	%
Media Networks	42.5			40.4			2.1		5.2	%
Corporate	53.5			49.5			4.0		8.1	%
	171.6		11.0%	157.8		8.1%	13.8		8.7	%
Share-based compensation expense	36.0			23.2			12.8		55.2	%
Purchase accounting and related adjustments	20.2			27.5			(7.3)		(26.5)	%

Total general and administrative expenses	$	227.8	14.6%	$	208.5	10.7%	$	19.3	9.3	%

General and administrative expenses increased in the six months ended September 30, 2020, resulting from increases in Television Production, Corporate, Motion Picture and Media Networks general and administrative expenses and an increase in share-based compensation expense, partially offset by decreased purchase accounting and related adjustments. See further discussion in the Segment Results of Operations section below.

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Corporate general and administrative expenses increased $4.0 million, or 8.1%, primarily due to an increase in incentive based compensation.

The increase in share-based compensation expense included in general and administrative expense in the six months ended September 30, 2020, as compared to the six months ended September 30, 2019 is primarily due to an increase in the number of share-based payment awards incurring expense in the current period as compared to the prior year's period. Additionally, the increase in share-based compensation expense is due to higher fair values associated with performance-based stock option and other equity awards that are revalued at each reporting period until the stock option or equity award vests and the applicable performance goals are achieved. The following table reconciles this amount to total share-based compensation expense:


	Six Months Ended
	September 30,
	2020		2019
	(Amounts in millions)
Share-based compensation expense by expense category
General and administrative expense	$	36.0	$	23.2

Restructuring and other(1)	2.8		0.3
Direct operating expense	0.9		0.4
Distribution and marketing expense	0.3		0.2
Total share-based compensation expense	$	40.0	$	24.1

_______________________

Purchase accounting and related adjustments represent the charge for the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with earned distributions related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense. Purchase accounting and related adjustments decreased $7.3 million, or 26.5%, primarily due to the expense associated with the earned distributions related to 3 Arts Entertainment.

Depreciation and Amortization Expense. Depreciation and amortization of $97.1 million for the six months ended September 30, 2020 increased $5.9 million, from $91.2 million in the six months ended September 30, 2019 due to a change in the amortization method for the Starz Traditional Affiliate customer relationships beginning in the quarter ended September 30, 2019, which resulted in an increase to amortization expense in the current period.

Restructuring and Other. Restructuring and other increased $3.3 million in the six months ended September 30, 2020 as compared to the six months ended September 30, 2019, and includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable. Restructuring and other costs were as follows for the six months ended September 30, 2020 and 2019 (see Note 13 to our unaudited condensed consolidated financial statements):

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	Six Months Ended
	September 30,				Increase (Decrease)
	2020		2019		Amount		Percent
	(Amounts in millions)
Restructuring and other:
Severance(1)
Cash	$	10.6	$	5.9	$	4.7	79.7	%
Accelerated vesting on equity awards (see Note 11)	2.8		0.3		2.5		nm
Total severance costs	13.4		6.2		7.2		116.1	%
COVID-19 related costs(2)	0.8		—		0.8		n/a
Transaction and related costs(3)	2.2		6.9		(4.7)		(68.1)	%

	$	16.4	$	13.1	$	3.3	25.2	%

_______________________
nm - Percentage not meaningful.

(1)Severance costs in the six months ended September 30, 2020 and 2019 were primarily related to restructuring activities in connection with cost-saving initiatives and recent acquisitions.

(2)During the six months ended September 30, 2020, the Company has incurred certain costs including costs primarily related to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic.

(3)Transaction and related costs in the six months ended September 30, 2020 and 2019 reflect transaction, integration and legal costs associated with certain strategic transactions, restructuring activities and legal matters.

Interest Expense. Interest expense of $90.2 million in the six months ended September 30, 2020 decreased $6.8 million from the six months ended September 30, 2019, due to lower interest expense on the term loans partially offset by an increase in amortization of debt financing costs and other non-cash interest. The decrease in interest expense on the term loans is primarily due to reductions of the outstanding principal amounts from required and voluntary principal payments since the prior year's period ended September 30, 2019, and the lower LIBOR rate in the current period. The increase in amortization of debt financing costs and other non-cash interest is due to the amortization of unrealized losses in accumulated other comprehensive loss related to de-designated interest rate swaps which are being amortized to interest expense (see Note 16 to our unaudited condensed consolidated financial statements). The following table sets forth the components of interest expense for the six months ended September 30, 2020 and 2019:

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	Six Months Ended
	September 30,
	2020		2019
	(Amounts in millions)
Interest Expense
Cash Based:
Revolving credit facility	$	2.0	$	3.3
Term loans	20.0		41.7
5.875% Senior Notes	15.2		15.2
6.375% Senior Notes	17.2		17.3
Other(1)	17.3		12.0
	71.7		89.5
Amortization of debt financing costs and other non-cash interest(2)	18.5		7.5
Total interest expense	$	90.2	$	97.0

______________________

(1)Amounts include payments associated with the Company's interest rate swaps (see Note 16 to our unaudited condensed consolidated financial statements).

Other Expense. Other expense of $2.3 million for the six months ended September 30, 2020 compared to other expense of $6.1 million for the six months ended September 30, 2019, and represented the loss recorded related to our monetization of accounts receivable programs (see Note 17 to our unaudited condensed consolidated financial statements).

Gain (Loss) on Investments. Gain on investments of $0.4 millionfor the six months ended September 30, 2020 represented a gain on sale of equity securities without readily determinable fair values and unrealized gains on equity securities, offset by impairments of equity securities without readily determinable fair values that were written down to their estimated fair value. This compared to loss on investments of $0.3 millionfor the six months ended September 30, 2019 which represented unrealized losses on equity securities.

Equity Interests Loss. Equity interests loss of $4.5 million in the six months ended September 30, 2020 compared to equity interests loss of $11.1 million in the six months ended September 30, 2019 due to lower losses from our equity method investees.

Income Tax Benefit (Provision). We had an income tax benefit of $0.2 million in the six months ended September 30, 2020, compared to an income tax provision of $4.5 million in the six months ended September 30, 2019. Our income tax benefit (provision) differs from the federal statutory rate multiplied by pre-tax income (loss) due to the mix of our pre-tax income (loss) generated across the various jurisdictions in which we operate, changes in the valuation allowance against our deferred tax assets, and certain minimum taxes and foreign withholding taxes. Our income tax benefit for the six months ended September 30, 2020 was also impacted by the release of uncertain tax benefits due to the close of audits or expiration of statutory limitations.

Net Income (Loss) Attributable to Lions Gate Entertainment Corp. Shareholders. Net income attributable to our shareholders for the six months ended September 30, 2020 was $32.7 million, or basic net income per common share of $0.15 on 220.0 million weighted average common shares outstanding and diluted net income per common share of $0.15 on 220.6 million weighted average common shares outstanding. This compares to net loss attributable to our shareholders for the six months ended September 30, 2019 of $52.2 million, or basic and diluted net loss per common share of $0.24 on 216.8 million weighted average common shares outstanding.

Segment Results of Operations

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Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and associated programming and content strategy, and, when applicable, certain costs related to the COVID-19 global pandemic, and purchase accounting and related adjustments. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses. The reconciliation of segment profit to the Company's consolidated income (loss) before income taxes is presented in Note 14 to the unaudited condensed consolidated financial statements.

Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the six months ended September 30, 2020 and 2019:


	Six Months Ended
	September 30,						Increase (Decrease)
	2020			2019			Amount		Percent
	(Amounts in millions)
Motion Picture Segment:
Revenue	$	538.3		$	803.6		$	(265.3)	(33.0)	%
Expenses:
Direct operating expense	236.4			402.1			(165.7)		(41.2)	%
Distribution & marketing expense	64.3			291.8			(227.5)		(78.0)	%
Gross contribution	237.6			109.7			127.9		116.6	%
General and administrative expenses	53.6			51.1			2.5		4.9	%
Segment profit	$	184.0		$	58.6		$	125.4	214.0	%

U.S. theatrical P&A expense included in distribution and marketing expense	$	—		$	197.2		$	(197.2)	(100.0)	%

Direct operating expense as a percentage of revenue	43.9		%	50.0		%

Gross contribution as a percentage of revenue	44.1		%	13.7		%

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Revenue. The table below sets forth Motion Picture revenue by media and product category for the six months ended September 30, 2020 and 2019:


	Six Months Ended September 30,
	2020						2019						Total Increase (Decrease)
	Feature Film(1)		Other Film(2)		Total		Feature Film(1)		Other Film(2)		Total
					(Amounts in millions)
Motion Picture Revenue
Theatrical	$	—	$	0.3	$	0.3	$	188.3	$	19.2	$	207.5	$	(207.2)
Home Entertainment
Digital Media	130.8		113.1		243.9		118.4		78.2		196.6		47.3
Packaged Media	38.6		34.9		73.5		71.8		49.8		121.6		(48.1)
Total Home Entertainment	169.4		148.0		317.4		190.2		128.0		318.2		(0.8)
Television	93.5		24.1		117.6		77.6		25.5		103.1		14.5
International	58.8		39.1		97.9		125.0		35.6		160.6		(62.7)
Other	2.6		2.5		5.1		13.6		0.6		14.2		(9.1)
	$	324.3	$	214.0	$	538.3	$	594.7	$	208.9	$	803.6	$	(265.3)

____________________

(1)Feature Film: Includes theatrical releases through our Lionsgate and Summit Entertainment film labels, which includes films developed and produced in-house, films co-developed and co-produced and films acquired from third parties.

With theaters closed during the period due to circumstances associated with the COVID-19 global pandemic, theatrical revenue decreased $207.2 million, or 99.9%, in the six months ended September 30, 2020 as compared to the six months ended September 30, 2019. The prior year's period included significant revenue from John Wick: Chapter 3 - Parabellum, Scary Stories to Tell in the Dark, Angel Has Fallen and Rambo: Last Blood.

Home entertainment revenue decreased $0.8 million, or 0.3%, in the six months ended September 30, 2020, as compared to the six months ended September 30, 2019, due to a decrease of $20.8 million from our Feature Films as a result of fewer home entertainment releases from our fiscal 2021 theatrical slate due to circumstances associated with the COVID-19 global pandemic, which was partially offset by digital media revenues from our fiscal 2020 theatrical slate (I Still Believe and Knives Out), and the Premium VOD release of Antebellum. In addition, the prior year's period included significant revenue from John Wick: Chapter 3 - Parabellum. This decrease from our Feature Films was offset by an increase of $20.0 million from Other Film from digital media revenue in the current period from The Secret: Dare to Dream and Force of Nature.

Television revenue increased $14.5 million, or 14.1%, in the six months ended September 30, 2020, as compared to the six months ended September 30, 2019 driven by increased revenue from our Feature Films from our fiscal 2019 and prior theatrical slates with television windows opening in the current period as compared to the prior year's period.

International revenue decreased $62.7 million, or 39.0%, in the six months ended September 30, 2020, as compared to the six months ended September 30, 2019 due to lower revenue from our fiscal 2021 theatrical slate in the current period, which had no new theatrical releases due to circumstances associated with the COVID-19 global pandemic, as compared to the revenue generated from our fiscal 2020 theatrical slate in the prior year's period, which included significant international revenue from John Wick: Chapter 3 - Parabellum.

We expect that Motion Picture segment revenues will decrease in fiscal 2021 as compared to fiscal 2020 due to delays in domestic and international theatrical distribution and production as a result of the closure of theaters and paused productions throughout the U.S., Canada, and worldwide due to circumstances associated with the COVID-19 global pandemic. The extent of the impact on Motion Picture segment revenues, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, global economic conditions, the ability for

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theaters to re-open at a scale to attract motion pictures and the rate of consumers' return to the theater.

Direct Operating Expense. The decrease in direct operating expenses is due to a decrease in Motion Picture revenues. The decrease in direct operating expenses as a percentage of motion picture revenue was driven by the change in the mix of titles and product categories generating revenue in the current period as compared to the prior year's period. In particular, the decrease was impacted by the lower amortization rate of the fiscal 2020 and prior theatrical slate titles generating revenue in the current period as compared to the prior year's period. Investment in film write-downs included in Motion Picture segment direct operating expense for the period were $0.9 million in the six months ended September 30, 2020, as compared to $1.6 million in the six months ended September 30, 2019.

Distribution and Marketing Expense. The decrease in distribution and marketing expense in the six months ended September 30, 2020 is due to lower theatrical P&A expense associated with the closure of theaters during the period due to circumstances associated with the COVID-19 global pandemic, partially offset by distribution and marketing expense associated with the Premium VOD release of Antebellum. In the six months ended September 30, 2019, approximately $23.5 million of P&A was incurred in advance for films to be released in subsequent quarters, such as Knives out, Jexi, Midway, I Still Believe and Bombshell, with no comparable expense in the Motion Picture segment in the current period.

Gross Contribution. Gross contribution of the Motion Picture segment for the six months ended September 30, 2020 increased as compared to the six months ended September 30, 2019, primarily due to lower Motion Picture distribution and marketing expense as a percentage of Motion Picture revenue, and to a lesser extent, lower Motion Picture direct operating expense as a percentage of Motion Picture revenue.

General and Administrative Expense. General and administrative expenses of the Motion Picture segment in the six months ended September 30, 2020 increased $2.5 million, or 4.9%, primarily due to an increase in incentive based compensation.

Television Production

The table below sets forth Television Production gross contribution and segment profit for the six months ended September 30, 2020 and 2019:


	Six Months Ended
	September 30,						Increase (Decrease)
	2020			2019			Amount		Percent
	(Amounts in millions)
Television Production Segment:
Revenue	$	392.9		$	553.8		$	(160.9)	(29.1)	%
Expenses:
Direct operating expense	311.7			482.6			(170.9)		(35.4)	%
Distribution & marketing expense	14.3			16.8			(2.5)		(14.9)	%
Gross contribution	66.9			54.4			12.5		23.0	%
General and administrative expenses	22.0			16.8			5.2		31.0	%
Segment profit	$	44.9		$	37.6		$	7.3	19.4	%

Direct operating expense as a percentage of revenue	79.3		%	87.1		%

Gross contribution as a percentage of revenue	17.0		%	9.8		%

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Revenue. The table below sets forth Television Production revenue and changes in revenue by media for the six months ended September 30, 2020 and 2019:


	Six Months Ended
	September 30,				Increase (Decrease)
	2020		2019		Amount		Percent
Television Production	(Amounts in millions)
Television	$	212.6	$	382.3	$	(169.7)	(44.4)	%
International	94.3		95.8		(1.5)		(1.6)	%
Home Entertainment
Digital	61.8		37.5		24.3		64.8	%
Packaged Media	1.8		1.6		0.2		12.5	%
Total Home Entertainment	63.6		39.1		24.5		62.7	%
Other	22.4		36.6		(14.2)		(38.8)	%
	$	392.9	$	553.8	$	(160.9)	(29.1)	%

The primary component of Television Production revenue is domestic television revenue. Domestic television revenue decreased in the six months ended September 30, 2020, as compared to the six months ended September 30, 2019, due to fewer television episodes delivered, decreased intersegment revenues from the licensing of Starz original series, and decreased revenue from reality television series, all of which were negatively impacted by disruptions associated with the COVID-19 global pandemic and the associated pausing of productions which resulted in the delay of television episodes delivered in the current period.

International revenue in the six months ended September 30, 2020 decreased $1.5 million, or 1.6% as compared to the six months ended September 30, 2019. International revenue in the current period included intersegment revenue from STARZPLAY International from the Starz original series Power Book II: Ghost, P-Valley Season 1 and Hightown Season 1. This compared to international revenue in the prior year's period from Mythic Quest Season 1, Dear White People Season 3, Orange is the New Black Season 7, and intersegment revenue from STARZPLAY International from the Starz original series The Rook Season 1.

Home entertainment revenue in the six months ended September 30, 2020 increased $24.5 million driven by digital media revenue in the current period for Mad Men Seasons 1 - 7, partially offset by digital media revenue in the prior year's period for Power Season 5.

Other revenue decreased in the six months ended September 30, 2020 as compared to the six months ended September 30, 2019. Revenue of 3 Arts Entertainment was negatively impacted in the six months ended September 30, 2020 as a result of the COVID-19 global pandemic related disruptions. The extent of the future impact on other revenue of the COVID-19 global pandemic is uncertain and will depend on film and television productions and releases returning to pre COVID-19 levels.

We expect that Television Production segment revenues will decrease in fiscal 2021 as compared to fiscal 2020 due to delays in domestic and international distribution and production as a result of paused productions throughout the U.S., Canada, and worldwide due to circumstances associated with the COVID-19 global pandemic. The extent of the impact of the COVID-19 global pandemic related disruptions on Television Production revenues, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions.

Direct Operating Expense.Direct operating expense of the Television Production segment in the six months ended September 30, 2020 decreased $170.9 million, or 35.4% due to the 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 the current period as compared to the prior year's period, and in particular, due to the COVID-19 global pandemic related disruptions, the current period included fewer deliveries of new shows in which direct operating expense is typically higher as a percentage of revenue.

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Gross Contribution. Gross contribution of the Television Production segment for the six months ended September 30, 2020 increased as compared to the six months ended September 30, 2019, due to lower direct operating expenses as a percentage of television production revenue, partially offset by lower television production revenue.

General and Administrative Expense. General and administrative expenses of the Television Production segment increased $5.2 million, or 31.0%, primarily due to increases in salaries and related expenses and incentive compensation.

Media Networks

The table below sets forth Media Networks gross contribution and segment profit for the six months ended September 30, 2020 and 2019:


	Six Months Ended
	September 30,						Increase (Decrease)
	2020			2019			Amount		Percent
	(Amounts in millions)
Media Networks Segment:
Revenue	$	755.5		$	746.4		$	9.1	1.2	%
Expenses:
Direct operating expense	329.4			337.0			(7.6)		(2.3)	%
Distribution & marketing expense	218.9			203.8			15.1		7.4	%
Gross contribution	207.2			205.6			1.6		0.8	%
General and administrative expenses	42.5			40.4			2.1		5.2	%
Segment profit	$	164.7		$	165.2		$	(0.5)	(0.3)	%

Direct operating expense as a percentage of revenue	43.6		%	45.2		%

Gross contribution as a percentage of revenue	27.4		%	27.5		%

The following table sets forth the Media Networks segment profit by product line:


	Six Months Ended								Six Months Ended
	September 30, 2020								September 30, 2019
	Starz Networks		STARZPLAY International		Other Streaming Services		Total Media Networks		Starz Networks		STARZPLAY International		Other Streaming Services		Total Media Networks
	(Amounts in millions)
Media Networks Segment:
Revenue	$	706.5	$	24.2	$	24.8	$	755.5	$	724.8	$	7.5	$	14.1	$	746.4
Expenses:
Direct operating expense	290.0		34.5		4.9		329.4		272.4		62.5		2.1		337.0
Distribution & marketing expense	166.0		34.1		18.8		218.9		178.0		12.0		13.8		203.8
Gross contribution	250.5		(44.4)		1.1		207.2		274.4		(67.0)		(1.8)		205.6
General and administrative expenses	31.8		8.0		2.7		42.5		30.5		6.9		3.0		40.4
Segment profit	$	218.7	$	(52.4)	$	(1.6)	$	164.7	$	243.9	$	(73.9)	$	(4.8)	$	165.2

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			Pro Forma
	September 30,	September 30,	September 30,
	2020	2019	2019
	(Amounts in millions)
Domestic Subscribers
STARZ	20.7	24.7	18.0
Other Streaming Services(1)	0.8	0.5	0.5
	21.5	25.2	18.5
International Subscribers
STARZPLAY International	3.8	2.3	2.3
STARZPLAY Arabia(2)	1.8	1.2	1.2
	5.6	3.5	3.5
Total Domestic and International Subscribers	27.1	28.7	22.0

Subscribers by Platform:
Linear Subscribers	13.4	21.0	14.3
OTT Subscribers(3)	13.7	7.7	7.7
Total Global Subscribers	27.1	28.7	22.0

___________________

(1)Represents subscribers of our premium Spanish-language streaming service, Pantaya, which was launched in the quarter ended September 30, 2017.

(2)Represents subscribers of STARZPLAY Arabia, a non-consolidated equity method investee.

(3)OTT subscribers includes subscribers of STARZPLAY Arabia, as presented above.

Revenue. The increase in Media Networks' revenue was driven by higher STARZPLAY International revenue of $16.7 million, and increased Other Streaming Services revenue of $10.7 million due to subscriber growth, which was partially offset by decreased Starz Networks' revenue of $18.3 million. STARZPLAY International revenue increased as a result of subscriber and revenue growth in the international territories previously launched, and additional territories launched since ~~December 31, 2018.~~September 30, 2019. Starz Networks' revenue decreased as a result of declines in revenue from traditional linear services, which was partially offset by higher OTT revenue resulting from increased subscriptions.

As a result of events related to the COVID-19 global pandemic, television and streaming consumption around the globe continues to increase, as well as home entertainment demand. STARZ continues to achieve an increase in viewership of its content across all platforms as well as an increase in subscribers to its OTT services, both domestically and internationally. This increase in subscribers is dependent upon future economic conditions, our ability to deliver original content and may vary due to changes in consumer viewing and subscription patterns. However, it is too early to say whether this increase is indicative of future results and whether growth may slow as governmental and other restrictions are relaxed, and as a result of the current and possible longer term negative economic impact of the pandemic.

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During the six months ended September 30, 2020 and 2019, the following original series premiered on STARZ:


Six Months Ended September 30, 2020						Six Months Ended September 30, 2019
First Quarter:						First Quarter:
Vida Season 3						The Spanish Princess
Hightown Season 1						Vida Season 2
						The Rook Season 1
Second Quarter:						Second Quarter:
P-Valley Season 1						Sweetbitter Season 2
Power Book II: Ghost						Power Season 6
						Power Confidential Season 1

Direct Operating and Distribution and Marketing Expenses. Direct operating and distribution and marketing expenses primarily represent programming cost amortization and advertising and marketing costs, respectively. The level of programming cost amortization and advertising and marketing costs and thus the gross contribution margin for the Media Networks' segment can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during the period. Programming cost amortization and advertising and marketing costs generally increase in periods where new original series premiere. In addition, the launch of the STARZPLAY international service has and will continue to result in an increase in expenses as the service continues to expand.

The decrease in Media Networks direct operating expenses is due to lower direct operating expenses at STARZPLAY International, partially offset by increases at Starz Networks and Other Streaming Services in the six months ended September 30, 2020. Direct operating expenses at STARZPLAY International decreased as a result of write downs of programming cost in the six months ended September 30, 2019 and other periods prior to the current period, which reduced the cost being amortized in the current period. The increase in Starz Networks direct operating expense was primarily due to a benefit in the prior year's period of $36.7 million associated with the modification of a content licensing arrangement, net of amortization for related changes in content availability and air dates, partially offset by lower programming amortization and development expense related to our Starz Originals due to fewer series premieres.

The increase in Media Networks distribution and marketing expense is due to increases at STARZPLAY International and Other Streaming Services, partially offset by lower distribution and marketing expense at Starz Networks. Distribution and marketing expense for STARZPLAY International increased due to an increase in advertising and marketing costs in order to drive subscriber growth in the international territories previously launched, and additional territories launched since September 30, 2019. Starz Networks' distribution and marketing expense decreased due to decreased marketing spend primarily due to fewer Starz Original series premieres during the six months ended September 30, 2020 as compared to the six months ended September 30, 2019. The increase in distribution and marketing expense for Other Streaming Services was primarily attributable to increased advertising and marketing costs in order to drive subscriber growth.

Gross Contribution. Gross contribution of the Media Networks' segment for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 was primarily from Starz Networks, offset partially by negative contributions from STARZPLAY International which has continued to expand in additional ~~territories, and to a lesser extent, negative contributions from Streaming Services.~~territories. The ~~decrease~~increase in gross contribution compared to the ~~prior year's period~~six months ended September 30, 2019 was primarily due to ~~higher~~lower negative contributions from STARZPLAY ~~International.~~International and increased contributions from Other Streaming Services, offset by a decrease at Starz Networks primarily due to the benefit in direct operating expense in the prior year's period as discussed above.

General and Administrative Expense. General and administrative expenses of the Media Networks segment in the ~~nine~~six months ended ~~December 31, 2019 decreased~~September 30, 2020 increased slightly from the prior year's period, driven by ~~a decrease in Starz Networks, partially offset by~~ increased general and administrative expenses for Starz Networks and STARZPLAY ~~International. The~~International, partially offset by a slight decrease in ~~Starz Networks resulted from a decrease in payroll and related costs.~~Other Streaming Services.

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LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Our liquidity and capital resources have been provided principally through cash generated from operations, debt, and our production loans. As of September 30, 2020, we had cash and cash equivalents of $463.7 million. Our debt at ~~December 31, 2019~~September 30, 2020 primarily consisted of a $1.5 billion five-year revolving credit facility (with no amounts outstanding at ~~December 31, 2019) entered into on~~September 30, 2020) due March ~~22, 2018~~2023 (the "Revolving Credit Facility"), a five-year term loan A facility ~~issued~~due March ~~22, 2018~~2023 (the "Term Loan A"), a seven-year term loan B facility ~~issued~~due March ~~22, 2018~~2025 (the "Term Loan B", and, together with the Revolving Credit Facility and the Term Loan A, the "Senior Credit Facilities"), 5.875% senior notes due 2024 (the "5.875% Senior Notes"), and 6.375% senior notes due 2024 (the "6.375% Senior Notes").

Our principal uses of cash in operations include the funding of film and television productions, film and programming rights acquisitions, and the distribution and marketing of films and television programs. We also use cash for debt service (i.e. principal and interest payments) requirements, equity method or other equity investments, quarterly cash dividends, the purchase of common shares under our share repurchase program, capital expenditures, and acquisitions of businesses.

In addition, the Company has a redeemable noncontrolling interest balance of ~~$150.1~~$182.3 million as of ~~December 31, 2019~~September 30, 2020 related to its acquisition of a controlling interest in Pilgrim Media Group and 3 Arts Entertainment, which may require the use of cash in the event the holders of the noncontrolling interests require the Company to repurchase their interests.

The 3 Arts Entertainment noncontrolling interest holders have a right to put the noncontrolling interest of 3 Arts Entertainment, at fair value, exercisable at five years after the acquisition date of May 29, 2018, for a 60 day period. Beginning 30 days after the expiration of the exercise period for the put rights held by the noncontrolling interest holders, the Company has a right to call the noncontrolling interest of 3 Arts Entertainment, at fair value, for a 60 day period.

The Pilgrim Media Group noncontrolling interest holder has a right to put and the Company has a right to call a portion of the noncontrolling interest, equal to 17.5% of Pilgrim Media Group, at fair value, exercisable at five years after the acquisition date of November 12, 2015. In addition, the noncontrolling interest holder has a right to put and the Company has a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable at seven years after the acquisition date of November 12, 2015.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. 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, the launch of the Company's STARZPLAY international service has and will require capital investment as the service expands to other international territories.

In the short-term, while a portion of our revenue has been reduced as a result of disruptions associated with the COVID-19 global pandemic, our cash requirements for productions and marketing spends have also been reduced. As previously discussed, in some areas we have experienced increases in revenue and viewership of our content. We expect that the ultimate impact of these disruptions, including the extent of any adverse impact on our business, results of operations and financial condition, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions. As a result, we cannot predict the outcome of the full extent of the disruptions associated with the COVID-19 global pandemic on our operating results, cash flows and financial position.

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, and available production financing will be adequate to meet known operational cash and debt service (i.e. principal and interest payments) requirements for the foreseeable future, including the funding of future film and television production, film and programming rights acquisitions and theatrical and home entertainment release schedules, and future equity method or other investment funding requirements, and international expansion. However, we may seek alternative sources of capital in connection with the STARZPLAY international expansion. 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.

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Our current financing strategy is to fund operations and to leverage investment in films and television programs through our cash flow from operations, our revolving credit facility, single-purpose production financing, government incentive programs, film funds, distribution commitments, and the monetization of trade accounts receivable. In addition, we continue to expand our STARZPLAY international service and may acquire businesses or assets, including individual films or libraries that are complementary to our business. Any such transaction could be financed through our cash flow from operations, credit facilities, equity or debt financing. If additional financing beyond our existing cash flows from operations and credit facilities cannot fund such transactions, there is no assurance that such financing will be available on terms acceptable to us. Our ability to obtain any additional financing will depend on, among other things, our business plans, operating performance and the condition of the capital markets at the time we seek financing. Additionally, circumstances related to the COVID-19 global pandemic has caused disruption in the capital markets, which could make financing more difficult and/or expensive, and we may not be able to obtain such financing. We may also dispose of businesses or assets, including individual films or libraries, and use the net proceeds from such dispositions to fund operations or such acquisitions, or to repay debt.

The 5.875% Senior Notes and 6.375% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations. As of ~~December 31, 2019,~~September 30, 2020, the Company was in compliance with all applicable covenants.

Share Repurchase Plan. On February 2, 2016, our Board of Directors authorized to increase our previously announced share repurchase plan from $300 million to $468 million. To date, approximately ~~$283.2~~$288.1 million of our common shares have been purchased under the plan, leaving approximately ~~$184.7~~$179.9 million of authorized potential purchases. The remaining ~~$184.7~~$179.9 million of our common shares authorized under the plan may be purchased from time to time at our discretion, including quantity, timing and price thereof, and will be subject to market conditions. Such purchases will be structured as permitted by securities laws and other legal requirements. WeDuring the three months ended September 30, 2020, the Company did not repurchase any ~~shares during~~common shares. During the ~~three~~six months ended ~~December 31, 2019.~~September 30, 2020, the Company repurchased 0.2 million of its Class A voting shares for an aggregate cost of $1.0 million, with an average repurchase price per share of $5.75.

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. In November 2018, our Board of Directors suspended our quarterly cash dividend to focus on driving long-term shareholder value by investing in global growth opportunities for Starz, while also strengthening the Company's balance sheet.

Capacity to Pay Dividends. At ~~December 31, 2019,~~September 30, 2020, the capacity to pay dividends under the Senior Credit Facilities and the 5.875% Senior Notes and 6.375% Senior Notes significantly exceeded the amount of the Company's retained earnings or net ~~loss,~~income, and therefore the Company's net ~~loss~~income of ~~$157.4~~$24.5 million and retained earnings of ~~$44.5~~$2.4 million were deemed free of restrictions from paying dividends at ~~December 31, 2019.~~September 30, 2020.

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Discussion of Operating, Investing, Financing Cash Flows

Cash and cash equivalents increased by ~~$10.1~~$142.8 million for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~decreased~~increased by ~~$270.4~~$48.9 million for the ~~nine~~six months ended ~~December 31, 2018,~~September 30, 2019, before foreign exchange effects on cash. Components of these changes are discussed below in more detail.

Operating Activities. Cash flows provided by operating activities for the ~~nine~~six months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ were as follows:


	Six Months Ended
	September 30,
	2020		2019		Net Change
	(Amounts in millions)
Operating income	$	119.1	$	54.3	$	64.8
Depreciation and amortization	97.1		91.2		5.9
Amortization of films and television programs and program rights	531.4		855.2		(323.8)
Non-cash share-based compensation	40.1		24.1		16.0
Cash interest	(71.7)		(89.5)		17.8
Current income tax (provision) benefit	0.2		(3.9)		4.1
Other non-cash charges included in operating activities	31.7		20.7		11.0
Cash flows from operations before changes in operating assets and liabilities	747.9		952.1		(204.2)

Changes in operating assets and liabilities:
Accounts receivable, net and other assets	150.6		123.7		26.9
Investment in films and television programs and program rights	(467.1)		(765.1)		298.0
Accounts payable and accrued liabilities	(94.9)		(22.4)		(72.5)
Other changes in operating assets and liabilities	(133.0)		(69.8)		(63.2)
Changes in operating assets and liabilities	(544.4)		(733.6)		189.2
Net Cash Flows Provided By Operating Activities	$	203.5	$	218.5	$	(15.0)

Nine Months Ended
December 31,
2019 2018 Net Change
(Amounts in millions)
Operating income $ 14.9
$ 164.0
$ (149.1 )
Amortization of films and television programs and program rights 1,306.0
1,105.3
200.7
Non-cash share-based compensation 41.4
43.7
(2.3 )
Cash interest (134.5 ) (107.9 ) (26.6 )
Current income tax provision (5.7 ) (9.7 ) 4.0
Shareholder litigation settlement charges and interest —
(221.3 ) 221.3
Other non-cash charges included in operating activities 186.4
151.6
34.8
Cash flows from operations before changes in operating assets and liabilities 1,408.5
1,125.7
282.8

Changes in operating assets and liabilities:
Accounts receivable, net and other assets 271.0
308.5
(37.5 )
Investment in films and television programs and program rights (1,136.1 ) (1,073.5 ) (62.6 )
Other changes in operating assets and liabilities (109.0 ) (105.0 ) (4.0 )
Changes in operating assets and liabilities (974.1 ) (870.0 ) (104.1 )
Net Cash Flows Provided By Operating Activities $ 434.4
$ 255.7
$ 178.7

Cash flows provided by operating activities for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 were ~~$434.4~~$203.5 million compared to cash flows provided by operating activities of ~~$255.7~~$218.5 million for the ~~nine~~six months ended ~~December 31, 2018.~~September 30, 2019. The ~~increase~~decrease in cash provided by operating activities for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 as compared to the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 is due to ~~higher~~lower cash flows from operations before changes in operating assets and liabilities, partially offset by ~~an increase in~~lower cash used from changes in operating assets and liabilities. The lower use of cash from changes in operating assets and liabilities ~~which were~~was driven by lower ~~decreases in accounts receivable and other assets,~~ increases in investment in films and television programs and program rights ~~and other~~partially offset by greater use of cash from changes in ~~operating assets and liabilities. The~~ other ~~changes in~~ operating assets and liabilities ~~reflect higher~~due primarily to decreases in film obligations and participations and residuals, ~~partially offset by lower~~and decreases in accounts payable and accrued liabilities. In addition, cash flows provided by operating activities for the ~~nine~~six months ended ~~December 31, 2019 benefited by~~September 30, 2020 included a net benefit of approximately ~~$280.9~~$1.4 million from the monetization of accounts receivables programs, as compared to a benefit of $147.3 million for the six months ended September 30, 2019 (see Note 1817 to our unaudited condensed consolidated financial statements).

Investing Activities. Cash flows used in investing activities for the ~~nine~~six months ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ were as follows:

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								Six Months Ended
	Nine Months Ended							September 30,
	December 31,							2020		2019
	2019			2018				(Amounts in millions)
Proceeds from the sale of other investments							Proceeds from the sale of other investments	$	5.1	$	—
Investment in equity method investees and other							Investment in equity method investees and other	(0.2)		(4.9)
	(Amounts in millions)
Investment in equity method investees	$	(14.8	)	$	(39.6	)
Business acquisitions, net of cash acquired of $5.5	—			(77.3		)

Capital expenditures	(24.0		)	(28.9		)	Capital expenditures	(17.1)		(16.9)

Net Cash Flows Used In Investing Activities	$	(38.8	)	$	(145.8	)	Net Cash Flows Used In Investing Activities	$	(12.2)	$	(21.8)

Cash used in investing activities of ~~$38.8~~$12.2 million for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 compared to cash used in investing activities of ~~$145.8~~$21.8 million for the ~~nine~~six months ended ~~December 31, 2018,~~September 30, 2019, as reflected above. The change was primarily due to cash used for the purchase of 3 Arts Entertainment, net of cash acquired, in the nine months ended December 31, 2018 (see Note 2 to our unaudited condensed consolidated financial statements).

Financing Activities. Cash flows used in financing activities for the ~~nine~~six months ended ~~December 31,~~September 30, 2020 and 2019 ~~and~~ ~~2018~~ were as follows:


	Nine Months Ended							Six Months Ended
	December 31,							September 30,
	2019			2018				2020		2019
	(Amounts in millions)							(Amounts in millions)
Debt - borrowings	$	597.1		$	2,909.5		Debt - borrowings	$	75.0	$	302.0
Debt - repayments	(738.6		)	(2,468.8		)	Debt - repayments	(109.1)		(328.5)
Net borrowings (repayments) of debt	(141.5		)	440.7			Net borrowings (repayments) of debt	(34.1)		(26.5)

Production loans - borrowings	54.0			246.9			Production loans - borrowings	47.8		51.8
Production loans - repayments	(290.9		)	(208.2		)	Production loans - repayments	(44.1)		(168.2)
Net proceeds from (repayments of) production loans	(236.9		)	38.7			Net proceeds from (repayments of) production loans	3.7		(116.4)

Payment of dissenter liability accrued at acquisition	—			(797.3		)
Repurchase of common shares							Repurchase of common shares	(2.2)		—
Other financing activities	(7.1		)	(62.4		)	Other financing activities	(15.9)		(4.9)
Net Cash Flows Used In Financing Activities	$	(385.5	)	$	(380.3	)	Net Cash Flows Used In Financing Activities	$	(48.5)	$	(147.8)

Cash flows used in financing activities of ~~$385.5~~$48.5 million for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 compared to cash flows used in financing activities of ~~$380.3~~$147.8 million for the ~~nine~~six months ended ~~December 31, 2018.~~September 30, 2019. Cash flows used in financing activities for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 primarily reflects ~~net production loan repayments of $236.9 million and~~ net debt repayments of ~~$141.5~~$34.1 million, and net production loan borrowings of $3.7 million which ~~consisted~~reflected minimal activity in the period due to the delay of ~~early repayments of $101.9 million in principal outstanding on~~productions associated with the ~~Term Loan B and required repayments on our term loans.~~COVID-19 global pandemic.

Cash flows used in financing activities for the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 primarily reflects ~~the payment~~net debt repayments of ~~the dissenting shareholders' liability accrued at acquisition associated with the Starz merger, the repayment of the April 2013 1.25% Notes in the amount of $60.0~~$26.5 million and required repayments on our term loans. The debt borrowings and repayments above reflect an intercompany refinancing transaction during the nine months ended December 31, 2018. In addition, cash flows used in financing activities in the nine months ended December 31, 2018 reflects net production loan ~~borrowings~~repayments of ~~$38.7 million, and cash paid for dividends of $57.4~~$116.4 million.

Debt

See Note 54 to our unaudited condensed consolidated financial statements for a discussion of our debt.

Production Loans

See Note 76 to our unaudited condensed consolidated financial statements for a discussion of our production loans.

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Table of Debt and Contractual Commitments

The following table sets forth our future annual repayment of debt, and our contractual commitments as of ~~December 31, 2019:~~September 30, 2020:


																Six Months Ending March 31,		Year Ending March 31,
	Three Months Ending March 31,		Year Ending March 31,													2021		2022		2023		2024		2025		Thereafter		Total
	2020		2021		2022		2023		2024		Thereafter		Total							(Amounts in millions)
					(Amounts in millions)
Future annual repayment of debt recorded as of December 31, 2019 (on-balance sheet arrangements)
Future annual repayment of debt recorded as of September 30, 2020 (on-balance sheet arrangements)															Future annual repayment of debt recorded as of September 30, 2020 (on-balance sheet arrangements)
Revolving credit facility	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Revolving credit facility	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Term Loan A	9.4		52.5		75.0		585.0		—		—		721.9		Term Loan A	26.3		75.0		585.0		—		—		—		686.3
Term Loan B	3.1		12.5		12.5		12.5		12.5		943.2		996.3		Term Loan B	6.3		12.5		12.5		12.5		915.1		—		958.9
5.875% Senior Notes	—		—		—		—		—		520.0		520.0		5.875% Senior Notes	—		—		—		—		518.7		—		518.7
6.375% Senior Notes	—		—		—		—		550.0		—		550.0		6.375% Senior Notes	—		—		—		545.6		—		—		545.6
Film obligations and production loans⁽¹⁾	89.1		244.0		31.0		29.3		3.2		0.8		397.4		Film obligations and production loans(1)	215.3		131.2		42.1		11.1		3.8		1.6		405.1
Finance lease obligations principal payments	0.8		3.0		0.9		0.9		1.0		36.6		43.2
Operating lease obligations															Operating lease obligations	24.8		38.7		37.4		25.2		14.9		49.0		190.0
Finance lease obligations															Finance lease obligations	1.0		—		—		—		—		—		1.0

	102.4		312.0		119.4		627.7		566.7		1,500.6		3,228.8			273.7		257.4		677.0		594.4		1,452.5		50.6		3,305.6
Contractual commitments by expected repayment date (off-balance sheet arrangements)															Contractual commitments by expected repayment date (off-balance sheet arrangements)
Film obligation and production loan commitments⁽²⁾	155.6		446.7		145.3		82.7		47.2		30.7		908.2		Film obligation and production loan commitments(2)	178.2		498.3		167.1		84.7		62.5		41.6		1,032.4
Interest payments⁽³⁾	39.6		160.3		159.6		155.3		127.2		119.4		761.4		Interest payments(3)	74.5		136.6		134.6		116.4		73.5		—		535.6
Other contractual obligations	56.1		78.6		51.3		24.6		2.8		0.4		213.8		Other contractual obligations	77.4		84.5		50.6		14.9		8.2		49.0		284.6
	251.3		685.6		356.2		262.6		177.2		150.5		1,883.4			330.1		719.4		352.3		216.0		144.2		90.6		1,852.6
Total future repayment of debt and other commitments under contractual obligations⁽⁴⁾	$	353.7	$	997.6	$	475.6	$	890.3	$	743.9	$	1,651.1	$	5,112.2	Total future repayment of debt and other commitments under contractual obligations (4)	$	603.8	$	976.8	$	1,029.3	$	810.4	$	1,596.7	$	141.2	$	5,158.2

___________________


~~(1)~~	Film obligations include minimum guarantees, theatrical marketing obligations, and accrued licensed program rights obligations. Production loans represent loans for the production of film and television programs that we produce. Repayment dates are based on anticipated delivery or release date of the related film or contractual due dates of the obligation.

~~(2)~~

Film obligation commitments include distribution and marketing commitments, minimum guarantee commitments, and program rights commitments. Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute. The payment dates of these amounts are primarily based on the anticipated release date of the film. Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future. Program rights commitments represent contractual commitments under programming license agreements related to films that are not available for exhibition until some future date (see below for further details). Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred. Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment. The amounts include estimated future interest payments associated with the commitment.


~~(3)~~	Includes cash interest payments on our debt (including interest on finance lease obligations), excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.


~~(4)~~	Not included in the amounts above are $150.1 million of redeemable noncontrolling interests, 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 9 to our unaudited condensed consolidated financial statements).

(1)Film obligations include minimum guarantees, theatrical marketing obligations, and accrued licensed program rights obligations. Production loans represent loans for the production of film and television programs that we produce. Repayment dates are based on anticipated delivery or release date of the related film or contractual due dates of the obligation.

(2)Film obligation commitments include distribution and marketing commitments, minimum guarantee commitments, and program rights commitments. Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute. The payment dates of these amounts are primarily based on the anticipated release date of the film. Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future. Program rights commitments represent contractual commitments under programming license agreements related to films that are not available for exhibition until some future date (see below for further details). Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred. Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment. The amounts include estimated future interest payments associated with the commitment.

(3)Includes cash interest payments on our debt (including interest on finance lease obligations), excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

(4)Not included in the amounts above are $182.3 million of redeemable noncontrolling interests, 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 8 to our unaudited condensed consolidated financial statements).

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We are obligated to pay programming fees for all qualifying films that are released theatrically in the U.S. by Sony’s Columbia Pictures, Screen Gems, Sony Pictures Classics and TriStar labels through 2021. We do not license films produced by

Sony Pictures Animation. The programming fees to be paid by us to Sony are based on the quantity and domestic theatrical exhibition receipts of qualifying films. Since the term of the output programming agreement with Sony applies to all films released theatrically through December 31, 2021, the Company is obligated to pay fees for films that have not yet been released in theaters. We are unable to estimate the amounts to be paid under these agreements for films that have not yet been released in theaters, however, such amounts are expected to be significant. We have also entered into agreements with a number of other motion picture producers and are obligated to pay fees for the rights to exhibit certain films that are released by these producers.

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 109 to our unaudited condensed consolidated financial statements, remaining performance obligations were $1.7 billion at ~~December~~September 30, 2020 (March 31, ~~2019.~~2020 - $1.6 billion). The backlog portion of remaining performance obligations (excluding deferred revenue) related to our Motion Picture and Television Production segments was ~~$1.0~~$1.2 billion at ~~December 31, 2019~~September 30, 2020 (March 31, ~~2019~~2020 - ~~$1.2~~$1.0 billion).

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements and other relationships with unconsolidated entities that will affect our liquidity or capital resources. We have no special purpose entities that provided off-balance sheet financing, liquidity or market or credit risk support, nor do we engage in leasing, hedging or research and development services that could expose us to liability that is not reflected on the face of our unaudited condensed consolidated financial statements. Our commitments to fund operating leases, minimum guarantees, production loans, equity method investment funding requirements and all other contractual commitments not reflected on the face of our unaudited condensed consolidated financial statements are presented in the table above.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Currency and Interest Rate Risk Management

Market risks relating to our operations result primarily from changes in interest rates and changes in foreign currency exchange rates. Our exposure to interest rate risk results from the financial debt instruments that arise from transactions entered into during the normal course of business. As part of our overall risk management program, we evaluate and manage our exposure to changes in interest rates and currency exchange risks on an ongoing basis. Hedges and derivative financial instruments will continue to be used in the future in order to manage our interest rate and currency exposure. We have no intention of entering into financial derivative contracts, other than to hedge a specific financial risk.

Currency Rate Risk. We enter into forward foreign exchange contracts to hedge our foreign currency exposures on future production expenses denominated in various foreign currencies. These contracts are entered into with major financial institutions as counterparties. We are exposed to credit loss in the event of nonperformance by the counterparty, which is limited to the cost of replacing the contracts, at current market rates. We do not require collateral or other security to support these contracts. See Note 1716 to our unaudited condensed consolidated financial statements for additional information on our financial instruments.

Interest Rate Risk. At ~~December 31, 2019,~~September 30, 2020, we had interest rate swap agreements to fix the interest rate on $1.7 billion of variable rate LIBOR-based debt. See Note 1716 to our unaudited condensed consolidated financial statements for additional information. The difference between the fixed rate to be paid and the variable rate received under the terms of the interest rate swap agreements will be recognized as interest expense for the related debt. Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements will have a corresponding effect on future cash flows.

Certain of our borrowings, primarily borrowings under our Senior Credit Facilities and certain production loans, are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease. The applicable margin with respect to loans under the revolving credit facility and Term Loan A is a percentage per annum equal to a LIBOR rate plus 1.75%. The applicable margin with respect to loans under our Term Loan B is a percentage per annum equal to a LIBOR rate plus 2.25%. Assuming the revolving credit facility is drawn up to its

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maximum borrowing capacity of $1.5 billion, based on the applicable LIBOR in effect as of ~~December 31, 2019,~~September 30, 2020, each quarter point change in interest rates would result in a ~~$3.8~~$3.6 million change in annual net interest expense on the revolving credit facility, Term Loan A, Term Loan B and interest rate swap agreements.

The variable interest production loans incur interest at rates ranging from approximately ~~3.90%~~2.46% to ~~4.56%~~2.96% and applicable margins ranging from 1.75% over the one, two, or three-month LIBOR to 2.25% over the one, ~~three,~~two, or ~~six-month~~three-month LIBOR. A quarter point increase of the interest rates on the outstanding principal amount of our variable rate production loans would result in $0.4 million in additional costs capitalized to the respective film or television asset.

At ~~December 31, 2019,~~September 30, 2020, our 5.875% Senior Notes and 6.375% Senior Notes had an outstanding ~~principal~~carrying value of ~~$1.07 billion,~~$1,045.4 million, and an estimated fair value of ~~$1.10 billion.~~$1,035.5 million. A 1% increase in the level of interest rates would decrease the fair value of the 5.875% Senior Notes and 6.375% Senior Notes by approximately ~~$32.3~~$32.8 million, and a 1% decrease in the level of interest rates would increase the fair value of the 5.875% Senior Notes and 6.375% Senior Notes by approximately ~~$23.7~~$31.5 million.

The following table presents information about our financial instruments that are sensitive to changes in interest rates. The table also presents the cash flows of the principal amounts of the financial instruments, or the cash flows associated with the notional amounts of interest rate derivative instruments, and related weighted-average interest rates by expected maturity or required principal payment dates and the fair value of the instrument as of ~~December 31, 2019:~~September 30, 2020:


	Three Months Ending March 31,			Year Ending March 31,																	Fair Value				Six Months Ending March 31,			Year Ending March 31,																Fair Value
	2020			2021			2022			2023			2024			Thereafter			Total		December 31, 2019				2021			2022			2023			2024			2025			Thereafter		Total		September 30, 2020
							(Amounts in millions)																								(Amounts in millions)
Debt and Production Loans																								Debt and Production Loans
Variable Rates:																								Variable Rates:
Revolving Credit Facility⁽¹⁾	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—		Revolving Credit Facility(1)	$	—		$	—		$	—		$	—		$	—		$	—	$	—	$	—
Average Interest Rate	—			—			—			—			—			—								Average Interest Rate	—			—			—			—			—			—
Term Loan A⁽¹⁾	9.4			52.5			75.0			585.0			—			—			721.9		714.7			Term Loan A(1)	26.3			75.0			585.0			—			—			—		686.3		651.9
Average Interest Rate	3.51		%	3.51		%	3.51		%	3.51		%	—			—								Average Interest Rate	1.90		%	1.90		%	1.90		%	—			—			—
Term Loan B⁽¹⁾	3.1			12.5			12.5			12.5			12.5			943.2			996.3		990.0			Term Loan B(1)	6.3			12.5			12.5			12.5			915.1			—		958.9		934.9
Average Interest Rate	4.01		%	4.01		%	4.01		%	4.01		%	4.01		%	4.01		%						Average Interest Rate	2.40		%	2.40		%	2.40		%	2.40		%	2.40		%	—
Production loans	2.7			128.2			—			18.4			—			—			149.3		149.3			Production loans	113.1			23.3			18.8			—			—			—		155.2		155.2
Average Interest Rate	4.42		%	4.50		%	—			4.06		%	—			—								Average Interest Rate	2.96		%	2.52		%	2.46		%	—			—			—
Fixed Rates:																								Fixed Rates:
5.875% Senior Notes	—			—			—			—			—			520.0			520.0		527.8			5.875% Senior Notes	—			—			—			—			518.7			—		518.7		496.7
Interest Rate	—			—			—			—			—			5.875		%						Interest Rate	—			—			—			—			5.875		%	—
6.375% Senior Notes	—			—			—			—			550.0			—			550.0		569.3			6.375% Senior Notes	—			—			—			545.6			—			—		545.6		538.8
Interest Rate	—			—			—			—			6.375		%	—								Interest Rate	—			—			—			6.375		%	—			—
Interest Rate Swaps⁽²⁾																								Interest Rate Swaps(2)
Variable to fixed notional amount	—			—			—			—			—			1,700.0			1,700.0		(107.0		)	Variable to fixed notional amount	—			—			—			—			300.0			1,400.0		1,700.0		192.4

____________________


~~(1)~~	~~The effective interest rate in the table above is before the impact of interest rate swaps.~~


~~(2)~~	Represents interest rate swap agreements on certain of our LIBOR-based floating-rate corporate debt with fixed rates paid ranging from 2.723% to 2.915% maturing in March 2025, which as of December 31, 2019, converts the effective rate on our LIBOR-based corporate debt to 4.899%. See Note 17 to our unaudited condensed consolidated financial statements.

(1)The effective interest rate in the table above is before the impact of interest rate swaps.

(2)Represents interest rate swap agreements on certain of our LIBOR-based floating-rate debt with fixed rates paid ranging from 1.840% to 2.915% with maturities beginning in March 2025 through March 2030. See Note 16 to our unaudited condensed consolidated financial statements.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of ~~December 31, 2019~~,September 30, 2020, the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective as of ~~December 31, 2019~~.September 30, 2020.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d) of the Exchange Act, the Company, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, has evaluated whether any changes occurred to the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, such control. Based on that evaluation, there has been no such change during the period covered by this report. We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to disruptions related to the COVID-19 global pandemic, but we are continually monitoring and assessing the COVID-19 situation on our internal controls.

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PART II

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Securities

On May 31, 2007, our Board of Directors authorized the repurchase of up to $50 million of our common shares. On each of May 29, 2008 and November 6, 2008, our Board of Directors authorized additional repurchases up to an additional $50 million of our common shares. On December 17, 2013, our Board of Directors authorized the Company to increase its stock repurchase plan to $300 million and on February 2, 2016, our Board of Directors authorized the Company to further increase its stock repurchase plan to $468 million. To date, approximately $288.1 million (or 16,608,796) of our common shares have been purchased, leaving approximately $179.9 million of authorized potential purchases. The remaining $179.9 million of our common shares may be purchased from time to time at the Company’s discretion, including quantity, timing and price thereof, and will be subject to market conditions. Such purchases will be structured as permitted by securities laws and other legal requirements. The share repurchase program has no expiration date.

No common shares were purchased by us during the three months ended September 30, 2020.

Additionally, during the three months ended September 30, 2020, 887 Class A voting shares and 447,534 Class B non-voting shares were withheld upon the vesting of restricted share units and restricted awards, share issuances and stock option exercises to satisfy minimum statutory federal, state and local tax withholding obligations.

Item 1. Legal Proceedings.

From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business. Due to the inherent difficulty of predicting the outcome of litigation and claims, the Company often cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, if any, related to each pending matter may be.

For a discussion of certain claims and legal proceedings, see Note 1615 - Contingencies to our unaudited condensed consolidated financial statements, which discussion is incorporated by reference into this Part II, Item 1, Legal Proceedings.

Item 1A. Risk Factors.

Other than as set forth below, there were no other material changes to the risk factors previously reported in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2019.~~2020.

~~An impairment in~~The impact of the ~~carrying value of goodwill~~COVID-19 global pandemic could materially and ~~intangible assets could have a material adverse effect on~~adversely affect our business, financial condition and results of operations.

~~At December 31, 2019,~~The impacts associated with the ~~carrying value~~ongoing COVID-19 global pandemic and measures to prevent its spread, and the resulting economic uncertainty, continue to affect our business in a number of ways. We continue to experience delays in theatrical distribution of our ~~goodwill~~films, both domestically and ~~indefinite-lived intangible assets was $2.8 billion~~internationally, as well as delays in the production of film and ~~$250.0 million, respectively. Our indefinite-lived intangible assets consist~~television content (resulting in continued changes in future release dates for some titles and series). While we have begun production of ~~trade names primarily representing~~a number of film and television series this quarter, and theaters have begun to reopen in certain locations with reduced capacity, we are not able to accurately predict when theaters will re-open at scale, at what level consumers will return to movie theaters, when film production will fully resume, whether productions that have resumed will be paused again, the ~~estimated fair value~~impact of incremental costs required to adhere to new health and safety protocols, or if and when certain of our content will be released. The full extent of impacts related to the COVID-19 global pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. See Part I, Item 1A. “Risk Factors” found in our Annual Report on Form 10-K filed with the SEC on May 27, 2020.

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circumstances. For instance, we have changed the release strategies of several of our theatrical films by releasing solely and/or earlier on streaming platforms, initially releasing in the premium video-on-demand ("Premium VOD") market, or by licensing directly to streaming platforms. We have also begun and completed post-production of a number of our television series and continue the development of film properties and television series.

In connection with the acquisition of Starz as of December 8, 2016. Our reporting units for purposes of goodwill impairment testing, along with their respective balances at December 31, 2019 were Motion Picture (goodwill of $394 million), Media Networks (goodwill of $2.04 billion), and each of our Television (goodwill of $309 million) and talent management (goodwill of $93 million) businesses, both of which are part of our Television Production segment. At December 31, 2019, the carrying value of our finite-lived intangible assets was approximately $1.51 billion. Our finite-lived intangible assets primarily relate to customer relationshipsdisruptions associated with ~~U.S. MVPDs, including cable operators, satellite television providers~~the COVID-19 global pandemic and ~~telecommunications companies (“Traditional Affiliate”),~~measures to prevent its spread and mitigate its effects both domestically and internationally, and the ~~carrying value reflects~~related economic disruption, including the ~~estimated fair value~~worldwide closure of ~~these customer relationships determined in connection with~~most theaters, international travel restrictions and the ~~acquisition~~pausing of ~~Starz on December 8, 2016, net of amortization recorded since~~motion picture and television productions, during the ~~date of the Starz acquisition.~~

~~Goodwill~~three and indefinite-lived intangible assets are not amortized but are reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value. Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 17 years. Through June 30, 2019, we amortized the Starz Traditional Affiliate customer relationships discussed above on a straight-line basis over 17 years. Our finite-lived intangible assets are tested for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset. If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value.

~~For the quarter~~six months ended September 30, ~~2019,~~2020 we have incurred $28.7 million and $39.6 million, respectively, in incremental costs which were expensed in the period. These costs include $22.3 million and $28.1 million, respectively, reflected in direct operating expense, which include incremental costs associated with an impairment of a motion picture due to changes in performance expectations, the pausing and restarting of productions including certain cast and crew, idle facilities and equipment costs resulting from circumstances associated with the COVID-19 global pandemic. In addition, these costs include $6.1 million and $10.7 million, respectively, reflected in distribution and marketing expense, which primarily consists of contractual marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit, and $0.3 million and $0.8 million in restructuring and other costs primarily due to transitioning the Company to a remote-work environment and other incremental costs associated with the COVID-19 global pandemic during this period. We expect to incur additional incremental costs in future periods. We are in the process of seeking insurance recovery for some of these costs, which cannot be estimated at this time, and therefore have not been recorded in our consolidated financial statements.

~~During the three months ended December 31, 2019, there were no events or circumstances that have changed that would have resulted in changes~~global economic conditions related to the ~~underlying key assumptions~~COVID-19 global pandemic. All of these impacts could place limitations on our ability to execute on our business plan and ~~judgments used in~~materially and adversely affect our goodwill impairment tests, or that would indicate that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. While historical performance and current expectations have resulted in fair values of our reporting units in excess of carrying values, if our assumptions used in our assessments are not realized, it is possible that an impairment charge may need to be recorded in the future, which could have a material adverse effect on ourbusiness, financial condition and results of operations.

~~Due~~ We have implemented policies, procedures and protocols to ~~changes~~address the situation and expect to continue to adjust our current policies and procedures as more information and guidance become available. In addition, a recent resurgence of COVID-19 in certain parts of the world, including the United States and parts of Europe, has resulted in the ~~industry related~~re-imposition of certain restrictions and may lead to more restrictions being implemented again to reduce the ~~migration from linear to OTT and direct-to-consumer consumption, during the quarter ended September 30, 2019, we determined it was appropriate to change the pattern~~spread of ~~amortization of our Starz Traditional Affiliate customer relationship intangible asset (i.e., a finite-lived intangible asset).~~

During the three months ended December 31, 2019, there were no events or changes in circumstance that would indicate that the carrying amount of our finite-lived intangible assets may not be recoverable. Should the revenues from our Traditional Affiliate relationships decline more than the assumed attrition rates used in our current estimates for measuring recoverability of these assets, we may have indicators of impairment whichCOVID-19. These measures could result in ~~an impairment~~further interruptions to our operations. Due to the evolving and uncertain nature of ~~our customer relationships intangible assets, or~~this situation, we ~~may need~~are not able to ~~shorten~~estimate the ~~useful life or adopt a more accelerated method~~full extent of ~~amortization. Both of these occurrences would increase~~ the ~~amount of amortization expense we record, which could have a material adverse effect~~impact on our operating results, cash flows and financial ~~condition and results of operations.~~

position, particularly over the near to medium term.

~~For further discussion, see~~ ~~Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies~~.

~~Item 2.~~ ~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

~~Unregistered sales of equity securities during the quarter ended December 31, 2019 were previously reported.~~

~~Issuer Purchases of Securities~~

On May 31, 2007, our Board of Directors authorized the repurchase of up to $50 million of our common shares. On each of May 29, 2008 and November 6, 2008, our Board of Directors authorized additional repurchases up to an additional $50 million of our common shares. On December 17, 2013, our Board of Directors authorized the Company to increase its stock repurchase plan to $300 million and on February 2, 2016, our Board of Directors authorized the Company to further increase its stock repurchase plan to $468 million. To date, approximately $283.2 million (or 15,729,923) of our common shares have been purchased under the plan, leaving approximately $184.7 million of authorized potential purchases. The remaining $184.7 million of our common shares authorized under the plan may be purchased from time to time at the Company’s discretion, including quantity, timing and price thereof, and will be subject to market conditions. Such purchases will be structured as permitted by securities laws and other legal requirements. The share repurchase program has no expiration date.

~~No common shares were purchased by us during the three months ended December 31, 2019.~~

Additionally, during the three months ended December 31, 2019, 5,229 Class A voting shares and 139,370 Class B non-voting shares were withheld upon the vesting of restricted share units and restricted awards, share issuances and stock option exercises to satisfy minimum statutory federal, state and local tax withholding obligations.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit Number Exhibit Description Incorporated by Reference
Form Exhibit
Filing Date/
Period End Date
3.1
Articles
8-K 3.1 12/8/2016
3.2
Notice of Articles
8-K/A 3.1 12/9/2016
31.1x
Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2x
Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1x
Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002

101x Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
104x The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 (formatted as Inline XBRL and contained in Exhibit 101).

Exhibit Number

Exhibit Description

Incorporated by Reference

Form

Exhibit

Filing Date/
Period End Date

3.1

Articles

8-K

3.1

12/8/2016

3.2

Notice of Articles

8-K/A

3.1

12/9/2016

10.38*

Employment Agreement among Jon Feltheimer and Lions Gate Entertainment Corp. dated as of August 21, 2020

8-K

10.1

8/26/2020

10.39*

Lions Gate Entertainment Corp. 2019 Performance Incentive Plan

8-K

10.1

9/15/2020

31.1x

Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2x

Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1x

Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002

101x

The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL: (i) Consolidated Balance Sheets (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

104x

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 (formatted as Inline XBRL and contained in Exhibit 101).

__________________________



*			Management contract or compensatory plan or arrangement.
x			Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LIONS GATE ENTERTAINMENT CORP.

By:

/s/ JAMES W. BARGE

Name:

James W. Barge

DATE: ~~February 6,~~November 5, 2020

Title:

Duly Authorized Officer and Chief Financial Officer



Item		Page
PART I — FINANCIAL INFORMATION


~~Item~~	~~Page~~
~~PART I — FINANCIAL INFORMATION~~

1. Financial Statements	4
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4344
3. Quantitative and Qualitative Disclosures About Market Risk		7985
4. Controls and Procedures		8187

PART II — OTHER INFORMATION

1. Legal Proceedings		8288
1A. Risk Factors		8288
2. Unregistered Sales of Equity Securities and Use of Proceeds		8388
3. Defaults Upon Senior Securities		8389
4. Mine Safety Disclosures		8389
5. Other Information		8389
6. Exhibits		8490



	Operating Leases			Finance Leases
	(Amounts in millions)
Three months ending March 31, 2020	$	8.8		$	1.6
Year ending March 31,
2021	35.9			6.2
2022	33.2			3.9
2023	32.5			3.9
2024	20.4			3.9
Thereafter	60.4			73.5
Total lease payments	191.2			93.0
Less imputed interest	(23.8		)	(49.8		)
Total	$	167.4		$	43.2



	December 31, 2019								March 31, 2019
	Level 1		Level 2			Total			Level 1		Level 2			Total
Assets:	(Amounts in millions)
Available-for-sale equity securities	$	0.8	$	—		$	0.8		$	1.2	$	—		$	1.2
Forward exchange contracts (see Note 17)	—		1.4			1.4			—		1.5			1.5

Liabilities:
Forward exchange contracts (see Note 17)	—		(0.7		)	(0.7		)	—		(0.6		)	(0.6		)
Interest rate swaps (see Note 17)	—		(107.0		)	(107.0		)	—		(63.6		)	(63.6		)



	Rest of Year Ending March 31, 2020		Year Ending March 31,
	Rest of Year Ending March 31, 2020		2021		2022		Thereafter		Total
	(Amounts in millions)
Remaining Performance Obligations	$	445.5	$	691.7	$	274.2	$	254.3	$	1,665.7



	Nine Months Ended December 31,
	2019		2018
	(Amounts in millions)
Non-cash investing activities:
Common shares related to business acquisitions (see Note 2)	$	—	$	83.7



	Three Months Ended December 31,
	2019						2018						Total Increase (Decrease)
	Feature Film⁽¹⁾		Other Film⁽²⁾		Total		Feature Film⁽¹⁾		Other Film⁽²⁾		Total		Total Increase (Decrease)
					(Amounts in millions)
Motion Picture Revenue
Theatrical	$	101.0	$	8.0	$	109.0	$	27.6	$	0.9	$	28.5	$	80.5
Home Entertainment
Digital Media	69.6		45.9		115.5		41.0		40.7		81.7		33.8
Packaged Media	42.4		33.0		75.4		37.9		30.1		68.0		7.4
Total Home Entertainment	112.0		78.9		190.9		78.9		70.8		149.7		41.2
Television	60.9		13.6		74.5		45.8		29.0		74.8		(0.3		)
International	68.4		27.7		96.1		89.3		15.4		104.7		(8.6		)
Other	2.1		1.3		3.4		3.4		1.5		4.9		(1.5		)
	$	344.4	$	129.5	$	473.9	$	245.0	$	117.6	$	362.6	$	111.3