10-K/A: Lionsgate Studios Details Strategic Separation, Record Revenue, and Executive Compensation in Amended Annual Report

Sentiment:

Annual Report Amendment 29 July 2025 4:06 PM

Lionsgate Studios Corp. filed an amended annual report (10-K/A) to provide detailed information on its recent separation from Starz, strong fiscal 2025 financial performance, and executive compensation structures.

Capital raiseThe company completed an equity raise of approximately $300 million in gross proceeds from a consortium of leading investors in May 2024, in connection with the business combination with Screaming Eagle Acquisition Corp. and launch of Legacy Lionsgate Studios.New financing structures were established for both Lionsgate and Starz, including a $1 billion senior secured amortizing term credit facility (LG IP Credit Facility), a $340 million senior secured amortizing term credit facility (eOne IP Credit Facility), a note exchange resulting in $390 million aggregate principal amount of 6.00% senior notes due 2030, and an $800 million revolving credit facility for Lionsgate Studios.For Starz, a $300.0 million senior secured term loan credit facility, a $150.0 million senior secured revolving credit facility, and $325 million aggregate principal amount of 5.50% senior notes due 2029 were established.

Worse than expectedAdjusted OIBDA for fiscal 2025 was $448.1 million, which was approximately 85% of the planned $528.8 million.The Compensation Committee approved funding of only 75% of the proposed annual incentive bonus pool, a downward adjustment reflecting underperformance in the Studio segment and the company's stock price.Television Production segment profit was $136.5 million, approximately 65% of the planned $215.3 million, significantly below the planned $215.3 million.

Summary

Lionsgate Studios Corp. filed an amended 10-K/A to include comprehensive details on corporate governance, executive compensation, and related party transactions, following its separation from Starz Entertainment Corp.
The company achieved record Studio revenue of $3.2 billion for fiscal year 2025, including its first-ever $1 billion+ quarter with $1.1 billion in Q4 FY25.
Record trailing 12-month library revenue reached $956 million, with a best-ever quarterly library revenue of $340 million in Q4 FY25.
Motion Picture segment profit exceeded $300 million for the year, with Q4 FY25 marking the highest quarterly performance in 10 years at over $135 million.
The separation of the Studio Business (Lionsgate Studios Corp.) and the Starz Business (Starz Entertainment Corp.) was completed on May 6, 2025, with both entities now trading independently on NYSE and NASDAQ, respectively.
Key strategic initiatives included the full integration of eOne Entertainment, adding thousands of titles and growing brand portfolios, and establishing a partnership with AI research company Runway to enhance production and marketing efficiency.
The company secured significant television series renewals, expanded the 'John Wick Universe' with new projects, and finalized a partnership with Blumhouse and James Wan for future 'Saw' movies.
Adjusted OIBDA for fiscal 2025 was $448.1 million, which was approximately 85% of the planned $528.8 million, leading to a downward adjustment in the annual incentive bonus pool funding to 75%.
The dual-class share structure was eliminated, consolidating Class A voting shares and Class B non-voting shares into one class of common shares, enhancing liquidity and investor appeal.
New financing structures were established for both Lionsgate and Starz, including a $1 billion LG IP Credit Facility and an $800 million revolving credit facility for Lionsgate Studios, aiming for net debt targets of approximately $1.4 billion for the Studio business.
Executive compensation for fiscal 2025 included a mix of cash and equity, with a significant portion of the CEO's bonus delivered in restricted share units to align with shareholder interests.
The ratio of the CEO's total compensation to the median employee's total compensation for fiscal 2025 was 75 to 1, with the CEO earning $9,823,232 and the median employee earning $131,000.

Sentiment

Score: 7

Explanation: The filing highlights significant strategic achievements, including the successful separation of the Studio and Starz businesses, record revenues in key segments, and innovative partnerships. While some financial metrics like Adjusted OIBDA and Television Production segment profit fell below plan, the overall narrative emphasizes strong execution of transformative initiatives and a positive outlook for future growth and efficiency.

Positives

Achieved record Studio revenue of $3.2 billion for fiscal year 2025, including a record $1.1 billion in the fourth quarter.
Reported record trailing 12-month library revenue of $956 million, with the best-ever quarterly library revenue of $340 million in Q4 FY25.
Motion Picture segment profit exceeded $300 million for the year, with Q4 FY25 profit of $135 million being the highest in 10 years.
Successfully completed the separation of the Studio Business and Starz Business into two independent, publicly-traded companies (Lionsgate Studios Corp. and Starz Entertainment Corp.).
Completed the integration of eOne Entertainment, significantly expanding the content library and brand portfolio.
Established a first-of-its-kind partnership with AI applied research company Runway to drive efficiency and cost savings in production, marketing, and library distribution.
Secured key television series renewals for 'The Rookie', 'Ghosts', 'The Studio', 'The Sherri Shepherd show', and 'Yellowjackets'.
Accelerated the expansion of the 'John Wick Universe' with multiple new projects in development, including a spinoff, Chapter 5, an animated movie, a TV series, and a AAA game.
Finalized a partnership with Blumhouse and James Wan for future 'Saw' movies, indicating continued franchise development.
Extended the pay one theatrical output agreement with Starz through 2028 and licensed film slates to Amazon Prime, ensuring future distribution revenue.
STARZ successfully transitioned to a streaming platform, with over 70% digital revenue and domestic over-the-top subscriber growth of 500,000 in Q4 FY25.
Implemented company-wide cost savings through procurement policy enforcement, vendor contract transitions, and production cost optimization, exceeding annual targets.
Executed a comprehensive real estate strategy resulting in significant cost savings and improved space efficiency.
Eliminated the dual-class share structure, consolidating shares into one class to align voting power with economic interests and enhance stock liquidity.
Adopted a shareholder rights plan to protect shareholder interests during market volatility.
Amended company Articles to eliminate the chair of a meeting of the Board of Directors' ability to have a second or casting vote in the event of a tied vote, enhancing corporate governance.

Negatives

Adjusted OIBDA for fiscal 2025 was $448.1 million, which was approximately 85% of the planned $528.8 million.
The Compensation Committee approved funding of only 75% of the proposed annual incentive bonus pool, a downward adjustment reflecting underperformance in the Studio segment and the company's stock price.
Television Production segment profit was $136.5 million, approximately 65% of the planned $215.3 million, indicating significant underperformance in this segment.

Risks

Potential impacts of climate change on facilities, supply chain partners, production logistics, and evolving stakeholder expectations, though currently not material.
Exposure to material legal matters, which can influence discretionary bonus adjustments and require significant management attention.
Unplanned acquisitions or divestitures, unanticipated programming or business development opportunities, corporate transactions, or other unforeseen events that can impact financial results and require discretionary adjustments to compensation.
Significant market volatility, which necessitated the adoption of a shareholder rights plan to protect shareholder interests.

Future Outlook

The company aims to replenish its theatrical content pipeline for fiscal 2026 and position the studio for accelerated growth and enhanced financial performance in fiscal 2027. It continues to strengthen its television portfolio with premium properties and advance development on high-profile intellectual properties. The company also plans to continue leveraging new technologies like AI to drive efficiency and savings.

Management Comments

The Compensation Committee believes that our executive compensation program aligns the interests of the Named Executive Officers with the Company’s long-term strategic direction and the interests of our shareholders.
We are committed to maintaining a proactive shareholder engagement program that facilitates open, transparent, and ongoing dialogue with our investors and other key stakeholders.
We view the strong shareholder support for our executive compensation program as a validation of our continued efforts to ensure that our compensation practices are performance-based, aligned with shareholder interests, and designed to support the long-term success of the Company.
The Compensation Committee believes that the compensation opportunities provided to the Named Executive Officers are appropriate in light of competitive considerations, and will modify its programs as appropriate based on ongoing industry trends and the Company’s competitive landscape.
The Compensation Committee determined that allocating a substantial portion of Mr. Burns' bonus in cash was appropriate in light of Mr. Burns' leadership in the strategic execution of the Separation – a unique, non-recurring, complex and transformative transaction requiring sustained engagement, stakeholder coordination, and long-term vision.
The Compensation Committee approved a bonus for Mr. Goldsmith slightly above target and determined to allocate a larger portion of the bonus to cash noting Mr. Goldsmith's leadership in managing the operational execution of the Separation – including oversight of organizational readiness, business continuity, systems migration and cross-functional coordination.
The Compensation Committee approved a bonus for Mr. Tobey above target and determined that allocating half of Mr. Tobey's bonus in cash was warranted in recognition of Mr. Tobey's central role in the legal execution of the Separation – a unique, non-recurring, complex and transformative transaction that demanded sustained leadership, technical expertise, and coordination across multiple jurisdictions and counterparties.

Industry Context

Lionsgate Studios operates within the highly competitive and evolving media and entertainment industry, characterized by shifts towards streaming, demand for diverse content, and increasing adoption of new technologies like AI. The company's strategic separation of its studio and premium subscription platform businesses reflects a broader industry trend towards specialization and optimizing capital structures for distinct business models. Its focus on expanding established franchises like 'John Wick' and adapting existing IP for television aligns with industry strategies to leverage proven content. The partnership with Runway for AI integration positions Lionsgate as an early adopter in using advanced technology to enhance efficiency in content creation and distribution, a critical area for competitive advantage in a cost-conscious environment. The company's efforts to secure distribution deals with major platforms like Amazon Prime and extend agreements with Starz highlight the importance of diversified content monetization in the current landscape.

Comparison to Industry Standards

The company's executive compensation practices, including the use of a peer group (AMC Networks, Electronic Arts, Fox Corporation, Hasbro, Live Nation Entertainment, Madison Square Garden Entertainment Corp., Nexstar Media Group, Sirius XM Holdings, Take-Two Interactive Software, World Wrestling Entertainment) and industry survey data (ABC, NBCUniversal, Amazon Studios, Netflix, Paramount/Showtime, Apple TV, Sony Pictures Entertainment, ESPN, Walt Disney Studios, Mattel, Warner Bros. Discovery), are consistent with industry benchmarks for attracting and retaining top talent.
The elimination of the dual-class share structure aligns the company with a growing preference among institutional investors for single-class share structures, which is considered a best practice in corporate governance for enhancing transparency and shareholder democracy.
The adoption of a shareholder rights plan is a common defensive measure used by companies to protect against hostile takeovers, particularly in times of market volatility, aligning with practices seen across various industries.
The company's commitment to environmental responsibility, including efforts to prevent pollution, conserve resources, and follow green production guides, reflects a growing industry trend towards sustainable practices in content creation, although specific comparable projects or results are not detailed in the filing.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Executive Officer	Jon Feltheimer (Old Lionsgate Parent)	Jon Feltheimer (Lionsgate Studios Corp.)	May 2025	Transition of role following the separation of the Studio Business from Old Lionsgate Parent.
Vice Chair	Michael Burns (Old Lionsgate Parent)	Michael Burns (Lionsgate Studios Corp.)	May 2025	Transition of role following the separation of the Studio Business from Old Lionsgate Parent.
Chief Financial Officer	James W. Barge (Old Lionsgate Parent)	James W. Barge (Lionsgate Studios Corp.)	May 2025	Transition of role following the separation of the Studio Business from Old Lionsgate Parent.
Chief Operating Officer	Brian Goldsmith (Old Lionsgate Parent)	Brian Goldsmith (Lionsgate Studios Corp.)	May 2025	Transition of role following the separation of the Studio Business from Old Lionsgate Parent.
Executive Vice President and General Counsel	Bruce Tobey (Old Lionsgate Parent)	Bruce Tobey (Lionsgate Studios Corp.)	May 2025	Transition of role following the separation of the Studio Business from Old Lionsgate Parent.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Share Structure Change	Eliminated the dual-class share structure by consolidating Class A voting shares and Class B non-voting shares into one class of common shares, aligning voting power with economic interests and streamlining the capital structure.	May 6, 2025	Increased appeal to both retail and institutional investors, created a more straightforward and accessible investment opportunity, and enhanced stock liquidity.
Board Voting Policy Amendment	Amended the company's Articles to eliminate the ability of the chair of a meeting of the Board of Directors to have a second or casting vote in the event of a tied vote.		Enhances democratic decision-making within the Board and strengthens corporate governance.
Shareholder Rights Plan Adoption	Adopted a shareholder rights plan.		Protects the interests of all shareholders and helps ensure the Board of Directors' ability to fulfill fiduciary responsibilities and duties to the company and its shareholders during significant market volatility.
Board Committee Structure	The Board has standing Audit & Risk Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Transaction Committee, all comprised solely of independent directors with different independent directors serving as chairs.	May 2025	Ensures independent oversight of key corporate functions and strengthens the Board's collective qualifications, skills, and attributes.
Investor Rights Agreement	Entered into an Investor Rights Agreement with MHR Fund Management LLC and Liberty Global Ventures Limited, providing for board designees based on share ownership thresholds and certain pre-emptive rights on future share issuances for cash consideration.	May 6, 2025	Formalizes representation for significant shareholders on the Board and provides them with certain rights regarding future capital raises, influencing governance and capital structure.

Legal Proceedings

Management's discretionary adjustments to annual incentive bonuses may account for 'material legal matters'.
Bruce Tobey's contributions included directing the resolution of key litigation and insurance matters, including third-party claims, internal disputes, and recoveries related to legacy transactions and insurance coverage.

Related Party Transactions

The filing refers to 'Other Related Party Transactions in Note 21 in the Original Filing' for detailed information.
The Investor Rights Agreement formalizes relationships with MHR Fund Management LLC and Liberty Global Ventures Limited, including board designees and pre-emptive rights, which are related party dealings.

Stakeholder Impact

Shareholders: Benefited from the elimination of the dual-class share structure, enhancing voting power alignment and liquidity. The shareholder rights plan aims to protect their interests during market volatility. Executive compensation is designed to align with shareholder interests and long-term value creation.
Employees: The company's compensation program aims to recruit, retain, and inspire top talent. Voluntary severance and early retirement packages were offered to eligible U.S. employees, impacting approximately 8% of them.
Customers: Benefit from continued investment in diversified film and television slates, expansion of popular franchises, and new content distribution deals.
Creditors: Impacted by the establishment of new, distinct capital structures for Lionsgate and Starz, including new credit facilities and notes, aiming for specific net debt targets.
Suppliers/Vendors: The company achieved cost savings through procurement policy enforcement and vendor contract transitions, potentially impacting supplier relationships and terms.

Next Steps

Replenish the theatrical content pipeline for fiscal 2026.
Position the studio for accelerated growth and enhanced financial performance in fiscal 2027.
Continue to strengthen the television portfolio with premium properties and advance development on high-profile IP.
Continue to utilize AI to enhance production, marketing, and library distribution efficiency, achieve cost savings, and serve as a tool for filmmakers.

Key Dates

Date	Description
2020-04-01	Start of fiscal year 2021 for financial reporting.
2021-03-31	End of fiscal year 2021 for financial reporting; gain on sale of Pantaya recorded.
2021-07-01	Annual equity awards granted to Named Executive Officers typically occur after this date.
2021-07-21	Date of performance-based restricted share units granted to Mr. Barge and Mr. Goldsmith, eligible to vest during fiscal 2025.
2021-11-03	Option expiration date for certain LGF.A and LGF.B shares held by Michael Burns.
2021-11-12	Option expiration date for certain LGF.B shares held by Brian Goldsmith.
2021-11-21	Loral Space & Communications Inc. merger with Telesat Canada.
2021-12-18	Option expiration date for certain LGF.B shares held by Michael Burns.
2021-12-20	Michael Burns' previous employment agreement date.
2021-12-21	Emisphere Technologies Inc. acquired by Novo Nordisk.
2021-12-28	Option expiration date for certain LGF.B shares held by James W. Barge.
2022-04-01	Start of fiscal year 2023 for financial reporting.
2022-07-15	Grant date for performance-based restricted share units to Messrs. Feltheimer, Barge, and Goldsmith, eligible to vest during fiscal 2025.
2022-09-30	End of second fiscal quarter 2023; goodwill impairment charge of $1.475 billion related to Media Networks reporting unit recorded.
2023-03-27	Bruce Tobey's previous employment agreement date.
2023-03-31	End of fiscal year 2023 for financial reporting.
2023-05-01	Sumo Logic, Inc. acquired by Francisco Partners.
2023-06-07	Option expiration date for certain LGF.B shares held by Jon Feltheimer, Michael Burns, and James W. Barge.
2023-07-03	Vesting date for certain unvested equity awards.
2023-07-15	Grant date for performance-based restricted share units to Messrs. Feltheimer, Burns, Barge, Goldsmith, and Tobey, eligible to vest during fiscal 2025.
2023-08-01	James W. Barge's employment agreement date.
2023-09-30	End of second fiscal quarter 2024; goodwill impairment charge of $493.9 million and $170.0 million for impairment of indefinite-lived trade names related to Media Networks reporting unit recorded.
2024-03-31	End of fiscal year 2024 for financial reporting.
2024-04-01	Start of fiscal year 2025 for financial reporting.
2024-05-01	Screaming Eagle Acquisition Corp. became LG Studios (NYSE: LION).
2024-05-06	Lionsgate entered into an Investor Rights Agreement with MHR Fund Management LLC and Liberty Global Ventures Limited; Michael Burns entered into a new employment agreement with the Company; Starz entered into an advisory services agreement with Mr. Burns.
2024-05-13	Form 4 filed with SEC by Mark H. Rachesky, M.D.
2024-07-01	Annual equity awards granted to Named Executive Officers typically occur after this date.
2024-07-15	Grant date for performance-based restricted share units to Named Executive Officers, treated as granted during fiscal 2025 for accounting purposes.
2024-08-01	Jon Feltheimer's new employment agreement date; grant date for time-based restricted share units to Named Executive Officers.
2024-08-08	Jon Feltheimer's new employment agreement date.
2024-09-30	Last business day of the registrant's most recently completed second fiscal quarter, used for aggregate market value calculation.
2024-10-30	Expiration date of Michael Burns' previous employment agreement.
2024-11-29	Grant date for annual equity retainer to non-employee directors.
2025-02-01	Zuora, Inc. acquired by Silver Lake.
2025-03-31	End of fiscal year 2025 for financial reporting; date used to identify median employee for pay ratio disclosure.
2025-04-09	Bruce Tobey's employment agreement amendment date.
2025-04-23	2024 Annual General and Special Meeting of Shareholders.
2025-05-06	Completion of the separation of Studio Business and Starz Business; new employment agreement with Michael Burns.
2025-05-07	Lionsgate Studios Corp. (NYSE: LION) and Starz Entertainment Corp. (NASDAQ: STRZ) trading began as standalone companies.
2025-05-09	Schedule 13F-HR filed by Vanguard Group, Inc.
2025-05-12	Schedule 13F-HR filed by Capital Research Global Investors.
2025-05-15	Schedule 13F-HR filed by Shapiro Capital Management LLC.
2025-05-30	Original Annual Report on Form 10-K for the year ended March 31, 2025, filed with the SEC.
2025-06-01	Compensation Committee approved an equity award for Mr. Feltheimer for fiscal 2026.
2025-07-01	Vesting date for certain unvested equity awards.
2025-07-07	Form 4 filed with SEC by Liberty 77 Capital L.P.
2025-07-17	Schedule 13G filed with SEC by BlackRock, Inc.
2025-07-18	Date for director ages and common shares outstanding information.
2025-07-27	Vesting date for certain unvested equity awards.
2025-07-29	Certification date for CEO and CFO.
2025-07-30	Signature date for the 10-K/A report.
2025-09-16	Date within 60 days of July 18, 2025, used for beneficial ownership calculations.
2025-09-30	End of Brian Goldsmith's employment agreement term.
2026-03-26	End of Bruce Tobey's employment agreement term.
2026-03-27	Vesting date for certain unvested equity awards.
2026-07-31	End of James W. Barge's employment agreement term.
2026-08-01	Start of James W. Barge's one-year consulting agreement.
2028-03-31	End of Bruce Tobey's extended employment agreement term.
2028-05-06	End of Michael Burns' new employment agreement term.
2028-07-31	End of Jon Feltheimer's employment agreement term.
2029-03-31	Maturity date for Starz 5.50% senior notes.
2029-07-01	Option expiration date for certain LGF.B shares held by Brian Goldsmith.
2029-09-26	Option expiration date for certain LGF.B shares held by James W. Barge.
2030-03-31	Maturity date for Lionsgate Studios 6.00% senior notes.
2030-08-21	Option expiration date for certain LGF.B shares held by Jon Feltheimer.

Recommendation

hold

The filing presents a mixed picture. On one hand, the successful separation of the Studio and Starz businesses, record revenues in key segments, and strategic partnerships like the AI initiative are strong positives, indicating effective management and growth potential. The elimination of the dual-class share structure and enhanced governance measures are also favorable for long-term investor confidence. However, the underperformance against planned Adjusted OIBDA and Television Production segment profit, leading to a downward adjustment in the bonus pool, suggests that operational execution did not fully meet internal targets. While the strategic moves are significant, the financial results, when compared to internal plans, indicate areas for improvement. Given the transformative nature of the separation and the mixed financial performance relative to internal targets, a 'hold' recommendation is appropriate. Investors should monitor the company's ability to translate its strategic initiatives into consistent financial outperformance against future targets, especially in the Television Production segment, before considering a 'buy' or 'strong buy'.

Keywords

Lionsgate Studios, SEC Filing, 10-K/A, Entertainment Industry, Film Production, Television Production, Studio Business, STARZ, Spin-off, Corporate Governance, Executive Compensation, Financial Performance, Revenue, Segment Profit, Adjusted OIBDA, Library Content, Shareholder Rights, Dual-Class Shares, eOne Entertainment, AI Partnership, John Wick, Sarbanes-Oxley Act

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