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Mergers and Acquisitions (Tables) | 3 Months Ended
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Jun. 30, 2017
Business Acquisition [Line Items] |
Summary of Estimated Purchase Consideration | The following table summarizes the components of the estimated purchase consideration, inclusive of Lions Gate’s existing ownership of Starz common stock and Starz’s share-based equity awards outstanding as of December 8, 2016:
|  |  | (Amounts in millions)
Market value, as of December 8, 2016, of Starz Series A and Series B common stock already owned by Lionsgate(1) |  |  | $ | 179.3 |
Cash consideration paid to Starz stockholders |  |  |
Starz Series A common stock at $18.00 | $ | 1,123.3 |  |  |
Starz Series B common stock at $7.26 | 52.8 |  |  |
|  |  | 1,176.1 |
Fair value of Lionsgate voting and non-voting shares issued to Starz's stockholders |  |  |
Starz Series A common stock at exchange ratio of 0.6784 Lionsgate non-voting shares | $ | 1,088.0 |  |  |
Starz Series B common stock at exchange ratio of 0.6321 Lionsgate voting shares | 121.6 |  |  |
Starz Series B common stock at exchange ratio of 0.6321 Lionsgate non-voting shares | 118.1 |  |  |
|  |  | 1,327.7 |
Replacement of Starz share-based payment awards(2) |  |  | 186.5 |
Liability for dissenting shareholders |  |  | 797.3 |
Total preliminary estimated purchase consideration |  |  | $ | 3,666.9 |
(1)The difference between the fair value of the Starz available-for-sale securities owned by Lionsgate and the original cost of the Starz available-for-sale securities of $158.9 million, of $20.4 million, was reflected as a gain on Starz investment in the consolidated statement of operations for the fiscal year ended March 31, 2017. (2)Upon the closing of the merger, each outstanding share-based equity award (i.e., stock options, restricted stock, and restricted stock units) of Starz was replaced by a Lions Gate non-voting share-based equity award (“Lions Gate replacement award”) with terms equivalent to the existing awards based on the exchange ratio set forth in the Merger Agreement. Each Starz outstanding award was measured at fair value on the date of acquisition and the portion attributable to pre-combination service was recorded as part of the purchase consideration. The fair value of the Lions Gate replacement award measured on the date of acquisition in excess of the fair value of the Starz award attributed to and recorded as part of the purchase consideration was attributed to post-combination services and will be recognized as share-based compensation expense over the remaining post-combination service period. The estimated aggregate fair value of the Lions Gate replacement awards recorded as part of the purchase consideration was $186.5 million, and the estimated remaining aggregate fair value totaling $43.3 million is being recognized in future periods in accordance with each respective award’s vesting terms. The fair value of the Lions Gate replacement restricted stock and restricted stock unit awards was determined based on the value estimated for the Class A voting shares and Class B non-voting shares as of the acquisition date as discussed above. The fair value of Lions Gate replacement stock option awards was determined using the Black-Scholes option valuation model using the estimated fair value of the Class B non-voting shares underlying the replacement stock options. For purposes of valuing the Lions Gate replacement awards, the following weighted-average applicable assumptions were used in the Black-Scholes option valuation model:
Weighted average assumptions: |
Risk-free interest rate | 0.39% - 1.83%
Expected option lives (years) | 0.01 - 5.50 years
Expected volatility | 35%
Expected dividend yield | 0%
The risk-free rate assumed in valuing the options is based on the U.S. Treasury Yield curve in effect applied against the expected term of the option at the time of the grant. The expected option lives represents the period of time that options are expected to be outstanding. Expected volatilities are based on implied volatilities from traded options on Lions Gate’s stock, historical volatility of Lions Gate’s stock and other factors. The expected dividend yield is based on an assumption that the combined company has suspended the quarterly dividend.
Fair Value Assumptions in Replacement Awards | For purposes of valuing the Lions Gate replacement awards, the following weighted-average applicable assumptions were used in the Black-Scholes option valuation model:
Weighted average assumptions: |
Risk-free interest rate | 0.39% - 1.83%
Expected option lives (years) | 0.01 - 5.50 years
Expected volatility | 35%
Expected dividend yield | 0%
Purchase Price Allocation | The preliminary estimated purchase price of Starz has been allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as follows:
| (Amounts in millions)
Cash and cash equivalents | $ | 73.5 |
Accounts receivable | 254.9 |
Investment in films and television programs and program rights | 851.9 |
Property and equipment | 121.4 |
Investments | 12.1 |
Intangible assets | 2,071.0 |
Other assets | 129.2 |
Accounts payable and accrued liabilities | (131.0 | )
Corporate debt and capital lease obligations | (1,013.1 | )
Deferred tax liabilities | (716.1 | )
Other liabilities | (156.6 | )
Fair value of net assets acquired | 1,497.2 |
Goodwill | 2,169.7 |
Total estimated purchase consideration | $ | 3,666.9 |

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- Definition Tabular disclosure of a material business combination completed during the period, including background, timing, and recognized assets and liabilities. This table does not include leveraged buyouts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463 + Details
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- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472 + Details
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- Definition Tabular disclosure of the significant assumptions used during the year to estimate the fair value of employee stock purchase plans, including, but not limited to: (a) expected term, (b) expected volatility of the entity's shares, (c) expected dividends, (d) risk-free rate(s), and (e) discount for post-vesting restrictions. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (f)(2) -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 + Details
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