Investments

The carrying amounts of investments, by category, at June 30, 2017 and March 31, 2017 were as follows:



	June 30, 2017		March 31, 2017
	(Amounts in millions)
Equity method investments	$	131.5	$	322.9
Available-for-sale securities	7.1		8.0
Cost method investments	40.6		40.6
	$	179.2	$	371.5

Equity Method Investments:

The carrying amounts of equity method investments at June 30, 2017 and March 31, 2017 were as follows:



	June 30, 2017
Equity Method Investee	Ownership Percentage	June 30, 2017		March 31, 2017
		(Amounts in millions)
EPIX⁽¹⁾	n/a⁽¹⁾	$	—	$	188.8
Pop	50.0%	96.3		96.8
Other	Various	35.2		37.3
		$	131.5	$	322.9

________________


(1)	In May 2017, the Company sold all of its 31.15% equity interest in EPIX to MGM (see further details below).

Equity interests in equity method investments for the three months ended June 30, 2017 and 2016 were as follows (income (loss)):



	Three Months Ended
	June 30,
Equity Method Investee	2017			2016
	(Amounts in millions)
EPIX	$	4.0		$	11.0
Pop	(3.0		)	0.3
Other	(9.3		)	(0.5		)
	$	(8.3	)	$	10.8

EPIX. In April 2008, the Company formed a joint venture with Viacom, its Paramount Pictures unit and Metro-Goldwyn-Mayer Studios ("MGM") to create a premium television channel and subscription video-on-demand service named “EPIX”. The Company invested $80.4 million through September 30, 2010, and no additional amounts have been funded since. Since the Company's original investment in April 2008, the Company received distributions from EPIX of $42.0 million through March 31, 2017.

On May 11, 2017, pursuant to the Membership Interest Purchase Agreement dated April 5, 2017 (the “Purchase Agreement”), Lionsgate, Viacom and Paramount, each completed the sale to MGM of 100% of their respective equity interests in EPIX, representing, in the aggregate, an 80.91% interest in EPIX. Lions Gate's 31.15% equity interest in EPIX represented approximately $397.2 million of the sale, of which $23.4 million was paid to Lions Gate between the signing of the Purchase Agreement and the closing of the sale as a member distribution, and $373.8 million was paid upon closing. Prior to the sale of its 31.15% interest in EPIX, the Company had accounted for such interest as an equity method investment.

Based on the carrying value of the Company’s interest in EPIX as of the date of closing and transaction expenses, the Company has recorded a gain before income taxes of approximately $201.0 million which is reflected as a gain on sale of equity interest in EPIX in the consolidated statement of income for the three months ended June 30, 2017.

EPIX Financial Information:

The following table presents the summarized statements of income for EPIX for the period from April 1, 2017 through the date of sale of May 11, 2017, and for the three months ended June 30, 2016 and a reconciliation of the net income reported by EPIX to equity interest income recorded by the Company:



	Period from			Three Months Ended
	April 1, 2017 to			Three Months Ended
	May 11, 2017			June 30, 2016
	(Amounts in millions)
Revenues	$	44.8		$	98.3
Expenses:
Operating expenses	32.3			49.2
Selling, general and administrative expenses	2.4			6.2
Operating income	10.1			42.9
Interest and other expense	—			—
Net income	$	10.1		$	42.9
Reconciliation of net income reported by EPIX to equity interest income:
Net income reported by EPIX	$	10.1		$	42.9
Ownership interest in EPIX	31.15		%	31.15		%
The Company's share of net income	3.1			13.4
Eliminations of the Company’s share of profits on licensing sales to EPIX⁽¹⁾	(0.1		)	(3.7		)
Realization of the Company’s share of profits on licensing sales to EPIX⁽²⁾	1.0			1.3
Total equity interest income recorded	$	4.0		$	11.0

_________________________


(1)	Represents the elimination of the gross profit recognized by the Company on licensing sales to EPIX in proportion to the Company's ownership interest in EPIX.


(2)	Represents the realization of a portion of the profits previously eliminated. This profit remains eliminated until realized by EPIX. EPIX initially records the license fee for the title as inventory on its balance sheet and amortizes the inventory over the license period. Accordingly, the profit is realized as the inventory on EPIX's books is amortized.

Pop. Pop is the Company's joint venture with CBS. The Company’s investment interest in Pop consists of an equity investment in its common stock units and mandatorily redeemable preferred stock units. CBS has a call option to purchase a portion of the Company's ownership interest in Pop at fair market value, which would result in CBS owning 80% of Pop, exercisable beginning March 26, 2018 for a period of 30 days. During the three months ended June 30, 2017, the Company made contributions of $2.5 million to Pop (2016 - none).

The mandatorily redeemable preferred stock units carry a dividend rate of 10% compounded annually and are mandatorily redeemable in May 2019 at the stated value plus the dividend return and any additional capital contributions less previous distributions. The mandatorily redeemable preferred stock units were initially recorded based on their estimated fair value, as determined using an option pricing model. The mandatorily redeemable preferred stock units and the 10% dividend are being accreted up to their redemption amount over the ten-year period to the redemption date, which is recorded as income within equity interest.

Pop Financial Information:

The following table presents the summarized statements of operations for the three months ended June 30, 2017 and 2016 for Pop and a reconciliation of the net loss reported by Pop to equity interest income (loss) recorded by the Company:



	Three Months Ended
	June 30,
	2017			2016

Revenues	$	24.7		$	24.9
Expenses:
Cost of services	16.9			11.5
Selling, marketing, and general and administration	12.1			10.4
Depreciation and amortization	2.0			2.0
Operating income (loss)	(6.3		)	1.0
Interest expense, net	0.2			0.1
Accretion of redeemable preferred stock units⁽¹⁾	18.6			16.0
Total interest expense, net	18.8			16.1
Net loss	$	(25.1	)	$	(15.1	)
Reconciliation of net loss reported by Pop to equity interest loss:
Net loss reported by Pop	$	(25.1	)	$	(15.1	)
Ownership interest in Pop	50		%	50		%
The Company's share of net loss	(12.6		)	(7.5		)
Accretion of dividend and interest income on redeemable preferred stock units⁽¹⁾	9.3			8.0
Elimination of the Company's share of profits on licensing sales to Pop	(0.1		)	(0.2		)
Realization of the Company’s share of profits on licensing sales to Pop	0.4			—
Total equity interest income (loss) recorded	$	(3.0	)	$	0.3

___________________

(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 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 income (loss).

Other Equity Method Investments

Defy Media. In June 2007, the Company acquired an interest in Break Media, a multi-platform digital media company and a leader in male-targeted content creation and distribution. In October 2013, Break Media merged with Alloy Digital to create Defy Media. The Company's effective economic interest in Defy Media through its investment in Break Media and its direct investment in Defy Media is approximately 11%. The Company is accounting for its investment in Defy Media, a limited liability company, under the equity method of accounting due to the Company's board representation that provides significant influence over the investee.

Roadside Attractions. Roadside Attractions is an independent theatrical distribution company. The Company owns a 43% interest in Roadside Attractions.

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. The Company owns a 49% interest in Pantelion Films.

Atom Tickets. Atom Tickets is the first-of-its-kind theatrical mobile ticketing platform and app. The Company owns an interest of approximately 15% in Atom Tickets. The Company is accounting for its investment in Atom Tickets, a limited liability company, under the equity method of accounting due to the Company's board representation that provides significant influence over the investee.

Playco. Playco Holdings Limited ("Playco") offers a STARZ-branded online subscription video-on-demand service in the Middle East and North Africa. The Company owns an approximately 41.3% interest in Playco.

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

Available-for-Sale Securities:

The cost basis, unrealized gains and fair market value of available-for-sale securities were as set forth below:



	June 30, 2017		March 31, 2017
	(Amounts in millions)
Cost basis	$	2.6	$	2.6
Gross unrealized gain	4.5		5.4
Fair value	$	7.1	$	8.0

Next Games. At June 30, 2017 and March 31, 2017, the Company's available-for-sale securities consisted of the Company's minority ownership interest in Next Games. Next Games is a mobile games development company headquartered in Helsinki, Finland, with a focus on crafting visually impressive, highly engaging games.

Cost Method Investments:

Telltale. Telltale Games ("Telltale") is a creator, developer and publisher of interactive software episodic games based upon popular stories and characters across all major gaming and entertainment platforms. The Company owns an approximately 14% economic interest in Telltale.