XML 36 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
Segment Information
 6 Months Ended
Sep. 30, 2017
Segment Reporting [Abstract]  
Segment Information
Segment Information
The Company’s reportable segments have been determined based on the distinct nature of their operations, the Company's internal management structure, and the financial information that is evaluated regularly by the Company's chief operating decision maker. Following the Starz Merger (see Note 2), the Company has added a new segment from the Starz business and realigned business operations within Lionsgate and Starz under three reporting segments and made some changes in what is included and excluded from segment profit.
The Company previously had two reportable business segments, consisting of the Motion Pictures and Television Production segments. Beginning in the quarter ended December 31, 2016, the Company now manages and reports its operating results in three reportable business segments: (1) Motion Pictures, (2) Television Production and (3) Media Networks.
As a result, the Company has presented prior period segment data in a manner that conforms to the current period presentation (see further discussion below).
Motion Pictures 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. As a result of the Starz Merger (see Note 2), beginning December 8, 2016, the Motion Pictures segment includes Starz's third-party distribution business, which is substantially the same as the Motion Pictures existing business.
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.
Media Networks (which was previously not a reportable segment) consists of (i) Starz Networks, which includes the licensing of premium subscription video programming to U.S. multichannel video programming distributors ("MVPDs") including cable operators, satellite television providers and telecommunication companies, and online video providers, and on an over-the-top ("OTT") basis (ii) Content and Other, which includes the licensing of the Media Networks' original series programming to digital media platforms, international television networks, home entertainment and other ancillary markets and (iii) Streaming Services, which represents the Lionsgate legacy start-up direct to consumer streaming services on its subscription video-on-demand ("SVOD") platforms which were moved under the Media Networks segment in connection with the Starz Merger.
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 from the Motion Pictures and Television Production segments to the Media Networks segment. In addition, intersegment transactions include distribution fees charged to the Media Networks segment by the Television Production segment for the distribution of Media Networks' original series programming in ancillary markets. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses or assets recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

Segment information by business unit is presented in the table below. The Media Networks segment reflects the Starz network business from the date of acquisition (December 8, 2016), and the Lionsgate direct to consumer streaming services on SVOD platforms for the historical periods presented.

 
Three Months Ended
 
Six Months Ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in millions)
Segment revenues
 
 
 
 
 
 
 
Motion Pictures
$
385.7

 
$
464.0

 
$
858.0

 
$
826.3

Television Production
168.7

 
175.1

 
325.4

 
366.2

Media Networks
393.4

 
0.4

 
783.9

 
0.6

Intersegment eliminations
(7.0
)
 
—

 
(21.2
)
 
—

 
$
940.8

 
$
639.5

 
$
1,946.1

 
$
1,193.1

Intersegment revenues
 
 
 
 
 
 
 
Motion Pictures
$
2.5

 
$
—

 
$
5.9

 
$
—

Television Production
4.5

 
—

 
15.0

 
—

Media Networks
—

 
—

 
0.3

 
—

 
$
7.0

 
$
—

 
$
21.2

 
$
—

Gross contribution
 
 
 
 
 
 
 
Motion Pictures
$
35.2

 
$
19.5

 
$
149.1

 
$
75.9

Television Production
19.2

 
19.9

 
40.7

 
37.1

Media Networks
141.0

 
(5.5
)
 
276.1

 
(12.4
)
Intersegment eliminations
(0.1
)
 
—

 
(2.0
)
 
—

 
$
195.3

 
$
33.9

 
$
463.9

 
$
100.6

Segment general and administration
 
 
 
 
 
 
 
Motion Pictures
$
26.3

 
$
24.5

 
$
53.2

 
$
49.1

Television Production
10.6

 
8.4

 
19.7

 
16.0

Media Networks
24.5

 
3.2

 
50.2

 
5.9

 
$
61.4

 
$
36.1

 
$
123.1

 
$
71.0

Segment profit (loss)
 
 
 
 
 
 
 
Motion Pictures
$
8.9

 
$
(5.0
)
 
$
95.9

 
$
26.8

Television Production
8.6

 
11.5

 
21.0

 
21.1

Media Networks
116.5

 
(8.7
)
 
225.9

 
(18.3
)
Intersegment eliminations
(0.1
)
 
—

 
(2.0
)
 
—

 
$
133.9

 
$
(2.2
)
 
$
340.8

 
$
29.6



Following the Starz Merger, beginning in the quarter ended December 31, 2016, the Company has revised what it will include and exclude from segment profit (loss), the primary measure used by management to evaluate segment performance. Segment profit (loss) continues to be defined as gross contribution (segment revenues, less segment direct operating and distribution and marketing expense) less segment general and administration expenses. However, segment direct operating expenses, distribution and marketing expenses and general and administrative expenses will exclude share-based compensation, other than annual bonuses granted in stock, and will include annual bonuses paid in cash. All share-based compensation was previously excluded from segment profit, and annual bonuses were previously included in corporate general and administrative expenses. In addition, segment profit will no longer exclude start-up costs of direct to consumer streaming services on SVOD platforms, non-cash imputed interest charge, and backstopped prints and advertising ("P&A") expense. Segment profit will continue to exclude purchase accounting and related adjustments. As a result of the changes to the segments and definition of segment profit, the Company has presented prior period segment data in a manner that conforms to the current period presentation.

The reconciliation of total segment profit to the Company’s income (loss) before income taxes is as follows:
 
 
Three Months Ended
 
Six Months Ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in millions)
Company’s total segment profit
$
133.9

 
$
(2.2
)
 
$
340.8

 
$
29.6

Corporate general and administrative expenses
(25.3
)
 
(21.5
)
 
(50.7
)
 
(42.8
)
Adjusted depreciation and amortization(1)
(9.3
)
 
(3.5
)
 
(19.4
)
 
(8.4
)
Restructuring and other(2)
(3.5
)
 
(10.7
)
 
(14.4
)
 
(18.3
)
Adjusted share-based compensation expense(3)
(23.6
)
 
(14.9
)
 
(47.4
)
 
(28.5
)
Purchase accounting and related adjustments(4)
(41.8
)
 
(5.4
)
 
(88.8
)
 
(11.8
)
Operating income (loss)
30.4

 
(58.2
)
 
120.1

 
(80.2
)
Interest expense
(48.7
)
 
(15.9
)
 
(101.0
)
 
(31.1
)
Interest and other income
2.7

 
1.3

 
5.5

 
2.2

Loss on extinguishment of debt
(6.4
)
 
—

 
(18.0
)
 
—

Equity interests income (loss)
(12.7
)
 
1.9

 
(21.0
)
 
12.7

Gain on sale of equity interest in EPIX
—

 
—

 
201.0

 
—

Income (loss) before income taxes
$
(34.7
)
 
$
(70.9
)
 
$
186.6

 
$
(96.4
)
___________________
(1)
Adjusted depreciation and amortization represents depreciation and amortization as presented on our unaudited condensed consolidated statements of income less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in the acquisition of Starz and Pilgrim Media Group 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,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in millions)
Depreciation and amortization
$
39.3

 
$
4.3

 
$
79.3

 
$
10.0

Less: Amount included in purchase accounting and related adjustments
(30.0
)
 
(0.8
)
 
(59.9
)
 
(1.6
)
Adjusted depreciation and amortization
$
9.3

 
$
3.5

 
$
19.4

 
$
8.4


(2)
Restructuring and other includes restructuring and severance costs, certain transaction related costs, and certain unusual items, when applicable (see Note 13).
(3)
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,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in millions)
Total share-based compensation expense
$
23.6

 
$
24.0

 
$
47.4

 
$
46.2

Less:
 
 
 
 
 
 
 
Bonus related share-based compensation included in segment and corporate general and administrative expense(i)
—

 
(6.7
)
 
—

 
(15.3
)
Amount included in restructuring and other(ii)
—

 
(2.4
)
 
—

 
(2.4
)
Adjusted share-based compensation
$
23.6

 
$
14.9

 
$
47.4

 
$
28.5

(i)Represents immediately vested stock awards granted as part of our annual bonus program issued in lieu of cash bonuses, which are, when granted, included in segment or corporate general and administrative expense.
(ii)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.
(4)
Purchase accounting and related adjustments represent the amortization of non-cash fair value adjustments to certain assets acquired in the acquisition of Starz and Pilgrim Media Group. 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,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in millions)
Purchase accounting and related adjustments:
 
 
 
 
 
 
 
Direct operating
$
10.2

 
$
3.3

 
$
26.0

 
$
7.7

General and administrative expense
1.6

 
1.3

 
2.9

 
2.5

Depreciation and amortization
30.0

 
0.8

 
59.9

 
1.6

 
$
41.8

 
$
5.4

 
$
88.8

 
$
11.8



The following table sets forth revenues by media or product line as broken down by segment for the three and six months ended September 30, 2017 and 2016:
 
Three Months Ended
 
Six Months Ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in millions)
Segment revenues:
 
 
 
 
 
 
 
Motion Pictures
 
 
 
 
 
 
 
Theatrical
$
57.9

 
$
62.0

 
$
108.7

 
$
109.2

Home Entertainment
165.7

 
157.1

 
399.7

 
300.4

Television
74.2

 
69.3

 
131.8

 
122.7

International
79.9

 
168.3

 
202.3

 
282.0

Other
8.0

 
7.3

 
15.5

 
12.0

Total Motion Pictures revenues
$
385.7

 
$
464.0

 
858.0

 
826.3

Television Production
 
 
 
 
 
 
 
Domestic Television
$
134.2

 
$
154.4

 
262.4

 
307.4

International
29.3

 
15.9

 
52.6

 
43.7

Home Entertainment
3.0

 
3.2

 
6.5

 
10.0

Other
2.2

 
1.6

 
3.9

 
5.1

Total Television Production revenues
$
168.7

 
$
175.1

 
325.4

 
366.2

Media Networks
 
 
 
 
 
 
 
Starz Networks
$
358.6

 
$
—

 
701.8

 
—

Content and Other
33.7

 
—

 
79.6

 
—

Streaming Services
1.1

 
0.4

 
2.5

 
0.6

Total Media Networks revenues
$
393.4

 
$
0.4

 
783.9

 
0.6

Intersegment eliminations
(7.0
)
 
—

 
(21.2
)
 
—

Total revenues
$
940.8

 
$
639.5

 
$
1,946.1

 
$
1,193.1




The following table reconciles segment general and administration to the Company's total consolidated general and administration expense:
 
Three Months Ended
 
Six Months Ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in millions)
General and administration
 
 
 
 
 
 
 
Segment general and administrative expenses
$
61.4

 
$
36.1

 
$
123.1

 
$
71.0

Corporate general and administrative expenses
25.3

 
21.5

 
50.7

 
42.8

Share-based compensation expense included in general and administrative expense
23.2

 
14.9

 
46.5

 
28.5

Purchase accounting and related adjustments
1.6

 
1.3

 
3.0

 
2.5

 
$
111.5

 
$
73.8

 
$
223.3

 
$
144.8



The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:
 
 
September 30,
2017
 
March 31,
2017
 
(Amounts in millions)
Assets
 
 
 
Motion Pictures
$
1,702.8

 
$
1,802.3

Television Production
1,138.2

 
1,142.8

Media Networks
5,295.8

 
5,443.9

Other unallocated assets(1)
563.8

 
807.9

 
$
8,700.6

 
$
9,196.9

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