Investments

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



	December 31, 2017		March 31, 2017
	(Amounts in millions)
Equity method investments	$	136.8	$	322.9
Available-for-sale securities	9.2		8.0
Cost method investments	30.6		40.6
	$	176.6	$	371.5

Equity Method Investments:

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



	December 31, 2017
Equity Method Investee	Ownership Percentage	December 31, 2017		March 31, 2017
		(Amounts in millions)
EPIX⁽¹⁾	n/a⁽¹⁾	$	—	$	188.8
Pop	50.0%	96.4		96.8
Other	Various	40.4		37.3
		$	136.8	$	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 and nine months ended December 31, 2017 and 2016 were as follows (income (loss)):



	Three Months Ended						Nine Months Ended
	December 31,						December 31,
Equity Method Investee	2017			2016			2017			2016
	(Amounts in millions)
EPIX	$	—		$	5.3		$	4.0		$	21.3
Pop	(1.4		)	(2.6		)	(3.9		)	(4.6		)
Other	(12.4		)	(4.2		)	(34.9		)	(5.5		)
	$	(13.8	)	$	(1.5	)	$	(34.8	)	$	11.2

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 were 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. 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. The Company 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 nine months ended December 31, 2017. Prior to the sale of its interest in EPIX, the Company had accounted for such interest as an equity method investment.

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 and nine months ended December 31, 2016 and a reconciliation of the net income reported by EPIX to equity interest income recorded by the Company:



	Period from			Three Months Ended			Nine Months Ended
	April 1, 2017 to			Three Months Ended			Nine Months Ended
	May 11, 2017 (date of sale)			December 31, 2016			December 31, 2016
	(Amounts in millions)
Revenues	$	44.8		$	101.5		$	298.3
Expenses:
Operating expenses	32.3			73.2			193.5
Selling, general and administrative expenses	2.4			5.3			18.2
Operating income	10.1			23.0			86.6
Interest and other expense	—			(0.1		)	(0.3		)
Net income	$	10.1		$	22.9		$	86.3
Reconciliation of net income reported by EPIX to equity interest income:
Net income reported by EPIX	$	10.1		$	22.9		$	86.3
Ownership interest in EPIX	31.15		%	31.15		%	31.15		%
The Company's share of net income	3.1			7.1			26.9
Eliminations of the Company’s share of profits on licensing sales to EPIX⁽¹⁾	(0.1		)	(3.7		)	(10.4		)
Realization of the Company’s share of profits on licensing sales to EPIX⁽²⁾	1.0			1.9			4.8
Total equity interest income recorded	$	4.0		$	5.3		$	21.3

_________________________


(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 remained eliminated until realized by EPIX. EPIX initially recorded the license fee for the title as inventory on its balance sheet and amortizes the inventory over the license period. Accordingly, the profit was realized as the inventory on EPIX's books was 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.

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.

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 carrying value of this investment has been reduced to zero as of December 31, 2017.

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 17% 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.

Laugh Out Loud. In March 2016, the Company entered into a partnership with Kevin Hart and Hartbeat Digital to launch a new streaming video service, Laugh Out Loud. The streaming video service launched in August 2017. The new service will serve as the exclusive home for all content created by Kevin Hart outside his theatrical and live touring activities and will include original series starring Kevin Hart. Laugh Out Loud will also showcase content curated by Kevin Hart along with shows featuring social media stars and up and coming comedians. The Company owns a 50% interest in Laugh Out Loud.

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:



	December 31, 2017		March 31, 2017
	(Amounts in millions)
Cost basis	$	2.6	$	2.6
Gross unrealized gain	6.6		5.4
Fair value	$	9.2	$	8.0

Next Games. At December 31, 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. Next Games is traded on the Nasdaq First North Finland marketplace maintained by Nasdaq Helsinki Ltd, and the Company classifies its investment in Next Games within Level 1 of the fair value hierarchy as the valuation inputs are based on quoted prices in active markets (see Note 8).

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.

Impairment of Long-Term Investment and Other Assets:

The Company’s investments consist of (i) investments accounted for using the equity method of accounting, (ii) investments carried at fair value, including available-for-sale securities, and (iii) investments accounted for using the cost method of accounting. The Company regularly reviews its investments for impairment, including when the carrying value of an investment exceeds its market value. If the Company determines 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 that is included in Impairment of long-term investments and other assets. Factors that are considered by the Company 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) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

For investments accounted for using the cost or equity method of accounting, the Company evaluates 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 the Company’s investment.

During the three and nine months ended December 31, 2017, the Company recognized $29.2 million of other-than-temporary impairments on its investments and notes receivable (included in other assets, see Note 18), which were written down to their estimated fair value. The impairment charges are included in the "impairment of long-term investments and other assets" line in the unaudited condensed consolidated statements of income.