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Segment Information | 6 Months Ended
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Sep. 30, 2019
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. The Company has three reportable business segments: (1) Motion Picture, (2) Television Production and (3) Media Networks. Motion Picture. Motion Picture 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. Television Production. 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. Television Production includes the licensing of Starz original series productions to Starz Networks and STARZPLAY International, and the ancillary market distribution of Starz original productions and licensed product. Additionally, the results of operations of 3 Arts Entertainment is included in the Television Production segment from the acquisition date of May 29, 2018 (see Note 2). Media Networks. Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic licensing of premium subscription video programming to distributors, and on a direct-to-consumer basis (ii) STARZPLAY International, which represents revenues primarily from the OTT distribution of the Company's STARZ branded premium subscription video services internationally and (iii) Streaming Services, which represents the Lionsgate legacy start-up direct to consumer streaming services on its SVOD platforms. 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 (including Starz original productions) from the Motion Picture and Television Production segments to the Media Networks segment. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results. Segment information is presented in the table below:
| Three Months Ended |  | Six Months Ended
| September 30, |  | September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Amounts in millions)
Segment revenues |  |  |  |  |  |  |
Motion Picture | $ | 405.8 |  |  | $ | 379.0 |  |  | $ | 803.6 |  |  | $ | 744.3 |
Television Production | 274.0 |  |  | 152.1 |  |  | 553.8 |  |  | 431.5 |
Media Networks | 374.0 |  |  | 377.3 |  |  | 746.4 |  |  | 732.2 |
Intersegment eliminations | (70.3 | ) |  | (7.4 | ) |  | (156.7 | ) |  | (74.4 | )
| $ | 983.5 |  |  | $ | 901.0 |  |  | $ | 1,947.1 |  |  | $ | 1,833.6 |
Intersegment revenues |  |  |  |  |  |  |
Motion Picture | $ | 5.7 |  |  | $ | 2.2 |  |  | $ | 10.1 |  |  | $ | 4.3 |
Television Production | 64.0 |  |  | 5.2 |  |  | 145.4 |  |  | 70.0 |
Media Networks | 0.6 |  |  | — |  |  | 1.2 |  |  | 0.1 |
| $ | 70.3 |  |  | $ | 7.4 |  |  | $ | 156.7 |  |  | $ | 74.4 |
Gross contribution |  |  |  |  |  |  |
Motion Picture | $ | 76.8 |  |  | $ | 38.9 |  |  | $ | 109.7 |  |  | $ | 117.7 |
Television Production | 19.7 |  |  | 20.4 |  |  | 54.4 |  |  | 46.1 |
Media Networks | 124.7 |  |  | 147.4 |  |  | 205.6 |  |  | 261.6 |
Intersegment eliminations | 2.2 |  |  | 9.1 |  |  | 0.5 |  |  | (2.3 | )
| $ | 223.4 |  |  | $ | 215.8 |  |  | $ | 370.2 |  |  | $ | 423.1 |
Segment general and administration |  |  |  |  |  |  |
Motion Picture | $ | 25.8 |  |  | $ | 26.0 |  |  | $ | 51.1 |  |  | $ | 52.8 |
Television Production | 7.1 |  |  | 11.0 |  |  | 16.8 |  |  | 21.5 |
Media Networks | 20.1 |  |  | 24.7 |  |  | 40.4 |  |  | 50.3 |
| $ | 53.0 |  |  | $ | 61.7 |  |  | $ | 108.3 |  |  | $ | 124.6 |
Segment profit |  |  |  |  |  |  |
Motion Picture | $ | 51.0 |  |  | $ | 12.9 |  |  | $ | 58.6 |  |  | $ | 64.9 |
Television Production | 12.6 |  |  | 9.4 |  |  | 37.6 |  |  | 24.6 |
Media Networks | 104.6 |  |  | 122.7 |  |  | 165.2 |  |  | 211.3 |
Intersegment eliminations | 2.2 |  |  | 9.1 |  |  | 0.5 |  |  | (2.3 | )
| $ | 170.4 |  |  | $ | 154.1 |  |  | $ | 261.9 |  |  | $ | 298.5 |
The Company's primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (revenues, less direct operating and distribution and marketing expense) less segment general and administration expenses. Segment profit excludes corporate general and administrative expense, restructuring and other costs, share-based compensation other than annual bonuses granted in immediately vested stock awards when applicable, certain programming and content charges as a result of management changes and associated changes in strategy, when applicable, and purchase accounting and related adjustments, when applicable. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company's management and enables them to understand the fundamental performance of the Company's businesses. Media Networks gross contribution and segment profit for the three and six months ended September 30, 2019 includes a benefit of $43.7 million and $36.7 million, respectively, in direct operating expenses associated with the modification of a content licensing arrangement net of amortization for related changes in content availability and air dates. 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,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Amounts in millions)
Company’s total segment profit | $ | 170.4 |  |  | $ | 154.1 |  |  | $ | 261.9 |  |  | $ | 298.5 |
Corporate general and administrative expenses | (25.4 | ) |  | (25.3 | ) |  | (49.5 | ) |  | (52.8 | )
Adjusted depreciation and amortization(1) | (10.2 | ) |  | (10.0 | ) |  | (21.1 | ) |  | (20.3 | )
Restructuring and other(2) | (7.6 | ) |  | (15.0 | ) |  | (13.1 | ) |  | (25.6 | )
Adjusted share-based compensation expense(3) | (14.5 | ) |  | (15.1 | ) |  | (23.8 | ) |  | (30.2 | )
Purchase accounting and related adjustments(4) | (55.1 | ) |  | (49.6 | ) |  | (100.1 | ) |  | (92.4 | )
Operating income | 57.6 |  |  | 39.1 |  |  | 54.3 |  |  | 77.2 |
Interest expense | (48.0 | ) |  | (55.5 | ) |  | (97.0 | ) |  | (106.8 | )
Shareholder litigation settlements(5) | — |  |  | (114.1 | ) |  | — |  |  | (114.1 | )
Interest and other income | 2.2 |  |  | 3.0 |  |  | 5.0 |  |  | 6.1 |
Other expense | (3.8 | ) |  | — |  |  | (6.1 | ) |  | — |
Loss on investments | (0.4 | ) |  | (36.1 | ) |  | (0.3 | ) |  | (37.0 | )
Equity interests loss | (3.2 | ) |  | (11.7 | ) |  | (11.1 | ) |  | (17.8 | )
Income (loss) before income taxes | $ | 4.4 |  |  | $ | (175.3 | ) |  | $ | (55.2 | ) |  | $ | (192.4 | )
___________________
(1) | Adjusted depreciation and amortization represents depreciation and amortization as presented on our unaudited condensed consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in recent acquisitions 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,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Amounts in millions)
Depreciation and amortization | $ | 50.9 |  |  | $ | 40.8 |  |  | $ | 91.2 |  |  | $ | 81.1 |
Less: Amount included in purchase accounting and related adjustments | (40.7 | ) |  | (30.8 | ) |  | (70.1 | ) |  | (60.8 | )
Adjusted depreciation and amortization | $ | 10.2 |  |  | $ | 10.0 |  |  | $ | 21.1 |  |  | $ | 20.3 |
(2) | Restructuring and other includes restructuring and severance costs, certain transaction and related costs, and certain unusual items, when applicable (see Note 14).
(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,
| 2019 |  | 2018 |  | 2019 |  | 2018
|  |  |  |  | (Amounts in millions)
Total share-based compensation expense | $ | 14.5 |  |  | $ | 15.1 |  |  | $ | 24.1 |  |  | $ | 30.2 |
Less: |  |  |  |  |  |  |
Amount included in restructuring and other(i) | — |  |  | — |  |  | (0.3 | ) |  | — |
Adjusted share-based compensation | $ | 14.5 |  |  | $ | 15.1 |  |  | $ | 23.8 |  |  | $ | 30.2 |
(i) | 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 primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions. These adjustments include the accretion of the noncontrolling interest discount related to Pilgrim Media Group and 3 Arts Entertainment, the amortization of the recoupable portion of the purchase price and the expense associated with the earned distributions related to 3 Arts Entertainment, all of which are
accounted for as compensation and are included in general and administrative expense. 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,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Amounts in millions)
Purchase accounting and related adjustments: |  |  |  |  |  |  |
Direct operating | $ | 1.0 |  |  | $ | 5.6 |  |  | $ | 2.5 |  |  | $ | 13.6 |
General and administrative expense | 13.4 |  |  | 13.2 |  |  | 27.5 |  |  | 18.0 |
Depreciation and amortization | 40.7 |  |  | 30.8 |  |  | 70.1 |  |  | 60.8 |
| $ | 55.1 |  |  | $ | 49.6 |  |  | $ | 100.1 |  |  | $ | 92.4 |
(5) | Shareholder litigation settlements of $114.1 million in the three and six months ended September 30, 2018 includes the following: (i) $54.8 million for the net expense recorded for the settlement of the Fiduciary Litigation (representing the settlement amount of $92.5 million, net of aggregate insurance reimbursement of $37.8 million (see Note 16) and (ii) $59.3 million related to the Appraisal Litigation, representing the amount by which the settlement amount of approximately $964 million exceeded the previously accrued (at date of acquisition) dissenting shareholders' liability plus interest through the date agreed in the settlement.
See Note 10 for revenues by media or product line as broken down by segment for the three and six months ended September 30, 2019 and 2018. The following table reconciles segment general and administration expense to the Company's total consolidated general and administration expense:
| Three Months Ended |  | Six Months Ended
| September 30, |  | September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Amounts in millions)
General and administration |  |  |  |  |  |  |
Segment general and administrative expenses | $ | 53.0 |  |  | $ | 61.7 |  |  | $ | 108.3 |  |  | $ | 124.6 |
Corporate general and administrative expenses | 25.4 |  |  | 25.3 |  |  | 49.5 |  |  | 52.8 |
Share-based compensation expense included in general and administrative expense | 14.1 |  |  | 14.8 |  |  | 23.2 |  |  | 29.7 |
Purchase accounting and related adjustments | 13.4 |  |  | 13.2 |  |  | 27.5 |  |  | 18.0 |
| $ | 105.9 |  |  | $ | 115.0 |  |  | $ | 208.5 |  |  | $ | 225.1 |
The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:
| September 30, 2019 |  | March 31, 2019
| (Amounts in millions)
Assets |  |  |
Motion Picture | $ | 1,596.6 |  |  | $ | 1,694.5 |
Television Production | 1,441.2 |  |  | 1,394.2 |
Media Networks | 4,666.5 |  |  | 4,850.3 |
Other unallocated assets(1) | 522.1 |  |  | 469.9 |
| $ | 8,226.4 |  |  | $ | 8,408.9 |
_____________________ (1) Other unallocated assets primarily consist of cash, other assets and investments.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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