Restructuring and Other (Tables)

3 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

During the three months ended June 30, 2023 and 2022, the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense in the consolidated statements of operations and are described below. The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the three months ended June 30, 2023 and 2022:


	Three Months Ended
	June 30,
		2023		2022
		(Amounts in millions)
Restructuring and other:
Content impairments(1)		$	28.0	$	—
Severance(2)
Cash		4.3		2.8
Accelerated vesting on equity awards (see Note 10)		0.5		0.6
Total severance costs		4.8		3.4
COVID-19 related charges included in restructuring and other		—		0.1
Transaction and other costs (benefits)(3)		(0.8)		4.5
Total Restructuring and Other		32.0		8.0

Other unusual charges not included in restructuring and other or the Company's operating segments:


COVID-19 related charges (benefit) included in direct operating expense(4)		0.2		(1.0)


Total restructuring and other and other unusual charges not included in restructuring and other		$	32.2	$	7.0

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(1)Media Networks Restructuring: In fiscal 2023, the Company began a plan to restructure its LIONSGATE+ business, which included exiting the business in seven international territories (France, Germany, Italy, Spain, Benelux, the Nordics and Japan), and identifying additional cost-saving initiatives. This plan included a strategic review of content performance across Starz's domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value. As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the three months ended June 30, 2023 of $28.0 million. The Company has incurred impairment charges from the inception of the plan through June 30, 2023 amounting to $407.3 million.

Under the current restructuring plan, the Company estimates it will incur additional charges ranging from approximately $5 million to $30 million related to certain contractual content commitments or programming content impairment charges, among other items, related to territories exited or to be exited. The net future cash outlay is estimated to range from approximately $60 million to $90 million, which includes contractual commitments on content in territories being exited or to be exited, and payments on the remaining amounts payable for content previously written down.

As the Company continues to evaluate the Media Networks business and its current restructuring plan in relation to the current micro and macroeconomic environment and the announced plan to separate the Company's Starz business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments), including further strategic review of content performance and its strategy on a territory-by-territory basis, the Company may decide to expand its restructuring plan and exit additional territories or remove certain content off its platform in the future. In July 2023, in connection with a modification to shorten a long-term distribution contract, the Company decided to shut down the LIONSGATE+ service in Latin America. While the modified contract covers the cost of the content during the shutdown period, there may be additional charges for remaining contractual commitments when the service is completely shut down in Latin America, which is expected toward the end of calendar 2023. The Company may incur additional content impairment and other restructuring charges beyond the estimates above.

(2)Severance costs were primarily related to restructuring activities and other cost-saving initiatives.

(3)Transaction and other costs in the three months ended June 30, 2023 and 2022 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs and benefits associated with certain legal matters. In the three months ended June 30, 2023, transaction and other costs also includes a benefit of $3.8 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the LIONSGATE+ international restructuring.

(4)Amounts include incremental costs incurred due to circumstances associated with the COVID-19 global pandemic, net of immaterial insurance recoveries in the three months ended June 30, 2023 (three months ended June 30, 2022 - insurance recoveries of $1.0 million). In the three months ended June 30, 2022, insurance recoveries exceeded the incremental costs expensed in the period, resulting in a net benefit included in direct operating expense. The Company is in the process of seeking additional insurance recovery for some of these costs. The ultimate amount of insurance recovery cannot be estimated at this time.

Changes in the restructuring and other severance liability were as follows for the three months ended June 30, 2023 and 2022:


	Three Months Ended
	June 30,
	2023		2022
	(Amounts in millions)
Severance liability
Beginning balance	$	8.7	$	1.5
Accruals	4.3		2.8
Severance payments	(8.2)		(2.0)

Ending balance(1)	$	4.8	$	2.3

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(1)As of June 30, 2023, the remaining severance liability of approximately $4.8 million is expected to be paid in the next 12 months.