Lionsgate Studios Corp. (LGFA) Earnings Call Transcript & Summary

And get started. We are very fortunate to have James Marsh of Lions Gate with us here today. Thank you for joining.

Great. Thanks for having me, Jason.

Yes. And James is just coming on an interesting format. Of course, we do it this way to try and encourage you all to ask questions. So if you do have any questions, just raise your hand and we'd love to have you ask a question.

So maybe just to start. Maybe it seems like 2019 is a pretty eventful year for Lionsgate. So maybe if we can just start off with you giving us an overview of what you see as the key events, that would be a good place to start.

Sure. So clearly, a busy year for Lionsgate. We like to joke there's never a dull day there. But I think maybe the best way to frame this out might be to just look at some of the individual segments, we could talk about the various highlights of each of those businesses. I think if we start with our Media Networks business that's anchored by Starz, it's our largest business segment, tends to be 60%-plus of our total segment profits. I think Starz had a pretty good year, all things considered. We concluded 2 different distribution deals. We wrapped up the year with 27 -- or I'd say wrapped up our last quarter at 27 million global subs, up 2 million over last year. We're on track to hit 6 million direct-to-consumer subs domestically. What else? Yes, we've pursued our international growth strategy. We've highlighted -- I'm sure we'll talk a little bit about this, but we highlighted all the framework there for that business. And that's underway. We're in nearly 50 markets globally now. On the Motion Picture side, that tends to be about 25%-plus of our segment profits typically. It's been a great year. And we're looking at 20%-plus growth for the year for segment profits, really been anchored by -- or I guess book ended by 2 different films. We have the John Wick Chapter 3 franchise early in the fiscal year. That substantially outperformed our expectations coming in fiscal '22. And then for the end of the year, Knives Out, which is still in theaters right now, it's been playing extremely well. So that's outperformed nicely as well. So it's always good to have those bigger films that are outperforming to help patch up any underperformance that you've had at other films. And then on the Television side, that's our smallest segment, 10%-plus in profits typically. I think that year, I think the highlight there has been replacing some big pieces of property like Orange is the New Black on Netflix. I think there was a lot of concerns about that. And we've responded this year with probably the biggest development slate we've had in quite some time. So I think, overall, it was a busy year, but I think we've made a lot of progress.

Okay. That's a great overview. I can't remember a time in my time following the media where there has been more sort of just structural change, right? CBS-Viacom, Disney-FOX, Time Warner sale to AT&T, Disney DTC pivot, continued heavy investment by Netflix. AVOD pivots by Comcast with Peacock and Pluto over at Viacom-CBS. HBO Max by AT&T. I mean there's just a ton that's going on, and they all seem to point in sort of the same direction, which is more scale, more direct-to-consumer. And so in that context, there's just a few companies that haven't done that much M&A. I mean I know you guys bought Starz. But where does that -- as you sort of survey the landscape, what does that mean for you guys strategically?

Sure. Good question. And there's a lot packed into that. So maybe the easiest way to do it would be to parse it into 2 different kind of topics. I think the first group of acquisition thing, basically, that's a consolidation in the space. And I think you're seeing traditional media companies want to get bigger to compete against the new mega-scale entrants, right? So I think they're worried about the pay TV ecosystem broadly. They all benefit pretty substantially from that business. They're worried about that growth profile and how that business might change. And I think getting more scale and helping to drive a little bit of EBITDA growth through cost cutting is an important thing. So where do we fit in there? I would say, obviously, we acquired Starz at $4.4 billion about 3 years ago. That was our step to get bigger, to get more scale. On the flip side of that, we've got a lot of very interesting assets, and we're frequently contacted about helping somebody else achieve the scale that they desire. So I think we're in the midst of that. Obviously, with our leverage situation, it's going to slow us down on the acquisition front these days. But I think we're right in the middle of that. The second theme you seem to be talking about is really just the evolution of the media and entertainment business model, and it's moving away from traditional wholesale licensing model where Lionsgate would make a film and basically give it to somebody else to monetize or license Starz to a Comcast and let them handle what. The model is changing and it is becoming more integrated. It's an aligned model behind a direct-to-consumer facing process. We've got -- and I think more alignment of TV studios, film studios behind them. It's a data-driven subscription-based model, and that seems to be the model that people are aspiring to achieve. I think we're attempting to do that. And we've been, I think, pragmatically aligning behind Starz. We're doing more TV shows for Starz. We've launched Starz internationally as well as domestically. I mentioned the 6 million direct-to-consumer subs we expect by the end of the year. So I think we're trying to do that as well. I think we've got other constraints. Capital is one of them. I think how people value our business is another one where lots of investment can be painful for our stock performance because our investors tend to focus a lot on EBITDA. But yes, I think we're in the mix of both of those things. So it's been an exciting time to be in the business. And we feel we're taking a lot of the right steps.

So maybe we can talk about Starz a little bit more. A lot of these services, even on a cash basis, like Netflix, and certainly Disney are sort of losing money, if you just sort of isolate that DTC part. The Street seems to be quite willing to sort of bet that in the -- there is a pot of gold at the end of the rainbow, this is all going to work out fine and the sort of encouraging implicitly management teams to make a more aggressive push, but there is that tension, right? Of about you said investors are very nervous about -- are very focused on EBITDA. So how does the -- how do the cadence of losses -- what do they sort of look like as you get these more and more direct-to-consumer subs either in the U.S. or international, if you have a comment on that phasing?

Sure. Yes. So they're 2 different topics. I think on the direct-to-consumer domestically, I think the challenge in isolating the DTC business is you run into this allocation problem with content because we have a pretty substantial traditional MVPD business that happens to have a direct-to-consumer offering. So I think if you want to talk about tracking losses, it becomes an allocation issue to some degree. So if we want to look at the top line, it might make it a little simpler. If you just look at ARPU for traditional MVPDs, for us, our average ARPU is probably $5 for Starz. Direct-to-consumer is probably $6.50, $6.60. And if you just look at the traditional MVPD ARPU, it's probably $4.50. So we have like a $2 spread -- positive spread on ARPU for direct-to-consumer. So the only real incremental costs we have probably are marketing. I don't think it's big enough to offset that. So we think the unit economics for the direct-to-consumer business will be more positive. And it's been one of the ways that we've been able to grow our business, even though our subs haven't grown that much domestically because we've had that mix shift moving from MVPD to DTC. On the international side, it's a lot easier to talk about that cadence because it's a stand-alone business. It's starting from 0. And we have provided a substantial amount of guidance on that business. I guess it was back in May of last year that we framed out some sub expectations for that business. We said that we expected to get 15 million to 25 million of subs over the next 5 years. We said that we expected operating losses for that international subsegment to approach $150 million this year. We said we expected breakeven by fiscal '23. So you can almost draw a dotted line there in a linear way. And it's $50 million less of losses each year if it were linear. I suspect that it's probably more exponential. But I think it gives you a sense for what that shape looks like. We're still fairly early on, on the international strategy. We've rolled out in 50 markets, as I mentioned, nearly 50 markets. We just launched with Apple in November. So I think it's still very early days, but we're tracking it very, very closely. We want to make sure that our internal expectations and budgets look like the actual results. And we're looking for deviations there. It's one thing to put together a 5-year plan. It's another thing to execute on that plan. I think there's been a lot of pressure on us to scrutinize that international investment with all the new players coming in and with the leverage that we have on the company at present. So I think it's something we're monitoring very carefully. It's still early days. We think there's a big opportunity for us. If we can execute on the plan in front of us, we think the returns could be very substantial. And we think we can make a lot of headway before a lot of these other big players really kind of get it together in the international markets.

All right. That's helpful. What about -- not on the direct-to-consumer side but just the traditional sort of premium channel and the Comcast dispute. Can you sort of get us up to speed on what happened? It felt like there was some news flow that happened towards the tail end of the year.

Yes. Sure. So this is my favorite topic. So anyway, typically, we don't spend a lot of time talking about individual MVPD relationships and deals. This was one that was kind of thrust upon us. And if you recall back in August when there was a trade press report about us having a dispute with them. But basically, in a nutshell, we had a fixed deal with Comcast. Analysts had estimated that it was $225 million or $250 million of revenue. And the way that article was kind of written at the time, it suggested that we might just be "kicked off their platform." And we've never been kicked off a platform before. We'd always found a path to negotiating with our MVPD partners. And it's just hard to put those things to rest once they start. And unfortunately, this was in August, and the deal wasn't up until December, so I've been talking about it for a long time. But not surprisingly, at the end of the year, we resolved our deal with them. That deal will transition from a fixed payment deal to an a la carte deal. I think that's becoming more popular these days. Roughly 60% of our Starz revenues today come from a la carte, so it's not an unusual business model for us. We'll probably be approaching 80% of our business coming from a la carte at Starz by the end of fiscal '21. So it's been a process that's been underway for a while. I think 40% of our revenues were from a la carte when we bought Starz 3 years ago and will be, I guess, at 80% next year. So it's been a transition that's been underway for a while. We're not uncomfortable with it. What we were looking for is just some type of reasonable transition as we move from that fixed world to an a la carte world. So -- and the devil is in the details there. But we did sign a multifaceted, very long-term deal with Comcast. It includes a transition path to a la carte. It includes some programming that's going to be licensed on STARZPLAY International's platform abroad as well as some Lionsgate content showing up on Peacock here in the U.S.

Sorry. Some Comcast content that's going to be on STARZPLAY International?

Oh, pardon me, it's going to be NBCUniversal content on STARZPLAY International abroad. And then domestically, on Peacock, there'll be some Lionsgate content available. So I guess it is a multifaceted deal. We're glad to have it in the rearview mirror. It was creating a lot of, I think, pressure on the stock. I think there's a lot of misunderstandings about what it meant for Lionsgate, in particular, but also for the industry. There's just so many dustups between distributors and networks these days. And I think historically, the premium platforms had been immune from some of that turmoil. And it's just -- it's a tough thing to talk to because we don't typically discuss a lot of the details. And unfortunately, it's hard to get people comfortable unless they know more of the details.

Well, at least it's behind you now.

It is behind us.

That's good. The way your stock -- I mean just qualitatively, when you sort of took all that investor inbound on this dispute and saw the stock come under some pressure and then you sort of resolved it, did the reflexive rebound make sense to you in terms of the stock, or you felt like you didn't get enough credit and there's still some confusion out there in the marketplace today?

I think the market is digesting the news. And I think if you look at consensus numbers, they've come down a little bit to reflect the new deal. And I think that's fair. But we've also removed a lot of uncertainty. And I think net-net, that's been positive for the stock. And you've seen the stock act better. And I think it has a knock-on effect as well. We'll probably get into the capital raise process, and we've talked about that in the past. It's just difficult to do that with big looming uncertainty like that renewal hanging over your head. So with that in the rearview mirror, I think it provides a path to move forward.

And if you -- when you say you expect 80% to be a la carte by the end of fiscal '21, does that almost imply like there's not a lot of other sort of distributors, where there's this tension between the bundle deal and the a la carte deal, or most of those are sort of behind you and it could be smoother sailing going forward? Or is that the wrong impression, there's one more potential boogeyman out there for investors?

I think that's a fair interpretation. I think the remaining fixed deals are relatively smaller players. We've already made the transition underway. Our direct-to-consumer business is getting bigger and bigger. So that gives us a little bit of flexibility when you get into -- if you can go direct, it's a nice threat to have. I don't know if we necessarily want to burn that bridge with a partner, but it's a good negotiating course to have, I think.

Yes. So some of the press reports, I think it was last year, were talking about potentially Starz seeking outside capital or maybe even pursuing an outright sale. Is that something that you think are sort of just fake news, as we say today? Or do you think there's some credence to those press reports?

Yes. So this has been a somewhat convoluted topic, I think, for the company, for a variety of reasons. Some of just the way that we've talked about it and I think some just because of the setup. But maybe the easiest way to understand the whole process is to look at through a lens where we've been really trying to unlock the value of Starz. I think that's an undervalued asset, it's a big asset for us, and we feel like it's been misunderstood in the market. And two, we feel like we've gotten a little bit too much leverage and we'd like to deleverage more quickly than we can organically. So that's been a message that we've had out there in the market. And I think you could talk -- a lot of those things that you just mentioned, potentially selling Starz to CBS, there was a rumor about that back in May, and there's been talk of STARZPLAY International capital raise. They sound like very different things. People will say, "Are you selling Starz? Are you investing more in Starz?" It's confusing. And I think if you look through the lens that we're trying to unlock more value at Starz, but we're also trying to delever more quickly, those fit through that lens. Selling Starz to CBS would unlock the value of Starz. Obviously, permanently, so a little bit differently, but it would allow massive deleveraging. We'd go from $2.7 billion of net debt to, whatever, $2 billion-plus of cash. So that would unlock the value and delever. And I think that STARZPLAY International would as well. So I think what we've tried to clarify with people is that there's multiple paths that we've been exploring to unlock value at Starz and to delever more quickly. There was an article about potentially working with us back in the Wall Street Journal, I think it was in October. There's been the STARZPLAY International announcement that's been publicly discussed, and obviously, the rumors with CBS being interested in Starz. So there's been a lot going on, on that front. But I think if you look through it through that lens, it makes more sense.

Okay. That's helpful. Can you remind us about the appraisal rights related to Starz and when are these claims due? How much has been paid so far? All the key things everyone cares about.

Sure. The appraisal rights. This is my second favorite topic after Comcast. So the appraisal rights, just to get everybody onto the same page, it's basically kind of unusual type of class action lawsuit. Investors, I use that word loosely, can elect not to tender their shares in a sale process and use the Delaware Chancery Court to reappraise that asset, which sounds reasonable enough, right? And certainly, in certain instances, you could see why that would be helpful. But the mechanics of it are they don't tender the shares, they take that consideration. Delaware Chancery Court requires you to accrue above market interest rate on that liability for some period of time and you wait for a court date. So you basically turn that into a high-yield bond and you wait around for 2 years until you get your court date. And not surprisingly, you settle. And we have basically $900 million of consideration that was not tendered in the original Starz acquisition. We accrued an additional $100 million of interest waiting for a court date. And I think we paid them $49 million to go away. So that $1 billion liability had been sitting on our balance sheet as a contingent liability, accruing interest -- noncash interest, and then basically moved on balance sheet a year ago, we drew down our revolver to pay for it and then termed that out. But I think there are a couple of things that are noteworthy there. I think, one, we ended up taking on more debt than we originally anticipated because if the dissenters would have taken the original deal, would have been half stock and half cash, so we ended up having to take on more debt. And it was on cost of capital, right? It was basically twice the amount of interest expense that we were paying on our current debt. The other nuance to it was that it was basically looming out, there is a contingent liability for some period of time. The credit agencies were calculating -- the sell-side analysts are generally aware of it. But once we drew down that revolver...

It became...

There was a lot more attention on our balance sheet and on our leverage because it went into the leverage calculation. It didn't go into everybody's leverage calculation previously. So that was a year ago. If you recall back then, the market was a little bit volatile. People are worried about the economy. People are worried about rates. So it started putting some pressure on the stock last year. It's in the rearview mirror now. Like I said, we termed it out, but we just -- we're left with a balance sheet that was more levered than originally anticipated. And we've been attempting to find a path to delever more quickly than we can organically. We generate substantial amounts of free cash flow. So we've got to naturally pay down debt, but that's been a priority for the company.

So where does your leverage sit today?

So at the end -- or the beginning of this fiscal year, we were at 5x leverage. We had stated that we aspired to get that to 4x by the end of the year. Embedded in that deleveraging was a capital raise, and we would have expected that capital raise to take place before the end of the fiscal year. We clarified that and said we didn't need to do a capital raise and we could still deleverage substantially even without the capital raise probably to the mid-4s. Now this was all prior to the Comcast discussion. And we haven't really updated that language since the Comcast news. On our last call, we didn't talk specifically about leverage, which obviously includes both debt as well as an EBITDA number because we would have been implying an EBITDA guide. But we did say that we expected to pay down debt. So I expect us to update that at some stage, but the reconciling item there would be Comcast. The other point I would make on that is the headline leverage is kind of one thing, pull up your Bloomberg Terminal and you figure out the debt pretty easily just from a few numbers. But I would differentiate that from the covenants that we have that underline our debt. And those are very different. It's a different numerator and it's a different denominator. And it tells a very different story. So I think if you ran through that math, first, it's net first lien debt. So it's a lower debt number. It doesn't include our bonds. And then the adjusted EBITDA for covenant purposes has a lot of add-backs to it. So that number gets a lot bigger. So a smaller debt number with a bigger adjusted covenant EBITDA number, you end up with a 2.9, I think, leverage number there. I think our covenants allow us to go to 4.75 until the end of the year. And then I think it steps down to 4.5. So we're not really at risk of tripping any covenants on that side. And it just -- it tells a different story. I'm not trying to say that we're not levered, but I don't think there's a lot of risk that we're going to be tripping covenants anytime soon.

Okay. Maybe we can shift over to the film studio. You gave some early color at the very beginning of our conversation. But what sort of financial targets do you guys have on the film studio side? And how do you feel about those? Where do you sit today?

Yes. Sure. So we gave guidance prior to the Comcast situation, but we had guidance outstanding. And I think for the company as a whole, we didn't give individual segment guidance. But analysts were basically expecting us to get to $160 million to $165 million of segment profits for fiscal '20. And that was a pretty big jump from the prior year. I think it's like a 25% increase in profits. And I think there was a lot of skepticism about that generally. We've had a good year. We feel pretty good about those numbers as it stands today. The Knives Out performance that we talked about, I think, has given us confidence that, that number is doable. So in a market where I think people are generally kind of nervous about the long-term secular trends of the movie business and they're worried about the impact of Disney taking share, Disney and FOX dominating the market, I think there's just been a lot of negative themes around the business. To have 25% growth feels pretty good. So we haven't provided any updated guidance for next year, but we've got a new management team in place there. I think there were some concerns that, that might not be the right management team. And I think they've really performed well here this year, so we feel really good about that business.

What about windowing. It seems like we had AMC in here the other day and we're talking about how the window has compressed a fair amount over the last 10 years. Maybe modest implications in terms of box office attendees, I mean a little bit? But given the quantum of the reduction in the window, it doesn't seem like the attendance has been that bad. But at the same time, I think you're right, consumers are looking at sort of this Disney+ and sort of how easy now it would be in this direct-to-consumer world to just sort of just cut out the exhibitors altogether. I think Disney, for their part, they've been very public that they like the exhibitor window and like -- they haven't said that they're not going to compress the window, but they like that mode of distribution by going through the theaters. Have you guys sort of said anything overtly about how you think about the exhibitors in terms of -- in windowing? Do you expect a lot of change? No change? Little change?

I mean I think if you look at it over time, like you said, there's been a kind of an erosion in the gap, right? And I think that's been a long-term trend. There are a lot of players that kind of want to compress that window. And I think we're very comfortable with the current model. We've got, we think, excellent partners on the distribution side, and we have great relationships with them. I think what we're careful about is we want to deliver content the way consumers want it. And if consumers demonstrate that they want to get it earlier and pay a premium for it, I think we'd be willing to explore that.

You're talking about more like PVOD.

Yes. Is that what we're talking about? Are we talking about...

Well, no. I don't know anything. I mean, I don't know, any way you want to answer the question.

Okay. I misunderstood.

No, it's fine.

On the PVOD side, I would say that I don't think we're planning anything on that front. We're going to work with our partners to find a path forward. And if consumers want that, we'll explore that process. But I suspect it would be a win-win. When I've run the numbers on it before, certainly, with the premium on the premium VOD, it covers a lot of potential errors in that process. So what specific windowing are you talking about because I'll chime in on that as well?

Well, I was just -- I think a lot of investors sort of -- I'll just use Disney as an example, right? They sort of say, "Okay, Disney+ is a good strategic move for Disney." A lot of consumers have gone and used the app and sort of said, there's not a lot that's new on there, Mandalorian, maybe a few other things, right? And so they just imagine that it's not going to be too far in the future before Disney just sort of circumvents the theatrical window and just starts dumping new movies right into the app, right? So I sort of think of that as a little bit different than PVOD, which I feel like was a hotter topic maybe 2 years ago.

Yes. It's usually a hot topic in April in Vegas at CinemaCon. But on the windowing side for direct-to-consumer, I don't see any major changes there. I mean we've got output deals in place. We've got a Lionsgate output deal in place with Hulu. And I think that wraps up at the end of '21. We've got the Summit label with HBO. And then Starz is actually utilizing the facility output deals. So all those come up for renewal around the same time. That would give us a lot more flexibility, I think, to do some of the things that you're talking about. But I think in the interim, licensing agreements behind those output deals are going to limit our ability to do that. There's still stuff that we can do on Starz with our -- we've got another group of film production assets that we call our Tier 2 or segment 2. They're more platform releases. Those typically are not included in output deals, so we might have more flexibility on that front. I know Starz has been working with our motion picture group on that front to find innovative ways to work together. I don't view them as needle movers. They're probably more experimental.

Okay. Do those types of titles go through the theatrical window today?

Sometimes in a very limited ways. So just to walk back a little bit, we typically do 12 to 15 wide-release theatricals. Those are the films that analysts and investors ask me about. There's another 30-plus films that we'll do. They might be very limited release, they might be 500 screens, they might be directed to digital. Now these are all kind of direct-to-DVD types of films, right? They tend to be low budget. They're very profitable and very consistently profitable. We don't make a lot of money on individual films, but they tend to be pretty predictable. So we like the business. It might be a Spanish language title in the U.S. So I said 500 theaters or so might release them. So they're not films that are on the tip of your tongue, but it's been a nice business for us. Those are the ones that I think are more likely to end up on the Starz platform, maybe doing something innovative there because they might not be a part of an output deal that would restrict our ability to license them.

Okay. You talked about the next John Wick coming out in 2022. The other one that I know used to garner a lot of attention years ago was Hunger Games. When does the next round of Hunger Games come out, or have you said anything on that front?

So the new Hunger Games buzz started a while back when, I think, Scholastic announced that the Hunger Games sequel book or prequel book will be coming out in May. So we're working with them now to pull that together. It's been super secretive. We got an executive reading the book in a lawyer's office and he's not allowed to discuss that. So it's top secret, but we're really excited about that. That was a very powerful franchise for us for a long time. It fits very well at Lionsgate. I'd also point out that we made close to $1 billion on those 4 films on a film ultimate basis. So it has a place in my -- near dear in my heart as well. But I think we're excited about it. That fiscal '22 slate, that film wouldn't be coming out anytime soon. The book's coming out in May. Best-case scenario would be fiscal '22 for us. But if we had a fiscal '22 slate that had a John Wick 4, a Hunger Games prequel, potentially that Kingkiller Chronicle IP as well, that's a much more muscular slate than the Motion Picture group has had for quite some time. We've been doing it the old-fashioned way without a lot of sequels and a lot of -- not a lot of pre-existing IP, and that would definitely help. So if you just go back and look at how much money we made on those films at the time, if we made anything even close to them, it would be a very positive story for the Motion Picture group.

So can I ask you a high level, just opinion question? I think everyone in this room sort of knows, just looking at the box office data, that there's no doubt a profound shift towards IP-based films, which is very different than when I was a kid, right? I mean it's just -- it's totally changed. And so we all know it's true, but it's not obvious to me why it's occurred. Like in other words, I don't know if it's sort of big media companies deciding we want to sell plush toys and pajamas and have rides on our theme park, and so we're just going to sort of force this to happen. Or if there was something sort of almost underlying and organic that was occurring in the culture that sort of made it happen and it's just the company is capitalizing on that trend, right? And so as you sort of think about the way Lionsgate used to make films and the success of some of these platforms or some of these pieces of IP like Hunger Games, what's your view of that? Is this -- is the world just really changed organically? Or is this more what Hollywood cranks out and promote?

It's an interesting question. I bet there's a lot more pre-existing IP in olden times than you think. It probably all came from books, right? But I think if you recall, a lot of the popular films had a book in advance of them. So I don't think it's a new concept. I think from a business standpoint, I think it's about derisking the model. And if you know that there's a large base of fans out there, they like the book, they're engaged in the book, you know what the demos are, you know how to reach them, I think there are a lot of advantages. If you think about that, the movie business just very broadly, it's a spec business. So you haven't sold a ticket yet and you could spend $50 million to $100 million to produce it, another $50 million to market it, and you haven't sold a ticket yet, so it's inherently risky. Because of it, we take a lot of steps to derisk that process. If you can kind of compare that to the...

In terms of the financing side, is that what you mean...

Yes. The financing side, and just structurally with we want to find -- you think about the Hunger Games, the Hunger Games had the advantage of selling lots of books, so we knew there was an installed fan base out there. It was a series of books, which is even better because once you know what the first movie is going to do, it's easy to extrapolate out what the next films will do. It was the right demo. It was younger audiences. They tend to over-index in movies. They're moviegoers. And I think just from like a casting standpoint, too, these are young actors and actresses. They're not that expensive yet. Jennifer Lawrence got very expensive at the end, but in the beginning, she probably wasn't that expensive. So there are a lot of elements to it that I think the business people like about it. I think there's also just secular concerns that you have to be worried about. I think creating messaging on ad platforms today is probably a little bit harder. If you had that pre-existing IP and people are engaged with it maybe on social media throughout the year and you're just basically activating those audiences, it's probably a little easier. 10 years ago, it was probably easy to buy a lot of 30-second spots on Thursday night to drive audiences. Now if people are using DVRs and they're watching it 2 weeks later or they're watching it on a platform that doesn't have ads, it might be harder to get that messaging out. So if you have some pre-existing IP, I think it also aids you on the marketing side.

That makes sense. Any questions? All right. I'm going to ask one last one. Anything that you want to say that's interesting on the television side of your business as we wrap up here?

Sure. I think there are a lot of positive things happening on the TV side at Lionsgate. As I mentioned, the development slate looks great and kind of hitting on all cylinders there. I think we're doing a lot on the reality side with our Pilgrim group. We've got a lot of dramas out there. We just had a show last night on NBC, Zoey's Extraordinary Playlist, that we're really excited about. But I think, overall, that business has been doing quite well. They're doing more with Starz. So that's become a big new customer for our TV group. And Kevin Beggs is working hard with the folks at Starz to push that forward. But I think, overall, that business has been doing well. The evolution of the market is changing, who we're doing business with. And I think it's shifting more towards some of those new entrants that are coming into the market. And I think they put pressure on some of the traditional cable networks that might be under pressure to not spend too much on programming because they're worried about the top line. So I think there's been some internal shifts there. But overall, I think the business seems really well positioned.

All right. That's great. Well, thank you very much for your time. That was super informative.

Thanks. I appreciate it.

Yes. Absolutely. Thank you, James.