Lionsgate Studios (NASDAQ:LION) released fourth-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
Lionsgate Studios reported a fiscal fourth quarter revenue of $907 million, with adjusted OIBDA reaching a 12-year high of $165 million, up 17% year-over-year.
The company completed the separation of Lionsgate and Starz, resulting in two standalone public companies, which has been positively received by the market.
Future outlook includes anticipated growth in fiscal 2027 and 2028, with a strong content pipeline featuring branded, repeatable intellectual properties.
Operational highlights include the success of ‘The Housemaid’ and ‘Michael,’ as well as upcoming productions like ‘The Housemaid’s Secret’ and a new ‘Hunger Games’ installment.
Management emphasized the strategic use of AI to enhance creativity and efficiency and noted a strong cash flow and improved leverage with net debt at approximately $1.6 billion.
Full Transcript
OPERATOR
Good afternoon and welcome to the Lionsgate Studios fourth quarter 2026 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Nilei Shah, Head of Investor Relations. Please go ahead.
Nilei Shah (Head of Investor Relations)
Good afternoon. Thank you for joining us for the Lionsgate Studios Corporation’s fiscal 2026 fourth quarter conference call. We’ll begin with opening remarks from our CEO John Feltheimer, followed by remarks from our CFO Jimmy Barge. After their remarks, we’ll open the call for questions. Also joining us on the call today are Vice Chairman Michael Burns, COO Brian Goldsmith, Chairman of the TV Group Kevin Beggs, Chairman of the Motion Picture Group Adam Fogelson, Chief Revenue Officer Jim Packer and Senior Advisor to the Office of the CEO at Lionsgate and Co CEO of 3 Arts, Brian Weinstein. The matters discussed on the call also include forward looking statements including those regarding the performance of future fiscal years. Such statements are subject to a number of risks and uncertainties. Actual results could differ materially and adversely from those described in the forward looking statements as a result of various factors. This includes the risk factors set forth in our public filings for Lionsgate Studios Corp. The company undertakes no obligation to publicly release the result of any revisions to these forward looking statements that may be made to reflect any future events or circumstances. I’ll now turn the call over to John.
John Feltheimer (Chief Executive Officer)
Thank you Nilay and good afternoon everyone. We just reported a quarter that is indicative of our earnings power, paving the way for outsized growth in fiscal 27 and 28. Since this is our fiscal year end call, I’m going to take you through some of the highlights during the year. Last May we completed the separation of Lionsgate and Starz into two stand alone public companies, collapsing our dual share structure into a single class of stock. The market’s response confirms that a focused content driven Lionsgate is the right structure for unlocking value. We’ve put together one of the strongest content pipelines we’ve ever had. Over the next two to three years, over half of our film, television and live entertainment slates will be comprised of branded, repeatable intellectual properties that we own or control. We secured renewals for 12 of our 13 scripted series, setting the stage for our television slate to nearly double the number of episodic deliveries from fiscal 26 to fiscal 27. We reported our third consecutive quarter of $1 billion trailing 12 month library revenue, creating valuable consistency in a constantly changing operating environment. We leaned into AI with a strategy designed to make technology a valuable part of the creative process and a driver of quality and efficiency across every part of our business and we ended fiscal 26 and started fiscal 27 with two massively successful movies, the Housemaid and Michael. Reasserting our brand and demonstrating our ability to compete effectively at every level of box office, the Housemaid reinforces our unique model and entrepreneurial approach. A provocative movie, an unconventional release strategy, a risk mitigated financial structure with significant upside, and one of the highest box office to ancillary market conversion rates in the industry. We’re excited to begin production later this year on The Housemaid’s Secret, based on the best selling second book in the trilogy, for a December 17, 2027 release. During the quarter, we took a number of other steps to keep this momentum growing, kicking off the marketing campaign for the next installment of our Hunger Games franchise, wrapping production on a new interpretation of Rambo with rising star Noah Centineo, wrapping production on Mel Gibson’s Resurrection of the Christ parts one and two, greenlighting the reimagining of Blair Witch in partnership with Blumhouse and James Wan’s Atomic Monster and signing acclaimed Spider man director Sam Raimi to direct a remake of the classic horror thriller Magic. After the quarter, we open Michael. The scenes of moviegoers dressing up, bringing their families over and over and dancing in the aisles are testament to what entertainment at its very best can do. With Japan still to open, Michael is on track to become our first movie grossing over a billion dollars at the worldwide box office, and we believe there is a lot more story to tell and a lot more music to share. Turning to television, the mantra remains the same. Lean into the creative strengths that enabled us to secure renewals of scripted TV series with 12 different buyers, keep costs down and maintain our flexibility to make shows at every price point for every buyer and across a balanced mix of retained rights and cost plus models. The Rookie, our long running procedural at ABC and Hulu, showed no signs of slowing down in the quarter, coming off a season eight finale that set a new streaming viewership record for the series and benefiting from an influx of younger audiences. The show was renewed for its ninth season and we’re excited to extend the brand with the ABC pickup of the Rookie north with potential breakout star Jay Ellis. No discussion of our television business would be complete without a few words about the hit comedy the Studio on Apple tv. The series just took the international category at the BAFTA Awards to complete one of the most dominant award runs in modern television history by winning the top prizes at the Emmys, Golden Globes, the Actor Awards and the PGA DGA and WGA Awards. We’re so proud of Seth Rogen, Evan Goldberg, the amazing cast and writers together with our partners at Apple TV for everything they have and are continuing to accomplish in closing Our success in the quarter is about more than one hit movie, we’re beginning to see signs that our operating environment is improving. People are returning to theaters. Imax, Dolby XD and other premium large format screens are transforming the movie going experience. Great storytelling is emerging in new and unexpected places across traditional and digital media alike and Gen Z audiences are enabling shows like the Rookie to break out with renewed vitality as we’re again seeing the resilience of our business in the largest entertainment market in the world. In this improving environment, the fact that our content pipelines are strong, our library is robust, our brand stands out and our franchises are adding value from new markets and new audiences should give everyone confidence in a strong year ahead. In the coming weeks, we’ll post several slides on our investor site that illustrate the core tenets of our business that I have touched on throughout my remarks, the proportion of repeatable branded properties on our film and television slates, the strength and consistent performance of our library, and the uniqueness of our business models. I encourage you to take a look because we’ll be returning to these themes often on future calls. Now I’ll turn things over to Jimmy.
Jimmy Barge (Chief Financial Officer)
Thanks John and good afternoon everyone. I’ll briefly Discuss our fiscal fourth quarter 2026 studio financial results and provide an update on the balance sheet. Beginning with the quarter, Lionsgate Studios revenue was expectedly down year over year to $907 million while adjusted EBITDA reached a 12 year high of $165 million and was up 17% year over year. Operating income of $118 million was up over 50% compared to last year. Reported diluted earnings per share was $0.23 per share and diluted adjusted earnings per share was $0.37 per share. Free cash flow for the quarter was a strong positive $190 million reflecting improved operating performance in the period as cash returns on our content investments in library were on full display. Trailing 12 months. Library revenue remained above $1 billion for yet another quarter, growing 5% year over year and continuing to demonstrate the durability and growing value of our content portfolio. Now breaking down the performance in the quarter, I’ll start with the discussion of our studio segment profit. Studio segment profit which reflects our motion picture and television segment profits before corporate overhead expense increased 24% year over year to $218 million. We began highlighting our studio segment profit last quarter because this metric is generally more comparable to the studio adjusted OIBITOFF figures reported by many of our peers. The increase in studio segment profit was driven primarily by strong motion picture performance. Moving to motion Picture revenue increased 23% year over year to $652 million while segment profit grew 39% to $187 million. The quarter was driven primarily by the outstanding performance of the Housemaid and continued carryover from now you See Me, now you Don’t. Particularly noteworthy was the Housemaid’s strong carryover into the home entertainment window where it became the industry’s highest gross in P VOD title among films with up to $150 million of domestic box office. Additionally, motion pictures results were particularly impressive given we leaned in heavily near the end of the quarter with incremental pre release P and A spend for Michael as well as early P and A spend for Hunger Games, Sunrise on the Reaping and John Rambo. Turning to television revenue was $255 million and segment profit was $31 million. Television’s year over year comparisons continue to reflect the timing of episodic deliveries and lower volume of scripted deliveries versus the prior year. Television segment profit remained resilient, benefiting from continued strength in library performance including the Rookie and Mad Men. Importantly, we remain confident in TV’s growth in fiscal 2027 as we expect to double the number of episodic scripted deliveries versus fiscal 2026. Now turning to the balance sheet, this quarter marks a post spin inflection point for strengthening our balance sheet as trailing twelve month adjusted OIBDA and free cash flow benefit from fully replenished pipelines in motion picture and television. We ended the fiscal year with net debt of approximately $1.6 billion, an improvement of nearly $150 million relative to the prior quarter driven by strong free cash flow. Year end leverage improved well over a full turn to 6.1 times reflecting both higher trailing 12 months adjusted EBITDA and strength in free cash flow. At quarter end we had approximately $800 million of unused capacity on our revolver available and $341 million of unrestricted cash on the balance sheet. Now let’s discuss how the business is positioned going forward. Our first year as a stand alone company was a transition year and we have all the pieces in place to enter fiscal 2027 with a lot of momentum. In particular, we enter the year with strong carryover contribution from our fiscal 2026 theatrical slate. In addition to starting the year with the exceptional performance of Michael, we have a highly anticipated motion picture release schedule and a large increase in scripted episodic deliveries within television. We now have enhanced visibility and continue to expect significant adjusted OIBDA growth in fiscal 2027. Additionally, this adjusted OIBDA improvement is expected to result in substantial growth in free cash flow and a continuation of significant deleveraging over the course of the year. Now I’d like to turn the call over to Neelay for Q and A.
OPERATOR
Thanks Jimmy. Operator, can we open up the line for Q and A? We will now begin the question and answer session. To ask a question, you may press Star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, Please press star then 2. The first question today comes from Vikram Kasab Botla with Baird. Please go ahead.
Vikram Kasab Botla
Yeah, hey, thank you for taking the questions. My first one is a higher level question on the industry, and you referenced this a little bit in your prepared remarks. But it seems like the box office has been in a really good place over the past few months and I’m curious to hear your perspective on the drivers behind those trends. And in particular, I’m curious if you think we’re seeing a sustainable improvement in in consumer demand at the box office, or if you think it’s too early to make that characterization. And I realize it’s a tough question to unpack with a lot of precision, but it’d be great to hear your perspective on the trends that you’re observing out there and then separate from that. Jimmy, I’m curious if you can just talk more about what the cadence of fiscal 27 is going to look like from a profit perspective. It seems like there are some moving pieces to consider relative to fiscal 26. You called out a few of those in the remarks. It’d be great if you could just talk more about some of the puts and takes we should be taking into consideration. Thank you.
John Feltheimer (Chief Executive Officer)
Thanks, Miriam. I’ll start, and I think I’ll turn it over to Adam to say just one thing I think is sort of an interesting statistic right now that growth in YouTube is actually being driven by 55 plus and that actually the growth in the exhibition business, the movie going business is actually being driven by Gen Z who are up to about a 30, 34%, I think share of that market. And so that’s obviously that’s the group that we want to engage with right now. We’re finding different ways to reach them. But overall that’s very exciting. That coupled with obviously this large screen formats that I talked about before, they’re actually making the movie going experience really like the live. What’s going on in live right now, which is much more of an event, especially if you’ve got an event movie. Adam, I don’t know if you want
Jimmy Barge (Chief Financial Officer)
to add to that. Yeah, thanks John. I would just say that I think the studios have done a tremendous job over the last couple years of understanding and recognizing what type of experience moviegoers of all ages want to have in a movie theater and how to reach moviegoers with marketing campaigns in a world where there is so much more fragmentation than there was once upon a time. So I think you are seeing lessons learned by studios across the board. And, and I think there is much more content on the release schedule over the course of the next year. And beyond that I think is going to continue to drive that type of attendance. It’s really exciting to see and I’m listening to it in my own house. Young people are talking about movies and going to the movie theaters as an incredibly fun way to spend time with their friends. And no question the exit polls reflect what John said, which is that group is driving real outsize opportunity alongside group that have gone in the past. So I’m encouraged by what’s coming. Yeah. And thanks Vikram. For sure. We’ve got great visibility and confidence as we look at significant growth rolling into 27. From a cadence standpoint, I would say that it’s not as back end loaded as it was in the prior year. So not as back end loaded as fiscal 26. TV is a little bit more back end loaded this year than motion picture. And to give you some color, part of that visibility. Right. Is we’re doubling episodic deliveries going into fiscal 27. You saw we had 12, 13 returning series renewed. So of that about 90% of those episodes are going to fall over Q2, 3 and 4. That’s just normal delivery cycles. So that’s why TB will be a little bit more back end loaded in that context.
OPERATOR
Okay, great. Thank you. The next question is from David Joyce with Seaport Research Partners. Please go ahead.
David Joyce (Equity Analyst)
Thank you. A couple questions. First. It was a great exit to 2026, great start to 27. But could you put a little finer point on the possible range of outcomes for the next year? Really, what does strong growth and significant growth mean given that you are also laying the groundwork on sequels and some other films coming out? And then I’ll have a follow up, please.
Jimmy Barge (Chief Financial Officer)
Well, for sure. Thanks, David. Appreciate it. Yeah, I mean, we clearly do have greater visibility into fiscal 27, as you would expect as we’re a bit closer. But it’s still early in the year. I mean, we gotta remind you, right. There’s timing and release schedules both on our film slate, ultimately episodic deliveries, even the cadence of P and A spend. Right. So we’re not going to put a range on that for you. But you know, we got great carryover coming out of the 26 slate. You know that. I mean, Housemaid’s written all over that. Obviously a great year. Great start to the year in terms of theatrical slate with Michael, but also great things to come as well as Hunger Games and beyond. So in the TV episodic deliveries, I’ve already kind of provided some color there. I’d also point you. I mean, I think it helps with the confidence and maybe doesn’t help you with the range. But you know, the backlog, which is contractual future revenues and cash flows is, you know, a billion three. So, you know, that likewise gives us a lot of confidence and probably 90% of that backlog will come within the next 24 months. So it’s not only strong carryover in 27, but also fiscal 28 is also nicely set up as well. So thank you.
David Joyce (Equity Analyst)
Appreciate that. There’s a lot of moving pieces and timing is still to come. Could you talk about some of the other TV titles besides Rookies and the spin off and the studio? What are some others that you’re excited about? And then finally, could you provide a perspective on what the impact might be from the Paramount, Skydance and Warner Bros. Discovery combination on your library business? Thank you.
Kevin Beggs (Chairman of the TV Group)
Kevin, why don’t you start? Sure. Kevin Begg speaking. In addition to the Rookie going into season nine, which is really quite an accomplishment and as John alluded to in his remarks, getting younger every year and demographics, which is just simply unheard of in broadcast television. The Rookie north spinoff is a great complement and expansion of that franchise. The studio, obviously we’re in season two. Hunting Wives has been a breakout success for us on Netflix. We just wrapped shooting season two. We’re in the middle of shooting the Rainmaker Season two for USA Network, a huge international driver for our business about to start shooting Robin Hood season two. And we continue to be deeply immersed in the power verse. The power franchise that we share with Stars Force, wrapped up in early January. That particular show, Season five of Canaan, is coming in June, and we’re in the first season of production on Origins, which is essentially a take on a young power and hopefully more powder in that pipeline. Speaking about the Skydance, Paramount, Warner potential combination, we’re really excited about what Skydance and Paramount have done before that, relative to opening up their platform to outside studio suppliers like ourselves, both in Originals in my area and Jim Packer’s distribution side. I think our thesis is that, you know, a strong, unified streaming player, whether they differentiate that to two brands or just one, is better than maybe two weaker ones in terms of firepower and ability to buy from the outside market. And, you know, we know we need to compete with the best creative product that we can and come up with better financial models. But knowing there’s a receptive buyer, of course, makes that virtuous circle really work for us. But, Jim, they want to talk about distribution.
David Joyce (Equity Analyst)
Yeah, hi, David. I would say talking about Paramount and Warner Brothers also. Both of those platforms are really going to be wanting to be strong and compete internationally. HBO has just opened up a couple of new territories in the last 24 months. The one thing I’ve seen when all these types of mergers or consolidations go on is nobody stops competing. They just compete. And we have the kind of content that really fits competition. Well. Going back, I know Kevin talked a lot about the original shows, but if you just look at our library, I’ll give you one quick stat that gives you a sense of the strength of our TV library. In fiscal 22, we only had four series that were sold to the big six streamers. And if you look at fiscal 26, we had 17 series. But the most important part of that, 10 of those 17 ranked in the top 10 of those various top six streaming platforms. Things like Nurse Shacky, Hightown, Mad Men, as you saw, went to number one or two on HBO and Spartacus. So the library itself, from a TV perspective, continues to perform in a way that I think many, many clients are going to want. All right, appreciate the color, all. Thank you.
OPERATOR
The next question is from Omar Magyas with Wells Fargo. Please go ahead.
Adam Fogelson (Chairman of the Motion Picture Group)
Hey, guys, thanks for the question. Jimmy, can you remind us what’s the path to deleveraging here? Is 3R still a part of that deleveraging story, or are you now focused on organic deleveraging? And then my second question, Adam, following the stellar performance of Michael, could you give us an update on Michael too? And if you believe part two carries a similar strong commercial appeal as part one, given the arc of the story. Thank you, guys. Hey, Omar, it’s Adam. I’ll go first and then I’ll turn it over to Jimmy. We are really excited about the progress we’re making with respect to a second Michael film. All the conversations that we’ve been having with all of the appropriate parties continue to go exceptionally well. And I would say that there is a ton of incredibly entertaining Michael Jackson story and much of the biggest and most popular parts of his music catalog that were not touched upon in the first film. And also I would just say, you know, we can go forwards and backwards in telling this story. There are so many other events that happened even in the time frame of the original movie that weren’t touched upon. So we’re very, very confident that we’ve got an incredibly entertaining movie that will appeal once again to a global audience. As the pieces come together.
Jimmy Barge (Chief Financial Officer)
And Omar, we’re just naturally deleveraging. I mean, with the visibility that we have in the context of EBITDA growth, significant growth into 27, likewise, strong positive free cash flow momentum just coming through our operations. So 3 Rx really isn’t either here or there. With regards to the deleveraging. I’m looking at four, four and a half times leverage off of 6.1 this period, which was, as you saw, down, you know, just a little over a full turn from the prior quarter. Okay. All of that is natural. When we get into the fourth quarter of our fiscal 27, as you know, there’s a three arch put there, we could easily absorb that. That would be about a half a turn. Otherwise, if it’s the right thing to do for three arch, and you know, we’ll do whatever we need to do is great for shareholder value in the business. But as far as deleveraging. We’re deleveraging naturally.
Brian Weinstein (Senior Advisor to the Office of the CEO, Co-CEO of 3 Arts)
Yeah. And just. It’s Brian Weinstein just jumping in. Look, we’re, you know, it’s an interesting time in our category. There’s a. There’s a ton of momentum in the entire space. There’s a lot of investor focus. And, you know, if you take a step back and you look at Accel’s transaction with Goldman Sachs, and you know, the team’s process formally was from. And there is just quite a bit of enthusiasm in the space for us, you know, in spite of some downward pressure in scripted and unscripted we have real momentum in our core business. And look, our decision to diversify has proven to be the right one. Just to give you some specifics on the production side, we’ve got renewals with running points on Netflix and Will Trent and nobody wants this and Hunting Wives and the full rise of Reggie Dickens. So it feels good, you know, for our business. The long term deal that SAG and the WGA struck, real positive sign going forward, you know, in our diversification strategy. We got ahead of some of this stuff. We’ve signed clients in sports like Miles Garrett and Mookie Betts and Jaden Daniels and Sophie Cunningham. We feel real good about that. You know, obviously the creator economy business is a big part of everyone’s future, including ours. We’re really proud. We’ve got a client named King Parsons whose film the Backroom is coming out soon. Started on his own YouTube channel, made it into a major motion picture. It’s just a sign of the sort of things to come as we move forward. So we’re excited. I would add the strategic conversations we’ve alluded to before would probably involve some deleveraging, but they will for sure be driven by the strategy, not the deleveraging.
OPERATOR
This is super helpful. Thank you guys, Appreciate it. The next question is from Brent Penter with Raymond James. Please go ahead.
Brent Penter (Equity Analyst)
Hi, good afternoon, everyone. Thank you for taking the questions. First one for me on Michael, is there any color you all can give in terms of EBITDA contribution from that movie?
Jimmy Barge (Chief Financial Officer)
Or at least as we try and do our own math, how to think about the puts and takes versus another movie of a similar scale in terms of maybe a very strong international presale, but. But also factoring in the estates portion. Well, yeah, we’re not going to break out the absolute contribution on that, but obviously it’s strong. Keep in mind we have Universal as a partner on the international side. And then of course we handle the pre sales in Japan, which as John noted, is yet to open. But great demand and great things happening there, we think. And so we’re just excited about this and that’s part of the momentum. Again, you know, coming into the year extremely strong, gives us enhanced visibility. We were always looking and striving for significant growth into fiscal 27. And I think this lays it out and I think, you know, we’re in a good, good position to not only drive 27, but also great carryover into 28.
Brent Penter (Equity Analyst)
Okay, great. And then just in broad terms, without getting into numbers, how should we think about the SQL and puts and takes? In terms of economics there, I think maybe there was some footage from the first one that’s already been shot that you might be able to use. So how might that benefit you for the sequel? Yeah, as we’ve said, it’s. Adam, as we’ve said previously, looking at the story for the second movie is unfolding, we think we’ve got 25 to 50, 30% of a second movie already shot from the prior production activity. And so obviously that will have some benefit ultimately, but we’re going to make sure we make a big and satisfying movie for a global audience once again. So I wouldn’t want to quantify exactly what that’s going to look like, but undoubtedly that 25 to 30% will be material. Okay. Okay, great. And then final question for me. The poison pill expired on May 7. Can you all talk at all about what that enables for you or what conversations that has enabled now that the poison pill is no longer in place, it’s not going to change our business materially. We have a. The shareholders can always decide if they want to re up a poison pill, but we’re going to leave it in their hands. And we think at the time that we did it, it was the right thing to do. And so as you mentioned, it will be expiring the next shareholder date. All right, thanks everyone.
OPERATOR
The next question is from Sean Difley with Morgan Stanley. Please go ahead.
Sean Difley (Equity Analyst)
Great. Thanks very much. Team two, if I may, the first is curious how you see AI changing studio margins over time and different things that it could unlock for your business. And then the second, follow up to the poison pill question, just as you think about the strategic landscape and obviously the value of ip, which has been underscored by Warner Brothers and other instances, how do you think about the standalone opportunity versus the potential benefits of being part of a bigger strategic organization?
Jimmy Barge (Chief Financial Officer)
Thank you. Well, the landscape continues to be moving towards more scale. It’s creating significant opportunities for a pure play studio like ours. We love the core assets that we put together over the last 25 years, both built and acquired, and we’re laser focused on maximizing the shareholder value. We separated the business to create a standalone studio and collapsed into a single share class which has given us a great deal of maximum optionality, but also certainly increased our liquidity dramatically. And we feel like we have a world where scale and franchises as well as very well known IP have never been more relevant. From studio margins perspective. Feel good about that? I mean, obviously we had really strong margins in the fourth quarter, so you can’t Always look to something like the Housemaids for example, which was very modestly price and even less expensive when you look at it relative to our New Jersey tax credits that were something special here. And you know I did $400 million of global box office, so you know, you can’t look at that margin. But generally speaking, good margins going into next year. If you look at our fiscal 26 margins in total going, growing, those in motion pictures, we go into 27 TV right around the same level. I would think. You know, you’ve got a lot of renewals, but they’re some sophomore series that are building in terms of profitability and margin. I mean certainly profitable, but margins building. So I think I feel really strong about 27 margins continuing to increase or hold certain levels in TV.
OPERATOR
I just want to clarify one thing. We put the pill in a year ago. It has expired. Thanks very much. The next question is from Matthew Harrigan with Benchmark. Please go ahead.
Matthew Harrigan (Equity Analyst)
Thank you and congratulations. Firstly, I guess it came out a few hours ago that you’re actually going to separate the resurrection, Ascension Day 26 and 27 versus having them so tightly clustered, which I always thought was kind of maybe not economically optimal. You’d get more cannibalization, you get more anticipation for the second film. Is there anything to comment on there other than the economics probably look better with better separation. Just out of curiosity.
Adam Fogelson (Chairman of the Motion Picture Group)
Hey Matthew, it’s Adam. Thanks for the question. No, you hit the nail right on the head. Look, it was. We claimed those two dates because those were the two most obvious dates where a film like the Resurrection could conceivably go. And we were able to protect both dates. Having just seen production wrap actually slightly ahead of schedule and slightly under budget, the scale of what Mel and the team have created is astonishing. And we couldn’t be more comfortable that there are two standalone exquisite movies. And with Ascension Day falling effectively at the beginning of the incredibly lucrative summer movie going corridor, taking advantage of that in consecutive years as other films in multiple parts have done so well just
Jimmy Barge (Chief Financial Officer)
felt like the right decision. So the reality is that initial dating was designed more than anything to protect the two possible dates we might want. And we’re excited now that we’ve landed on this as our go forward strategy. And Matthew, with regards to just the economics on fiscal 27, right, as you move that out of the back end of 27, that’s a slight improvement. But realize we’re also dropping Daydrinker in on that date and you’re going to have P and A. There So it’s actually relatively neutral, probably slightly down a bit. Just those changes on their own relative to fiscal 27.
Matthew Harrigan (Equity Analyst)
And then secondly, I know this is really conjectural, but you had the CDANCE 2.0 sell off among the studio stocks in February. And then we had some talk today on, on Hellgrind that shown it can, which is supposedly produced for $500,000, which certainly doesn’t look like a top studio film. It looks a lot better than you expect for $500,000 from what I’ve seen. How do you feel about just on the. Obviously you’ve got benefits on the timeline for getting movies out faster and costs, but how do you feel about emergent competition from maybe people outside even the traditional studio, rather in particular on the streaming side?
John Feltheimer (Chief Executive Officer)
Yeah, look, as you well know, through the history of our business, all the technical technological advances have unlocked value for media companies. This is going to be the same. I’m very bullish. We’re very bullish that AI is a total net positive for us. We want more people engaged with content. We’re across all of our digital footprints, YouTube, social channels, and then we’ll be launching, I’m very excited. We’re launching a new fan and creator site. We’re engaging with the fans wherever they are and these digital toolkits that we’re going to give them, that will empower them to interact with our content, to to extend our brands, to build new versions of our brands. We’re excited about the use of AI across the board in our own company. Right now we’ve deployed it over 80% of our workforce, whether it’s Copilot, whether it’s ChatGPT, Enterprise, Snowflake, whatever, we’re utilizing it across the board for productivity, for advanced analytics. And so across the board, whether it’s just the operations of our business in terms of sales or whether it’s enhancing our pre production, post production, AI is a total net positive for us. And again, we want to engage with our fans. We want to give them digital toolkits to create different versions, obviously in a protected environment, obviously with the authority and approvals of our talent. But we’re really excited. Our early engagement with Runway enabled us to take an early look at generative AI. And so big plus for us, big value add. Looking forward to more and more deployments.
OPERATOR
Great. Thanks, John. Thanks, Adam. The next question is a follow up from Vikram Cassava Botla with Baird, please go ahead.
Adam Fogelson (Chairman of the Motion Picture Group)
Yeah. Hey, thanks for letting me ask a couple more questions here. I just wanted to follow up on Michael Given that it was such a standout result. Now that you’ve had time to reflect on the feedback and the reactions, why do you think that this film performed as well as it did? It seems like you took some unique approaches to marketing around that film that may have benefited the performance as well. I’d be curious if you could elaborate on some of the strategies that you used there that helped drive the success. Sure. I’m happy to try to offer some thoughts. Look, I think we said on multiple earnings calls prior to the release of the film that that the fact that Michael is inarguably one of the most influential artists in human history and that so many of not only his songs, but his dance, his impact on fashion, his impact on motion pictures, his impact across so many different areas, had a profound emotional effect on people all over the world. And so the idea that when people had a chance to, if they’re old enough, relive many of those extraordinary moments. And for younger people, who we were not shocked, but thrilled at how many young people are really, really engaged with his music and his life. And Antoine and Graham did an extraordinary job of capturing that with energy. And so, you know, we expected something big. We were planning for something big. When we said to everyone that it was the biggest, most watched trailer in the history of the studio, it wasn’t just that fact. It was looking into the details of who was responding to it. And, you know, you’re seeing the ancillary benefits because his music is at the top of the charts now as well. In terms of marketing, it is definitely a different era than when I was running marketing 20 years ago. How you reach people has significantly changed. And I give an immense amount of credit to both our marketing and our distribution team. And in partnership with Universal, we really found ways to create stunts that were not only exciting to the people who were seeing them in the moment, but became viral and passed along on every platform in social media. And you just can’t buy your way into awareness and enthusiasm anymore. You have to create the tools for fans to share with one another. And I think the teams here and around the world did that extraordinarily well.
Vikram Kasab Botla
Okay, that’s helpful. And just last one for me. Curious if you could talk about or refresh us on your philosophy around balancing the mix of tentpole films versus mid budget films over the next few years. And particularly given the success you’ve had recently with the Housemaid and Michael, if any of that has affected your perspective on how you plan to manage the portfolio going forward.
Adam Fogelson (Chairman of the Motion Picture Group)
Yeah, no, it has not changed it, it’s reinforced what what I’ve been talking about, what John has been talking about and the conversations that we’ve been having. I mean, it’s nice that when you mention a movie like the Housemaid and a movie like Michael, you are talking about two very different movies. One lower end of mid budget film, that while it had a passionate fan base from book sales, it was not a massive fan base from book sales. And Michael being a very large movie and both of them were extraordinarily profitable. The criteria we’re using to decide what films to make remains unchanged. Do we believe it can be creatively great? And I’m so thrilled every time we make another announcement about what filmmakers and what actors and actresses are coming on board, what producers we’re working with, can it be creatively great? Is there a marketing strategy that allows us to do what I was just talking about, that allows us to reach consumers where they are now and the way they want to be impacted? And then is there a rational business plan? Can you make enough money in reasonable success to justify the risks that go into every film? And so we’ve definitely been working hard to make sure that our existing IP when we see an audience demanding more, that we’re giving them an exciting version of what they’re demanding. But when John mentioned in his opening remarks things like Blair Witch or another Hunger Games movie, those are very modestly priced films. When we’re talking about a Hunger Games or we’re talking about a Michael, those are larger films. And when any film is able to pass the threshold criteria that I laid out, it becomes a great candidate. And I think we’ll have two to four tent poles and the rest of the films will fit into a variety of other cost categories.
John Feltheimer (Chief Executive Officer)
Yeah, I think I’d just add that that word tentpole implies just a huge box office, a huge project. You could interchange tentpole and franchise. And they just put branded properties. And as I said in my remarks, we’re going to be posting. I’m going to keep doing that. In the future, we’re going to be posting at least one slide that just shows what our pipeline looks like going forward in terms of television, film and live entertainment. I think everyone’s going to be really surprised to see how many branded properties we have. I think you’ll be able to look at that and you will see that we have as many well known branded properties as any studio in the business. And so we’ll be filling the pipeline with those properties in the future. And obviously whether It’s a house made that was made for about a fifth of the price of Michael. I mean, you can call that now a tent pole, you can call it a franchise. But I think the key thing is take a look at that slide. I think you’ll be excited to know how much visibility we have in terms of proved IEP going forward.
Vikram Kasab Botla
Okay, thanks everyone. I appreciate the color.
OPERATOR
This concludes our question and answer session. I would like to turn the conference back over to Nilei Shah for any closing remarks. Hi everyone. Please refer to the press releases and events tab under the investor relations section of our website for discussion of certain non GAAP forward looking measures discussed on this call. Thank you.
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