2019 Annual Report - Investors

2019 Annual Report

July 26, 2019

To Our Shareholders:

We're pleased to report that fiscal 2019 was a year in which we refilled our film and television content pipelines with exciting new properties, grew our existing franchises and created new ones, and continued the robust growth of our domestic streaming business at Starz while expanding our STARZPLAY premium branded platform around the world. It was also a year in which we cut costs and reduced overhead Company-wide, streamlining and modernizing our business in order to continue to compete effectively in a changing world. As a result, we believe that all of the building blocks are in place for strong and profitable growth in fiscal 20 and growing recognition of the value we're creating for our shareholders as we move forward.

Financially, we reported fiscal 2019 revenue of $3.68 billion, operating income of $130 million, net loss attributable to shareholders of $284 million or $1.33 diluted net loss per share, adjusted diluted EPS of $0.87 per share, adjusted OIBDA of $520 million and adjusted free cash flow of $638 million, reflecting continued strong free cash flow generation that is expected to enable us to de-lever our balance sheet as we have done in the past.

Investing in the Future -- 3 Arts Entertainment

In May 2018 we took a majority stake in 3 Arts Entertainment, a collaboration that is generating strong results with an influx of top-tier talent across our business. We're already partnering with 3 Arts on over two dozen television projects, with the critically-acclaimed Florida Girls for Pop, Mythic Quest: Raven's Banquet for Apple and Silicon Valley creator Mike Judge's Qualityland for HBO leading the way.

To allow us to focus ever more sharply on our core businesses and growth opportunities going forward, we also continued to monetize our non-core assets during the year, selling our 50% stake in Pop to CBS while continuing to supply the network with breakout new series like Florida Girls.

Strong Growth at Starz

Fiscal 2019 was a strong growth year at Starz as we grew revenues by 3% and increased overall domestic subscribers from 23.5 million to 24.7 million. During the year, we accelerated the integration of our two companies, widened the creative aperture to add exciting new global properties to Starz's original programming slate, and continued to stand up a vibrant domestic over-the-top business that launched successfully on Apple, Hulu, Roku, YouTube TV and other platforms with over 4 million over-the-top subscribers to date.

It was also a year in which Starz continued its international expansion with global streaming platforms like Apple and Amazon, top local distributors including Bell Media (Canada), Liberty Global's Virgin Media (UK), Vodafone and Orange (Spain), and our Starzplay Arabia joint venture that has become the top subscription video-on-demand service in the Middle East and North Africa, tapping into a nascent and under-served market with enormous growth potential.

With over 7 million new subscribers added to our over-the-top and international businesses in the past 3 years, Starz has been transformed from a domestic linear channel into a modern global platform that has become one of the world's leading pure play subscription services. The combination of Starz original series, Lionsgate films and television shows from our 17,000-title library, exclusive first-run acquired product, unparalleled speed to market and relative freedom from legacy constraints will continue making us a launch partner of choice, and we expect these benefits to translate into 15 to 25 million new international subscribers by 2025, adding enormous value for our Company and our shareholders.

On the programming front, Starz has carved out a unique and resonant identity as the premium pay platform for women, African-American, Latinx, LGBTQ and other historically underserved audiences. We continued to strengthen that identity during the year, readying perennial ratings leader Power for a 15-episode sixth season while expanding the Power cinematic universe. The first Power spinoff, which continues the stories of several of the franchise's most provocative characters while incorporating exciting new additions like Academy Award? nominee Mary J. Blige, has already been ordered to series. A Power prequel and additional spinoffs are in development, all shepherded by Power creator and showrunner Courtney A. Kemp.

The epic tale Outlander, currently in production on its fifth season, continues to deliver upscale, premium female audiences. American Gods returned with its loyal and passionate fan base in March 2019 and has been renewed for a third season. The critically-praised, award-winning series Vida has also been picked up for a third season as it continues to build its audience and generate fresh acclaim. The series recently launched on our premium Spanish-language streaming service PANTAYA as we continue to expand our content across our Latinx vertical.

Starz continues to bolster its slate with the recent debut of the supernatural thriller The Rook from Lionsgate and Liberty Global, the planned return of the edgy and acclaimed series The Girlfriend Experience for a third season, and provocative new shows like Dangerous Liaisons from Lionsgate Television, a sexy thriller about seduction and betrayal that heads a line-up of newcomers currently in production. We will continue to invest in bold, original new content and cutting edge marketing to create a diverse and balanced slate year-round, deep in areas of proved strength, one that offers a compelling value proposition for domestic and international, streaming and traditional MVPD partners alike.

John Wick 3 Leads Rebound in the Motion Picture Group

Following a year of transition, our new Motion Picture Group leadership team has refocused our film content strategy and realigned our development slate, streamlined our Motion Picture Group organization to enable it to change more quickly with a changing world, and established major talent partnerships with Seth Rogen, Evan Goldberg and James Weaver's Point Grey Pictures, leading faith-based producers The Erwin Brothers (I Can Only Imagine) and filmmaker Jonathan Levine (Warm Bodies, 50/50).

The results are already evident. Our domestic box office revenues for the first six months of calendar 2019 increased 93% from the comparable period last year. In May, we again showed our ability to deliver iconic entertainment to a global audience by launching John Wick: Chapter 3 -- Parabellum to over $300 million at the worldwide box office, doubling the performance of the last installment, an almost unprecedented feat among movie franchises, and establishing John Wick as one of the premier action franchises in the world.

And in true Lionsgate fashion, we've already expanded the John Wick universe to include an upcoming television spinoff for Starz, The Continental, a first-of-its-kind game integration with Fortnite, and the successful virtual reality game John Wick Chronicles.

The resurgence of our Motion Picture Group is also evident in an upcoming slate that returns the studio to its roots: a diverse portfolio of bold, original, star-driven films and new and returning franchises that includes Sylvester Stallone's Rambo: Last Blood, Roland Emmerich's epic action film Midway, Star Wars director Rian Johnson's whodunit Knives Out, Jay Roach's timely sexual harassment drama starring Nicole Kidman, Charlize Theron and Margot Robbie, I Still Believe, the follow-up to the Erwin Brothers' faith-based hit I Can Only Imagine, a mind-bending re-imagining of Saw starring Chris Rock, Hitman's Bodyguard 2 and John Wick 4.

Television Group Assembles One of its Strongest Development Slates Ever, Several New Series Ordered

As the television landscape continues to evolve, we saw an opportunity to turn to our top-tier production partnerships with 3 Arts, Courtney A. Kemp, Universal Music Group, BBC Studios, the Tannenbaum Company, Point Grey and Paul Feig for new series, leveraging their talent relationships and expertise while reducing our reliance on infrastructure. The strategy has led to our most prolific development slate ever, with 44 of 57 new projects placed with network partners coming from our producer "pods."

Lionsgate Television is in production on a growing roster of high-profile new series for a broad array of streaming, cable and broadcast platforms, including the ground-breaking musical drama Zoey's Extraordinary Playlist for NBC, Mythic Quest: Raven's Banquet, one of the first original series for Apple, Love Life, featuring Anna Kendrick in her first major television role, for the new HBO Max streaming platform, Chasing the Cure, a highly-anticipated crowd-solving medical detective series anchored by Ann Curry for Turner, and three original series, The Rook, Dangerous Liaisons and Ghost, for Starz. In an increasingly fragmented television universe, one of our strongest line-ups of new shows in years reflects our ability to create bespoke business models for every platform.

Among our current series, Manhunt: Lone Wolf is being readied for its debut season on Charter's Spectrum, Greenleaf is entering its fourth season on OWN, and Step Up: High Water continues to dance into the hearts of audiences in its second season on YouTube Premium. Dear White People and Orange is the New Black continue to win rave reviews as they enter their third and seventh seasons, respectively, on Netflix, underscoring our ability to create evergreen content for today's diverse audiences.

New Content Partnerships Reaffirm the Value of Our Films and Television Series

Demand for our content is greater than ever. During the year we entered into a record-breaking pay television agreement with Hulu and FX for Lionsgate theatrical films to be released in 2020 and 2021, the first time a streaming platform and a cable network have partnered to jointly secure the pay television window of a theatrical output deal.

Fiscal 2019 was also one of our most successful years for extending our hit film and television properties into location-based entertainment and interactive games. On July 31, 2019, we'll open Lionsgate Entertainment World in Hengqin, China, a vertically-designed indoor theme park built around multiple Lionsgate properties. It adds to a portfolio of Lionsgate-branded attractions and events that includes the Lionsgate Zone of the Motiongate theme park in Dubai, the Official Saw Escape Room in Las Vegas, The Hunger Games: The Exhibition, the Now You See Me Live stage show and La La Land, Hunger Games and Twilight live-to-film concert tours. We're also adapting two of our most acclaimed intellectual properties, the long-running television series Nashville and the film sensation Wonder, to the Broadway stage in collaboration with award-winning producers, with more iconic properties in the pipeline.

Our games division is coming off a productive year that featured, in addition to the Fortnite X John Wick crossover, the launch of top-selling virtual reality title Five Nights at Freddy's VR: Help Wanted, and two major PC/console game announcements -- Blair Witch in partnership with Microsoft and the award winning strategy game John Wick Hex. We also integrated the character Ash from the Starz original series Ash vs. Evil Dead into the popular horror game Dead by Daylight.

Commitment to A Diverse and Inclusive Culture

One of our greatest strengths is a culture that places a premium on innovation, resourcefulness, empowerment, inclusiveness, integrity and collaboration across our businesses -- what we call "Lionsgate 360." During the year, we continued to reaffirm these values across our workforce, reinforced by Employee Resource Groups that celebrate multicultural diversity, women's empowerment, LGBTQ Pride and military veterans.

We partnered with the UCLA Anderson School of Management and Howard University on an internship program designed to increase the diversity of our industry, and we're pleased to be recognized for the second year in a row by the Bloomberg Gender Equality Index and to receive a perfect score of 100 from the Human Rights Campaign, ranking as one of the Best Places to Work for LGBTQ+ Inclusion. Diversity and inclusiveness make our Company stronger.

We enter fiscal 2020 with re-energized film and television pipelines, strong talent relationships and a Starz platform that is fulfilling its promise as a premier global streaming service backed by the full content resources of our Company. Though mindful of the competitive challenges and disruption in our operating environment, we continue to play our own game and define success on our own terms. We remain confident in our strategy and committed to its diligent and disciplined execution.

It is a strategy that we believe will maintain our position as a relevant and essential part of our media ecosystem and will create significant long-term value for our shareholders.

Sincerely,

Jon Feltheimer Chief Executive Officer

Michael Burns Vice Chairman

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2019

Commission File No.: 1-14880

LIONS GATE ENTERTAINMENT CORP.

(Exact name of registrant as specified in its charter)

British Columbia, Canada (State or Other Jurisdiction of Incorporation or Organization)

N/A (I.R.S. Employer Identification No.)

250 Howe Street, 20th Floor Vancouver, British Columbia V6C 3R8

(877) 848-3866

2700 Colorado Avenue Santa Monica, California 90404

(310) 449-9200

(Address of Principal Executive Offices, Zip Code) Registrant's telephone number, including area code:

(877) 848-3866 Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Class A Voting Common Shares, no par value per share Class B Non-Voting Common Shares, no par value per share

Trading Symbol(s) LGF.A LGF.B

Name of Each Exchange on Which Registered New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer Non-accelerated filer

Accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of September 30, 2018 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately $4,255,846,171, based on the closing sale price of such shares as reported on the New York Stock Exchange.

As of May 20, 2019, 82,605,121 shares of the registrant's no par value Class A voting common shares were outstanding, and 133,601,545 shares of the registrant's no par value Class B non-voting common shares were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive proxy statement relating to its 2019 annual meeting of shareholders (the "2019 Proxy Statement") are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2019 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

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