Lionsgate Studios NYSE: LION executives said the company ended fiscal 2026 with stronger profitability, a replenished content pipeline and momentum from recent film releases, setting up what management described as significant growth in fiscal 2027 and 2028.
On the company’s fiscal fourth-quarter earnings call, Chief Executive Officer Jon Feltheimer said the quarter was “indicative of our earnings power” and pointed to the studio’s standalone structure following its separation from Starz as a key development over the past year.
“Last May, we completed the separation of Lionsgate and Starz into 2 standalone public companies, collapsing our dual-share structure into a single class of stock,” Feltheimer said. “The market’s response confirms that a focused, content-driven Lionsgate is the right structure for unlocking value.”
Profitability rises despite lower revenue
Chief Financial Officer Jimmy Barge said Lionsgate Studios generated fourth-quarter revenue of $907 million, down year over year, while adjusted OIBDA reached $165 million, up 17% from the prior year and the highest level in 12 years. Operating income rose more than 50% to $118 million.
The company reported diluted earnings per share of $0.23 and diluted adjusted earnings per share of $0.37. Free cash flow was a positive $190 million, which Barge said reflected “improved operating performance” and cash returns from the company’s content investments and library.
Trailing 12-month library revenue remained above $1 billion for a third consecutive quarter, growing 5% year over year. Barge said that performance continued to demonstrate “the durability and growing value” of the company’s content portfolio.
Studio segment profit, which includes motion picture and television segment profit before corporate overhead, rose 24% year over year to $218 million. Barge said Lionsgate began highlighting that metric because it is more comparable to adjusted OIBDA figures reported by some studio peers.
Film segment benefits from “The Housemaid” and “Michael”
Motion picture revenue increased 23% year over year to $652 million, while segment profit rose 39% to $187 million. Barge attributed the quarter’s performance primarily to “The Housemaid” and continued carryover from “Now You See Me: Now You Don’t.”
Barge said “The Housemaid” became the industry’s highest-grossing PVOD title among films with up to $150 million of domestic box office. Feltheimer described the film as an example of Lionsgate’s model: “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.”
The company plans to begin production later this year on “The Housemaid’s Secret,” based on the second book in the trilogy, for a Dec. 17, 2027, release.
Executives also highlighted the early performance of “Michael,” the Michael Jackson biopic that opened after the quarter ended. Feltheimer said that with Japan still to open, the film is “on track to become our first movie grossing over a billion dollars at the worldwide box office.”
During the call’s question-and-answer session, Motion Picture Group Chairman Adam Fogelson said the company is making progress on a second “Michael” film. He said there is “a ton of incredibly entertaining Michael Jackson story” and a significant amount of music not addressed in the first movie. Fogelson also said Lionsgate believes it has already shot 25% to 30% of a potential second film from prior production activity.
Other film updates included:
- The start of marketing for the next installment of the “Hunger Games” franchise.
- Completion of production on a new interpretation of “Rambo” starring Noah Centineo.
- Completion of production on Mel Gibson’s “Resurrection of the Christ” Parts I and II.
- A greenlight for a reimagining of “Blair Witch” with Blumhouse and James Wan’s Atomic Monster.
- Sam Raimi signing on to direct a remake of “Magic.”
Television deliveries expected to nearly double
Television revenue was $255 million, and segment profit was $31 million. Barge said the year-over-year comparison continued to reflect the timing of episodic deliveries and lower scripted delivery volume versus the prior year. However, he said television segment profit remained resilient due to library strength, including “The Rookie” and “Mad Men.”
Feltheimer said Lionsgate secured renewals for 12 of its 13 scripted series, which positions the television slate to nearly double episodic deliveries from fiscal 2026 to fiscal 2027. Barge later said about 90% of those episodes are expected to fall across the second, third and fourth quarters of fiscal 2027.
Feltheimer highlighted “The Rookie,” saying the ABC and Hulu procedural set a new streaming viewership record for the series after its Season 8 finale and was renewed for a ninth season. He also cited ABC’s pickup of “The Rookie: North,” starring Jay Ellis.
Television Group Chairman Kevin Beggs pointed to additional titles including “The Studio” on Apple TV, “The Hunting Wives” on Netflix, “The Rainmaker” for USA Network, “Robin Hood” and the “Power” franchise shared with Starz. Feltheimer said “The Studio” had completed a major awards run, winning the international category at the BAFTA Awards after taking top prizes at the Emmys, Golden Globes, SAG Awards, PGA, DGA and WGA Awards.
Balance sheet improves, with further deleveraging expected
Barge said Lionsgate ended the fiscal year with net debt of about $1.6 billion, an improvement of nearly $150 million from the prior quarter, driven by free cash flow. Year-end leverage improved to 6.1 times, down more than a full turn from the prior quarter. The company had about $800 million of unused revolver capacity and $341 million of unrestricted cash at quarter end.
Looking ahead, Barge said fiscal 2027 is expected to benefit from carryover from the fiscal 2026 theatrical slate, “Michael,” a larger television delivery slate and an anticipated release schedule that includes “The Hunger Games: Sunrise on the Reaping.” He said Lionsgate continues to expect “significant Adjusted OIBDA growth” in fiscal 2027, along with substantial free cash flow growth and additional deleveraging.
In response to an analyst question, Barge said the company is focused on organic deleveraging and is targeting 4.5 times leverage from the 6.1 times level reported for the period. He said a potential 3 Arts put in the fourth quarter of fiscal 2027 could be absorbed if needed, adding that any decision would be based on what is best for the business and shareholder value.
Executives point to box office recovery and AI opportunities
Feltheimer said Lionsgate is seeing signs that the operating environment is improving, including consumers returning to theaters and premium large format screens helping make moviegoing more event-driven. He said Gen Z audiences are increasingly important to the box office, while Fogelson said studios have improved their ability to identify what kind of experiences moviegoers want and how to market to them in a fragmented media environment.
Executives also discussed artificial intelligence. Feltheimer said Lionsgate is using AI tools across the business, including productivity, analytics, pre-production and post-production. He said the company has deployed AI tools across more than 80% of its workforce and views the technology as “a total net positive.”
Feltheimer said Lionsgate plans to engage fans through digital tools that allow interaction with its content and brands in a protected environment and with the proper talent approvals. “We want more people engaged with content,” he said.
Management said Lionsgate expects to post investor slides in the coming weeks illustrating the share of branded and repeatable properties across its film, television and live entertainment slates, as well as library performance and business model characteristics.
About Lionsgate Studios NYSE: LION
Lionsgate Studios, operating under the ticker NYSE:LION, is a leading global entertainment company specializing in the production, acquisition and distribution of motion pictures, television programming and digital content. Headquartered in Santa Monica, California, and with additional operations in Vancouver, the company develops, finances and markets feature films that span a wide range of genres—from major franchise hits like The Hunger Games and John Wick to independent and specialty titles.
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