Lions Gate Entertainment Corp
NYSE:LGF.A
Earnings Call Analysis
Q1-2024 Analysis
Lions Gate Entertainment Corp
The company reported modest year-over-year revenue growth of 2% with total revenue reaching $909 million, while adjusted OIBDA jumped significantly, reflecting a growth of over $80 million. Despite these improvements, the company faced losses with a reported fully diluted earnings per share (EPS) of $0.31 and adjusted EPS of $0.04. Nonetheless, the adjusted free cash flow remained positive at $35 million. The outlook remains optimistic, with the company restating its fiscal 2024 adjusted OIBDA target of $400 million to $450 million, translating to a substantial midpoint growth of nearly 19% year-over-year.
Media Network's revenue remained consistent at $381 million, but internal shifts painted a more nuanced picture. The unit saw a 3% domestic revenue dip, counterbalanced by a 38% spike in international revenue. Segment profit saw improvement, credited to reduced losses internationally and lower domestic expenses. A strategic price increase for retail domestic subscribers is anticipated to contribute positively to revenue from the September quarter onwards.
The company closed the quarter with a slight decline in global subscribers, totaling 29.4 million, attributed to domestic market pressures. Yet, the global OTT subscribers grew by 9% year-over-year, reaching 19.9 million. In light of market strategy decisions, the company plans a full exit from the Latin American market by the end of 2023, aiming to streamline operations and reduce exposure to volatile markets.
The Studio division faced a 12% revenue dip year-over-year, bringing in $625 million, while segment profit soared by 31% to $92 million. The library revenue hit a record high of $896 million on a trailing 12-month basis, marking a consistent upward trend. The success of 'John Wick 4' significantly bolstered the Motion Picture revenues and profits despite an increase in spend, while the Television segment battled with a year-over-year decline in revenue but managed to increase its segment profit by 17%.
The company's liquidity position remains robust with $323 million in unrestricted cash and an untapped $1.25 billion credit facility. Debt management efforts are evident as the company actively reduced its unsecured bonds, purchasing $85 million worth at a discounted price and overall achieving a net debt reduction of approximately $90 million, yielding significant interest savings in the future.
Expected to close before the year's end, the eOne acquisition, priced at $375 million in cash, promises to enhance the company's TV and Motion Picture Studios with an additional 6,500 title library. Financially, the transaction is forecasted to generate a yearly adjusted OIBDA between $55 million and $75 million post-synergies. Though the acquisition will temporarily raise the leverage ratio more than a half turn, the company has a strong track record of reducing leverage — nearly two turns in the past nine months — and anticipates a quick return to lower ratios post-transaction.
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Good day. And welcome to the Lions Gate First Quarter of Fiscal Year 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded.
I would now like to turn the conference over to Nilay Shah, Head of Investor Relations. Please go ahead.
Good afternoon. Thank you for joining us for the Lions Gate fiscal 2024 conference call. We'll begin with opening remarks from our CEO, Jon 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 our Vice Chairman, Michael Burns, COO, Brian Goldsmith, Chairman of the TV Group Kevin Beggs, Chairman of the Motion Picture Group Joe Drake and President of Worldwide TV and distribution Jim Packer and And from STARZ, we have President and CEO, Jeffrey Hirsch; CFO, Scott MacDonald; and President of Domestic Networks, Alison Hoffman.
Hoffman. The matters discussed on this call 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 and Lions Gate's most recent annual report on Form 10-K as amended and also as amended in our most recent quarterly report on Form 10-Q filed with the SEC. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made reflect any future events or circumstances.
The matters discussed on this call also include the proposed separation of our television and movie production business from our media networks business. We urge you to read the relevant materials that we and our subsidiary LG Orion Holdings have and will file with the SEC, including a registration statement on Form 10, which was filed on July 12, 2023 that includes a preliminary joint information proxy statement. The information on the Joint Information proxy statement will not be complete and may be changed.
You can find these materials and other documents filed with the SEC free of charge at the SEC's website www.sec.gov or on our Investor Relations website. Lions Gate, LG Orion and our directors, executive officers and certain other employees and other persons may be deemed to be participants in the solicitation of proxies from the shareholders in favor of the proposed separation under SEC rules. Information about participants and their direct and indirect interest will be included in the Joint Information proxy statement and the other relevant documents filed with the SEC as available.
I'll now turn the call over to Jon.
Thank you, Nilay. And good afternoon, everyone. Thank you for joining us. It's been only two months since we spoke with you last but it's been a busy period culminating in our signing a definitive agreement with Hasbro, last week to acquire global entertainment platform eOne.
The eOne deal allows us to do what we do best and in 6,500 titles to one of the largest and most valuable libraries in the world, growing our portfolio of brands with properties like the Rookie, Yellowjackets, Naked and Afraid and film development rights to monopoly, continuing to strengthen our scripted and unscripted television business and scaling our operations in Canada and the UK. On closing, we expect the transaction to be immediately and highly creative. Jimmy will provide more color on that in a few minutes.
Taking a look at each of our businesses beginning with Motion Pictures, our Feature Film Group reported strong profits in the quarter thanks to the overall performance of library titles, multi-platform releases like the thriller Sisu, theatrical carryover from John Wick: Chapter 4, and the Home Entertainment performance of Plane. The strong financial performance even with three releases that opened softer than anticipated in the quarter speak to the resilience and diversification of our film business.
With the Expendables 4, Saw X and the long awaited return of the Hunger Games coming up, we're bullish about our slate for the rest of the year. Looking ahead, we've completed principal photography on Ballerina, the first of what we expect will be several movie spin offs from the John Wick universe, and we're readying the Michael Jackson film from producer Graham King. Beyond that, we have a strong roster of branded world class properties, including Dirty Dancing, Now You See Me three 3 director Ruben Fleischer, and Highlander from John Wick director Chad Stahelski.
In the faith-based vertical our partnership with the Kingdom Story Company has already produced the box office hits I Can Only Imagine and Jesus Revolution. In October will release the next film from Kingdom, the inspirational drama Ordinary Angels, starring two time Academy Award winner Hilary Swank, and Kingdom's Unsung Hero will hit screens next April in time for Easter.
Turning to television, we have a robust slate of content at all stages of production, Aka Poko, Manhunt Lincoln and the Seth Rogen Comedy, all for Apple TV plus, the Jon Cryer Comedy Extended Family for NBC, Son of a Critch for the CW, and Ghost, Raising Canaan and The Serpent Queen for STARZ to name a few. And we've completed and delivered one of our biggest and most eagerly anticipated properties, the John Wick prequel event series, The Continental, launching on Peacock and Amazon Prime on September 22.
As a number of our series move into later seasons are scripted seriously continues to drive growing profit contributions that are expected to reach record levels this year, with continued growth into fiscal '25 and fiscal '26. Ghosts, one of TV's highest rated comedies for CBS, Mythic Quest for Apple, and BMF for STARZ had a roster of 10 Lions Gate television series in their third or fourth seasons.
On the distribution front, with platforms now selling some of their best content to third parties, there's more supply than ever in the marketplace. In response, our aggressive approach to fast channels has created distribution opportunities with a whole new generation of MVPDs, like Roku, Pluto, Vizio, LG and Freebie. And we're driving substantial and growing incremental revenue using our existing infrastructure through Lions Gate's own fast channels movie sphere, her sphere, outer sphere, Nashville in more than a dozen others. We anticipate this revenue stream will double next year.
We've also become a leading distributor of great third-party content. Our Television Group was chosen by creator director and producer Dallas Jenkins to distribute the acclaimed event series The Chosen, which has grown from a crowdsourcing project to a massive global phenomenon, with over 110 million viewers. Within a few weeks of our securing global distribution rights, the series was picked up for multiple seasons by the CW Network in the U.S.
The Quentin Tarantino films Kill Bill volumes 1 and 2 and Jackie Brown have become great recent additions to our library, giving us distribution rights to the industry's largest portfolio of Tarantino Films. And as you read yesterday, our Worldwide Television Distribution Group and Dettmer Mercury have partnered with the Carsey Werner team to license their hit television series, The Connors, ABCs number one comedy for five straight seasons to SVOD AVOD basic cable and fast platforms worldwide, along with domestics indication.
This growing slate of third-party properties reaffirms Lions Gate's stature as a place that the world's leading IP creators and trust with their big brands, and all content roads lead to our film and television library, which achieved yet another record performance in the quarter, reporting nearly $900 million and trailing 12 month revenue.
I want to make an important point about our library. 10 years ago, over 60% of our library revenue still came from acquired and manage third-party content. By contrast, nearly 80% of higher margin library revenue today is driven by Lions Gate films, television shows, and STARZ original series that we have created many in the past few years as we continue to grow our crown jewel asset organically and through acquisitions.
Turning to STARZ, the service continues to take steps to strengthen his business in preparation for becoming an independent standalone public company after the separation. During the quarter, it streamline its distribution footprint executed a rate increase across its platforms, and began to ramp up a first run studio movies to complement its original series.
Though the rate increase may have impacted subscriber growth in the short term, we continue to be profitable and expect the financial benefits of that increase to become apparent in terms of revenue and contribution growth in the next few quarters. Combined with new efficiencies and content and marketing spend, it will be an important contributor to the growth of STARZ's domestic margins.
On the international front, after being approached by a key distributor in Latin America, we transacted a favorable agreement that motivated us to exit the territory by December 31, as we move towards focusing the service on the U.S. and other English-speaking territories, the UK, Canada and Australia, while also continuing to take significant cost out of the business.
As movies play a large and growing role in shaping what streamers offer their consumers, STARZ continues to ramp its roster of hit films alongside its original series. In that regard, I'm pleased to note that the theatrical output agreement between Lions Gate and STARZ has been extended through 2027.
The Lions Gate Pay 1 and universal Pay 2 slates will take STARZ from 14 movies last year to 28 films this year, and more than 40 next year, with the eagerly anticipated STARZ launch of John Wick: Chapter 4 on September 26.
In closing, we remain committed to the separation of Lions Gate and STARZ. We filed a Form 10 with the SEC last month as the next step in the process. With the impact of the eOne acquisition on regulatory approvals, uncertainty surrounding the strike and our efforts to create the most efficient capital structure within a disruptive marketplace. We anticipate that the separation will now take place in the first quarter of calendar 2020.
Now, I'll turn things over to Jimmy.
Thanks, Jon. And good afternoon, everyone. I'll briefly discuss our first quarter financial results, provide an update on the balance sheet and then provide some details on last week's eOne acquisition announcement.
First quarter adjusted OIBDA was $86 million and total revenue was $909 million. Revenue grew 2% year-over-year, while adjusted EBITDA was up over $80 million. The year-over-year increases reflect revenue growth and motion picture and segment profit growth at all three business units. Reported fully diluted earnings per share was a loss of $0.31 and fully diluted adjusted earnings per share was a loss of $0.04 a share. Adjusted free cash flow for the quarter was $35 million. We are reiterating our fiscal 2024 outlook of adjusted OIBDA of $400 million to $450 million, which at the midpoint reflects nearly 19% year-over-year growth.
Now I will discuss the fiscal fourth quarter performance of our Studio & Media Networks businesses, as well as the underlying segments compared to the previous year quarter. Media Network's quarterly revenue was $381 million, and segment profit was $32 million. Revenue was flat year-over-year, as continued growth of domestic OTT and international ancillary distribution revenue was offset by domestic linear revenue declines. Domestic revenue was down 3% while international revenue was up 38%. Media Network segment profit compared favorably to last years due to lower international losses and lower domestic distribution, marketing and direct operating expenses.
As a reminder STARZ $1 price increase for retail domestic subscribers went into effect in the last week of the June quarter. Accordingly, we expect the revenue benefit of the price increase to start in the September quarter.
Now let me discuss our subscriber numbers, which for comparability purposes are pro forma figures that exclude the historical subscribers and territories we have already exited, which includes Continental Europe and Japan. We ended the quarter with 29.4 million total global subscribers, including STARZ Play Arabia. This represents a sequential decline of 300,000 subscribers, driven by domestic pressure. Focusing specifically on our OTT subscribers, we ended the quarter with 19.9 million global OTT subscribers. This represents a year-over-year global OTT subscriber growth of 9%.
As Jon announced in his prepared remarks, subsequent to the end of the quarter, we decided to exit the Latin American market. We expect that we will fully exit LatAm down by the end of calendar year 2023. As part of this decision, and subsequent to quarter in, we received accelerated payment of unpaid future contractual revenue guarantees from one of our largest bundling partners. This consideration more than offsets the remaining in territory, content commitments and shutdown cost.
Now I'd like to talk about our Studio business. Revenue of $625 million has decreased 12% year-over-year, while segment profit of $92 million was up 31%. On a trailing 12-month basis, library revenue at the studio was a record $896 million up 1% compared to the prior quarter's record trailing 12 months library revenue. The Studio has now reported three consecutive quarters of record trailing 12-month library revenues.
Breaking down the Motion Picture and Television Studio businesses. Let's start with Motion Picture. Motion Picture revenue was up 46% year-over-year to $407 million, while segment profit of $69 million was up 37% year-over-year on strength in John Wick 4 box office and home entertainment as well as library stream. This segment profit growth is particularly impressive in light of the greater than 220% year-over-year increase in theatrical P&A spend in the period.
And finally Television revenue of $218 million expectedly declined year-over-year on a difficult comparison with last year's elevated content deliveries. Segment profit of $23 million increased 17% on favorable year-over-year comparisons at [Indiscernible].
Now let's talk about our balance sheet. Excluding adjusted OIBDA from previously exited Lions Gate Plus territories in Continental Europe and Japan, trailing 12 months leverage for the quarter improved almost a full turn to 3.6 times. We continue to retain significant liquidity with $323 million of unrestricted cash on hand at quarter end and $1.25 billion of an undrawn revolver.
This level of liquidity is particularly strong after another quarter of reducing the face amount of unsecured bonds outstanding. In particular, we purchased $85 million of our bonds for just over $60 million. Like today, we have repurchased $285 million for bonds for less than $200 million, resulting in a total net debt reduction of approximately $90 million and significant future cash interest savings.
Finally, I want to talk about our recently announced eOne transaction. We're paying $375 million of cash to acquire eOne's TV and Motion Picture Studios as well as its 6,500 title library, we expect that the transaction will close before the end of the calendar year.
In terms of the financial profile of eOne asset, I wanted to provide some more color on the normalized pro forma adjusted OIBDA that we expect to realize from the transaction. Specifically, after the transaction closes and synergies are layered in, we expect the run-rate annual adjusted OIBDA of eOne asset to be between $55 million and $75 million.
At the midpoint, this implies a highly attractive enterprise value to adjusted OIBDA multiple of just under 5.8 times. We intend to fund the transaction in an efficient manner through a variety of options, which include potentially using a combination of cash on balance sheet using our $1.25 billion undrawn revolver, and/or a non-recourse IP backed facility similar to the structure we use to acquire the Spyglass library.
As we integrate eOne with our complementary businesses the overall impact to leverage on a pro forma basis post-synergies is expected to be less than a half turn. So while leverage will increase by more than a half turn at closing, we expect it to fall quickly. You have seen us lower our leverage almost two turns in the last nine months. And we remain confident in our ability to continue to deliver through strong adjusted a webinar growth.
Now I'd like to turn the call over to Nilay for Q&A.
Thanks, Jimmy. Operator, can we open up the call for Q&A?
Absolutely. [Operator Instructions] And our first question today comes from Steven Cahall with Wells Fargo. Please go ahead.
Thanks. So first just on eOne. I think a lot of investors feel like it's been a long time since you started this strategic review and the spin of the Studio was coming up. And so I think the big question is, well, it seems like you paid a pretty attractive multiple and you get some library, why did this transaction need to happen now, pushing out the data, the spin till now it sounds like the beginning of the next calendar year, versus waiting until you got the spin done, which is only about a month away. And then looking at that acquisition thereafter.
And then as a follow up for Jeff. You've got to I think defined audiences at STARZ that you target. Can you talk about how you're looking to save the content to retain subs, drive more pricing increases really, ultimately, just get back towards the 20% segment profit margin that you've targeted historically? Do you feel like four to five shows a year and your two key demos is enough? Or that you'll need to change tactile? Thank you.
Yeah, I'll answer Steve. It's Jon. I'll answer the first part, which is really pretty simple. You partly answered your own question, which is -- it was a really attractive multiple, particularly in our hands, frankly. This is something, again, we do really well. We built the company with a lot of library acquisition. And there's a lot of operating assets there. And frankly, in our hands, I think this is, as I said, in my remarks, super accretive.
So the other is this is when it was for sale. And so pretty simple. We felt it was an asset that would really bolster the value of our Studio side upon separation. There were other timing issues and regulatory stuff and financial structuring capital restructuring that we're working on. But we felt this was something that we really didn't want to miss. And I'm glad we didn't.
Jimmy?
Yeah, I think bottom line, we're excited to have this. It puts us in a much stronger position, both operationally and strategically. And as we go forward into the new quarter of the calendar year, a lot of things will line up. As you've seen, we've restructured LatAm that'll be in our favor, as well as we exit LatAm by the end of the December quarter. And I expect there'll be more clarity around the writers' actor strike by that time as well. So anytime you remove uncertainty, it's a good thing and put us in a position of strength.
Steven, it's Jeff. As we talked, I think we have these very valuable two core demos. And I think four to five shows for each demo is actually the right number for us to kind of stream shows together, move the consumer from one show to the next extend lifetime value, and ultimately reduce churn.
Unfortunately, in the current quarter, we had VMF, and goes back-to-back in the prior quarter, we had scheduled run the world behind it, hoping that it would extend it and that was a little softer than planned. But ultimately, we do believe that that's the right portfolio of number of content shows, coupled with movies to drive the business back to a long-term, approximately 20% margin, I think there's really two components to that.
One on the revenue side, obviously great increases, you've seen, we just executed our first rate increase in the history of business. I think over time, we'll be able to drive more rate there, as well as bundling on the revenue side. And you'll start to see bundling accelerate, which will ultimately help obviously lifetime value in churn.
And then we've been working very closely with Kevin on the Lions Gate side to look at the shows. And I think ultimately, we've got to start to turn the slate over to be more cost effective in the shows that we have. And so as we do those three things, we can approach long-term approximate 20% margin on the domestic business.
Thanks.
Thanks, Steven. Operator, could we get the next question, please?
Absolutely. Our next question comes from Barton Crockett with Rosenblatt Securities. Please go ahead.
Okay. Thanks for taking the question. Let me see. I guess, two things, I'm just kind of curious about. One, could you talk a little bit more about the financial impact of exiting Latin America in terms of subs? You're trying to schedule, give us subs for, actually you've already exited, but we don't know why then. We don't know, the revenue and the EBITDA impact, but some color that would be helpful.
And then secondarily, I just was wondering if you could address the question that I've heard from some quarters, about whether there could be some pushback from STARZ bondholders around, maybe some concerns around the possibility of their view that substantially most or all of the business might be taken away from them in the split, and that might cause some resistance. Are you seeing anything there? And how do you feel about your position?
Yeah, thanks, Barton. I'll take the financial piece and LatAm and Jeff wants to add on the subs. But, broadly speaking, as we said, there's going to be in cash has been received that will more than cover our exit costs so to speak in our commitments in that territory. You'll see that play out over the next two quarters, but it's not overly impactful. But it's beneficial, it's beneficial way to exit the territory. And so we're happy with what we're doing there and focused on the UK.
With regards to the bonds, definitely, as we've said before, these travel STARZ so to speak, or another way to say that as they remain which remainco, that's the issuer of the bonds. And we'll evaluate that long term, but that's part of that structure. We'll refinance the term loan A and term loan B as part of the studio structure.
There's more than ample assets to do that. And then as we evaluate the STARZ structure, it clearly includes the bonds. Similarly, we could also layer in a level of secured financing, regular type of bank relationship financings term loan A as an example with revolver and set that capital structure up. And their cash flows are very visible, and very capable of financing that. And I'll remind you, we financed off of the domestic businesses because the internationals been restructured is moving to profitability. And that will happen and the banks will focus on it that way.
Okay. All right. I'll leave it there. Thank you very much.
Thank you. Our next question today comes from Thomas Yeh with Morgan Stanley, please go ahead.
Thanks so much, Jimmy, you mentioned some uncertainty on the strike, but you also reiterate the fiscal '24 guide. Can you talk about any trike impact that's baked into there? And does that elevate uncertainty on expectations for deliveries that still might happen throughout the duration of this fiscal year?
And then I just want -- I wanted to ask about the spin in the context of the idea that you've spoken about separate assets, having greater strategic optionality longer term. There is some language in the Form 10, about a two-year waiting period, if strategic conversations have been discussed in the past. Can you just talk about any limitations you might see there that limits you from pursuing those options? Thank you.
Okay. Let's first take the strike and the uncertainty of the strike. First, our assumption first, we're happy or reiterate guidance. And I'll tell you, it's not only in the aggregate, but it is also on line-by-line basis for both the Studio as well as Media Network. So that's reaffirmed. We have in our assumptions, we've built in an assumption that strike goes through the September quarter that was about a $30 million impact. We, as you can imagine, it most primarily affects our talent management business, so Three Arts and Television in that context. So we factored that in.
If it goes longer, it was similar impact probably is it rolls quarter-to-quarter. If it does, we're hopeful that things get resolved. And we're back to work in the mid-fall.
Having said that, in terms of the overall guide, we factored that in. And we're comfortable with where we are at this time.
Yeah. And the other part of your question, I don't think there's anything there that we're worried about in terms of strategic limitations. I would say, that is part of our plan. I think scaling up in on both sides of the business is certainly part of the plan. And on the Studio side, we are pretty aggressive and the one deal is indicative of that. I think STARZ is a great business, it's a profitable business.
It's got two really strong demos. I could definitely see after separation. And Jeff has mentioned this before, we're going to be looking for ways to scale that up with other like, kinds of platforms. I think that's definitely in the plan. I don't see any limitations.
And the key there's nothing in contemplation at that time. And as you know, it's a corporate, as we've said before, it's taxable in the corporate bases it's tax free from a shareholder perspective. So that gives you -- puts you in a better position as you go forward if opportunities do arise in the future to capitalize on those.
Got it super helpful. And maybe just to clarify one last thing, Jimmy on the moving pieces around that accelerated payment in Latin America for STARZ. It sounds like it's net OIBDA neutral in terms of how it relates to the guide for the year. Is that right?
Yeah, that's right. It's somewhat positive. But I think in certainly the cash was received after quarter-end. So it's not reflected in the current strength of our balance sheet.
Got it. Thank you so much.
Thanks, Thomas. Operator can we get the next question please?
Absolutely. Our next question comes from Jim Goss with Barrington Research. Please go ahead.
All right. Thank you. Couple of them. First, I was curious on the exiting of Latin America, you want said high hopes. And I was just wondering if, if it was just not generating adequate traction that caused the separation. And I was curious to between that and the content you just purchased. How complicated does it get when you're moving toward a separation of two businesses, and you're still making these strategic businesses that would affect one or the other and possibly both?
If I understand your second part of your question, Jim, we spent a lot of time and have spent a lot of time working out our internal deal between and part of the extension of the paid television deal was part of that our intercompany agreements about series and who owns new IP. And so I think we're pretty much there, which all of those rules have been set. When you say the new IP, I'm not sure if you're talking about eOne. But again, that would fit into the intercompany.
Yeah, that was fit into the intercompany agreement that we have unnegotiated amongst ourselves. So all taken care of. And again, we said numerous times, even after separation there, there will be a great brotherhood between STARZ, and Lions Gate numerous projects together a paid television deal for four years. So there'll be still a very, very productive relationship between the two companies.
Yeah Jim. The pricings representative of fair market values is closest we can get those. So it does make it easier to reposition that content to other third parties who are still within various territory. So you saw us do that or maybe you didn't see us do that. But we did in Continental Europe and other territories. So the content has continuing value.
In terms of LatAm, we were pretty excited about the territory, we have great distribution. Obviously, our content was continuing to work there. But it was really backstopped by one of our large partner that we had when the partner approached us, as Jimmy said, in his prepared remarks. And didn't have the same excitement about the partnership. We negotiated a very favorable deal. And with that deal being done, it didn't make the path to profitability within the portfolio that we want it. And so we made the decision to exit.
Okay. Jimmy too, in terms of intercompany revenues that effectively both sides will be able to count in some way when the separation occurs. Is there a way of sizing that or is just whatever is showing up in your books right now? Because it would seem like the two parts will be bigger than the aggregate revenue base. Is there any way thinking about it.
Yeah, absolutely. Jim. You're right. The eliminated revenues just completely goes away. So does the eliminated profit is well. The revenue happens one for one dollar for dollar never comes back to you in a consolidated world. In a separated world, it just never eliminated to begin with, and likewise to profit similarly, doesn't get eliminated because you're two standalone trading companies.
So yes, I would just eliminate everything you see there in historical financials. And in terms of going forward, again, with the Pay 1 window, on the Film side of the business and television, you'd expect that just to continue to be big and grow as we phase into that. So I'd size it using the numbers that you see in our reported financial statements.
Okay, and one last one, regarding your access to the chosen and then marketing that to various other partners. Is that, does that provide any template that you're going to pursue for any genre of content that you might be able to -- given the mouths to feed out there with streaming services and the additional distribution agents? Are there some things that you'll be able to do with that sort of content to create more revenue opportunities?
Hi, Jim. It's Jim. So yes, I think it's clear that we have a lot of really valuable partners that have chosen us to distribute their content. The Chosen is a unique show that's got an incredible audience that's pretty much over 110 million people globally. And we've done a, I think, a good job of getting on The CW. They're going to run it all the way through the holidays.
Seasons, one, two and three, it's also on Peacock, which was a deal that we did on Amazon premiered in the last two weeks or three weeks and is in the top five, after its premiere. So we get these shows, and they tend to be really great opportunities for our company, great opportunities for our partners. And they do add to our overall revenue pie.
Maybe the strike provides you with an opportunity right now, with some holes to fill.
Yeah, the other one that we've been able to pick up that you saw yesterday was The Connors, which is really unique in the sense that it is a five season show. It is the number one comedy on ABC for 25 to 50 for adults. And they had not been out with the show in the marketplace. So we're now going to take it out our partnership with Debmar-Mercury, for traditional syndication, and then our team for global distribution. And that is another example of just taking advantage of our distribution infrastructure and bringing something to market actually during the strike that I think will be quite unique and different. And we're very excited about it.
Thanks, Jim. Thanks very much.
Thanks, Jim. Operator, could we get the next question, please?
Absolutely. Our next question comes from Alan Gould with Loop Capital. Please go ahead.
Thanks for taking the questions.
Hey, Alan.
Hi there. Firstly, Jimmy I realized that a lot of the value created over the years has been through these accretive acquisitions. That 65 million have adjusted EBITDA, how much synergy are you projecting there?
We're not going to lay out the specific synergies there, as I know, you can appreciate Alan. But we feel confident with that. I mean, it is a pretty big range, the 55 to 75, but obviously hopeful we're at the 75. Okay. It's in the range for a reason.
I think the synergies in particular, this library, you put that in the hands of gentleman, [Indiscernible] and the team here, it just over-indexed. So I really am excited about the revenue synergies capabilities there and really nobody does it better there. And then the assets on the television side just fit like a glove with Kevin's business in terms of the scripted obviously, as well as unscripted. So
Yeah, we feel really good about that. And as you know, we do accretive transactions. We know this is accretive. And we'll utilize those cash flows to effectively pay for the asset.
We came at least to my next question for Jim, how [Indiscernible] that library already? Or is there a lot of opportunity to license the heck out of it?
You're speaking about eOne, Alan?
Yeah. The eOne library?
Yeah, I think it's a really unique asset or great library. It's complementary to what we have Alan. I mean, as an example, we have two procedurals there, the Rookie, Rookie Feds, we do not have big procedurals internationally. So this is going to add to our portfolio and I think be really complimentary.
It's also really interesting because eOne was our partner on Summit in places like the UK. So now all of a sudden, where we did not control movies like Twilight, Now You See Me in Red, my team is going to be able to go out there and take advantage of that. And I think those are the kinds of things that we buy these libraries for.
All of a sudden, you can take those franchises and put them in Hunger Games and John Wick, and we have a full complement. So I'm really excited about it. And I'm sure we'll find things in there that we didn't even know, which is what we do on most of these library acquisition.
Okay, and one question for Joe. Any change here to the mid-budget film strategy? The mid-budget films seem to be having a tough time out there.
Yeah. Look, Alan, it's a fair question. We learned a couple things over these last couple of titles that will certainly focus our content strategy, particularly around the audiences that we will serve theatrically versus multi-platform and how we focus those segments of business. It'll also put will get even more disciplined -- pretty darn disciplined on that mid-budget level will get even more disciplined on the greenlight metrics there.
Jon mentioned in his opening remarks, it was really -- it at the same time, this quarter, the performance on the quarter really highlighted the strength of the diversified nature and the diversified nature of the portfolio structure we have in the Motion Picture business. Because while those movies did underperform a little bit, and you can see a couple of them get to profitability. We have a multi-platform business that did really, really great business there.
Jon talked about prior theatrical releases in their value in the ancillary market. That is true for all theatrical films. I've spoken before about how the just general economics of theatrical films are as strong as they could ever be. And so, while it will focus a little bit more on what we release in that mid-budget range will lean -- will continue to lean hard into our big brands.
We've got Expendables and Saw X and Hunger Games coming up. So we are as bullish about the theatrical business as ever. We'll be a little more disciplined on the mid-budget. Overall, the business is performing really, really well.
Yeah. And by the way, one thing, the numbers in the quarter reflected actually great performance in the ancillary markets on Plane. Plane was in that same realm worked really well. And I think that that we're honing in at least on some rules, Alan, which is these midsize pictures have to have a real recognizable name. Maybe recognizable brands we have Saw X coming out, we've got Expendables coming out. We've got to have the right budget and actually you have to really know who the audience you're going after is. So look, we learn everyday just like everybody else.
Thanks. So one last quick accounting question for Jimmy. The STARZ international revenue, does that still include revenue from the exited territory? And when does that change?
That's as we close those territories here, the revenues are excluded. So the numbers aren't historical basis. We do pro forma subscribers for you to make that trending easier, but the revenue recognition and losses just follow suit with the closures.
Okay, thanks a lot.
Thanks, Alan. Operator can we go to the next question please?
Absolutely. Our next question comes from Matthew Harrigan with Benchmark. Please go ahead.
Thank you. The monopoly movie development certainly seems like an exciting project. But a lot of the family IP is being retained at Hasbro, clearly your transformers Dungeons and Dragons. And then some franchises where Lions Gates , been involved before your Power Rangers My Little Pony I'm sure a lot of people in the call waiting for the next My Little Pony movie. Do you feel like this transaction actually pushes you to do some more things with Hasbro in terms of some of the retained IP?
I mean, do you fully expect to be involved in more of the projects that have not hopper I know everyone's getting a little greedy on account of Barbie, clearly not everything's going to be Barbie, but they certainly have a lot of great content in house that they will have you in after the eOne sale. Thank you.
Yeah, sure. It absolutely does. We're really, really, really excited about monopoly. Brands are working. We talked about leaning into brand. This is a brand for the entire family and globally. And that -- that's a category of film that is working in theaters everywhere and drives enormous ancillary value.
When you think about adding that to a pool like Now You See Me, Naruto, Hunger Games, and John Wick and Highlander it's [technical difficulty]
Pardon me, everyone. This is the conference operator. Hello, are you all back?
Yep, we are.
All right. Sorry about that. Please continue.
Don't know where we lost you. But what I was saying is that we were looking forward to getting back also getting into their development site and seeing where else we can be great partners, and help grow brands together.
Highlanders really the eternal franchise too. Thanks for your answer.
Operator, can we get the next question, please.
Absolutely. Our next question comes from Douglas Creutz with TD Cowen. Please go ahead.
Hey, thanks. I think in the past, you've talked about a willingness and desire to explore the possibility of bundling STARZ with other streaming services. And it seems like there's been more conversations about that at a high level. Can you tell me are there people in positions of power actually actively talking about that at this point, particularly with some of the labor issues that are going on with the industry?
Yeah, hi, it's Jeff. Actually, it's already going on. I mean, we're bundled with MGM Plus and Amazon, today, we're bundled with AMC Plus, on Amazon today. We're bundled with a bunch of other premiums on Roku, were bundled on a couple other platforms, with Verizon just launched the Verizon Plus bundle with you buy STARZ. You get Netflix included for a year. And so the bundling is happening. It's happening across the industry. Paramount did it with Showtime.
And so I think it will accelerate as we get through the year. So we're excited about that. What we've seen around the globe in bundles is that lifetime value extended turn comes down. Obviously you don't have to market as much on the front end and what you give up for and rate. You more than make up for lifetime value and churn reduction.
So we liked the bundles we're in today and we expect to be in a lot more in the coming months.
Great, thank you.
Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Nilay Shah for any closing remarks.
Please refer to the press releases in the events tab under the investor relations section of the company's website for discussion and certain non-GAAP forward-looking measures discussed on this call. Thank you, everyone.
Thank you, ladies and gentlemen, this concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.