Q4 2023 Lions Gate Entertainment Corp Earnings Call
Participants
James W. Barge; CFO; Lions Gate Entertainment Corp.
Jeffrey A. Hirsch; President & CEO; Starz
Jim Packer
Jon Feltheimer; CEO & Director; Lions Gate Entertainment Corp.
Joseph Drake; Chairman of Motion Picture Group; Lions Gate Entertainment Corp.
Kevin Beggs; Chairman of Lionsgate Television Group; Lions Gate Entertainment Corp.
Michael R. Burns; Executive Vice Chairman; Lions Gate Entertainment Corp.
Nilay Shah; Executive VP & Head of IR; Lions Gate Entertainment Corp.
Alan Steven Gould; MD; Loop Capital Markets LLC, Research Division
Barton Evans Crockett; MD & Senior Internet Media Analyst; Rosenblatt Securities Inc., Research Division
Devin MacArthur Brisco; Research Analyst; Wolfe Research, LLC
James Charles Goss; MD; Barrington Research Associates, Inc., Research Division
Matthew Corey Thornton; VP; Truist Securities, Inc., Research Division
Matthew Joseph Harrigan; Senior Equity Analyst; The Benchmark Company, LLC, Research Division
Steven Lee Cahall; Senior Analyst; Wells Fargo Securities, LLC, Research Division
Thomas L. Yeh; Research Associate; Morgan Stanley, Research Division
Presentation
Operator
Good day, and welcome to the Lionsgate Fiscal 2023 Fourth Quarter Conference Call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Nilay Shah, Investor Relations. Please go ahead.
Nilay Shah
Good afternoon. Thank you for joining us for the Lionsgate Fiscal 2023 Fourth Quarter 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 are 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 the Worldwide Television Distribution Group, Jim Packer. And from STARZ, we have President and CEO, Jeffrey Hirsch; CFO, Scott MacDonald; and President of Domestic Networks, Alison 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 in Lionsgate's most recent annual report on Form 10-K. 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 Jon.
Jon Feltheimer
Thanks, Nilay. Good afternoon, everyone, and thank you for joining us.
I'm pleased to report that we ended the fiscal year with another strong quarter. We enter fiscal '24 with strong earnings momentum and projected strong growth.
To recap the quarter's highlights, in our Motion Picture Group, success came from many places, a franchise best performance from John Wick Chapter 4, the faith-based hit, Jesus Revolution, the action film, Plane, and a record performance from our growing multi-platform release business, showcasing our ability to build unique financial models for every kind of movie.
In television, we relied on a similar portfolio strategy, continuing to launch new shows, renew current series and develop exciting new properties in our scripted business while generating strong contributions from 3 Arts, Pilgrim Media and Debmar-Mercury.
STARZ came back strongly in the quarter, growing subscribers, improving ARPU, completing bundled deals domestically and internationally, streamlining its international operations to focus on key territories and maintaining its profitability.
Our library continued its record performance with trailing 12-month revenue of $884 million as it finished the fiscal year with its best 2 revenue quarters ever. Its performance also benefited from continued diversification as the long tail of our content grew longer, generating nearly $150 million in library revenue in the fiscal year from titles outside the top 500.
And financially, we continue to prepare for the separation of Lionsgate and STARZ by strengthening our balance sheet opportunistically buying back bonds, improving our leverage ratio and ending the fiscal year with an untapped revolving credit facility of $1.25 billion and $272 million in unrestricted available cash. Jimmy will provide more details in a few minutes.
In an operating environment that is tougher than ever, our business models and our employees continue to be resilient, navigating the headwinds, pivoting in order to seize even the smallest opportunities, unafraid of change in a changing world.
Drilling down on each of our businesses, beginning with the Motion Picture Group. The success of John Wick Chapter 4 demonstrated our ability to deliver big IP comparable to any studio. Not only did John Wick 4 achieve our franchise best performance at the domestic box office, it improved its international box office performance by more than 50% over its predecessor, establishing John Wick as our fourth billion-dollar franchise and a truly global phenomenon.
Its success continues to drive the expansion of the John Wick universe as we complete production on the Anna De Armas spin-off, Ballerina, for a June 2024 release, ready the launch of the prequel television event series, the Continental, on Peacock and Amazon and continue our planning for multiple additional spin-offs.
As we've said before, our motion picture strategy is a little different. We surround our tentpoles with targeted original movies built around smart releasing strategies, multi-platform releases that drive historically outsized returns on investment and direct to streaming films that capitalize on the enormous demand for studio movies across every kind of platform.
Our upcoming slate reflects the same balance that led to our success last quarter, driven by tentpoles like the Hunger Games, Ballad of Songbird and Snakes, franchise extensions with built-in fan bases, such as Saw X and Expendables 4; bold, edgy and original fare like Tim Story's horror-comedy, The Blackening; Adele Lim's effervescent and raunchy Joyride; and great new intellectual properties like the Michael Jackson event film to be produced by Graham King and directed by Antoine Fuqua.
Turning to television. We had a busy quarter, taking advantage of our ability to create and deliver bespoke content with unique business models to every platform. Ghosts led the CBS lineup as one of the top half hour comedies in television. Mythic Quest continued its standout performance in its third season on Apple TV Plus with a spin-off series in the works. And a true crime limited series, Love & Death, starring Elizabeth Olsen and written by David E. Kelly was the most-watched premiere this year on HBO Max.
Looking ahead, we delivered all 3 event installments of the Continental to Peacock and Amazon for its September premiere, and Peacock launched the promotional trailer to record numbers on the heels of John Wick Chapter 4's opening at the box office.
We started production on the new NBC multi-camera comedy, Extended Family, starring John Cryer and Donald Faison from creator and showrunner, Mike O'Malley, and executive producer, Tom Werner. And we're preparing to begin full production on Seth Rogen's new show for Apple TV+ to launch in 2024 from our television and motion picture group collaboration with Point Grey. Behind them, we have another strong development slate that includes extensions of Weeds, Nurse Jackie and some of our other major film and television brands.
Our global expansion strategy in scripted television also continues to bear fruit. ABC recently picked up Lionsgate Television's Motherland to pilot, adapted from the hit BBC series. Disney's Onyx collection picked up Queenie from our partnership with Channel 4 in the U.K. and the Lionsgate CBC comedy, Son Of A Critch was renewed for a third season in Canada and picked up for multiple seasons by the CW in the U.S. We are also partnering with Stan in Australia on the family drama Prosper and the comic crime thriller, Population: 11.
And in the current quarter, we acquired the worldwide distribution rights to 2 very high-profile intellectual properties. Earlier this week, we announced that we would be the global distributor for all seasons of the acclaimed event series, The Chosen, from creator, director and producer, Dallas Jenkins. The first multi-season series of its kind, a groundbreaking historical drama about the life of Jesus as seen through the eyes of his followers, The Chosen has grown from a crowdsourcing project into a massive global phenomenon with over 110 million viewers in 175 countries. It continues to deepen our faith-based vertical that is already responsible for the hit films; Jesus Revolution and I Can Only Imagine.
And this afternoon, I'm pleased to announce that Lions Gate has partnered with master filmmaker, Quentin Tarantino for distribution rights to 3 of his most iconic films, Kill Bill volumes 1 and 2 and Jackie Brown.
Beginning with Reservoir Dogs, a Lionsgate library favorite for nearly 20 years, we've grown what is now Hollywood's largest portfolio of Tarantino films to include Inglourious Basterds, Django Unchained, The Hateful Eight and Death Proof, in addition to the movies we just picked up. We look forward to collaborating with the Tarantino team on a celebration of Kill Bill's 20th anniversary later this year with a new and remastered 4K edition.
At STARZ, we finished the year strong with 2 returning tentpoles; the second season of the crime drama, BMF, was a standout performer in the quarter, and the third season of Power Book II: Ghost shattered multi-platform viewership records with the platform's biggest premier weekend ever.
The success of fan favorite Party Down rounded out a strong content quarter as STARZ achieved robust subscriber growth, with the addition of 1.3 million global streaming subscribers including 700,000 domestically, an overall net growth of 1 million global subscribers. And in the current quarter, we're excited to bring back one of our most popular and eagerly anticipated series, the seventh season of Outlander.
Streaming services have discovered that properly marketed feature films that arrive on their platforms with built-in awareness are powerful tools for driving subscriber acquisition and retention. In this regard, STARZ enters the new fiscal year with a strong flow of movies from its pay 1 and pay 2 theatrical output deals that has nearly doubled the number of films from last year, including the STARZ's premiere of John Wick Chapter 4.
Perhaps the most important development for STARZ is the emergence of bundling in the streaming space. With STARZ' transition to digital more than 60% complete, we're well positioned to execute on our core strategy becoming a complementary premium add-on service to every platform, and our efforts are gaining significant traction.
In the quarter, STARZ teamed with Amazon to enter a domestic bundling agreement with MGM+, followed by a domestic bundling deal with AMC+ and a bundling agreement with Hayu in the U.K., while completing our integration into the Disney+ bundle in Latin America. We expect this momentum to continue as the industry evolves.
Internationally, our restructuring has significantly improved our financial profile, concentrating our resources on territories where we believe we can continue to scale our operations profitably. We entered the new fiscal year with a strong international slate, great partnerships and a compelling value proposition to drive subscriber growth and further improvement in our economics.
In closing, we continue to execute on our strategy of separating Lionsgate and STARZ by the end of the September quarter. We submitted our Form 10 with the SEC in March, and we're working through the organizational and governance issues accompanying the separation, finalizing the intercompany agreement and taking the appropriate steps to strengthen both companies and their respective balance sheets so they will be prepared to unlock the incremental value that the separation makes possible.
Now I'll turn things over to Jimmy.
James W. Barge
Thanks, Jon, and good afternoon, everyone. I'll briefly discuss our fourth quarter financial results and update you on the balance sheet.
Q4 adjusted OIBDA was $138 million and total revenue was $1.1 billion. Revenue grew 17% year-over-year, while adjusted OIBDA was up 67%. The year-over-year increases reflect revenue and adjusted OIBDA growth in both Motion Picture and Media Networks.
Reported fully diluted earnings per share was a loss of $0.42 a share, and fully diluted adjusted earnings per share was $0.21 a share. Adjusted free cash flow for the quarter reflects a $37 million use of cash.
Fiscal '23 adjusted OIBDA was $358 million which exceeds the top end of our previously provided outlook of $275 million to $325 million. The strength we saw as we closed the year reflects operational momentum heading into fiscal '24 and gives us confidence in reiterating all components of our fiscal '24 outlook including our outlook for adjusted OIBDA of $400 million to $450 million, which at the midpoint reflects nearly 19% year-over-year growth.
Now let me briefly discuss the fourth quarter performance of our Studio and Media Networks businesses as well as the underlying segments compared to the previous year quarter. Media Networks' quarterly revenue was $389 million, and segment profit was $73 million. Revenue was up 2% year-over-year as the launch of Disney+ bundle in Latin America combined with the continued growth of OTT revenue was partially offset by domestic linear revenue pressure.
Domestic revenue was down slightly, while international revenue was up 37%. Media Networks segment profit was up over 100% and was driven by growth in revenue, lower distribution and marketing expenses and lower LIONSGATE+ operating costs associated with market closures.
We ended the quarter with 29.7 million total pro forma global subscribers, including STARZPLAY Arabia. Pro forma global subscribers increased by 1 million both sequentially and year-over-year.
Focusing specifically on our OTT subscribers, we ended the quarter with 19.8 million pro forma global OTT subscribers. This represents year-over-year global OTT subscriber growth of 14%, comprised of domestic OTT growth of 7% and international OTT growth of 27%.
Now I'd like to talk about our Studio business. Revenue of $824 million was up 25% year-over-year, while segment profit of $123 million was up 48%. On a trailing 12-month basis, library revenue at the studio was a record $884 million, up 5% compared with the prior quarter's record trailing 12-month library revenue. In addition, the Motion Picture Group recorded its highest ever quarterly library revenue in the March quarter.
Breaking down the Motion Picture and Television Studio businesses, let's start with Motion Picture. Motion Picture revenue was up 85% year-over-year to $532 million, while segment profit of $94 million was up 89% year-over-year on the strength of Plane, Jesus Revolution and John Wick 4.
The success of John Wick will drive strong carryover profit into fiscal '24 and beyond, and we're excited to return to the pre-pandemic level of theatrical output in fiscal '24.
And finally, Television revenue of $292 million and segment profit of $29 million expectedly declined on the timing and mix of content deliveries relative to a strong prior year quarter. On a full year basis, TV achieved record profit in fiscal '23, and we continue to project strong segment profit growth in fiscal '24 on returning series and the release of The Continental this fall.
Now let's talk about our balance sheet. Excluding the restructured LIONSGATE+ territories from trailing 12 months adjusted OIBDA Leverage for the quarter improved to 4.5x. We continue to retain significant liquidity with $272 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 the unsecured bonds outstanding. And in particular, we purchased $58 million of our bonds in the quarter for $39 million, representing a $19 million reduction in net debt. Subsequent to the end of the quarter, we purchased another $85 million of our bonds for $61 million. Life to date, we have repurchased $285 million of our bonds for $196 million resulting in total net debt reduction of approximately $90 million and significant future cash interest savings.
In summary, we finished the year with a strong operational quarter and a further strengthening of the balance sheet while looking forward to a year of solid double-digit consolidated adjusted OIBDA growth in 2024.
Now I'd like to turn the call over to Nilay for Q&A.
Nilay Shah
Thanks, Jimmy. Operator, can we open the call up for Q&A?
Question and Answer Session
Operator
Sure. (Operator Instructions) Our first question comes from Steven Cahall with Wells Fargo.
Steven Lee Cahall
Sorry, I've got 3. So maybe first, just Jimmy, on the guidance for OIBDA. I think the midpoint is $425 million for the year. Any change at the segment level? It sounds like Motion Picture is really strong. You talked about strong performance at TV. So just curious how we think about that. And also on the timing, is it kind of front half-weighted?
Second question, just around the spin. How are you thinking about allocating the debt between the 2 sides, STARZ and Studio. It seems like STARZ probably can't handle a lot of debt. I just want to make sure we're thinking about that right.
And maybe just lastly for Jim Packer. Can you talk at all about what some of the drivers were of the big motion picture library sales that you saw in the quarter? Was this like a big delivery? Or did you just see a lot of home entertainment spend? I would love to kind of get some context there.
James W. Barge
Thanks, Steven. Yes, with regard to the guidance, so we're reiterating guidance across all of our business segments. As you've seen in the quarter, we -- in the fiscal year, we closed strong and exceeded expectations across all of our business units. So we feel well poised going into fiscal '24 with that guidance.
I would say on the cadence, Interestingly, it's back-end loaded, a lot like last year. So similar to fiscal '23 with perhaps a stronger second quarter. And this is because in the Q1 it's going to be impacted by the P&A spend in the Motion Picture Group.
We have 3 wide theatrical releases in the quarter compared to 1 in the prior year quarter. We also are going to have likely some pre-spend on Joyride, which releases on July 7. And then in STARZ, there's going to be carryover amortization from Ghost, which premiered mid-March. So that's the impact in Q1, and then in Q2, TV will benefit from the release of The Continental.
I would just add, too, that the free cash flow would similarly be back-end loaded, but overall positive for the full year as we continue to fund our investment content and marketing from positive free cash flow.
Regarding the financing, in terms of separation, you can see that we significantly reduced the amount of unsecured bonds, reiterate that they do remain at STARZ as we've spoken to in the past. We've taken this opportunity to strengthen our balance sheet, as you've seen, and to manage our capital structure as we move towards separation.
On the Studio side, we will refi the Term Loan A and Term Loan B upon separation. We have a significant amount of assets within Studio, as you know, including unsold library rights. And we'd return more likely to an asset-backed facility, which is similar to what we had prior to the acquisition of STARZ.
And then on the STARZ side, rounding out beyond the bonds, it's very possible that we would layer in some secured financing, more traditional term loan and Term Loan B. So separation will allow us to put in the best suited capital structure for each of these businesses.
Jim Packer
Steven, first of all, I think it's really great that the Motion Picture Group is back into releasing movies. Again, that's obviously a help for us. We had a 24-month bit of a drought. Now we're back into 8 to 10 slate, which is great.
Also, we all get a great halo off of the John Wick and the Hunger Games dynamics, having new movies come out. John Wick was a particular driver for us given the release, and we have Hunger Games coming up, obviously, in the fall.
And then lastly, it really was a great [tool] for us to get the 3 Quentin Tarantino movies. We now have 8, which really gives our library a unique situation in Hollywood, and we're going to take advantage of that.
Operator
Our next question comes from Thomas Yeh with Morgan Stanley.
Thomas L. Yeh
One, on the Studio side, I was wondering if you could opine on how we should think about the potential impact of a prolonged writers' strike, if that would impact our fiscal '24 outlook at all on that side of the business? And then STARZ, I think I've seen some notification about a price increase on STARZ in the U.S. Any help thinking about the execution of that and how many subscribers that affects? Is it just tenured subscribers? Or are new subscribers going to see that as well?
And then maybe squeezing one last one in on STARZ's ARPU, as we move more into the streaming bundle world, Jeff, can you talk about the potential impact that you might see on ARPU? Are you sacrificing any ARPU for better retention. It looked like it was pretty healthy in the quarter, particularly on the international side. So any help there would be helpful.
Jon Feltheimer
Jeff, why don't you start?
Jeffrey A. Hirsch
Sure. So yes, we have notified customers this week that we are adjusting their rate. This is existing and to new customers that our standard retail rate will go up $1. It will effect -- start going to effect June 26. We really looked at the business and did a lot of analysis around the business, we haven't changed the rate since we launched into the digital side of the world in 7 years. And in that time, some of our peers have done one and some have done 2 rate increases. And so we feel pretty good that with increasing our slate from 6 to 11 originals of all the great movies from Lionsgate, Universal are at sub $10, so it's a great value for the consumer. While there will be some short-term sub pressure, we think, net-net, it's a positive for the business.
James W. Barge
And Thomas, in terms of your question relative to the strike, we've not factored a prolonged strike into our guidance. But I think in terms of Motion Picture Group, I don't think you're going to see a significant impact I think if -- looking at 2008 precedent of 3 months, up to that point, I think the financial impact for us would be, if any, would be modest.
We've, of course, been preparing for the strike for several months, and we've got a significant content pipeline, completed projects and with our film and television library, our businesses are very resilient. So we're nicely poised for growth as we go into '24 and manage through the challenges.
Jeffrey A. Hirsch
And Thomas, on the ARPU question. As we talked about -- and John talked about in his prepared remarks, we're starting to see the bundling of -- or the rebundling of the business really start to come into in a bigger way. And to remind you, we've got great really connectivity into our 2 core demos, really hard to replicate. And so it's better for people to bundle with us to get access to those demos. Ultimately, what that means is that you're going to see some lower ARPU, but ultimately, that should result in lower churn, longer lifetime value and less marketing spend.
So ARPU will move around a little bit based on the number of bundles that we have in the business. But we still think long term, it will help us overall in terms of segment profit. In terms of international, you see a jump quarter-to-quarter. A lot of that is -- we had a lot of large bundled deals in some of the shutdown territories. And so that's normalizing to that long-term $2 range that we've talked about in the past.
Operator
Our next question comes from Barton Crockett with Rosenblatt Securities.
Barton Evans Crockett
Okay. Great. I was wondering if you could talk about the health of the market for selling your content to other services. We've obviously seen a lot of pruning by streamers from Max to Disney+ to Netflix. And are you feeling that in the market generally or specifically for your titles?
Kevin Beggs
It's Kevin. That's a great question. Look, there's no question that there's some more fiscal discipline being deployed across the entire business, and you're seeing that with some of the pruning that you mentioned in some of the platforms.
It's a hit-driven business, and there was a 4-year push toward huge volume and hoping to find some hits. And what's happening now is hits are just as important, but the middling shows that may not be performing as well are being winnowed out.
The interesting dynamic about a show that is not a giant hit or an immediate loss or loser is that it's not great kind of for the platform or the studio. So it's not a terrible thing. As much as we love all of our children, if some don't get promoted to the fifth grade, it's all right and we take our lumps and we focus on the hit.
So when you think about things like Ghosts and Power Book II: Ghost and BMF and Serpent Queen and Mythic Quest, these are the shows that we're spending a lot of our time on and focusing and getting them into later seasons where the profitability really rises. So we look at that. Of course, you want as many buyers as possible buying as much as possible. But a targeted buyer is helpful for a studio. So we are very positive about how it's all looking right now.
Joseph Drake
Barton, this is Joe. In the film business -- Barton, the film business, we're seeing as voracious demand as we have seen for the last couple of years. And I think it's -- there is still -- they're still going to continue to be a demand, as Kevin alluded to true premier content. We're currently the largest provider of widely asked releases that's available for sale. Other studios are obviously distributing their own in every territory.
And so in addition to traditional theatrical buyers, you have all of the platforms. You have other studios trying to fill their pipelines internationally. And we just came back from a market and it was as robust as it has ever been. I think we'll see it continue to be competitive. And I think Jim probably has a few thoughts about the library.
James W. Barge
Yes. Barton, I think you can see from our trailing 12 months, we really have had a great run here and it's continuing. I think part of it has to do with the Motion Picture Group new slate. Part of it has to do with a lot more clients. I mean we have about 10 to 15 different AVODs that we do business with. The fast market has really exploded. We actually have 10 fast channels in market right now. So we're able to take advantage of this amazing library in a lot of different ways which has not stopped, and I still feel very bullish.
Barton Evans Crockett
Okay. And then if I could ask kind of a related question. So wondering if you could give us a little bit more kind of background on 3 Arts. Obviously, there's some discussion. And obviously, that's not resolved, but I think that there's some caution in the market contribution to your business from 3 Arts and what this kind of discussion about, what they do with their remaining minority stake, what the materiality is of that to Lionsgate, if you could clarify, that would be nice.
Michael R. Burns
Yes. Thanks, Barton. I'm not, of course, going to give you any specifics about the discussions. But I would say that I'm sure the 3 Arts partners would agree. This has been a great partnership. And so right now, what we're doing is pursuing a number of paths to extend that partnership and most importantly, to grow our joint business together. So it's all good. We're going to move forward with them. As I say, there's a number of different ways we're going to do that, but it's all positive.
Barton Evans Crockett
But can you give us any sense of how meaningful that is and where it hits the P&L or not really at this point?
Michael R. Burns
I think you know I won't because if I was going to, we would have done that already. Thank you.
Operator
The next question comes from Matthew Thornton with Truist.
Matthew Corey Thornton
Most of mine have been asked, but I have 2 quick ones here. I guess, first, Shotgun Wedding, I think most of the proceeds came in 3Q, but I just want to see if there was anything that's now in the 4Q, any color there?
And then just with the success of John Wick at the box office, I'm just kind of curious if that's changed the prospects for partnering on a AAA video game, which I think you guys have alluded to a couple of times in the past. Any update there would be great as well.
James W. Barge
Yes. The Shotgun Wedding is in Q3. So that's the primary impact, so not really contributing significantly to Q4. And Joe will take the...
Joseph Drake
As it relates to the video game, we are continuing to have those conversations. There's a ton of energy around it. What I would say is with the success of John Wick 4 that actually you see growth from 3 to 4 which is very rare in any franchise, much less an action franchise, creates a lot of energy and excitement in the company. It does the same with filmmakers.
And we're now moving across that franchise, not just in the AAA video game space, looking at what the regular cadence of spin-offs, television, really growing that universe so that there is a steady cadence of a franchise that there's clear appetite by the audience.
Matthew Corey Thornton
And maybe can you just remind us, is John Wick 5 official? I think it was scheduled initially to be about a year later and then there were some back and forth as to whether that was still the case. Is that still official?
Joseph Drake
What is official is that, as you know, Ballerina is the first spin-off that comes out next year. We're in development on 3 others, including 5 and including a television series, The Continental, will be airing soon. And so we're building out the world and when that 5 movie comes, will be an organic -- will be organically grown out of how we're starting to tell those stories. But you can rely on regular cadence with John Wick.
Operator
(Operator Instructions) The next question comes from Jim Goss with Barrington Research.
James Charles Goss
I had a couple of questions. First one, I'd ask if there are certain elements that will remain with STARZ as a surviving company, if you will, that landscape, the new landscape will be free of. I'm sure Jimmy will remember the Westinghouse assets had stayed with CBS after the Viacom spun itself out of itself.
James W. Barge
Jim, I think the segregation of the assets is pretty straightforward in the context of this particular separation. So I would remind you though that the intercompany eliminations, they're self-eliminating upon separation, and it's just math.
So currently, they're masking the strength of our stand-alone businesses. So anywhere from $36 million of intercompany eliminations in fiscal '23 to the low point of the -- low point of the guidance range of '24, $750 million, so -- or $75 million. So just at a 10x multiple, that's masking close to $0.5 billion of enterprise value.
And then on the leverage side, likewise masks the leverage, which affects trailing 12 months, and that's about a half a turn of leverage being masked. And I would say, just to remind you that the STARZPLAY Arabia, we sold about half of our interest last quarter for $45 million, and we still retain about a 14% stake and that is expected to travel with STARZ.
James Charles Goss
Okay. Two others, the faith-based audience is sort of an interesting development. I wonder if you can talk about how -- if it's affecting basically continued development on the studio? And I assume it's not -- that part is not really affecting STARZ so much given the nature of the programming on STARZ.
Joseph Drake
Thanks for the question. Yes, on the faith-based side, we made a commitment to this business, interestingly right before COVID happened, and it's finally come into fruition that audiences are coming back into theaters. You saw the performance of Jesus Revolution, which wasn't a real surprise to us. We just needed audiences back. We've always felt that we should have 2 premier faith-based movies a year, one spring, one fall. And we're working with the best brands in the entire business, Kingdom Story Company that the Jesus Revolution, they did I can Only Imagine. And Dallas Jenkins, we're doing the Best Christmas Pageant Ever, which is a big brand in the space. Dallas is the creator of The Chosen, which we spoke about earlier.
And so our plan is to have 2 movies a year with the best teams in the business and branded stories in the space. And right now, we have lined up a movie in October. We have a movie the following March, and then we have our fall movie already in place. So important in the space for us.
The last thing I would say about that space, it's an incredibly efficient space as well. That audience is super efficient to target from a marketing perspective. And so we love that space and we're going to stay in it.
James W. Barge
And Jim, I would just add that with regards to SPA, we may retain that investment stake as part of the Studio, to be determined.
James Charles Goss
Okay. All right. Last one. I notice this description, you said Lionsgate brand stands for bold, original, relatable. A lot of companies will make statements like that, and that actually fits pretty well. But usually, movie company brands, aside from maybe Marvel or Pixar or Disney, they tend to own most of them, don't really resonate. Nobody really goes to see the movie because of the brand. Maybe Lionsgate is different. I'm wondering if you can talk about how you're using that and to what advantage can you put it.
Joseph Drake
I think at a consumer level, I think there's aspects of our business. So as an example, I just got done speaking about the faith space. I think Kingdom stands for something in that space. I think that within the industry, Lionsgate stands for bold, we do make original movies. There aren't many companies still doing that. So I think that we are -- it certainly has brand value within the industry because we have such a diverse slate, we're making action movies. We're making faith-based movies. We're making horror movies, doing all kinds of things. I don't think that like a Disney perhaps, Lionsgate is a specific brand to the consumer.
Jeffrey A. Hirsch
Yes. I would add, when Michael and I started in January 2000, we made culture important. We made being entrepreneurial important. And when we started doing movies and television shows that everybody else passed on like Saw and Monster's Ball and Fahrenheit, 9/11 and it sort of extended to Hunger Games and now sort of really edgy movies like Joyride, I think about the culture inside the company, our ability to pivot quickly, particularly in a difficult environment like we're in right now.
And frankly, to take chances with movies, look at Sisu, Sisu is a super profitable movie for us, and nobody else would have done that movie. And so the way we market, the way that we look at acquiring content, the way we look at green lighting content, I think whether that's something for the consumer or sort of that's a message we're sending to the business and to the creators that we do business with and who say, this is something we should take to Lionsgate because they will take a chance on it, I think it's meaningful and significantly meaningful for our business.
And frankly, I would say the reason we're the only studio that has started what in the last 70, 80 years that really is still standing at this point in time because I think we did build a different mousetrap. It's not necessarily a better mousetrap, but it's our mousetrap, and we're really consistent about how we operate this business. We're really efficient about how we operate this business. And so I think brand, in that respect, even if it's not a consumer brand like Disney certainly is, we think that brand is really effective. And it's a rallying cry for all of our business partners here at Lionsgate.
Operator
Our next question comes from Matthew Harrigan with Benchmark.
Matthew Joseph Harrigan
Could you comment further -- I mean now that you have even more prominent brands, John Wick has really taken off. I know you have a number of other things in the hopper on the interactive entertainment and particularly the video game potential there? And also, Joyride, we're seeing a tremendous amount of buzz, but it feels like the Asian market is still very remarkably underserved at this point. Do you have anything else in development there? And I assume you would probably agree with that observation.
Joseph Drake
So on the video game side, I don't think there's much more to say. The conversations continue. And hopefully, we'll have something more specific to announce soon on John Wick. As it relates to Joyride, sure, part of what we always talk about is we have our tentpole pillar brands. We have really extraordinary economics given the way our international operation works and what's happening here domestically and the efficiency P&A that we also have the ability to do a handful of super interesting, exciting original movies that have the chance to explode.
We took Joyride to South by Southwest and it got the kind of energy underneath it that one would hope, and we think it's going to do great business for us. We acquired a movie at Toronto called The Blackening that we're incredibly excited about, same kind of situation where you've got an original movie that we think we can turn into a real event for an audience.
And we continue to populate our slate every year with 2 to 3, 4 of those movies a year because if you -- if you actually look at the history of Lionsgate, there was a time when John Wick was just an original story, medium budget film.
The Hunger Games, same thing. I was here when we bought that book, there were 40,000 copies sold at the time. And so most of these things at Lionsgate start out as original movies, we happen to have economics that allow us to do that and continue to mine that space as well as really monetize those big brands competitively with any other studio in the marketplace.
Operator
The next question comes from Alan Gould with Loop Capital.
Alan Steven Gould
First for Joe, are a dozen films a year your sweet spot? Is that where you want to be and can you unpack a little more on what your expectations might be for the Hunger Games Freefall, what kind of response it's gotten so far?
And then a question for Jimmy. As you increase production, how should we think of the investment in content? It looks like for the past year, the Studio was about $1.5 billion and Media Networks $1.2 billion. Should the Studio grow from that level?
Joseph Drake
So I'd say on the dozen films a year, that's what our slates look like at a planning stage and in terms of what we have currently calendared. What John -- we continue to look for opportunities, so Jon mentioned a very interesting movie we released in the last quarter that wasn't on the schedule 3 months ago called Sisu. We're seeing a new model. We did something like this last year with a movie called Fall.
At that multi-platform business, we're seeing movies that have theatrical potential that we can leverage our infrastructure without spending a lot of P&A that can be incremental to that slate and widely improve those segment 2 economics.
And so Sisu is an example, we nearly quadrupled the return on that movie by just leveraging our infrastructure with very limited media dollars. And we think that we're one of the -- we think that's a real differentiator for us. There aren't really other studios playing in that game. And so there is the potential as we source the content to add 2, 3, 4 of those a year and duplicate that model.
James W. Barge
And Alan, with regards to your question on the investment in production and programming spend, this year was lower relative to the prior year, mostly timing. We're still seeing -- we're not pulling back. We're still seeing strong demand. So I would expect things to move up just a little bit in '24, but I'd expect likewise, we continue to fund all of our investment in content as well as marketing behind that from positive free cash flow.
Joseph Drake
On the Hunger Games, I forgot to answer that question for you. We're seeing some really interesting things. The team did something really smart. They planned it about a year ago. We lined up all of the 4 original movies to play on Netflix, so that they would get very wide viewership and we can start to ignite a conversation digitally. And what we had hoped to be a conversation turned into a bit of a revolution actually, where the fans took it over on their own. And what we saw was very exciting, not unlike what we saw with Wick 4, which is that you could see in the data prior to Wick 4 that there was the potential that the audience has expanded.
And what's happening on the Hunger Games side is the original levers of Hunger Games have really energized and are super excited and picked this movie up and kind of put it on their back and created a lot of chatter. But we've also seen is a new generation. The kids of those fans who are now taking mom and dad's book, book sales are going up because those -- that next generation is finding the franchise, they're following the first 4 movies and want to see the next one.
So between the research and data that came out of that initiative, coupled with we've seen the movie. And it is just a spectacular piece of cinema. And so those things have us very, very excited about what's going to happen for us this fall.
James W. Barge
I'll give you a little more color, Martin, on the -- Alan, sorry, in terms of the increased production spend. You see that mostly on the studio side, right, as you ramp up on your theatrical slate and filling the demand on television production and a little more modest settling of production spend on the STARZ side as they manage our portfolio programming.
Operator
The last question comes from Devin Brisco with Wolfe Research.
Devin MacArthur Brisco
I have a follow-up really on the last content spend question. I'm curious, as you get closer to a potential spin, how you think about managing STARZ and specifically the domestic business, how do you think about managing profit and free cash flow growth versus further investment in scaling the sub base?
Jeffrey A. Hirsch
It's Jeff. I'll start and Jimmy can jump in. Look, like we said, we've got 2 really, really valuable core demos, as I said, are hard to replicate. It really makes us a great complementary service to almost anybody out there. We do think there's a lot of opportunity domestically. TAM is somewhere between $70 million and $80 million. So we've got a long way to go to drive in that business. And we do think that long-term margins should hover approximately around 20%. And so we're on a path to get there. And so we'll start to manage toward that long-term goal.
Michael R. Burns
Yes. And I would note that this was a year where we expanded our programming from 6 to 11 originals. So obviously, to get to that sort of run rate position. We actually spent a fair amount of more free cash and made a bigger investment in that business. We expect that to turn around, get the benefits of that going forward.
I wouldn't expect to actually expand that programming much beyond that for at least a year, maybe even a little bit more than that because we manage with that amount of original programming plus, as Jeff mentioned, we have the Lionsgate pay 1 movies coming down and the Universal pay 2. So we're going to have a really full motion picture slate, which actually all the streamers are starting to realize that these well-marketed movies that go into the marketplace with a lot of recognition don't require nearly as much marketing spend from the streamers.
So we think we're in really good shape from the perspective of free cash flow and sort of where that business is and sort of getting to a position of financing itself.
Nilay Shah
Thanks, Devin. And thanks, everyone. Please refer to the Press Releases and Events tab under the Investor Relations section of the company's website for a discussion of certain non-GAAP forward-looking measures discussed on this call. Thanks all.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may all disconnect.
