Lions Gate Entertainment : 2023 Annual Report

LIONS GATE ENTERTAINMENT CORP.

2023

ANNUAL REPORT

To Our Shareholders:

In fiscal 2023, we successfully executed the key elements of our strategy: growing our content pipelines; extending our portfolio of brands and franchises; carrying out strategic initiatives to increase the value of our businesses; creating new efficiencies in our operations; and strengthening our collaborative and entrepreneurial culture.

We finished the year with strong financial results, growing our revenue to $3.85 billion and reporting $358.1 million in adjusted OIBDA. We continued to grow our film and television library, reporting a record $884 million in trailing 12-month revenue. We also opportunistically paid down debt, buying back $285 million of our bonds for $196 million, a net savings of nearly $90 million, ending the fiscal year with $272 million in available cash and an untapped revolving credit facility of $1.25 billion. We continued to generate positive adjusted free cash flow during the year, while investing $2.7 billion in content and marketing, and we enter fiscal 2024 with strong momentum and projected double-digit adjusted OIBDA growth.

We're also continuing to create incremental value through our strategic initiatives. After the fiscal year ended, on August 3, 2023, we entered into a definitive agreement to acquire the global entertainment platform eOne from Hasbro for approximately $375 million in cash, a transaction that will add thousands of titles to our library, deepen our content pipelines with new television and film brands, strengthen our scripted and unscripted television business, and expand our presence in Canada and the UK. We expect the transaction to be immediately and highly accretive. During the year, we also continued to monetize non-core assets with the sale of a portion of our minority stake in STARZPLAY ARABIA for approximately

$45 million.

On July 12, 2023, we filed our public Form 10 with the SEC as the next step in our plan to separate Lionsgate and STARZ. The integration of Lionsgate and STARZ helped transition STARZ into a profitable premium streaming platform, and now we believe that the operation of our studio and STARZ as independent, standalone, pure play companies will unlock greater value and allow both companies to scale their respective businesses.

Renewing Current Franchises While Creating New Ones

Fiscal 2023 was a year in which we extended many of our biggest franchises, cultivated new ones and added important third- party properties for global distribution. John Wick: Chapter Four grossed a franchise-best $440 million at the global box office as it grows its performance from one installment to the next. We completed principal photography on the action

spin-offBallerina, starring Ana de Armas, and in September 2023, we successfully launched the prequel event series The Continental on Peacock and Amazon Prime, one of our most lucrative television properties in years. We also finalized an agreement to produce a John Wick AAA game with a major video game developer and publisher.

After the close of the fiscal year, Saw X returned to the franchise's roots with a strong performance at the box office and the best reviews in franchise history. Excitement continues to build for the November 17, 2023 release of The Hunger Games: Ballad of Songbirds & Snakes, the first Hunger Games movie in eight years. Beyond that, we're preparing to begin production on Now You See Me 3, to be directed by Ruben Fleischer, and continuing the fast-track development of Naruto, based on one of the world's biggest manga franchises, and Highlander, with John Wick filmmaker Chad Stahelski set to direct. We also greenlit the production of Michael, the Michael Jackson biopic chronicling the untold story of the King of Pop, from producer Graham King and director Antoine Fuqua.

The acquisition of eOne will add the television franchises The Rookie, Yellowjackets and Naked & Afraid along with film development rights to the coveted Monopoly brand. Our Worldwide Television Distribution Group continues to secure distribution rights to leading third-party properties like Quentin Tarantino's Kill Bill Volumes I & II and Jackie Brown, the historical drama The Chosen, with more than 110 million viewers worldwide, and the television series The Conners, currently in its sixth season on ABC.

Adapting Our Motion Picture Business to a Changing World

During the year, we continued to re-imagine our Motion Picture Group in order to capitalize on strengths which help us adapt to a fast-changing landscape. We are surrounding our tentpoles with a thriving multiplatform and direct-to-streaming slate of over 50 films annually that reflects alternative distribution strategies and innovative business models. Lower-budget successes like Sisu, Fall, Clerks III and Alice, Darling led a multiplatform and limited release slate that generated record profit contribution during fiscal 2023.

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We are also growing our leadership in the faith-based vertical. Building on the success of the breakout hit I Can Only Imagine, we reteamed with Kingdom Story Company on fiscal 2023's box office hit Jesus Revolution. Upcoming titles from our Kingdom partnership include Ordinary Angels, starring two-time Academy Award winner Hillary Swank, and Unsung Hero, slated for release for Easter weekend 2024.

Maturing Series Driving Growth in Profitability

Our Television Group posted record revenue in fiscal 2023 with profitability also expected to grow as current hit series continue to mature. Eight Lionsgate Television series, led by Ghosts on CBS, one of the top-ratedhalf-hour comedies on television, Mythic Quest and Acapulco on Apple TV+, and P-Valley,BMF and two of the Power Universe installments on STARZ, are in their third or fourth seasons with their recent renewals driving growing profitability and long-term library value.

The world's leading independent supplier of premium scripted series at scale, Lionsgate Television also continues to generate major newproperties. The Continental was one of the most highly-anticipated streaming events of the year on Peacock and Amazon Prime, Love & Death became the most watched limited series in the history of Max, and the comedy Extended Family starring Jon Cryer for NBC, the Seth Rogen comedy for Apple TV+, and the thriller The Hunting Wives (in collaboration with 3 Arts Entertainment) for STARZ lead the next wave of properties green-lit for production or preparing to launch.

During the year, the Television Group also expanded into lower-cost international co-productions with the CBC (Son of a Critch, Wong & Winchester) and Bell Media in Canada, Channel 4 (Queenie) in the UK, and Stan (Prosper, Population 11) in Australia. Lionsgate has also been a first mover in capitalizing on the boom in FAST Channels, launching Moviesphere, Hersphere, Outersphere and nearly two dozen other services that continue to grow the value of our library IP.

With more than 100 shows spanning our premium scripted series business, our partnership with 3 Arts Entertainment, our minority investment in U.K.-based talent management company 42, unscripted programming powerhouse Pilgrim Media, leading syndication company Debmar-Mercury and soon eOne, our diversification helps us weather cyclicality in any one part of the business.

Another Record Library Revenue Performance

This has been another year of record growth for our crown jewel library. Revenues have increased from approximately $500 million to nearly $900 million in the past 10 years, adding an incrementalannual run rate of nearly $200 million in cash contribution. Growth in contribution has been driven in large part by the library's changing composition: 10 years ago, more than 60% of library revenue came from acquired and managed third-party catalogs. Today, 75% of our library revenue comes from feature films, television series and STARZ original programming that we created. The long tail of our library is also growing, with 16% of fiscal 2023 library revenue generated by titles outsidethe top 500.

STARZ Reports Another Profitable Year

STARZ has continued to be one of the few profitable subscription services with a focused content strategy, a successful transition to digital with more than 60% of revenue and subscribers coming from streaming, and the repositioning of its business to concentrate on English-speaking territories where our content is resonating. After the end of the fiscal year, the service also implemented a subscriber rate increase as part of its margin growth strategy.

STARZ's content strategy has produced five hit series with more than eight million multiplatform viewers apiece, added three new hit series to the Power Universe and grown Outlander into a major brand with the prequel Blood of My Blood set to debut next year. The service has also begun a significant ramp in movies from its theatrical output deals, with 27 movies expected in fiscal 2024 compared to 14 in fiscal 2023. John Wick: Chapter Four had a strong launch on STARZ in September 2023, while the success of smaller movies such as Plane, Operation Fortune and Fall affirmed the importance of complementing original series with a robust slate of films to drive subscriber growth and retention. As part of its movie strategy, STARZ recently extended its Pay One theatrical output deal with Lionsgate into 2027.

STARZ also continues to be a bundling and packaging partner of choice, announcing bundling deals with MGM+ and AMC+ domestically and Hayu and YouTube in the U.K. As the industry continues to evolve, STARZ's clearly defined premium programming strategy and the appeal of its valuable and scalable core demos will keep it at the forefront of new bundling and packaging initiatives as well as aggregation and consolidation opportunities expected to emerge after the separation.

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Continuing to Strengthen Our Entrepreneurial Culture

Our greatest resource is our people. During the year, we continued to take steps to further strengthen a culture that has met the COVID pandemic and the industry's first double strike in more than 60 years with great resilience. We made our workforce more diverse and inclusive, with women making up nearly 60% of new hires and employees of color nearly 30% during the year. We doubled employee participation in our Employee Resource Groups and continued to increase the number of minority vendors with whom we do business. Widely recognized for its #TakeTheLead initiative, STARZ took part in White House ceremonies to celebrate the Juneteenth holiday and was hailed by Fast Company as "one of the brands that matters." During the fiscal year, we also returned employees to the office in order to take full advantage of our collaborative, no silos, "Lionsgate 360" culture.

In closing, our industry is evolving at an unprecedented rate, creating significant challenges but also opening up a wide range of opportunities. We bring to these challenges and opportunities a resilient business model, a vibrant culture and great IP along with a not-easily-replicable portfolio of assets anchored by one of the most valuable content libraries in the world. As we continue to execute our strategic agenda, we are confident that our unique place in the media ecosystem will enable us to create incremental value for our partners, audiences, employees and shareholders.

Sincerely.

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