LION - NASDAQ

Good day, and welcome to the Lionsgate Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this 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 Lionsgate Studios Corporation's Fiscal 2026 Second 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, Adam Fogelson; President of Worldwide TV and Digital Distribution, Jim Packer; and Senior Adviser to the Office of the CEO at Lionsgate and Co-CEO of 3 Arts, Brian Weinstein. The matters discussed on the call also 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 our public filings for Lionsgate Studios Corp. 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.

Thank you, Nilay, and good afternoon, everyone. Thank you for joining us. We reported a quarter in line with our financial expectations and with all signs pointing to significant growth over the next 2 quarters and through fiscal '27. We're pleased to report that our trailing 12-month library revenue reached $1 billion for the first time, a record performance that highlights not only the value of our library, but our entire portfolio of intellectual property. During the quarter, we continued to invest in that portfolio by preparing our tentpoles for fiscal '27 and beyond, wrapping production on Michael while shooting the Hunger Games and 2 Resurrection films. This morning, we dropped our first Michael trailer to kick off the marketing campaign for what we believe will be a true motion picture event in April. This week, we announced a multifaceted deal with Millennium to acquire all future film and television rights to the Expendables franchise and worldwide distribution rights to the next Rambo movie, starring The Recruit's Noah Centineo and directed by Sisu's Jalmari Helander. We will also be the lead studio on all future Rambo TV series. Next week, I will be in London for the launch of the first ever Hunger Game stage play. Early ticket sales have been so strong that the play has already been extended to October 2026, kicking off a roster of Lionsgate stage plays that includes La La Land, Dirty Dancing, Wonder and Silver Linings Playbook. In a difficult operating environment, our television business has scored 3 wins in a row with the studio, winner of a record 13 Emmys, including Best comedy, the breakout hit, The Hunting Wives for Netflix and most recently, the Rainmaker, 3 different types of shows on 3 different kinds of platforms with 3 different financial models. All 3 have been renewed for second seasons. And our 3 Arts talent management and production company continues to have a year of strong growth and diversification. Last quarter, 3 Arts expanded into sports with the acquisition of A&A Management, adding world-class athletes like NFL Superstar, Travis Kelce to the newly rebranded 3 Arts Sports. This quarter, they built on that momentum by hiring leading sports manager and entrepreneur, Sheyi Olaoshebikan, who has already brought aboard NFL star Miles Garrett, as 3 Arts continues to build a top-tier sports talent management business. Turning to our Motion Picture Group. From Now You See Me 2 resurrection, we've put together a film slate primed to deliver strong growth over the next 18 months. We have 3 major holiday season releases with excitement building for the return of Now You See Me's 4 Horsemen opening next Friday. Paul Feig's thriller, The Housemaid starring Sydney Sweeney and Amanda Seyfried and based on the first novel of the best-selling Housemaid Trilogy is generating strong buzz ahead of its December 19 release. And rounding out an active 2 months, we're pleased to extend our collaboration with one of the greatest filmmakers of our generation with the December 5 release of Quentin Tarantino's Kill Bill, The Whole Bloody Affair, presenting the entire Kill Bill Epic as a single combined film in theaters nationwide for the first time. Speaking of classic theatrical releases, we partnered with Fathom to release the 5 Twilight movies in theaters last week to celebrate the 20th anniversary of the first Twilight novel. It was one of Fathom's top releases of the year with the first Twilight film opening at #2 at the box office out of all releases 17 years after its debut. Our 3 tentpoles in fiscal '27, Michael this coming April, the Hunger Games in November and the first Resurrection movie in March 2027, followed by the second Resurrection film to kick off fiscal '28, give us added visibility into our slate in an unpredictable box office environment. Beyond these tentpoles, we continue to develop many of our signature properties, Saw, Blair Witch, American Psycho, Monopoly, Naruto, based on the blockbuster Manga property and new films from the John Wick Universe. In television, our go-forward slate has a strong cadence as we secured key renewals for Ghosts, The Rookie, The Studio, The Hunting Wives and the Rainmaker with an anticipated doubling of scripted series deliveries from fiscal '26 to fiscal '27. And we continue to refill our pipeline with strong new shows like Robinhood, which debuted on MGM+ last weekend, Spartacus House of Ashur, which just dropped its first trailer ahead of its December 5 debut, bringing back one of Star's most successful brands, and the adult animated Twilight TV adaptation Midnight Sun, which is being ready for production at Netflix. The new season of Power Book IV: Force returns tomorrow on Starz with Power: Origins, the next installment of a franchise that has already generated 3 hit spin-offs launching next year. In an ultra-competitive environment, we have to work over time and entrepreneurially for every win. We found the right home in Netflix to grow The Hunting Wives, putting together a viral grassroots marketing campaign to propel it to 6 weeks in Netflix's U.S. top 10 and renegotiated our international licensing deals to pave the way for a second season Netflix renewal. We partnered with Blumhouse and shot the Rainmaker in Ireland to create a winning financial model for our network partner at USA. And we continue to grow the long tail of older series with deals in new and traditional markets alike, securing a third cycle syndication sale for Mad Men, testing a traditional broadcast syndication rollout for Ghosts in 14 markets and exploring opportunities to repurpose several of our classic series for the micro drama market. It's important to note that the value of our continued investment in scripted television, playing the long game in order to retain rights is becoming more and more evident with the percentage of our library revenues from television doubling over the past 10 years. Operationally, in September, we made the difficult but necessary decision to reduce our headcount by approximately 5% bringing overall headcount reduction over the past 18 months to more than 20% as we continue to align our business with the reality of a changing marketplace. On the technology front, we continue to find exciting new use cases as we apply AI to more areas of our business, increasing our productivity, generating cost savings and expanding our creative toolkit. But we're also diligently protecting our content and that of our partners from unauthorized use of AI. Our intellectual property is the core of our business, and it is our prerogative to decide when, where and how to use it. But we do believe that as long as appropriate guardrails are established, the growing intersection of entertainment and AI will ultimately create significant and mutually beneficial value. In closing, for the past 100 years, the big idea driving the entertainment business has been if you build it, they will come. If you make a movie and you put it in theaters, they will come. If you put television series on 3 or 4 broadcast networks, 100 million homes will watch them. Today, as our world expands into new digital and social media platforms, audiences are harder to find, harder to engage and harder to market to. But they are also consuming more content across more platforms than ever before, offering even more upside to a company like ours that brings to this new environment a massive portfolio of content, a roster of valuable franchises, efficient production models and an entrepreneurial spirit. Now I'd like to turn things over to Jimmy.

Thanks, Jon, and good afternoon, everyone. I'll briefly discuss our fiscal second quarter 2026 Studio financial results and provide an update on the balance sheet. For the quarter, Lionsgate Studios revenue was $475 million, adjusted OIBDA was $14 million and operating loss was $46 million. Reported fully diluted loss per share was $0.39 and fully diluted adjusted loss per share was $0.20. Net cash flow used in operating activities was $104 million, while use of adjusted free cash flow for the quarter was $129 million. Trailing 12-month library revenue grew 13% year-over-year to just over $1 billion, reaching record levels for the fourth consecutive quarter. Now breaking down our performance in the quarter, let's start with Motion Picture. Motion Picture revenue was $276 million and segment profit was $31 million. Revenue was expectedly down year-over-year due to a difficult comparison with last year's second quarter, which had 5 wide theatrical releases in the period relative to just 2 releases this quarter. Segment profit was up significantly year-over-year as we rebounded off of last year's underperformance of Borderlands. We anticipate Motion Picture segment profit to build from Q3 to Q4, driven by an increase in titles entering their Pay 1 window in Q4 and P&A spend, primarily tied to Now You See Me: Now You Don't and Housemaid being weighted to the third quarter. There will be some P&A spend in the fourth quarter tied to April release of Michael. Which will be followed by other highly anticipated fiscal '27 titles, including the November release of Hunger Games, Sunrise on the Reaping and the March 27 release of Resurrection Part 1. This cadence of tentpole films, coupled with our mid-range budget slate, gives us extended visibility and bolsters our view on motion picture growth in fiscal '27. Now moving to TV. Revenue was $199 million and segment profit was $13 million. Revenue and segment profit were expectedly down year-over-year due to the timing of episodic deliveries in the quarter. We expect strength in segment profit in TV over the remainder of the year, driven by an increase in deliveries and incremental licensing revenue tied to The Hunting Wives, which will be available in more Netflix international markets over the coming months. Furthermore, as we noted on our prior call, we are forecasting significant growth in scripted deliveries next year, strengthening TV's financial outlook in fiscal '27. Now let's take a look at the balance sheet. We ended the quarter with $1.7 billion of net debt, expectedly reflecting a modest sequential increase in leverage to 6.4x on the timing of content spend. In addition, we strengthened our balance sheet by upsizing our IP facility by $320 million. We used the proceeds to early pay the Spyglass library acquisition facility, reduce our revolver draw to 0 and stockpile cash. We ended the quarter with $800 million of undrawn revolver and $247 million of cash on the balance sheet. We are similarly seeing strength in off-balance sheet assets as evidenced by our backlog ending the quarter at approximately $1.6 billion, up $379 million or 31% sequentially. As you will recall, backlog represents off-balance sheet contractual orders not yet delivered and is indicative of the strength we see in our future revenues and cash flows. We continue to anticipate that fiscal '26 will be a back-end loaded year, and we expect sequential growth into Q3 and Q4. Additionally, as we noted last quarter, we expect stronger carryover of profits from our fiscal '26 film slate into fiscal '27, which combined with our previously discussed tentpole-driven fiscal '27 slate and a TV business that is expected to show significant growth next year gives us confidence that we are still on track to deliver strong adjusted OIBDA growth in fiscal '27 relative to fiscal '25. Now I'd like to turn the call over to Nilay for Q&A.

Thanks, Jimmy. Operator, can we open the call up for Q&A?

[Operator Instructions] Our first question comes from David Joyce with Seaport Research Partners.

Two questions, please. First, if you could drill down some more on what's giving you the confidence for the back half of this year in 2027 and beyond with your slate granted. You explained the backlog being up significantly. But are there other metrics with social media or audience testing that you or your licensees are doing? And then secondly, if you could please comment on your views of the M&A optionality and what's going on more broadly in the industry.

David, it's Adam. I'll start with your confidence question in terms of the slate. Clearly, there is no perfect predictor out there. But that having been said, we are seeing a ton of excitement. Just yesterday, the day before, Exhibition was talking about a number of our films in the fourth quarter and into next year that they're seeing a lot of enthusiasm. We're getting a lot of traction online. I can't either confirm or deny that we participated in the [indiscernible] Heist, but Now You See Me has been all over social media, and The Housemaid is generating a ton of conversation. The Michael trailer generated over 30 million views in the first 6 hours of its launch today, which is 50% more than what John Wick 4 trailer delivered in its first 6 hours. The conversations around the Hunger Games with every announcement of casting and the massive global demand for Resurrection. All of that gives us confidence. We recognize that you can't be perfect in predicting each film, but when you look at the portfolio and the films I mentioned and a lot of the mid and small budget films that we have on our slate, it does give us an exceptional amount of confidence. And the growth we're talking about is not based on projecting that every one of those turns into a blockbuster, but we think we've got a bunch in that mix.

Yes. In terms of the M&A environment, I think we can all see it's incredibly disruptive. There's a lot of uncertainty out there right now. All we can do, David, is keep sticking to our knitting, building into next year with, again, a great TV slate, a great film slate and this library really starting to perform. And I can't say often enough, we've been investing for 25 years in that library, and we've retained rights almost every single time. We continue to retain them every time we can when we sell a television show. And so we own the majority of our library, and it's paying dividends for us right now. So we'll keep doing what we do, and we'll see all the -- where the bouncing ball ends up. It will be some interesting [ dead fellows ], I think.

And the next question comes from Brent Penter with Raymond James.

Good to see the Michael trailer out today and it sounds like really strong interest in that. There was a thought in the past that you all have some optionality on that in terms of the ability to then make a second film, assuming that one performs well. Can you update us on where we stand on that option?

Sure, Brent. It's Adam. Thanks for the question. Look, since the last time we were together on an earnings call, we have now had the great pleasure of seeing the director's cut of the first film, and it is exceptional. And while we're not yet ready to confirm plans for a second film, I can tell you that the creative team is hard at work making sure that we're in a position to deliver more Michael soon after we release the first film.

Okay. Great. That's good to hear. And then more near term, Now You See Me: now You Don't coming out next weekend, what's the general sense you all are getting from tracking on that relative to what you're expecting when you green lit? And then the first 2 movies were pretty big internationally. So should we expect there's a bit more revenue locked in there via some of those international licensing deals than what we typically see?

Yes. I mean, as I was saying on one of the prior questions, there is no perfect predictive measure, and I think tracking has become less reliable than ever. That said, the movie is tracking much closer to the universe of the first movie. So we think that where traditionally you see significant degradation between the second and third film, we think that performing in line with or ahead of the second film is possible. And it's important to note, this quarter of the year really needs to be judged over multiple weeks. You'll recall that when the last Hunger Games movie came out, we had a 4 multiple off a $44 million opening. And I think a 3.5 to 4.5 multiple on this film is what we should be thinking about the movie. There are a lot of social reactions to the movie that we've been screening online, and people are loving the film. As it relates to international, what I can say definitively is that, that international performance has led to high demand from our foreign licensing partners. And so that's already accounted for. And we are not -- we don't have a massive domestic gap that we're trying to deal with here. So the economics of this film are already considering its global appeal and Jim could speak to it, but we also have additional benefit not reflected in the individual P&L of this one film. When you make a good film in a franchise like this and have 2 existing installments out in the marketplace, there is meaningful financial benefit to that separate and apart from Now You See Me 3.

I think what you end up seeing is a halo on any of these remakes that we do or sequels or prequels. We've seen it. You can see it with John Wick. You can see it with Hunger Games. You can see it with most of these franchises, whether it's transactional, whether it's licensing, every single aspect of our business goes up. So we definitely get a benefit when we have a new one coming out.

Okay. Great. And then final question for me. You talked about the strong growth at 3 Arts. Can you just remind us the sizing of that business in terms of revenue and EBITDA? And what kind of growth exactly you're seeing?

Yes, Brent, in terms of just sizing the number, we're not going to disclose that separately. It's not something that we've provided. But I'll tell you, we're seeing very strong growth going in the second half. And remember, in particular, it's a nice seasonal business too in the December quarter. And so we're seeing nice growth going into the second half and that continued growth into fiscal '27. We like what we're seeing in that business and our partners there. And Brian can probably give you a little bit more color on the operations.

Sure. Brent, it's Brian from 3 Arts. Speaking, look, operationally, we're seeing a lot of positive momentum on the production side of our business, where we partner with and produce alongside of our clients. You have things like Season 2 and 3 of the new King of the Hill, which is back on the air, a business we've been involved with, a show we've been involved with from the start, obviously, along with our partnership at Lionsgate, the success of The Hunting Wives, another season for The Paper, more seasons for [indiscernible]. And then just this week, a third season for Nobody Wants This. So we continue in this environment to succeed on the sports side. We have real momentum, as Jon noted at the top of this call. But some interesting innovative stuff. Our client, Travis Kelce, who's part of the team we brought over now 3 Art Sports, formerly A&A management and a really innovative deal with channel partners and a bunch of compelling corporate relationships in Travis' world and just growth in the core business. So we feel pretty good about where we're headed, about representation in general as we continue to grow that platform beyond our historical core into other new areas where we can diversify the offering that we provide to our clients.

And the next question comes from Thomas Yeh with Morgan Stanley.

Just following up on that industry M&A question. As an active seller to many of these companies, it seems like you're still seeing pretty broad strength in the series orders and series pickup environment. Is there a sense that consolidation of the buyer pool could change those dynamics if the broader view is that they'd still be spending as much content, if not more, perhaps on a consolidated basis?

Yes. That's a great question. It's Kevin speaking. I think uncertainty when it's hanging over the market makes everybody buy a little bit less. The extended process of Skydance and Paramount froze Paramount for a lot of time. We're pretty excited about that being resolved. They've laid out to the selling community what they're looking for. They have an appetite to buy more dramas, more scripted in general. I think you're going to see more clarity around Comcast between the Peacock NBC Studio side and Versant, where we have Rainmaker, which has done really well. So that consolidation could happen, but in stronger buyers that have bigger appetite and are signaling to the selling community that they're healthy, that's a positive. Obviously, the more buyers than not as good, but unhealthy buyers are not good. But we are seeing some green shoots. It's not a full recovery, but we're off to a nice start this year, this summer between Studio, The Hunting Wives, Rainmaker. We just launched Robinhood. Force is about to go tomorrow. Spartacus is behind it. Ghost and Rookie are coming. Ghost just premiered 2 weeks ago, Rookie in January. It's a nice cadence of things and nice renewals, and that's giving us a lot of confidence about the market.

Okay. Helpful. And then, John, you mentioned ramping stage play adaptations and IP monetization kind of starting to kick in. Can you just help us think about the ancillary revenue opportunity and the economics that you'd be participating there? Is this like a high-margin licensing revenue sort of deal for like a Lava and musical?

I'll let Adam answer that. He's been really driving that business.

Yes. I mean it's not one size fits all. We're looking at each individual opportunity. There are a lot of no-risk licensing opportunities in here, but there are certain cases where we will take an investment position. It really depends on our comfort level with our being meaningfully additive to the creative process. But each of the projects Jon mentioned as it relates to stage and some of the stuff we've talked about in our previous conversations, continuing to see really great attendance of the John Wick Live experience in Las Vegas, and there definitely is interest in expanding that to other destinations. Our AAA game opportunities and other gaming opportunities around John Wick and Saw and some others that we'll be announcing soon, we're seeing increased interest and increased opportunity, and we remain on schedule. So I think in totality, you are going to see a meaningfully additive financial opportunity coming in the coming years.

And the next question comes from Omar Mejias with Wells Fargo.

Jimmy, first, you talked about the backlog now at $1.6 billion or up 31% sequentially. Can you expand on the puts and takes of this incremental demand? And are market trends improving on the TV side? Or is this a Lionsgate specific driver? Any help on unpacking the underlying strength would be helpful.

No, absolutely. The strength is across motion picture and TV and particularly the $380 million, 30% plus uplift sequentially was driven by both, but majority showing strength in television. So examples like Studio Season 2 rolling in, Housewife Season 2. Power Book Origins, Season 1, Yellow Jacket Season 4. So kind of broadly spread, giving us visibility as we were anticipating into the second half as well as into 2027. And as Jim mentioned a minute ago, with these franchises, whether it be the John Wick franchise or Twilight or Hunger Games, you just have continuing lift in demand. And so that's really nice in that window. And I would just say that of that $1.6 billion, 85-plus percent of that will come in, in the next 18 months. So this is not only second half, but it's also well into fiscal '27, and it's really reflective of how we're rebuilding the pipeline for future revenue and cash flow. I'll remind you that's off balance sheet, which means it's future revenue and cash flows.

That's super helpful. And then on leverage, can you remind us what can you do to bring down leverage? And where do you think you can get leverage to in the relative near term? So maybe twofold question here. How should we think about growth over the near to medium term to drive down leverage? And then just an update on where things stand with 3 Arts and the potential to bring in a partner there?

Sure. So look, we're naturally going to delever. I mean, you see it. Our peak leverage is probably going to be in Q3 and then back down in Q4 and then significantly declining as we go into '27 and '28. And this is really about restocking the pipeline. If you think about it, right, in Q3, we've talked about the P&A spend, we're going to have around Now You See Me and Housemaid. If you look at our content spend, it's generally throughout the year, but more heavily weighted to the mid-quarters, meaning Q2 that we're just coming out of and extending as well into Q3, we'll also have the P&A spend. So you'll see net debt balances rise a little bit. And really, the trailing 12 months, right, is a lower level than usual because of, again, we got the P&A spend, we're rebuilding the pipeline. And then what you'll see is the delevering will naturally occur with the ramp-up in trailing 12 months adjusted EBITDA. I think as we go out into '27 and I would say even into '28, right, which we're going to have great carryover from '26 into '27, even stronger carryover from '27 to '28, we're going to get back to that 3 to 3.5x leverage that we're more comfortable with. And that is not taking anything into consideration with regards to a potential 3 Arts transaction, it would obviously result in delevering.

Yes. We're talking to 4 or 5 potential partners. We have a nice growth profile, as Brian said, in terms of sports and in terms of our news personality business, and we're seeing really tremendous uptick of activity across the board there. We should have more information, I think, for the Street in the first quarter and be able to kind of hone in on whether there's a smart deal to be made. But if we can find the right partner at the right deal to help us grow that business, we're going to do it.

Great. And lastly for me, Jon or Adam, excited about Michael. Watched a trailer today and looks great. Curious what's the early feedback on the trailer? And what's the potential opportunity for this film globally?

The response has been overwhelmingly positive. People have been waiting a long time for this. The trailer, I think, smartly acknowledges that with the very first words that are spoken in the trailer. And we have seen wild enthusiasm. I think people are stunned with Jaafar's performance even in the short amount that's in this first relatively brief teaser. I think the production values are there. I think when you look at the quality of the filmmaking team and look at the kinds of films that they've delivered in the past and you look at the successful -- the top-tier, most successful sort of musical biopic that have ever come out, you see a broad range, but all of those broad range results would be fantastic wins for the filmmakers and for the studio and for our partners at Universal and our partners in Japan as well. So I think if you look at the top-tier musical biopics, you get a pretty good sense of what the range is. And anything in any version of that is going to be a huge success.

Our next question comes from Matthew Harrigan with Benchmark.

Living in Colorado, I'm not even a particularly avid Broncos' fan, but I can't -- I think I'm going to have to take 3 or 4 points off you -- my price target for your signing Travis Kelce, not a fan of that one. But seriously, I'm curious on the Resurrection movie, it sounds very complicated, Marvel movie plus on the special effects. I know you're recasting so you don't have to go through the aging process, even though that's more feasible now from an AI vantage point? I think you said you couldn't have done it at all 2 or 3 years ago. But are you completely confident that you can meet -- you probably wouldn't -- would have said it already if there's any hesitation, but are you confident you can get that together? And what is the possibility of that also breaking into 2 parts? Similarly, I know it's probably a little early relative to Michael because you've seen so much of Michael. And then secondly, you must be really confident in Now You See Me because whether you watch the election night results or the NBA or the NFL, you've got a pretty heavy load of commercials for that they're often not full 30 second. But what are you seeing in the cost of advertising from your vantage point? And what are you doing to change the marketing? By the way, I'm a little surprised with AI and everything that it's actually getting harder to track films. It's kind of intuitively, I would think that you might have better visibility rather than worse. But I know it's always been an art rather than a science, kind of fracturing the question a little bit there, but I'm sure you get it.

Okay. Matt, that was a complicated question. But I'm going to go to our man on the ground actually in room right now to answer the first part of your question. Mike, you're there. Let's talk about resurrection.

Yes, I am. Matt, I had dinner with Bruce, the producer and Mel Gibson tonight. I was on the set today, had a visit actually with the new ambassador from Italy. And the visit, I felt like I was going -- walking in Jerusalem. The sets are extraordinary. The movie is on time, on budget. Mel showed me a bunch of footage that he shot at dinner. He is quite a filmmaker, and Adam and I hotly pursued him for this movie. It is going to be 2 movies. It is not 1 movie. It is going to be 2 movies, and Mel thought his comment to me tonight that it was going to be -- each one of those pieces would be less than 2 hours, and -- but he feels very confident that he's got a real one-two punch here. So what I saw today was extraordinary and Mel Gibson can really direct. So we are very optimistic, Matt.

Thank you, Michael. And Adam?

Yes. No, so I would add that the 2 movies combined cost less than any one movie that the major -- any one tentpole that the major studios have made in the last 10 years. So the economics of it are actually very powerful. The AFM market begins shortly, and it has been written and it is not incorrect that we once again have absolutely the hottest title out there, and we're getting incoming calls from everybody in the foreign distribution space asking to participate. And so the value of it is not only a value that we see, but it's a value that the entire market sees. And so we're really excited about the opportunity. As it relates to your marketing question, I really appreciate how you framed it because I can tell you that we are being completely competitive in generating awareness and urgency in our films -- and yet we are still spending 30% to 50% less than competitive studios to do that work. And it is using every bit of available technology to make sure that when you are buying more traditional media, you're buying it in places where people are watching and actually watching the ads, but also leaning into all available digital opportunities, not only the ones you buy, but the ones you create. I was having only a little bit of fun on the Now You See Me speculation around the Heist at the Louvre, but there's a ton of content that we created to allow the audience to continue to have fun speculating on what happened there. The same thing on The Long Walk when we had the treadmill screening, massive amount of pickup and social engagement on that. Sydney Sweeny and Amanda Seyfried, each thing they put out on The Housemaid is generating a massive amount of engagement. And those are things that are not high cost. But if you come up with creative on brand, on-message ways to incentivize the audience to share with one another, you can still create a significant motion picture event without spending massive sums of money. And being efficient continues to be a hallmark, but being efficient if you're not generating awareness would not be good for us or our filmmaking partners. And our filmmaking partners are all really excited with the work we're doing.

And the next question comes from Peter Supino with Wolfe Research.

Jack Stid here on for Peter. My question is with your upcoming slate increasingly concentrated behind larger, more IP-driven films, I was curious if those films garner higher international presales as a percentage of their production budget to offset the concentration risk.

Yes. I mean I would say that it's not always the case that the percentages change radically. We're actually still able to get a terrific collaboration with our foreign partners on our midsized and smaller films. But yes, on the bigger films, you sometimes will see a very outsized participation from our partners. And the risk profile of each individual film is something that we take very seriously before the movie is green lit. So we're not going into it surprised by that. We have enough intel to know going in what level of performance we need to hit the profitability threshold that we're aiming for. But we're still seeing great support for our mid and lower budget films, but it is true that on movies like Michael and Hunger Games and the Resurrection, that percentage can get up to a really strong number.

And the next question comes from Vikram Kesavabhotla with Baird.

I have 2. My first one is really a follow-up to some of your comments there. I'm curious if you could just share some of your observations from The Long Walk and Good Fortune and really from a higher level going forward, how you plan to balance your investment in the small and midsized portfolio relative to your tentpole films. And then my second question is on the library. You called out the strength there over the last 12 months. Curious if you can just talk more about what you think the drivers are that are supporting that performance and how sustainable you think this level is on a go-forward basis?

[indiscernible], do you want to take the second part first?

Yes, sure. I'll take the second part first. Jim, thank you for the question. I think you're seeing an expanding amount of contributors that are going into these numbers. It's really kind of unique and interesting that we've been growing certain areas like if you look at our self-directed channels, that business has started to really help our trailing 12 months. The series licensing that I'm seeing in the business right now has changed. I was looking at our numbers recently. We've sold about 5x more series than we did 5 years ago. And the series that we have are really strong and relevant. I mean, if you look at our Netflix top 10, we've had 9 in the top 10 recently, which is a big number for us. And then lastly, as we've talked about earlier, with Adam producing IP that has other versions in our library, that helps pretty much become a halo for everything else we're doing. So all of that is contributing and really, I see the strength staying strong.

And as it relates to the slate mix, look, we're never going to be forcing big films onto our slate to make it look like we've got tentpoles. We just happen to have a really good stockpile of incredibly valuable content right now. So I think when we mentioned a few quarters ago that we were anticipating 2 to 4 tentpoles a year going forward, our development slate is putting us in a position to be able to accomplish that. We talked about another Resurrection and the possibility of a second Michael film. I think when we mentioned things like Naruto, which we've talked about on previous calls, I'm not sure everyone was clear on what the growing popularity of Manga is in the world, but it has been very clear generally and specifically in film, how big it is, and there is no bigger property than that. We're making huge progress on that front, making huge progress on the Monopoly front and a lot of conversation around things like American Psycho. But whether it's not priced like a tentpole, but we've had a great conversation with James Wan and Jason Blum about the new takes on both the SAW franchise and the Blair Witch franchise. So we think we're going to have films across a broad range of costs, but we should be in that 2 to 4 tentpole year range for the foreseeable future because we've got a number of films that have earned it. But our midsized and smaller films are things that are coming with great talent, often with great IP or brand value, and we think there will still be a huge opportunity there as well.

Yes. I want to emphasize again, for me, the biggest uplift in recent years is the fact that we've taken deficits on television shows and retain rights in the feature film business that no other independent company has done. We retain all of our rights, for example, downstream rights to all our films in Latin America. We retain all rights in the U.K. And television, while we sometimes will do a cost-plus deal, really, we probably have 70% of our television shows, maybe 80% of them. We've been taking deficits for them. Even a show like Orange Is the New Black, you think about that as a Netflix show, that's not a Netflix show. It's on Netflix right now, but it's a Lionsgate show. And in a couple of years, when we get that back, we will be a very valuable addition to Jim Packer and his team on a global basis. And so I think we're starting to see the reward that we've had for taking these deficits all these years. And as I said, we've doubled the television contribution over that last, call it, 10-year period. We've doubled it from about 15% to 30% of our library. So it's all working. And in addition, Jim has done an amazing job of building these self-directed channels, whether they're FAST channels, whether they're -- and so right now, any time we have an avail, any time it's not sold to a third party, Jim has the ability to monetize that title. You've got over 20,000 of those, and you can see it's starting to add up. So I think ultimately, it's our strategy to be different than every other independent that's starting to pay off.

This concludes our question-and-answer session. I would like to turn the conference back over to Nilay Shah for any closing remarks.

Thank you. Please refer to the Press Releases and Events tab under the Investor Relations section of our website for a discussion of certain non-GAAP forward-looking measures discussed on this call. Thanks all.