Lions Gate Entertainment Corporation Class A (LGF.A) Q4 2022 Earnings Call Transcript

Lions Gate Entertainment Corporation Class A (NYSE: LGF.A)
Q4 2022 Earnings Call
May 26, 2022, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Lions Gate fiscal 2022 fourth quarter earnings conference call. All participants will be in a listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [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.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Good afternoon. Thank you for joining us for the Lions Gate fiscal 2022 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; and chairman of the Motion Picture Group, Joe Drake. And from Starz, we have president and CEO, Jeffrey Hirsch; CFO, Scott MacDonald; president of the Domestic Networks, Alison Hoffman; and president of International Networks, Superna Kalle. 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 Lions Gate's most recent annual report on Form 10-K as amended and our most recent quarterly report on Form 10-Q filed with the SEC. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. I'll now turn the call over to Jon.

Jon Feltheimer -- Chief Executive Officer

Thank you, Nilay, and good afternoon, everyone. Thank you for joining us. Before I recap the quarter and the year, I'd like to update everyone on our progress in creating a structure to allow investors to value our Starz and Studio assets separately by spinning off Starz. We are engaged in a robust and productive process with our bankers and a number of potential strategic and financial partners.

We're targeting an announcement of our plan by the end of the summer and expect a transaction could close as early as our fiscal fourth quarter. Turning to our results. In spite of a very competitive and disruptive environment, we've just completed one of our best content-building years ever, as we continue to create significant long-term value. We produced 21 feature films, had a record 14 new television shows picked up to network series.

We went 15 for 15 in renewals of current series, including all three of our broadcast network series, putting them on the path to syndication. We generated $766 million in revenue from our film and television library, added more than 500 titles to our library organically and through acquisitions like the SpyGlass Media deal. We finalized Pay 2 theatrical output deals with Roku and Peacock, complementing our Pay 1 theatrical output agreement with Starz; closed major licensing deals for the hit comedy Ghosts with Paramount Plus and Schitt's Creek with Hulu. We supported our content creation by opening and beginning production at our Lions Gate Studios in Yonkers, then extended our studio production footprint by announcing a second studio facility in Newark.

We ramped our slate of Starz original scripted series from six to 11, doubling down on a focused content investment that did its job by reducing over-the-top churn by nearly 20%. We grew Starz global subscribers by a record 6.3 million in the year to 35.8 million, including STARZPLAY Arabia, with approximately 80% of them streaming and linear a la carte subscribers. And with an eye toward the economy, we took a disciplined and conservative approach to overhead while being opportunistic in executing treasury management strategies to keep our balance sheet strong. Not all of these accomplishments have been reflected yet in our financial results.

Some of them, like our investment in new television series, will show their full value as our shows continue to be renewed for later seasons, but these early results promise a significant return on our investment. Instead of my usual overview of each of our businesses, I want to talk about four things that contributed to our value creation across our content platform during the year. First, our strong content creation year is driving growth across all of our businesses. Our television group is the top independent supplier of premium scripted series with five series at HBO Max, three shows at Apple TV Plus, five series airing or in the works with our broadcast network partners, seven shows with AVOD platforms, 15 series lined up at Starz and series at Showtime, Netflix, and Amazon, among others.

We've maintained our film production tempo throughout the pandemic, assembling a slate that encompasses big tentpoles, a strong multi-platform business, and a growing lineup of feature films for streamers. As we continue to prepare our biggest brands for theatrical release, we're also releasing smaller and medium budget films that lend themselves to innovative windowing strategies and release on streamers. In a world that rewards optionality, by the end of the year, we expect to return to our annual run rate of 45 to 55 films across our wide theatrical, multi-platform and direct-to-streamer businesses. In addition to being a content distribution platform, throwing off recurring subscriber revenue, Starz is a pillar of our content creation strategy, building a slate of valuable intellectual property with a bold, premium, adult sensibility, that can be a valuable complement to the programming of the general entertainment platforms.

Even after executing our strategic plan for Starz, we will continue to partner with them in the creation of great IP, building our library, and achieving important synergies between Starz and our Studio business. Second, our portfolio of franchises lies at the core of our intellectual property, and we're in production or active development on spin-offs, sequels, prequels, reimaginings, and other brand extensions for nearly every one of them. "John Wick: Chapter 4" is finishing production for release early next year. Ana de Armas will start in "Ballerina," the "John Wick" action spin-off, which begins production later this year.

"Dirty Dancing," starring Jennifer Grey and the reimagining of our classic library title, got a great response from distributors at Cannes this week. "Expendables 4," with a world-class cast of action stars, has wrapped production for release next year. And on November 17, 2023, the "Hunger Games" franchise returns in its customary place on the release calendar with the global rollout of "The Ballad of Songbirds and Snakes," starring "Billy the Kid's" Tom Blyth as the young Coriolanus Snow and directed by Francis Lawrence. Third, we're continuing to scale one of the most valuable film and television libraries in the world.

We continue to grow our library organically, manage and window it creatively, and acquire, integrate and monetize new libraries efficiently. Our recent licensing of "Ghosts" and "Schitt's Creek" are the latest examples of the importance of retaining rights to our properties and our ability to increase their value over time. Finally, when we acquired Starz, we saw an opportunity to build a global streaming platform to bring our content directly to consumers, to enable our Lions Gate Television business to scale its content creation by giving it a dedicated buyer, expand the opportunities we offer to our talent, and create another source of valuable IP generation. Our increased content investment at Starz is working.

During the year, we grew global subscribers by 21% and reduced domestic churn by nearly 20%. In fact, with big series on the air for both of our core demos, March was our fourth best streaming subscriber growth month ever, and subscriber acquisition costs declined significantly. This investment has delivered our most robust programming slate with new content every single week for our two key cohorts, women and underrepresented audiences. Over the last few months, we grew our Power Universe with the launch of our third hit series in the franchise, "Power Book IV: Force," brought back fan favorite "Outlander" for a successful sixth season, and launched premium star-driven property "Shining Vale" with Courteney Cox and Greg Kinnear and "Gaslit" with Julia Roberts and Sean Penn.

Though streaming is not an end in itself. It is a very efficient way to bring content to our consumers worldwide. In that regard, we've built a strong and profitable streaming business at Starz. A number of our international territories will soon turn run rate positive given our early global expansion and we remain on track for achieving our long-term financial and subscriber projections.

We have also positioned ourselves where the streaming world is heading. As a premium platform with a predominantly wholesale distribution model, we believe in and are rooting for the success of the broad general entertainment platforms, because they will become our future distribution partners. The premium adult focus of our content and the desirability of our core demos gives us confidence that Starz will be bundled and packaged by a growing number of streaming platforms as the industry continues to evolve. In closing, despite all the noise in our environment, our own path is clear.

Our investment in content is working. Our business model is resilient and our strategy remains focused. Now I'd like to turn the call over to Jimmy.

Jimmy Barge -- Chief Financial Officer

Thanks, Jon, and good afternoon, everyone. I'll briefly discuss our fourth quarter financial results and update you on our balance sheet. Fourth quarter adjusted OIBDA was $83 million and total revenue was $930 million. Year-over-year revenue and adjusted OIBDA growth was driven by strong television performance, with adjusted OIBDA further benefiting from G&A cost control.

Reported fully diluted earnings per share was a loss of $0.46 a share, and fully diluted adjusted earnings per share came in at $0.06 a share. Adjusted free cash flow for the quarter was $88 million. Now let me briefly discuss the fiscal fourth quarter performance of the underlying segments compared to the previous year quarter. As you will see in our online trending schedules and SEC filings, I will separately address our Media Networks and Studio businesses in total, while still providing a breakout of the Domestic and International networks, as well as our Motion Picture and TV Studios.

Media networks' quarterly revenue was $380 million, and segment profit was $33 million. Excluding Pantaya in last year's fourth quarter, revenue was down 2.2%. Year-over-year domestic revenue declined 4.2% as positive OTT revenue growth was offset by a decline in linear revenue. Year-over-year international revenue was up 29%, reflecting continued subscriber growth.

The year-over-year media networks segment profit declined 23% and primarily reflects the reduction in domestic linear revenues as total content, marketing, and G&A costs were in line in relation to the prior-year quarter. We ended the quarter with 35.8 million total global subscribers, including STARZPLAY Arabia. Total global media networks' OTT subscribers grew 4.8 million sequentially to 24.5 million. This represents a year-over-year global OTT subscriber growth of 47%.

Now I'd like to talk about the Studio business in aggregate. Revenue of $658 million was up 31% year over year, driven by the television group. Segment profit was $83 million, up 17% year over year, also driven by television. Our total library revenue at Studio was $766 million on a trailing 12-month basis, down less than 2% over the $780 million trailing 12-month library revenue reported in the fourth quarter last year.

As we've noted in the past, last year's trailing 12-month library revenue included significant contribution from the licensing of "Mad Men." Breaking down the studio business between motion picture and television, let's start with motion picture. Motion picture revenue was down 1.5% to $288 million, while segment profit of $50 million was down 20%. Revenue and segment profit trends reflect continued strength of our library, partially offset by the timing of P&A prerelease spend on "The Unbearable Weight "and content deliveries. And finally, television revenue was up 76% to $370 million, driven by continued growth in post-pandemic output, which included both new and returning series.

Segment profit came in at $33 million, up over 250% year over year, reflecting new and returning series episodic deliveries, as well as the continuing strength of 3 Arts' performance. On the balance sheet, we ended the quarter with leverage at 5.2 times or 3.8 times excluding our investment in STARZPLAY International, down from five and a half times at the end of the prior quarter. We continue to retain significant liquidity with $371 million of cash on hand and $1.25 billion of an undrawn revolver. After year-end, we used some of our excess cash to prepay the $194 million of Term Loan A notes that would have otherwise been due in the fourth quarter of fiscal '23.

Currently, we have no maturities until the fourth quarter of fiscal '25. We remain committed to strengthening our balance sheet and continuing to pay down debt, while funding our increased investment in content and marketing from adjusted free cash flow. While we don't generally provide annual adjusted OIBDA guidance, I wanted to provide some color on how to think about the quarterly cadence of earnings throughout fiscal '23. While, overall, I would expect fiscal '23 to look a lot like fiscal '22, the cadence will be more back-end loaded.

This reflects the timing of episodic deliveries in Starz programming, including some continuing amortization from the fiscal '22 buildup of Starz original series that we expect to put some pressure on adjusted OIBDA in the first half of the year. Our leverage will naturally rise a bit in the near term as trailing 12 months' adjusted OIBDA reflects the cadence of content marketing costs, but we expect to again delever in the second half. Now I'd like to turn the call over to Nilay for Q&A.

Questions & Answers:

Operator

We will now begin the question-and-answer session [Operator instructions] At this time, we will pause momentarily to assemble our [Audio gap]. And our first question will come from Steven Cahall with Wells Fargo. Please go ahead.

Steven Cahall -- Wells Fargo Securities -- Analyst

Yeah, thanks. Good afternoon. So Jon, I just want to make sure I heard you right with your opening remarks. I think you said you expect to have Starz either spun off or otherwise separated from Studios probably with an announcement this summer by the end of the year.

So just to be clear, there will certainly be a separation? I'm not asking for kind of details on what happens to Starz, but it sounds like barring something really changing, will we see the two separated in the coming months? Did I hear that correctly?

Jon Feltheimer -- Chief Executive Officer

You certainly heard sort of what I would indicate as a probable time frame. Obviously, anything can change. We're in an incredibly disruptive environment right now. But based upon the conversations we're having right now, we think that's the appropriate time frame.

Steven Cahall -- Wells Fargo Securities -- Analyst

Great. And then as we just think about valuing the two different sides of the company, can you update us, are there any content rights that are owned and controlled at Starz, or do we really think about Starz as a consumer-facing service and the content comes in primarily from Lions Gate? Or does Starz actually own and control some of the content that fits with the service?

Jon Feltheimer -- Chief Executive Officer

Yeah, that's a great question. I think you could talk about two things. One, I would say Starz generates a lot of its own content. And we would expect that going forward to continue.

Currently, most of the underlying IP resides with the Studio side. Going forward, obviously, there's a lot of devil in the detail, and we'd have to see how we want to structure that with our potential strategic partners.

Steven Cahall -- Wells Fargo Securities -- Analyst

Great. Thank you.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Operator, can we get the next question, please?

Operator

Our next question will come from Kutgun Maral with RBC Capital Markets. Please go ahead.

Kutgun Maral -- RBC Capital Markets -- Analyst

Great. Thanks. So again, thanks for the update on the Starz transaction. And just a follow-up on Steve's line of questioning.

Is there -- just so we're all on the same page, is there any more color you can provide in terms of the structure of the transaction and whether or not you're expecting to monetize your entire stake? And second, it's very encouraging, I think that despite the current market backdrop and value compression that we've all seen across the broader ecosystem, that it sounds like there's a robust demand environment for Starz given the discussions you're having with, I think you called out a number of, strategic and financial partners. I guess I appreciate the urge to crystallize value for the asset. But the question is why sell now, especially when Starz's profitability is being weighed down by all the investments that you've made and there's perhaps such a dislocation in valuation across the market? or perhaps you're not seeing that dislocation given the demand that you're seeing? So any color would be appreciated.

Jon Feltheimer -- Chief Executive Officer

Yeah. There's a lot to unpack there. I think certainly, the main impetus for the separation is that we don't feel that the Street is giving us the value for the sum of the parts. I feel like with the companies separated, they can both concentrate on their core businesses.

And my sense is they will also see some opportunities, perhaps some strategic opportunities, that they might not see with the companies that are combined. I appreciate what you're saying. I think it's true we got out early in the international marketplace. And so it is true that a number of those territories are going to be turning positive in the near future.

And so one could say, well, why aren't you waiting. But this is the plan that we have now. Our sense is right now that we are not selling all of it. But honestly, anything could happen, and that's why we're not giving you more details right now.

Kutgun Maral -- RBC Capital Markets -- Analyst

Fair enough. Thank you so much.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Operator, could we get the next question, please?

Operator

Our next question will come from Matt Thornton with Truist Securities. Please go ahead.

Matt Thornton -- Truist Securities -- Analyst

Hey, good afternoon, everyone. Maybe two, if I could. If I'm not mistaken, and correct me if I'm wrong, I think in Starz Domestic, we should be coming out the other side of a three-year transition with one of your large MVPD partners. I just want to make sure that, that was correct.

And maybe you can kind of give some color on maybe what kind of pressure that might have created on the financials kind of looking back at the quarter and the past year? Just any color there would be helpful. And then just secondly, it's been a couple years, I think, since you guys gave us a little color on the ARPU between MVPD and OTT in Domestic. So again, any -- if you'd be willing to give us any update on kind of where the two ARPUs stand on the domestic side, that would be helpful as well. Thanks.

Jeffrey Hirsch -- President and Chief Executive Officer, STARZ

Hi. It's Jeff. Thanks for the question. We saw some pressure on linear ARPU in the quarter.

Sequentially, we're coming out of the end of the transition from a fixed deal to an a la carte deal on one of our largest domestic linear MVPDs. That's behind us now. So sequentially, we'll put that behind us, and you'll start to see the linear ARPU normalize going forward. There is a difference between the OTT and digital ARPU versus the linear ARPU.

But that, as we've transitioned off of those fixed rate deals over the last couple of years -- and I remind you, by the end of this fiscal year in March, over 88% of our subscribers are either on a la carte or some kind of revenue share. So, we really moved off of those low ARPU, high-volume deals to be much more of a service that is chosen by the consumer. And so -- but that linear ARPU has actually been accelerated up to closer to what we see on the OTT side. So I think linear-wise long term we will be somewhere between $575 and $605 in terms of an ARPU on the domestic side.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Thanks, Matthew. Operator, can we get the next question, please?

Operator

Our next question will come from Barton Crockett with Rosenblatt Securities. Please go ahead.

Barton Crockett -- Rosenblatt Securities -- Analyst

OK. Great. Thank you. Just a couple of things.

One, I just want to make sure I understand the targets that you guys have given before on subscribers for 50 million to 60 million global subs by 2025. I think Starz International is hitting breakeven most recently, you were saying fiscal '24, that type of stuff. Is that still what you're saying? Or is there a meaningful update there?

Jon Feltheimer -- Chief Executive Officer

Yeah. We still feel really good about that 50 million to 60 million subscriber range by fiscal 2025. We do think that we'll come out and turn positive to breakeven as we're coming out of calendar -- run rate calendar '24. There's -- we're really excited about the progress we're making internationally in the top five or six markets that really drive 75% to 85% of the revenue.

Of the planned ones that have already turned, two will turn in the next couple of quarters, and three and four, we have a real great line of sight there. So we feel really good about the business that we've built and the progress that we're seeing in terms of hitting those long-term subscriber goals and success.

Barton Crockett -- Rosenblatt Securities -- Analyst

OK. And I guess the other question is on kind of coming at it from a slightly different angle with what I think everyone's been asking about in terms of the impact of this crazy environment on your process. It seems to me like this process might have taken longer maybe than you guys expected, certainly than I would have expected -- all's well that ends well. But I'm just wondering if the crazy market situation with valuations for assets and streaming media everywhere changing so dramatically, going south so much, if that's really slowed things down? If that's kind of gummed up the works a little bit.

Jon Feltheimer -- Chief Executive Officer

Yeah, Barton, I think we're right on schedule. I know a couple of people have said that, but to do this right and have the right partners, I think actually, we think we're right on schedule. In terms of the environment, I mean, obviously, in terms of everybody's stock, I think everyone is suffering. I would say that I think that certainly the people we're talking to and I would hope even the Street would see this is, we have a whole different business model than these big streamers.

And I think they're hurt because all of them are competing for, as Jeff has said numerous times, this huge, broad base streaming dominant, if you will. And we're not. As a matter of fact, we're rooting for each and every one of them, because these are our distributors of the future. And we're clearly differentiated.

We are premium, virtually entirely scripted, entirely not ad supported. And so we see sitting on top of their platforms is a great add-on for them, and it's going to be great distribution value for us. And so I don't think The Street is certainly recognizing this. I certainly hope the potential partners that we're talking to, do.

But yes, in this kind of an environment, obviously, it puts a little bit of a damper on virtually everything, obviously. It's distressing to see our stock getting hit when we're having really a fantastic year, huge value creation year. And again, we funded $600 million of investment into content, more than last year, and we've done the whole thing, $2.2 billion, out of our own free cash flow. And so I think we're doing what we're supposed to be doing, which is building long-term value between the Studio and Starz.

And again, it's a rough environment, but we think that value will be recognized.

Barton Crockett -- Rosenblatt Securities -- Analyst

OK. That's great. Thank you.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Operator, could we get the next question, please?

Operator

Our next question will come from Thomas Yeh with Morgan Stanley. Please go ahead.

Thomas Yeh -- Morgan Stanley -- Analyst

Thanks so much for taking the question. Just a quick point of clarification for Jimmy. You said fiscal '23 is expected to look a lot like fiscal '22. Are you suggesting we should kind of be looking at that $400 million ballpark on the adjusted OIBDA that you reported for this year? Is that the right place to be? I just wanted to understand that point.

And then for Jeff, in a market that seems to be focusing a lot recently on just broader macro-related uncertainty ahead, wondering if you could opine on just the impact you might see, particularly in the complementary add-on streaming service game? How if at all, a tougher economic condition might impact your expectations on just general consumer streaming behavior and pricing power? Thanks.

Jimmy Barge -- Chief Financial Officer

Yeah. Thanks, Thomas. Yes, I think you're interpreting that pretty close from a ballpark perspective. We're not giving a specific number or range relative to guidance.

But that was also trying to help you with the cadence of how profits lay out over the fiscal '23.

Jeffrey Hirsch -- President and Chief Executive Officer, STARZ

It's Jeff. Great question. I think if you think back over the last 20-some-odd years in linear MVPD video services in inflationary periods, you've always seen, as people kind of roll back to their house and start to stay home, that the video services continue to support and the entertainment selection or solution of the home. And we think you look at our two core demos that we really are serving something for those two core demos every week, 52 weeks a year, with a lot of Pay 1 movies, a lot of series, and also library movies at a very, very compelling price point.

So we think our value proposition is in a really good state based on what we're seeing in the market today. And we also think, as Jon said, as those broad-based streamers start to really compete and consolidate and bundle, that they lack the destination for our two core demos, and it puts us in a really unique place to do some very unique pricing with them to give, again, further bundled opportunities and value to the consumer and drive our business.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Thanks, Thomas. Operator, can we get the next question, please?

Operator

Our next question will come from Jim Goss with Barrington Research. Please go ahead.

Jim Goss -- Barrington Research -- Analyst

Hi. A couple of things. First, I was going to ask a little bit more about the competitive environment you're describing. And whether an ad like version of Starz would be contemplated? And how is the -- how is that the notion of being packaged with some of the other services versus competing with these broader, more comprehensive services, where HBO is included in the broader service and Showtime is included in the broader service, whether -- how that might affect the competitive situation as well?

Jeffrey Hirsch -- President and Chief Executive Officer, STARZ

It's Jeff. Currently, AVOD is not part of our strategy. It's not included into our 50 million to 60 million subscriber goal that we've laid out that we really feel confident that we're going to hit. And we'll -- we continue to believe that being a premium adult non-ad-supported service that is complementary to all these broad-based services is a great place for us to be just like we were in the linear business for the last couple of years and super successful there.

And we truly believe, based on the conversations that we've had with all of our partners, that we will be included in bundles with each of these broad-based services. Again, we really have a unique programming strategy focusing on those two core demos. And like I said, we really are the destination for those demos. And so adding those to these broad-based streamers in a way that we can put economic value back to the consumer with both companies, I think, is what you're going to see this year and next year as kind of the theme in the business.

Jon Feltheimer -- Chief Executive Officer

Yeah. I think I would add, Jim -- I think I would add, Jim, that even as an ad-free service, we think there's a lot of running room in the domestic market. I don't know, Jeff, if you want to opine on that.

Jeffrey Hirsch -- President and Chief Executive Officer, STARZ

Yeah, I'm happy to. We think domestically, if you look at the number of households and you back out, folks that just won't watch video services and then folks that won't watch adult-rated content, there's probably somewhere in the neighborhood of 80 million to 90 million households that we can go after domestically. And as you saw in the numbers, sitting around 21 million today. So a lot of opportunity for us to still grow into those two core demos.

The programming is working. We're lining -- as Jon talked about, the lining up of the content is really reducing churn. We're seeing that as we put longer-term offers in the marketplace, and we're getting customers for over six to 10 months on the service, the churn is coming down sub-5%. And so we feel really good about the data informing our business, but the content strategy working and stabilizing our revenue base for longer-term success.

Jim Goss -- Barrington Research -- Analyst

OK. Thank you. And could I ask one -- if I could ask one last take on what -- the conversation we started with. Are -- as you look at the structural opportunities, are most of them assuming that you would no longer consolidate Starz? Or would they be structures that would presume that the partner would not take so much that you wouldn't own a sufficient piece to consolidate it? And are you looking more for strategic partners or financial partners?

Jimmy Barge -- Chief Financial Officer

Well, Jim, in terms of consolidation, any type of spend, if that were the course of action, without getting into specifics, you wouldn't have continuing consolidation, right? It would be separate companies. Not going to get into the specifics, but any transaction would involve delevering in a tax-efficient manner and without any restrictions that would impede shareholder value.

Jim Goss -- Barrington Research -- Analyst

OK. All right. Thank you.

Jon Feltheimer -- Chief Executive Officer

Thanks, Jim. Operator, could we get the next question, please?

Operator

Our next question will come from Alan Gould with Loop Capital. Please go ahead.

Alan Gould -- Loop Capital Markets -- Analyst

Thanks for the question. Jimmy, I'm going to go back to the initial comment about the split as well. It was helpful that you broke up the OIBDA between the Studio business and the Starz business. Can you give us some idea how the free cash flow would split up between the two businesses?

Jimmy Barge -- Chief Financial Officer

No, we don't break that out separately, but there will be a time for that. But each one has their own uniqueness in the context of investment and content and the timing of that. And again, that's not broken out separately at this time.

Alan Gould -- Loop Capital Markets -- Analyst

I know it was a big content investment year for Starz. In the past, their content investment and amortization were pretty close. I think this year, I think you spent about $650 million more in content investment than amortization for the total company or invested in the content. Is that mostly at the Starz business this year?

Jimmy Barge -- Chief Financial Officer

Well, it's across the board. But certainly, there's a lag between the -- you have the cash spend and then it is followed by amortization later. But yes, there's probably a longer lag at the -- on the Starz side of the business more so than some of the others.

Alan Gould -- Loop Capital Markets -- Analyst

OK. And then one last one. Does it contemplate that Starz gets spun off tax free -- I mean, debt free?

Jimmy Barge -- Chief Financial Officer

Yeah. We're not going to get into specifics on that. But again, any transaction would likely involve delevering. And again, I think both sides of the house are eminently financeable.

Alan Gould -- Loop Capital Markets -- Analyst

OK. Thanks for taking the questions.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Sure. Operator, could we get the next question, please?

Operator

Our next question will come from Matthew Harrigan with Benchmark. Please go ahead.

Matthew Harrigan -- The Benchmark Company -- Analyst

Thank you. By virtue of your focus on those two demographic segments and just really having cost control pretty much in your DNA for a very long time, you've been able to navigate around some of the cost flows over the last few years. You've had pretty ample noises coming out of guys like Netflix and Discovery now on the cost containment side. And also with respect to projects, I imagine you're even more desirable as a destination.

Can you talk about that and whether -- I'm sure you're not going to give us discrete cost bogeys for Motion Picture and TV, but do you feel like there's going to be some favorable trajectory in the margins over time even apart from all the noise over the last couple of years with COVID and all that? Thanks.

Jon Feltheimer -- Chief Executive Officer

Jimmy? I'm sorry, could you repeat the question?

Matthew Harrigan -- The Benchmark Company -- Analyst

Lots of pressures on the cost side for the industry for motion picture and TV production. You've somewhat insulated yourself on that by being focused and having a lot of discipline. But with other guys, Netflix and Discovery really trying to contain costs now, do you think that that's going to have a favorable benefit for you in terms of getting your margins up as is more disciplined on paying talent and all that over a period of time? And are you seeing even more projects now that other people are getting more constrained?

Jeffrey Hirsch -- President and Chief Executive Officer, STARZ

Let me -- I'll take that, Matt. Thanks for the question. Let me say a couple of things. One is, this year, we absorbed about $158 million of COVID costs.

That's a cash -- that's a cash number. Obviously, a big ton of it was amortized into our business. And don't forget that when we have COVID costs for Starz show, and we're supplying it from Lions Gate, we're paying 100% of those costs. So again, I think given sort of that amortization into our business, doing our $400 million in this environment was really a good year.

Going forward, I'm certainly hoping to mitigate those costs, I hope those costs go down, and we are working really hard right now on it. Some of it is dependent upon sort of union demand, things like that. But I think we're expecting that to come down and that should help our margins. In terms of our overall, I appreciate what you're saying about our ability to control costs.

I do think we're really good at it. That's why -- and still delivering quality, which is why, as we said, as Kevin said, we have so many shows at 25 different networks or platforms. And I think we're going to continue to do that. The main thing that I would say in terms of margin is two things.

One is that the demand for content is higher than ever, and we have more and more buyers. And that's not always the first buyer for content. If you look at what we just did with "Schitt's Creek" and with "Ghosts," there are tremendous -- there's tremendous demand for the post-initial run initial license fee content, especially when it's this premium content and scripted content that we are doing most of, and frankly, are really good at. And so the downstream revenue from these shows is going up, the demand for those windows is significant.

And our ability, frankly, of Jim Packer and Kevin Beggs and our production and distribution teams to window that product to create really interesting creative deals with the networks is really, I think, going to drive those margins. And then the last thing that I would say is we are getting -- these shows are all -- at both Starz and Lions Gate Production for other networks, these shows are being picked up: "Home Economics" going to its third season, "Ghosts" into its second season. And so what we're seeing and why the contribution -- the contribution from the television business segment profit is going to go up -- I don't want to guide, but it's going to go up this year, and it's going to go up a lot more in '24. And the reason is that we are getting mature scripted shows and those margins, obviously, as we go into some version of what you would call syndication, those shows are going to become more and more valuable.

Does that answer your question?

Matthew Harrigan -- The Benchmark Company -- Analyst

Yeah, absolutely. Thanks, Jon. Thanks, Jimmy. [Inaudible] verbose.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Thanks, Matt. Operator, can we get the next question, please?

Operator

Our next question will come from Matt Thornton with Truist. Please go ahead.

Matt Thornton -- Truist Securities -- Analyst

Hey, guys. A couple of just really quick ones. Corporate expense, as you think about the spin and approach the spin, I'm just curious if there's any opportunity at the corporate expense line or whether that's already pretty efficient. And then just secondly, Jimmy, you talked a little bit about OIBDA for fiscal '23.

Curious if you could give us any color on how you're thinking about free cash flow for the year, at least qualitatively? Thanks again, guys.

Jimmy Barge -- Chief Financial Officer

Sure. Well, first, on your first question in terms of the overhead, look, with regards to the spend, not going to get into the specifics, but certainly, under a separate company structure, each company would be focused on their respective core businesses and it will enable individual company efficiencies, but perhaps more importantly, a singular focus by each business, likewise, as Jon alluded to earlier, would provide for a wide range of opportunities in the marketplace for each company. With regards to -- with regards to cash flow, my sense there is that clearly, we have a very resilient structure from a cash flow perspective, as you've seen, and we will continue to be able to fund from positive free cash flow our investment -- increased investment in content and marketing, which is less of a steep curve than it was last year. So going from '21 to '22, as Jon noted, with quite a step-up in the content spend; by the way, marketing spend goes with that.

There's a step-up going from '22 to '23. But again, I think we can very comfortably handle that out of positive free cash flow, including our continuing investment in STARZPLAY International.

Jeffrey Hirsch -- President and Chief Executive Officer, STARZ

Yeah. Let me drill down just a teeny bit more on the first question, which is obviously, we're constantly looking at corporate expense, and that you can assume will be an ongoing initiative of ours too. I think you would assume there will be some service sharing in a spin and that will change the percentages, if you will, where that corporate expense lies. So yes, you can assume some of that.

And again, I think that what you can assume is corporate expense at either side, as each side actually continues to grow their business potentially with strategic imperatives, if you will, that corporate expense will get spread out over a larger revenue base.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Operator, can we take the next question, please?

Operator

[Operator instructions] Our next question will come from Steven Cahall with Wells Fargo. Please go ahead.

Steven Cahall -- Wells Fargo Securities -- Analyst

Thank you. Jimmy, just a follow-up. You've got a lot of cash on the balance sheet, no maturities for a while. I know leverage over five times is high, but you've got a lot of discretion based on how you decide to invest in international.

And clearly, you all are pretty frustrated by the stock price. So you talked about first half of the year being a little -- upward pressure on leverage, back half kind of down, but would you consider getting into the market with cash and buying back shares at this point?

Jimmy Barge -- Chief Financial Officer

Well, look, we certainly have authorized levels, but our focus is on delevering and taking our free cash flow and continuing to delever. And you'll also note that we took some of that excess cash that was on the balance sheet at the close of the year and subsequently paid down the Term Loan A of $194 million. So to your point, we have no additional maturities until the back part of fiscal '25.

Steven Cahall -- Wells Fargo Securities -- Analyst

Thanks.

Nilay Shah -- Executive Vice President and Head of Investor Relations

Thanks, Steve. Operator, can we take the next question, please?

Operator

As there are no more questions, this concludes our question-and-answer session. I would like to turn the conference back over to Nilay Shah for any closing remarks.

Nilay Shah -- Executive Vice President and Head of Investor Relations

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. Thank you very much.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Nilay Shah -- Executive Vice President and Head of Investor Relations

Jon Feltheimer -- Chief Executive Officer

Jimmy Barge -- Chief Financial Officer

Steven Cahall -- Wells Fargo Securities -- Analyst

Kutgun Maral -- RBC Capital Markets -- Analyst

Matt Thornton -- Truist Securities -- Analyst

Jeffrey Hirsch -- President and Chief Executive Officer, STARZ

Barton Crockett -- Rosenblatt Securities -- Analyst

Thomas Yeh -- Morgan Stanley -- Analyst

Jim Goss -- Barrington Research -- Analyst

Alan Gould -- Loop Capital Markets -- Analyst

Matthew Harrigan -- The Benchmark Company -- Analyst

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