Starz Entertainment Corp (STRZ) 2012 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Lionsgate fiscal 2012 fourth quarter earnings call. For the conference, all the participants are in a listen-only mode. There will be an opportunity for your questions. (Operator Instructions) As a reminder, today's call is being recorded. I'll now turn the conference over to the Senior Vice President of Investor Relations, Mr. Peter Wilkes. Please go ahead, sir.

Thank you for joining us on the call this morning. Jon Feltheimer, our CEO, will lead off with opening remarks. We will then open the call to Q&As. Joining us for the Q&As will be Michael Burns, our Vice Chairman; Rob Friedman and Patrick Wachsberger, Co-Chairs of our Motion Picture Group; Steve Beeks, Co-COO and President of the Motion Picture Group; Kevin Beggs, President of Lionsgate Television Group; Jim Keegan, our CFO; and Rick Prell, our Chief Accounting Officer.

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 in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the risk factors as set forth in Lionsgate's 10-K filed with the SEC on May 30, 2012. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. Jon?

Thank you, Peter. Thank you all for joining us on the call this morning. Fiscal 2012 was a milestone year for Lionsgate. We acquired Summit Entertainment and significantly increased the scope of our business and the depth of our content portfolio. We saw our strategy of building brands and franchises reach fruition with the launch of The Hunger Games worldwide, and we continued to increase the diversification and enhance the profitability of our television business. We've had a very productive four months since our last call.

First, we've begun to achieve significant benefits from our acquisition of Summit Entertainment, bringing to our buyers, partners, and consumers a business whose scale has increased dramatically in the past year. Our theatrical slate is positioned to generate more than $1 billion at the North American box office this calendar year, leading off with The Hunger Games, finishing up with Twilight Breaking Dawn 2, and anchored by The Expendables 2 in the middle. Our theatrical and home entertainment businesses are on pace to achieve double-digit market share throughout the year, ranking among the industry leaders.

We continue to strengthen our 13,000-title library. Not only with the addition of a number of valuable titles from our Summit acquisition, but with our renewal last week of our long-term distribution deal with StudioCanal, whose titles include such blockbuster hits as Terminator 2, Total Recall, Basic Instinct, and Rambo. Our library achieved a record $416 million in revenue last year, and with increasing margins, it generated close to $150 million in cash flow. In the 4.5 months since the Summit acquisition, we've taken several specific steps to translate our increased scale into margin improvement and a stronger position in the marketplace.

We've revisited our theatrical exhibition, retail, and vendor relationships across our motion picture companies to take advantage of new economies of scale and new opportunities, reflecting the scope of our combined Lionsgate and Summit slates. In January, we pointed out that one of the major benefits of the Summit acquisition was strengthening our international licensing business, and our focus on this area is already achieving results. We have just extended and expanded our output deal with Nordisk in Scandinavia to encompass Lionsgate as well as Summit titles, and we strengthened our multi-faceted relationship with our valued StudioCanal partner with last week's announcement that they will distribute The Hunger Games Catching Fire in Germany.

We're also finalizing plans to extend the IDC-Summit partnership in Latin America to the Lionsgate brand as well. These deals increase our long-term visibility and retain our upside while continuing to mitigate risk because of our upfront minimum guarantees. With The Hunger Games and Twilight, we've established ourselves as the number one studio in young adult franchises, and we'll continue to leverage our market leadership to serve as a magnet for the most compelling new properties in the marketplace.

Our next wave of young adult films includes Ender's Game, a book series which has a passionate and long-standing fan base of its own and is scheduled for a November 2013, three weeks ahead of Catching Fire. We also have a number of very promising development properties, including the first book in our Chaos Walking trilogy, The Knife of Never Letting Go; Veronica Roth's Divergent, the first book in another New York Times' best-selling young adult trilogy of books; and Erin Morgenstern's highly acclaimed The Night Circus, to be produced by Harry Potter producer David Heyman.

We're already exploring ways to extend some of the properties we acquired in the Summit deal across all of our businesses, including potential TV series based on the Red and Step Up film franchises. We've completed the bulk of the integration of Lionsgate and Summit on schedule, eliminating 80 positions or approximately 12% of our combined workforce, and our divisions are headed by executives who represent the best-in-class from our two companies. Our overhead to revenue percentage remains the best in the media sector. It's important to note that we have already paid down more than $100 million of our $500 million Summit term loan, leaving a balance of less than $400 million.

Turning to our second area of focus, we're positioning ourselves to take full advantage of the continued rollout of The Hunger Games franchise in the years ahead. As you know, the first Hunger Games film is nearing $400 million at the North American box office and already approaching $650 million worldwide. We will open The Hunger Games in China next month with a launch that includes 67 IMAX screens, and its performance there should drive its worldwide box office significantly higher. The Hunger Games will have the biggest home entertainment launch in Lionsgate's history on August 18. Like our theatrical marketing campaign, our home entertainment rollout of The Hunger Games will take an integrated approach to digital and traditional media with significant utilization of social networks.

We'll kick off the launch with midnight retail events across the country that we expect to recapture the excitement and fan frenzy of its theatrical debut. We're already setting in place all the elements to make the next installment of the franchise Hunger Games Catching Fire an even bigger success. We secured a very talented director in I Am Legend's Francis Lawrence, and we'll begin production in September for our scheduled November 22, 2013, theatrical release. We began licensing Catching Fire, as well as Red 2 and a number of other significant titles at the Cannes Film Festival last week. I'm pleased to report that our newly combined sales force achieved a record $170 million in sales.

Turning to our other young adult franchise, Twilight Breaking Dawn 2 is completing post-production for its November 16 release. Director Bill Condon has done a terrific job, and we believe that Breaking Dawn 2 will be the strongest Twilight film to date. A special 60-second Breaking Dawn 2 teaser will be included on The Hunger Games DVD in August, as we capitalize on our dominant young adult presence. Continuing our emphasis on repeatable franchises, our next three releases, Madea's Witness Protection, Step Up Revolution, and The Expendables 2, are all proven brands. In fact, more than half of our upcoming release slate is comprised of franchise properties. In addition to the titles I just mentioned, these include Hunger Games Catching Fire, Twilight Breaking Dawn 2, Red 2, and Texas Chainsaw 3D.

Turning to our third area of focus. The successful diversification of our Television business continues, as our core cable shows continue to move through or towards their syndication windows. Mad Men returned for season five with record ratings, up 9% from last season, driven in part by its increased exposure on Netflix. Nurse Jackie is our next candidate for syndication. We and Showtime are announcing today a fifth season order, with new showrunner Clyde Phillips, the creative force behind Dexter. Our critically acclaimed drama Boss is currently shooting its second season in Chicago and will resume airing on Starz after the Olympics.

But the biggest newsmakers are the four exciting new series that highlight the increased breadth of our TV business. We have completed shooting the first 10 episodes of Anger Management, and it will begin airing on FX on June 28. Charlie Sheen's performance shows why he has been and continues to be one of the top television stars in the world and why FX has committed such an impressive and creative marketing campaign to the show. As we've mentioned before, there's strong interest in Anger Management internationally. I'm pleased to report that we've now generated more than $600,000 per episode in just five territories. Again, contemplating the 10 plus 90 model of Anger Management, we've recently announced a new deal with major TV star George Lopez.

We expanded into broadcast television this year, batting 1,000 as both our network pilots, Nashville for ABC and Next Caller for NBC, were ordered to series. Nashville is written by Academy Award-winning screenwriter Callie Khouri, and ABC has announced it as their new Wednesday 10 PM show, airing right after the comedy block anchored by Modern Family. Mining one of our most important assets, Weeds writer/producer Steven Falk's Next Caller joins NBC's mid-season lineup in early 2013. Stars Dane Cook and Jeffrey Tambor in a workplace comedy set in a satellite radio station.

Both series will be co-financed with their respective network studio partners, and both are shot in states with significant tax credits in order to mitigate risk. Next week, we'll begin pre-production on Orange is the New Black from Weeds creator Genji Cohen. It's our first original series for Netflix as we diversify into original programming for digital platforms. As a first mover in this space, we're attracting a lot of attention from other digital platforms with an appetite for original programming of their own. We've established a track record of creating shows that help put emerging cable networks on the map, and we believe that we can expand our spectrum of buyers by doing the same for digital platforms.

Turning to our development slate, we're delighted to be teaming with the great Simon Fuller -- the TV and music entrepreneur who built the American Idol franchise, on a musical drama about the lives and loves of a young rock-and-roll band in Los Angeles. This project is already generating tremendous excitement in the creative community. The promise that we're seeing today across all of our businesses is a culmination of 12 years of building our Company, growing our content pipelines, and defining those areas of excellence where we believe we can operate as a long-term market leader. We're gratified when our exhibition partners discuss our emergence as a seventh major studio, as they did at their recent annual CinemaCon convention.

But let me assure you that we will never operate in a traditional manner. We will continue to adhere to our disciplined film and TV business models, maintain the lowest ratio of overhead to revenue in the industry, and use the cash generated by our Summit assets and the success of our Hunger Games franchise to reduce our interest expense and lower our debt. Having The Hunger Games and Twilight franchises, coupled with a prolific library, a strong and profitable TV business, and a record backlog of $1 billion, gives us highly visible cash flow and earnings for the next several years.

For all of the reasons we spelled out last year, we still believe the timing issues and the movement of films on our slate make it inadvisable to give annual guidance. However, because of the transformative nature of the events of the past several months, we believe that it is prudent to provide our shareholders and analysts with some directional guidance. With substantially all of the profitability of the first Hunger Games film still ahead of us, we anticipate that with the base case performance of our future product, we will generate approximately $900 million in EBITDA over the next three years. With this level of profitability, we remain confident that our Summit term loan will be paid down on schedule and our corporate debt at the Lionsgate level will be significantly reduced. I'd now like to turn the call over to your questions.

(Operator Instructions) First go to the line of Alan Gould. Please go ahead.

Thank you. I've got a question regarding the $900 million of guidance and, Jim, a question for you regarding the write-up of the Summit film cost. It looks like for purchase price accounting, you wrote up the Summit film cost by $250 million. I assume that -- the question is how much of that will that impact fiscal year '13 EBITDA, and fiscal year '13 to '15 EBITDA, having to amortize that additional $250 million?

The step-up was probably closer to $200 million, Alan. It will impact the '13 EBITDA, probably -- could be in the $100 million range. In '14, maybe '15, it will drag out because you amortize that step-up over time. However, that has no impact to the cash flows on it. The guidance that Jon has given took into account the step-up in basis for the Summit films.

Okay. But your free cash flow, doesn't that affect the EBITDA, because you have to amortize that film cost and then you add it back when you calculate free cash flow?

The answer is yes. So that's why I said, EBITDA is impacted. However, cash flow is not impacted.

So it will impact the three-year EBIT -- is the $900 million that Jon gave us a base case? That's an EBITDA number or a free cash flow number?

That was an EBITDA number with the Summit step-up in basis baked in.

With the Summit baked in. So it already accounts for that $150 million, $200 million increase?

Absolutely.

Okay. Then my second question is, can you give us an update on the TV Guide status?

Yes, I think, Alan, as we said before, we're continuing to have conversations with our partner OEP to maximize the value of that asset. I can tell you that we are proceeding on track to where we wanted to be, which is about 80% full screen by the end of the year. We've completed most of the distribution deals that we anticipated, and we're having a number of conversations about, as I say, the best way to maximize the partnership.

Okay. And one last thing. You said substantially all The Hunger Games profits are still ahead of you. I was projecting north of $300 million for Hunger Games profit. How much got recognized in the March quarter?

I won't comment on your projection, but I would say that we probably have about -- approximately 90% of The Hunger Games profit to go.

Okay. Thank you very much.

Our next question's from Monica DiCenso. Please go ahead.

Hi. This is Caroline Anastasi for Monica. Can you just give us a little more color on the bottom line impact of each of the Summit-related charges and to what extent we may see more in Q1, particularly with respect to the stock appreciation rate?

Sure. Well, the Summit-related charges, the step-up in basis that happened on the Breaking Dawn 1. Breaking Dawn 2 will also have a step-up in basis, but that is always factored into Jon's numbers. The stock appreciation rights are just depending on how the stock performs. So, you'll have to do the math. If it goes up as a standard stock appreciation charge, maybe between, I don't know, $8 million to $10 million a year.

Effectively what I was going to say is, that on the SARs, it's almost a mark-to-market. That's how I would look at that. So, at March 31, it was a certain price. We'll look at it at the end of the quarter as well.

Okay. Just a follow-up. Can you update us on your opinion surrounding Epix's deal with Netflix and where things stand today? And do you think it makes sense to continue with an exclusive deal?

I would say, it's not really appropriate for us as just one of the three partners to discuss ongoing discussions. I would say we're very pleased with our relationship with Netflix. I would also say that if you look at their numbers that have been published recently in terms of their prime or heavy usage times, a significant portion of that is going to Epix films. But obviously, as well, there are new players, new deep pocketed players who are interested in the product as well. So, we'll just have to see how that goes. But we're very pleased with the Netflix arrangement right now.

Okay. Great. Thank you.

Our next question's from Ben Mogil. Please go ahead.

Hi. Good morning. Thanks for taking my question. So, wanted to just go back to Epix. You've now got a situation where the channel's relatively profitable. Have you thought a little bit about return of capital to the shareholders? And how should we be thinking about the relationship between Epix's net income and Epix's free cash flow? Are there more original programming investments to come? Is it steady state?

I think for Epix, their EBITDA and free cash flow should pretty well track each other. I think there's no question that as we continue to generate cash, I would say there's a strong likelihood that we will distribute that cash. So, does that answer your question?

Yes. Do you have any -- it does, thanks, Jon -- any sense of timeline, or is it -- I realize there's partners, so it's not just a solo decision. But any sense of timeline that you can see based on the [current] deals that you have and what the upcoming schedule looks like in terms of programming costs?

I think the timeline would be fairly current.

Okay. Then lastly, just going back. So, you take an EBITDA number of $900 million, you add in $200 million of amortization from the step-up situation. Is it fair to say that on an unlevered pre-tax free cash flow basis, we should be looking at about $1 billion, $1.1 billion of free cash flow, assuming again that amort and new investment are going to be roughly equal?

I don't know if you did that with all your fingers and toes, Ben, but I'd say that's a pretty accurate number. (Laughter)

I have a calculator. Thanks, Jon. That's it from me, guys. Thank you.

Next we go to James Marsh. Please go ahead.

Two quick questions. First on Anger Management, assuming the ratings reach the appropriate threshold and FX takes the additional 90 episodes, when would you expect to announce the additional 90? And related to that, could you elaborate a little bit on that threshold calculation? Is it as simple as the show just generating above average ratings of a typical show on FX?

I'm actually pleased to have for the first time, one of our analysts called Kevin Beggs here, runs our Television Production business. So I'll let him answer the question.

We will know by early September from FX about reaching the ratings threshold. The formula is complex, and obviously, it's confidential. But in general, it's an achievable rating that is in keeping with FX's other originals.

Okay. That's helpful. Then earlier, you guys were talking about talking to vendors, exhibitors, et cetera, about your new market power. Should we expect any change in film splits with exhibitors going forward?

I'm going to let Rob answer that question.

We had very, very successful conversations and negotiations with our exhibition partners across the whole world, actually. And yes, our settlement rates will increase, definitely.

I would say by the way, it's not even necessarily just a question of leverage. I think that the exhibitors, it's really a win-win. I think the exhibitors can see that we're delivering between the two labels. We're delivering a lot of the product that works for them. Obviously, it's franchise product, and so they're rewarding us for what's working for them as well.

Excellent. Thanks very much.

Our next question's from David Miller. Please go ahead.

Hey, guys. One question for Rob and then a question for Michael. Rob, my understanding is there are a number of scenes on Catching Fire where you're going to have to shoot on water. I don't have to tell you this, but I just know shooting water is just a royal pain in the butt. There's all kinds of things that can go wrong. So is that the reason for the higher negative cost on the second film? Or is the reason for the higher negative cost just broader production value in general? If you can couch that for me, that would be great.

Then, Michael, just in terms of timing of taking out the high-yield debt, are you comfortable with doing that? If you're willing to tell us, are you comfortable with doing that in the current quarter, or do you see that as a back half of the fiscal year type of situation? Thank you.

Rob?

The answer to your question is, there will be greater and more exciting production value, which is one of the reasons for the increase in production cost. As it relates to water, the actual water scenes do not involve vessels, which generally are the ones that create the problems in production. The water that we're talking about in Catching Fire is a much more controlled situation, so we're way on top of that.

And I think given that, I think Patrick might want to talk about the international, because the budget will go up, we think, in a very disciplined manner. But I think Patrick perhaps has some good news on the other side.

First of all, we've done extremely well in Cannes in licensing the rights to Catching Fire. We had a lot of competition from a lot of buyers who wanted to get in. We got the best deal, improved the back end, improved on the front money, and also the quality of the distributors. We are anticipating that Catching Fire will probably reach the $400 million international box office.

We based those calculations on the history that we had with Twilight. The first Twilight did $197 million internationally, and the second one did $413 million. There is new development of countries that did not exist at the time, such as China, which becomes really a very, very important market for us. In fact, Hunger Games is actually opening next month in China. It's going to be, in fact, the last foreign non-Chinese movie opening before June 20 of this year. So we are very, very pleased with the reaction and anticipate a huge number for Catching Fire.

So David, I think the key point that really I wanted to make is, even with the franchises, we're still going to continue to look at them the same way we always do, which is what is our risk capital, really? Taking the budget, taking out the pre-sales and the minimum guarantees from the international marketplace, that's what we always intend to manage is the gap. Michael, would you answer the second?

David, in regards to your other question, we have about 14 months left on our current credit facility, so you should expect us over the next 6 months to look to redo that. Obviously, that is a LIBOR-based facility, which is a lot cheaper than 10% money on our high yield. Our bonds, our high yield bonds are callable at 105.25. Starting in about 17 months, they're trading a little bit -- 5 or 6 points higher than that right now. But I think you certainly should expect us over the next 24 months to lower our cost of capital. We finished the year at about $300 million of cash and cash availability. Our expectation is as we collect additional revenue and additional profit, for us to lower our cost of capital and our debt significantly, as Jon talked about.

Okay. Wonderful. Thank you.

Our next question's from the line of Doug Creutz. Please go ahead.

Yes, thanks. I was wondering if you could help comment on what you're budgeting in fiscal '13 for theatrical P&A, P&A expense excluding stock comp, and your investment from production. Thanks.

I think you could -- I'll give you some metrics, you've heard them before, that would help you build your model. We're going to probably -- the slate this year will probably have about 10 additional films than last year. I think Rob has noted on the last call, that's not steady state. We see going back down in fiscal '14 and '15 to around 14. You can assume an average of some larger, some considerably smaller, an average of about $25 million of P&A for those pictures. You can also assume a gap on each of those movies in terms of investment, a gap in terms of risk capital of approximately $12 million or $13 million per picture.

In terms of television, you're talking about somewhat around $350 million to $400 million of investment in film. However, as you recall, almost all of that, over perhaps 80%, is covered by network license fees. So perhaps those elements would help you build your model.

Can you talk about what G&A will look like in fiscal '13?

It will be probably somewhat flat compared to our G&A this year, actually.

Okay. Great. That's very helpful. Thanks.

We'll go to Matt Harrigan. Please go ahead.

Thank you. Most of my questions were answered. But on the new development side, some of the very promising things, like The Night Circus, and I think Ender's Game, you're sharing a lot of the economics with various partners. Are you pretty much able to keep most of the economics in house on some of the projects you talked about, apart from Ender's?

Then, I guess a question for Jon. At CinemaCon some of the major directors were really saying that 3D was going to be the norm on productions before too long, and there's a pretty big schism on the reaction, I guess, of the 48 Frame rate side. So I was just curious if you could comment on the in-theater experience and where Lionsgate was in the spectrum of studios. I think Universal was pretty skeptical, but some of the other studios were pretty over-the-top in terms of the long-term benefits of the faster Frame rates and all that.

Sure. I'll have Rob answer all those questions.

Comment about the 3D experience and the IMAX experience. I think the consumer is enjoying the opportunity to have the variety to be able to pick and choose. With the explosion of digital cinema throughout the world, you can switch on or switch off any one of those experiences at will, as an exhibitor. So, I think the consumer is definitely enjoying it. We like the idea of 3D for special movies, for particular movies, and we like the idea of giving the consumer the opportunity to choose an experience. We feel it's very, very good. We see 3D as a real opportunity around the world.

On the deal economics, Ender's Game, I think you have a minority share of the profits, if I'm not mistaken.

Well, I wouldn't say we have a minority. We're sharing in the profits, but remember, we're also the distributor. So we have fees that we collect in addition to our equity participation. On our other properties, we look to risk mitigate all of our production. So appropriately, we'll bring in equity partners where we think it's correct to do on the overall fiscal planning basis and try to retain as much of the upside as possible. That's just generally the way we operate our business.

I think, again, to extend that a little bit, I think our whole business model is predicated on, number one, we're a distributor, and we get distribution fees first. We recoup our P&A first, and we're generally happy to take on partners to mitigate the risk, as we recently did with What to Expect When You're Expecting.

I would tell you parenthetically that we were offered a number of slate deals 1.5 years or 2 years ago. All of them were to include the Hunger Games. So the bet that we made at the time was that the upside of Hunger Games really mitigated any interest in laying off some of the risk on the rest of that slate. I think we made a smart decision on that, obviously. But in general, we're happy to share the risk we -- as Rob said, we always want to mitigate the risk of losing much money on the ones that don't work and really maximize the benefit of the movies when they work. That's going to be an ongoing strategy for us.

Great. Thank you.

Our next question's from David Joyce. Please go ahead.

Thank you. Question about the Twilight Breaking Dawn Part 1 home entertainment revenue. The receivables have gone up. I was wondering if you're still expecting cash to be coming in from that, even though that was back in February. I was also wondering if you could talk about the participations involved with those properties. Thanks.

Yes, regarding receivables. It did go out in February, and pretty much the jump in receivables in our financials was almost 100% from the -- we had not received the home entertainment receivables, nor have we received The Hunger Games theatrical film rentals. So you will see a big increase, the receivables coming down on a go-forward basis. On the participation level, there will obviously be participation associated with it. We've basically recorded it, but I don't see that as being a huge number in relation to the -- our total participations.

Okay. Great, thank you.

We'll go to Marla Backer. Please go ahead.

Thank you. Couple of questions. First, on Hunger Games, you're obviously engaged now in greater discussions with international distribution partners. But my understanding is that the books were not or have not been as popular internationally as they have been here. Are you doing any marketing now to boost the fan base ahead of the sequel?

Well, you are correct. You are correct. But that was months ago. Now, actually, the book is becoming really, really popular. There was a major delay between the success of the book in the United States and the success of the book internationally. So, Hunger Games series is really starting to catch up all over Europe.

Okay. That's good. Then my other question is, given the success that you've had with these major franchises, first Twilight with the Summit acquisition and now Hunger Games. Does that imply that there will be less importance placed on some of the smaller franchises that you've historically had?

Not at all. We think that having a varied release schedule is an important element in operating our business, and we think movies from Tyler Perry, the Madea -- we couldn't be more excited about Madea's Witness Protection. We think it's a great opportunity. We're bringing it into the summer environment because we think it's a real opportunity. It's the first time it will be brought into the summer. We're excited about that. We generally take a portfolio approach to our slate. So we think it's an important -- it's important to have a varied mix.

Marla, if you go back in history, some of the most profitable pictures that we have ever had have been some of the lower budget pictures, including platform releases. Precious has been one of the most profitable pictures that we've had. Obviously, Saw, we all know about. There's an old adage, you don't know where your next hit is going to come from. In this case, I think we do know where a couple of our hits are going to come from. But certainly, we still want to mine the businesses that have been a really strong suit for us all along.

Okay. Thanks very much.

You're welcome.

Having time for one more question, we'll go to David Bank. Please go ahead.

Thanks very much. So, a couple of questions. The first is, I just want to make sure that I understand the $900 million of cumulative EBITDA. Does that include all of The Hunger Games existing releases, or is there one outside the three-year time frame? I'm not sure of the timing of like the fourth release. The second question is, on the international pre-sales, obviously, the astounding success of Hunger Games is going to allow you to increase the international guarantees, as Patrick cited. Can you actually quantify a ballpark even of what you got on the first one versus what you expect to get on the second one? I realize it's going to be bigger. Patrick clearly said that, but something a little more quantified. And maybe for perspective, what those numbers look like for something like a Breaking Dawn 2.

And then last question, I guess for Kevin, this is an unusual -- Anger Management as the 100 season order. Even if it gets picked up, is different than some of the other 100 season Debmar-Mercury deals you guys have done, in that those were deals -- those were shows that sort of stripped, right? So you had an episode a day. You get to 100 episodes in less than a year. What is the timing, like would Anger Management strip? Like how long would it take to get to 100 episodes, and what do you think the prospects for syndicating that show somewhere else would be? Thanks for taking all the questions.

Start with Kevin.

The prospects are really good. Getting to 100, we would do those 100 over the next 24 months. That would fit nicely with Debmar-Mercury's model of syndicating it to the station groups within two years of its original pattern on FX. FX is going to run the 10 episodes this summer, as they've announced. When we get the back 90, obviously, they'll start running them sometime next year. They'll run them on a weekly basis while we accumulate enough episodes to be in syndication. But we will get them quickly. That's the whole key to the whole model is to get them quickly so that we can be in all those platforms simultaneously, almost within 18 months of the FX premiere.

So they first run once a week, every week for 52 weeks a year.

That's right.

Okay.

Okay. Patrick?

Okay. To try to answer to your question, to give you roughly some parameters, the estimate on The Hunger Game coming from international before the overtures is probably, call it $70 million. The Catching Fire numbers, between the licensing and the projection on the UK, where we basically start distributing the movie, is already $100 million. That does not include any potential overages. Just bear in mind that we improved tremendously, tremendously the back end agreement with all our distributors.

And I think -- (multiple speakers).

Also, as it related to your initial question about the $900 million over the three years, the final Mockingjay would not be included in that.

Okay. Thank you very much.

We will take a follow-up from Ben Mogil. Please go ahead.

Question's more for Patrick. Just, Patrick, conceptually, when you're thinking about how you want to be looking at international guarantees, are you more -- are you more of the view that just take a higher guarantee and somewhat similar -- somewhat better but somewhat similar terms to the first one? Or are you willing to really bet more on the foreign overages and take a smaller MG and take much better back end economics? Just curious, as you think about the film, think about the opportunity, but think about the risk management, how you're balancing out the two.

Okay. First of all, the approach now is that we basically setting up some output deals. We're starting negotiating already, one output deal with Nordisk. On the Summit front, we have set up a lot of international output deals. We selected distributors which we think are the best in each country and with probably the most aggressive back end terms. We are going to progressively create the same model for the Lionsgate product, which means that we're looking at maximizing the MG and also creating the best possible back end for us in success.

Thank you. That's very, very helpful.

We do have a follow-up from David Miller. Please go ahead.

Hi, guys. Just a quick follow-up. Just wanted to clarify on the guidance. The $900 million in EBITDA over the next three years, I'm assuming that's an unadjusted number. The only reason I assume that is I'm assuming you guys sell TV Guide. So, I just wanted to make sure that's a pure consolidated EBITDA number and not an adjusted number. Is that correct?

Yes, that's correct. I hate to -- you used the word guidance. I would say the direction. But yes, that's an unadjusted number, David.

Wonderful. Thank you.

With that I'll turn it back to you, Mr. Wilkes.

For discussion of certain non-GAAP forward-looking measures discussed on this call, please refer to the presentations tab under the Investor Section of the Company's website at www.lionsgate.com. Thank you for joining us today.

Thank you all.

Ladies and gentlemen, this conference is available for replay. It starts today at 10 AM Pacific time, will last until June 7 at midnight. You may access the replay at any time by dialing 800-475-6701 or 320-365-3844. The access code is 248708. Those numbers again, 800-475-6701 or 320-365-3844. The access code, 248708. That does conclude your conference for today. Thank you for your participation. You may now disconnect.