Lionsgate Studios (LION) risk factors, FY2025 10-K

Risks Related to Lionsgate’s Business

1. 01Lionsgate faces substantial capital requirements and financial risks
2. 02The requirements of being a public company, including maintaining adequate internal control over financial and management systems, may strain Lionsgate’s resources, divert management’s attention, and affect Lionsgate’s ability to attract and retain executive management and qualified board members
3. 03Lionsgate may incur significant write-offs if its projects do not perform well enough to recoup costs
4. 04Changes in Lionsgate’s business strategy, plans for growth or restructuring may increase its costs or otherwise affect its profitability
5. 05Lionsgate’s revenues and results of operations fluctuate significantly
6. 06Lionsgate’s content licensing arrangements, primarily those relating to the distribution of films in foreign territories, may include minimum guarantee arrangements which, absent such arrangements, could adversely affect its results of operations
7. 07Lionsgate does not have long-term arrangements with many of its production or co-financing partners and, as a result, Lionsgate may not have certain derivative rights related thereto
8. 08Lionsgate relies on a few major retailers and distributors and the loss of any of those could reduce Lionsgate’s revenues and operating results
9. 09A significant portion of Lionsgate’s library revenues comes from a small number of titles
10. 10Changes in consumer behavior, as well as evolving technologies (such as artificial intelligence) and distribution models, may negatively affect Lionsgate’s business, financial condition or results of operations
11. 11Lionsgate faces substantial competition in all aspects of its business
12. 12Lionsgate faces economic, political, regulatory, and other risks from doing business internationally
13. 13Lionsgate is subject to risks associated with possible acquisitions, dispositions, business combinations, or joint ventures
14. 14If Entertainment One Canada Ltd. loses Canadian status, it could lose licenses, incentives and tax credits
15. 15Lionsgate’s success depends on attracting and retaining key personnel and artistic talent
16. 16Global economic turmoil and regional economic conditions could adversely affect Lionsgate’s business
17. 17Lionsgate could be adversely affected by labor disputes, strikes or other union job actions
18. 18Business interruptions from circumstances or events outside of Lionsgate’s control could adversely affect Lionsgate’s operations
19. 19Lionsgate’s business is dependent on the maintenance and protection of its intellectual property and pursuing and defending against intellectual property claims may have a material adverse effect on its business
20. 20Lionsgate’s business involves risks of claims and content of material, which could adversely affect Lionsgate’s business, results of operations and financial condition
21. 21Lionsgate may become subject to litigation and other legal proceedings, which could adversely impact its business, financial condition and results of operations
22. 22Piracy of films and television programs could adversely affect Lionsgate’s business over time
23. 23Lionsgate relies upon cloud computing services to operate certain aspects of its service and any disruption of or interference with its use of its cloud computing service could adversely impact its operations and its business
24. 24Purported noteholders have instituted suit against Old Lionsgate claiming that it breached the indenture governing certain 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes

Risks Related to Lionsgate’s Indebtedness

1. 25Lionsgate has incurred significant indebtedness that could adversely affect its business and profitability and its ability to meet other obligations
2. 26Lionsgate may not be able to generate sufficient cash to service all of its indebtedness and may be forced to take other actions to satisfy its obligations under its indebtedness, which may not be successful
3. 27Despite its current level of indebtedness, Lionsgate and its subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to Lionsgate’s financial condition described above
4. 28The terms of Lionsgate’s corporate indebtedness restrict Lionsgate’s current and future operations, particularly Lionsgate’s ability to respond to changes or to take certain actions
5. 29Lionsgate’s variable rate indebtedness subjects it to interest rate risk, which could cause its debt service obligations to increase significantly

Risks Related to Tax Rules and Regulations

1. 30Changes in foreign, state and local tax incentives may increase the cost of original programming content to such an extent that they are no longer feasible
2. 31Lionsgate’s tax rate is uncertain and may vary from expectations
3. 32Legislative or other governmental action in the U.S. could adversely affect Lionsgate’s business
4. 33Changes in, or interpretations of, tax rules and regulations, and changes in geographic operating results, may adversely affect Lionsgate’s effective tax rates