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Lions Gate Entertainment Corp. (NYSE:LGF)

F3Q10 (Qtr End 12/31/09) Earnings Call

February 11, 2010 09:00 am ET

Executives

Peter Wilkes - SVP, IR

Jon Feltheimer - CEO

Michael Burns - VC

Steve Beeks - President

Analysts

David Miller

James Marsh

Ben Mogil

Doug Creutz

David Gober

Vasily Karasyov

Presentation

Operator

Ladies and gentlemen thank you for standing by. Welcome to the Lionsgate fiscal 2010 Q3 earnings conference call. At this time all participants are in a listen-only mode. Later there will be an opportunity for questions-and-answers with instructions being given at that time. (Operator Instructions). I would now like to turn the conference over to our host, Senior Vice President of Investor Relations and Corporate Communications, Mr. Peter Wilkes. Please go ahead.

Peter Wilkes

Thank you for joining us this morning. Jon Feltheimer our CEO would give the remarks this morning; the rest of the management team will join for the Q&A, now will include Michael Burns, our Vice Chairman; Steve Beeks our President; Co-COO, Joe Drake, President of our Motion Picture Group and Co-COO, Jim Keegan our CFO and Rick Prell our Chief Accounting Officer.

Matters discussed on this call will include forward-looking statements, that statements are subjects to a number of risks and uncertainty. 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 risk factors as set forth in Lionsgate's annual report on Form 10-K filed with the SEC on June 1st 2009 and in Exhibit 99.1 for a current report on Form 8-K filed with the SEC on October 13th, 2009.

The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. Jon.

Jon Feltheimer

Good morning everyone. Thank you for joining us on the call today. We had a solid quarter with strong revenue recognition and strong free cash flow. Our television business generated $92 million in the quarter, taking us to $267 million for the first nine months, and despite of lots of discussion about the maturing DVD marketplace, we had our best library quarter in our history with $91 million in catalog revenues. This was driven by a very strong performance from packaged media and a growing contribution from on-demand digital and Blu-ray which I will address in a few minutes.

Our EBITDA was affected by an unusual amount of (inaudible) in this quarter, pictures that will be released next quarter. However, we're still on track to exceed our adjusted EBITDA guidance of $75 million. These numbers tell only part of the story. Today I would like to look at the numbers trends within the industry that we believe will be very favorable going forward. These trends we are seeing were expected and informed a number of decisions we've made. Let's look at a few of them.

The first trend I would like to discuss is the recent theatrical box office. Box office revenues are up, admissions are up and studio and independent film output is down. In fiscal '10 we decided to (inaudible) for a year. Now there are fewer players and less product competing for a larger industry revenue pie, obviously a better formula. This has been working to our advantage in most of our recent releases, and it will work to our advantage as we bring a more muscular and diversified slate to the marketplace in fiscal '11. In fact our last 10 wide releases have grossed $387 million at the North American box office, an average of nearly $40 million per film. This compares favorably to $30 per wide release for our previous 10 wide releases. Four of our last five domestic releases have been profitable including Precious, Brothers, Daybreakers and The Spy Next Door. In fact, seven of our last 11 wide releases have been profitable at the box office approaching our historical success rate of about 70%.

Obviously even with the success rate of 70% not every film will work. Yes we were disappointed by the opening From Paris With Love last weekend, but From Paris With Love does more to underscore the strength of our model than its weaknesses. It was a $52 million picture in which we invested only $12 million domestic theatrical rights. While we rode off $7 million this quarter to be conservative, we breakeven at approximately $24 million of total box office which is doable with a strong upcoming four day weekend.

Parenthetically Monday and Tuesday's numbers were quite strong. Obviously our job is to make money, but with a portfolio approach to our slate of films, mitigating losses is part of that discipline. Our solid success rate should continue next year with a slate lead by Kick-Ass, the Expendables and Killers. The marketing materials for these three films are achieving a positive response of over 90% from their target audiences. If you want to share their excitement please take a moment to go to our website to look at these materials.

There is a slate of 14 films which we project to generate over $500 million in box office and play to our strengths. PRECIOUS is a good example of films in [hour reel]. It's approaching $50 million at the box office and has been nominated for six academy awards. Obviously we are very proud of this quality movie, but please be assured, PRECIOUS will be very profitable.

By anticipating its award success we're able to position it in over 600 theatres this past weekend, up from 220 giving it momentum into its DVD launch on March 9th. Our Maple Pictures affiliate in Canada and Lionsgate UK also distribute independent third party films and this year in addition to our own films they distributed the Hurt Locker which earned 9 Academy Award nominations.

Combined with the six Oscar nominations for PRECIOUS and another Academy Award nomination for Roadside Attractions documentary THE COVE, we had a total of 16 Oscar nominations within the Lionsgate family this year. Oscar nominations are of course very prestigious but the key is that they help create ultimate value for our content. For example Hurt Locker will convert between 200% and 300% on DVD in the UK and Canada. I should note both Maple Pictures and Lionsgate UK are contributing strong positive EBITDA to our results this year.

Just as we did last year with the Sundance Film Festival with PRECIOUS, we acquired this year's commercial and critical cream of crop with Buried starring Ryan Reynolds. You'll be hearing a lot more about this powerful and remarkable film. Our sister company Roadside Attractions followed a similar pattern. They acquired THE COVE at Sundance last year and picked up another prestige title Winter's Bone this year.

In both cases, we were able to take advantage of less competition as third party financing exits our industry. We like the trends in our television business as well. The advertising market is on the rebound coupled with very strong industry growth in the cable and niche markets where we have demonstrated remarkable consistency over the years. 8 of our last 10 shows have worked including our most recent success Blue Mountain State. It raced to solid ratings last month and Spike is making their highest rated franchise for the (inaudible). We expect the second season pickup to be announced shortly and in the wake of Blue Mountain State success Spike has ordered a new pilot from the Lionsgate team.

We also have a new pilot for FX, another network that likes edgy, distinctive programming. The advertising rebound will be leading a comeback in the syndication market as well. We can take advantage of this ad growth in three separate areas of our business, where Debmar-Mercury is driving our momentum. Distribution and syndication of third party shows like True Hollywood Stories, syndication of our own Lionsgate shows like Weeds and creation of significant new cash generating shows like Tyler Perry's House of Payne, and Meet the Browns, a category that now includes such Lionsgate produced and syndicated shows as Wendy Williams in the Jon Heder sitcom for Comedy Central.

Wendy Williams has been picked up by Fox in 2012 and spurred by a stronger ad market it's poised for breakthrough Oprah Winfrey type success that we hope will keep it on the air for a long time. The next show Debmar is working on launching in the same fashion as Wendy Williams is The Jeremy Kyle Show, the most new day time event in the U.K. Just as we did with Wendy Williams we expect that after a limited multi-week on air preview, Jeremy Kyle will rollout in full national syndication in 2011.

In the meantime, the success of our two Tyler Perry hit sitcoms, House of Payne and Meet the Browns continues to grow with our additional 40 episodes of House pf Payne and 60 episodes of Meet the Browns. These two shows will generate revenue approaching $400 million over their life time with the margin between 15% and 20%. Two years ago, we decided significantly expand our channel initiative in order to complete our vision of a fully integrated company and our channel business is gaining great momentum.

In the year, since we bought TV Guide Network with One Equity Partners, it has begun its evolution into a successful branded general entertainment channel. The key to our success in a growing roster of programming, we have acquired opportunistically and typical Lionsgate fashion from a diverse array of suppliers. By October we will have three strips on the air. Ugly Betty, Curb Your Enthusiasm and a third show to be announced shortly. We're going to air Curb as no basic cable network has done before, uncut and in a 45 minute format and Larry David is coming in to create new material to play the end of every episode.

In December, TV Guide Networks ratings were up 20% in primetime, and up 32% among our target female demographic driven by the Susan Boyle special, Ugly Betty and two Dirty Dancing movies from our library. Susan Boyle was our highest rated program of the year among women aged 25 to 54 and the number one special in TV Guide Network's history. We continue to see explosive growth in TVGuide.com as well. Our TV Guide online business has grown from 5 million to 21 million unique monthly visitors in the past three years.

On the distribution side, we expanded our footprint by reaching new long-term agreements with Comcast and Charter. The momentum is equally evident for Epics. Last week we signed another carriage deal with Charter, the fourth largest cable company reaching 5.9 million homes. And this week we signed a deal with NCTC, the National Cable Television Cooperative, an influential group of mostly smaller cable operators.

The NCTC deal marks the 5th carriage deal coverage for Epics and the 4th MSO to come on board in just the past four weeks. It grants us a hunting license to approach to NCTC members representing millions of homes.

We are adding distribution partners large and small with more to follow. Our patient disciplined approach is working with five distribution partners in place, Epic will be available to consumers in nearly 20 million homes by spring.

And with a combination of minimum guarantees, À la carte pricing and packaging, we can also say that our deals are consistent with our business plan. We continue to build a game changing network with our partners Viacom and MGM that will allow us to control our existing content, and build a slate of original programming that complements one of the most prudent movie line ups to be found on television, PC or portable screen.

We've invested $51 million in Epic till date. Make no mistake our past to full distribution is clear, our momentum is strong and Epic is working.

I would also like to highlight a few encouraging trends on the home entertainment front. Our packaged media results remain solid, our digital growth is promising and the continued strength of our library is very encouraging.

We continue to believe that when you look at packaged media on demand and digital as a whole, home entertainment remains a vibrant business. You just can't keep operating the same way if you want to maximize the performance of your content.

Last year we made a call that went against the grain on RedBox and its working for our product. Gamer was our second theatrical title under the RedBox deal and like Crank 2, it worked everywhere. We projected to convert it 145% of box, it rented well at RedBox with no discernible impact on sell through and it performed well at other rental outlets. It was also our first title to go day-and-date on VOD concurrent with its DVD release. Gamer VOD revenue is expected to convert at close to 20% box.

Two years ago our VOD title converted under 4% about in last year at around 8% to 10%. In other words VOD revenues on Gamer will be about $3 million higher than they would have been two years ago and we believe this is largely incremental revenue. And we expect to see other innovative and accretive windowing of products responsive to our consumers' taste and preferences later this year.

Overall, our revenues from on demand platforms digital and VOD combined are projected to be $68 million this year as far high on margin from the packaged media business. This is a 17% increase on a normalized basis from last year, certainly not digital pennies by any stretch of the imagination.

Streaming and downloading our movies and television through to iPods, iPads, iPhones, Xbox, PS3 and a numerable other devices will be generating new business and new customers for our content.

Another favorable trend for our home entertainment business is our ongoing success with our television product on DVD. As we've noted on previous calls, WEEDS is expected to generate more than $100 million on home entertainment during its lifetime. Based on its first two seasons which are tracking 20% to 30% better than WEEDS, we now expect Mad Men to generate even more that that.

We are seeing favorable financial trend as well. The strong free cash flow we generated this quarter was driven by cash flow generated from operations. Although it may continue to fluctuate from quarter-to-quarter, we anticipate a more consistent and positive trend towards the end of our next fiscal year, with positive free cash flow generated for the full fiscal 2012.

Our momentum isn't random, for the past few years our strategy has been very simple. Grow our television businesses, build the channel business and expand our international distribution in English speaking territories. These strategies were meant to diversify our revenues and provide more margin for our businesses.

Our next strategic thrust will be equally focused. While I'm not going to respond specifically any of the talk on the street about possible MGM or Miramax bids.

I am happy to refer to both our strategic rationale for any potential transaction as well as our manual of our history in regard to strategic moves.

Our criteria are simple, our acquisitions need to be immediately accretive, provided value added strategic components one more of our operating companies, provide immediate infrastructure benefit through [lease] cost or superior man power and fit into our Macro integrated media strategy. We don't overpay, and we are not in a hurry, any transaction we make goes through this filter. Looking back at a snapshot of recent transactions will provide solid foundation for these thoughts.

This year mandate will contribute a projected $14 million before overhead on forecast revenues of over $100 million. Debmar-Mercury which we bought for $27 million, continues to achieve success with our own and third party product, it will contribute 13 million on projected revenues of a 100 million.

Lions Gate U.K. will contribute about $7 million on projected revenues of over $70 million this year and based upon its ratings increased traffic to TVGuide.com and expanded distribution. We believe that TV Guide network and TVGuide.com are already worth twice what we paid just a year ago. We continue to believe in our long-term view of the value of professionally produced content. We remain agnostic to platforms believing that content will be an impulse item in so many emerging in the platforms and devices that will continue as historical trend towards becoming an ever increasing value proposition.

I'd now like to open the call to your questions.

Question-and-Answer Session

Operator

(Operator Instructions). And our first question will come from the line of David Miller. Please go ahead.

David Miller

Congratulations on the outstanding revenue and free cash flow numbers. I have three questions. The first is on CapEx, you guys have obviously made tremendous progress as you alluded to five deals in place, but correct me if I'm wrong, I still don't think you have a satellite deal and its just going to be one of the situations where once you get an EchoStar Direct TV deal, pretty much the other big (inaudible), Comcast, Time Warner cable fall in the place and you can comment on that, that will be great.

Secondly on Miramax, I know you can only flush this out so much, some of the fluid situation, but if you can comment on any sort of EBITDA or free cash flow statistics that you're willing to share with us, that would be great and whether or not do you think this would be a two part transaction whereby you buy the library and buy brand name, but then maybe sell back some of the titles to the (inaudible) and then finally on TV Guide, I think a lot of us on the call are kind of confused about the scroll, I know there are some MSO contracts where the scroll is already off. There are some MSO contracts where the scroll is still there. For those where the scroll is still there, could you comment on when the scroll finally disappears? Thanks very much.

Jon Feltheimer

Okay TV Guide, pretty simple David, on satellite and Telco we have a full screen product already. On the cable MSOs we are transitioned to a full screen product, in some places we might be providing a full screen scroll product as well as a full screen entertainment product, but the key thing is really digital penetration and as the cable MSOs go to fully digital penetration obviously we believe we will be full screen product everywhere. Michael do you want to comment on Miramax?

Michael Burns

Yes, on Miramax David let me say this as that we're certainly not known to overpay and obviously is an asset that would fit into a lot of criteria that Jon mentioned earlier, but again our key for any acquisition is whether it would be accretive from a multiple standpoint, we cant talk about that deal specifically, but again it would be something that we would certainly look at.

Jon Feltheimer

Yeah I would say however that we would never look at a library deal like that if we thought we're going to sell a whole lot of title to one of our competitors. So that scenario probably would work. In terms of FX, I think my simple answer David was I mentioned in my statement that we are moving towards full distribution. Obviously we got great momentum picking up four new distributors in last four weeks and I would say actually any of the big (inaudible) would be good and I don't really care which one comes first. So we are talking to a number of them and again I think we got a great product and we believe we will get there.

Operator

Thank you. And our next question will come from the line of James Marsh. Please go ahead.

James Marsh

Two quick questions. One just a clarification on the 14 theatrical releases coming up, I thought you mentioned that it might do about $500 million plus. I assume that's all domestic box and that would average about $36 million which is 20% or so ahead of your $30 million average.

Jon Feltheimer

Our target is $500 million or better. I didn't understand the $36 million.

James Marsh

Revenue you use with a quick math on that, it would about $36 million per, so that's not bad.

Jon Feltheimer

That's correct. We've built a very balanced portfolio of films that's a mix of a few bigger productions as well as lower cost acquisitions. The acquisitions really fall into two categories, mainstream movies like Buried which we just acquired, Expendables, Kick-Ass and then sort of target niche stuff like Precious, Buried is an example of movie that we can go out on a platform basis and grow as well as service deals. We've got that through a relatively relationship.

Michael Burns

James its Michael I will say this is that we never in our budgeting process budget for a hit. It is encouraging if you take a look at some of the early tracking for example, how the stock exchange works, Expendables and Kick-Ass. We've never had a triple digit $100 plus million number on how the stock exchange than we actually do for Kick-Ass.

James Marsh

Okay, then just one quick follow-up here on Epics, could you explain a little bit kind of how the responsibilities for funding the partnership work if certain partners elect not to fund etcetera. And then secondly, if you could just kind of break down the cash versus non-cash elements to the investment, it seems like a substantial portion of that is film amortization. So if you could just talk about the funding responsibilities and then just for the breakdown between the investment.

Jon Feltheimer

Okay, first of with the amortization, so what's happening is the product (inaudible) had at last year because at launch it had a backlog with investment of films that were funded that now that the channel has launched, it is now beginning to amortize its film cost.

James Marsh

[Excluded] non-cash?

Jon Feltheimer

The (inaudible) of film costing is non-cash.

Michael Burns

Yes, and obviously we have no outside investors currently in Apex, we believe we are moving towards a cash break even to obviously targeted cash flow channel the assumptions that I have seen and read in some of the analyst report that MGM isn't going to fund going forward or not necessarily correct but obviously this is a partnership I really can't speak to the other partners, but it is the intention of the partners to fund ourselves on a pro rata basis.

Operator

Thank you. And our next question will come from the line of Ben Mogil. Please go ahead.

Ben Mogil

Hi, thanks for taking the call. Wanted to talk first about library, you sort of talked about strong library numbers in the quarter. When you look at the contracted backlog that was down to $433 from $500 million at year end. Can you sort of help us reconcile those sort of two trends if you will?

Michael Burns

I'll talk, as the backlog is going down, primarily the backlog flowed into the television product is where that was going. So, you'll see that backlog becoming more television revenue and is what that happened, library revenue, Steve.

Steve Beeks

Ben, the backlog in the library really aren't related, library really goes to the overall health of the home entertainment business it really speaks to the opportunities but they are still out there, retail as well as the work that our team has done, and which is what we're really known for, which is really working that product repackaging, repromoting and finding opportunities.

Ben Mogil

Steve, maybe you can talk more about that, when you look at sort of stripping out titles that sort of came in the quarter that were library titles for the first time, the titles were released six to nine months ago in the theatres. Just in terms of sort of an organic or an apples-to-apples library basis, can you talk about some trends, sort of genre trends or distribution trends that would sort of give us a sense of what you're saying, just sort of curious?

Jon Feltheimer

The truth is I don't think that there's been any dramatic shift. The beauty of our library which has 12,000 titles is that we tend to have something for every assortment, whether it's classic products, recent films, whether it's fitness or it's family. We've actually had an upturn in the family business; just we found some opportunities there. I think it really has to do with library as a whole and there really hasn't been a dramatic shift.

Ben Mogil

And your distribution contract [permits duplication, it was Cinram is that correct?

Jon Feltheimer

Yes.

Ben Mogil

And we've obviously seem more leave Cinram, we've seen Paramount do a new deal with Technicolor, obviously both of your deals have been beneficial to the studio. Do you have some room, or do you have any expirations coming up with that deal that will give you some sort of cost relief?

Jon Feltheimer

We've been talking to Cinram for the last several months, and just as last year, we went through a cost-reduction initiative, and we were able to actually lower our replication cost as well as our distribution cost, hopefully reflected in our numbers going forward. There is always an opportunity for that, Cinram is been a tremendous partner. I had breakfast with the CEO this past week. After the Warner announcements I think they are pretty well positioned to remain healthy over the next couple of years.

They've been a tremendously supportive partner and obviously one of the reasons that our distribution looks so well.

Michael Burns

I would add one more thing library. I think that hasn't really been written. There's been a lot of discussion lately about these two libraries that people are saying have lost value therefore that means library product is losing value and I think you know it's really pretty simple to pinpoint why those libraries are losing value it's because they haven't been getting any new investment. And it's pretty clear when you invest in new products it turns into library, you've got all kinds of benefit from them, you've got packaging possibilities, you are creating a different kind of relationship with the retail and (inaudible) and frankly different relationship with the customer and so I really don't think it's making a statement about the entire industry as a whole or library as a whole. I think it's very specific to those libraries and again clearly our numbers suggest the whole entirely different story.

Ben Mogil

John is it fair to say that the two libraries you are talking about for fragrances totally applicable to one of them but one of them is going to buy a pretty large studio which now continues to crack our new product and continues to bundle that new product with the library of the subsidiary they own.

Jon Feltheimer

I am sure I don't know which libraries you are talking about. But I actually don't believe that's the case for a number of reasons.

Ben Mogil

Okay let me switch gears very quickly and I will pass the queue on to someone else. On Epics Jim I think you recorded a $26 million of revenue since Epic started with you guys, what's the payable amount and then I think in the past you guys have talked a lot about what the cap is or how much you would invest in Epics, I guess we are 51 on, do you have a cap sort of contractually or in mind if you will.

Jon Feltheimer

Currently, Epic at the end of December we had $7.9 million in account receivables that the account was fully current, fully paid up. That $7.9 million represents, they pay in installments, there's another installment that's due December and even right now Epic is completely current with all payments due us.

Ben Mogil

Okay great and on the investment side, I think in the past you talked mid 40s was the cap clearly we're past that now. Can you talk about, do you have a contractual cap or as you sort of see as we go along.

Jon Feltheimer

Yeah I mean before we actually were talking about not a CapEx actually it was more of a contractual minimum I can't really discuss where we are, but as I said, I think we are moving very quickly towards a breakeven or positive situation in terms of cash flow with a couple of more deals in place. So other than that I don't want to give you a number.

Operator

And our next question will come from the line of Doug Creutz. Please go ahead.

Doug Creutz

Thanks. Could you give an update on where you are expecting the actual pay to come in for fiscal '10 and how much of that is no risk and if you can't give an indication of where you are thinking financial P&A will come in for fiscal '11. Thanks.

Jon Feltheimer

The P&A is going to be, we're looking for the numbers exactly in '10 right now. The P&A for fiscal '11 will be up for a couple of reasons. It's up because we're going in to 14 pictures and our service feels a relativity require certain in the P&A levels however on a risk adjusted basis, the P&A in fiscal '11 will be down. I'm sorry the P&A fiscal '11 on risk adjusted basis will be right within our historical norms largely because of the service deals and our relativity relationship which has a risk protection component. In 2010 the P&A will be at a $165 million.

Unidentified Company Speaker

That's a non risk PNA

Jon Feltheimer

Its 215 reducing to 165 due to the risk mitigation.

Operator

(Operator Instructions). Our next question will come from the line of David Gober. Please go ahead.

David Gober

Good morning and thanks for taking my questions. Two if I could, first on the TV business, obviously that's growing into and has continued some very strong top line growth and we were a little bit surprised to see EBITDA losses this quarter, just wondering if you could kind of walk through the increase in amortization and residuals as a percentage of revenue there and maybe as a result of mix or something. And then secondly on the international side, Jon you talked a little bit before that the success for the (inaudible) films in Lionsgate UK businesses. Is there any interest in going into further areas and then potentially it's a non-English speaking regions in order to kind of leverage the portfolio particularly as international box as a percentage of total has grown so much in recent years?

Michael Burns

I guess I'll take the first one, if you look in to Q; we basically take a couple of write-downs on TV division of about $4 million. It was some product that had a serious had failed (inaudible) international ultimate that we lowered. So that's really impacted the quarter, I think you'll find for the full year, you'll see it on aggregate doing well with (inaudible) P&L that contributing to it.

Jon Feltheimer

And the only other territory that we have looked at actually it began a hybrid effort as I mentioned before as Australia, we like English speaking, the difficulty in expanding distribution internationally is when they enough titles, where we have enough international rights which requires a larger risk factor if you will. So a number of our films on our domestic slate, we don't have the international rights, but the UK and Canada have done extremely well. I mentioned (inaudible) as they have been very opportunistic in terms of third party product and again are contributing nicely this year.

So it's possible we could take another look at Australia, but other than that, I don't see making significant investment in other territories.

Operator

And next we'll go the line of Vasily Karasyov, please go ahead.

Vasily Karasyov

Have two follow-up questions, one on TV Guide, one on Epics. On Epics can you please give us more color on what kind of carriage the channel is getting? Is it basic tier, is it a pay tier, that would be appreciated and also on TV Guide, given what's on going with the retransmission fees and Fox pushing hard, and to Time Warner cable deal that was concluded recently, are you having different conversations with MSOs about a affiliate fees than you were let's say a year ago? Thank you.

Jon Feltheimer

Well, on TV Guide, the deals that we've made so far were both good deals and fees were both adjusted upward, but we're at the beginning of the phase and obviously as a rate it continues to grow. The next set of conversations we're going to have are hopefully, going to have us in a better position to make better deals, that's part of the process. These are essentially long-term proposition. However given we've only been one year into it and seen growth both in the TV Guide ratings as well as Tv.com really extraordinary traffic. We are actually ahead of schedule in terms of where we thought we would be.

In terms of Epics, it is a combination. We are trying to create tremendous flexibility for our MSO partners and so as I said before, its going to be a combination of À la carte, a combination of tiering and a combination of guarantees because I said based upon all of the above and all of our projections, we are on our plan. So that's the best answer I can give you.

Operator

Thank you. And at this time there are no further questions coming from the phone lines. Ladies and gentlemen this conference will be made available for replay after 8:00 am today through February 17 at midnight. You may access the executive playback service at any time by dialing 1800-475-6701 and entering the access code of 143850. Again, this conference will be made available for replay. You can dial 1800-475-6701 and enter the access code of 143850. That does conclude our conference for today. Thank you for your participation and for using the AT&T executive teleconferencing service. You may now disconnect.

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