Ladies and gentlemen, thank you for standing by. Welcome to the Lionsgate Entertainment First Quarter twenty twenty one Earnings Call. At this time, all participants are in a listen only mode. Later, will conduct a question and answer session. Instructions will be given at that time.
As a reminder, this conference is being recorded. I'd to now turn the conference over to our host, Executive Vice President and Head of Investor Relations, James Marsh. Please go ahead.
Good afternoon. Thank you for joining us for the Lions Gate fiscal twenty twenty one first quarter conference call. We'll begin with opening remarks from our CEO, John 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.
From Starz, we have President and CEO, Jeff Hirsch CFO, Scott McDonald and EVP of International, Superna Callie. 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 a variety of factors. This includes the risk factors set forth in Lionsgate's most recent annual report on Form 10 ks as amended in our most recent quarterly report on Form 10 Q filed with the SEC.
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. I'll now turn the call over to John. John?
Good afternoon. Thank you, James, and thank you all for joining us. I hope everyone is staying safe and healthy. We completed the quarter with strong financial results in an extraordinary environment in which our priorities were evident: monetizing our film and television library embracing innovative distribution strategies for our films and acquiring new properties while renewing others. Most importantly, it was a quarter in which we continued to use our content engine to create a unique, valuable and scalable global streaming platform at Starz.
As I go through a recap of the quarter, one message stands out. Our programming at Starz is working. The identity of the Starz brand is resonating. The growth of its domestic over the top business is robust. Its international platform is successfully differentiating itself at a critical inflection point in the marketplace.
And the proposition that bringing Lionsgate and Stars together allows us to accelerate the growth of our direct to consumer offering by using the full portfolio of our resources is fulfilling its promise. Let's start with the quarter's highlights. Stars programming drove domestic streaming paid subscribers to an all time high of 7,400,000 in the quarter. Internationally, Stars continues to establish itself as a must have service with continued subscriber growth and expanding distribution footprint and a best of global SVOD content strategy that is resonating with consumers and platform partners alike. Globally, we reached 11,400,000 over the top subscribers in the quarter, and our growth trajectory is on target for 13,000,000 to 15,000,000 over the top subscribers by the end of the fiscal year.
It was a productive quarter for our Lions Gate Television Group as all five of our new series were renewed with Love Life becoming the second most watched series on HBO Max. We entered a lucrative multifaceted syndication deal for Mad Men with Amazon Prime internationally, Amazon's IMDb TV domestically, AMC and STARZPLAY. We're readying our next big property, Weeds, for syndication in the fall. And on the heels of last year's record revenue, our library continued its outsized performance in the quarter as we continue to capitalize on demand for content. Turning to our individual businesses.
Stars continues to differentiate itself as the home for programming for women, African American and Latinx audiences who have been underserved in the premium TV landscape. The Outlander franchise is stronger than ever, rounding out its fifth season with record multi platform viewing as it became the number one original series on premium for women. We also successfully launched two new series in the quarter. The crime drama Hightown from creator Rebecca Cutter and producer Jerry Bruckheimer premiered to an all time high for a new series on the Starz app and grew 33% from its series premiere to its final episode. Its record was broken just a few weeks later when Katori Hall's Pea Valley launched to rave reviews that have propelled audience growth week over week since its premiere, a rare feat among new shows.
Both series are squarely in our wheelhouse of bold, provocative programming that is unique within the premium space, and both have been renewed for second seasons where our research shows that we often see outsized subscriber growth. Understanding the importance of the Power franchise, our Lions Gate Television group is doing a great job getting the next two Power series Ghosts and Raising Kanan ready for their scheduled launches as our vertical integration gives us an important element of control over the production of our shows. We're also expanding the world of Outlander with the new docuseries Men in Kilts, starring Sam Hewen and Graham McTavish. Going forward, we're continuing to open the creative aperture with a combination of exciting new series, including the comedy Run the World from Dear White People's Yvette Lee Bowser and returning favorites, The Girlfriend Experience from Steven Soderbergh and The Spanish Princess, which follows in the footsteps of critically acclaimed The White Queen and The White Princess. It was also a strong quarter internationally.
Planting our flag early in many countries gave STARZPLAY the opportunity to develop relationships with a growing list of established distribution partners and secure an enviable pipeline of exclusive world class content to deliver on our best of global SVOD strategy. We have positioned ourselves as a destination for premium programming by curating a portfolio of provocative, edgy series, including Normal People, The Great, Rami and Killing Eve, shows that have garnered a total of 17 Emmy nominations, along with iconic library series such as Mad Men and our full slate of Starz originals with Star Play now becoming the exclusive worldwide home of the power universe. Earlier this week, STARZPLAY announced its partnership with its sister company, leading Spanish language streaming service, Pantaya, for a slate of original local language titles that reflects our focused premium approach. Exciting new series ranging from the thriller crime drama Express from renowned storyteller Ivan Escobar to addictive period pieces such as Senorita Mexico and an unfiltered look at the life of international porn star Nacho Vidal. With a track record of success at Pantaleon films, strong subscriber growth at Pantaya and the ability to create the best in Spanish language programming, as evidenced by our 11 recent Imagen Award nominations, this is a vertical where we can create exceptional value as a true market leader.
STARZPLAY's content strength has made it a must have service on third party platforms, as evidenced by the most recent launches on Roku, Apple TV plus and Rakuten, and it's fueling the growth on our own STARZPLAY app, which we launched in three additional countries. Our bespoke relationships now encompass 58 different international partners who have recognized the appeal of our offering and whose collaboration will continue to serve as an enduring competitive advantage. To sum up, the transition to digital at Starz continues to accelerate. The majority of revenue from our traditional business is migrated to a la carte. We've executed a successful content strategy, and we are continuing to grow a valuable, scalable global streaming platform with unique characteristics that set us apart.
Turning to our Motion Picture group. It was an active quarter where we moved major franchises forward, resumed theatrical production and demonstrated the flexibility and optionality of our slate. There's good news on The Hunger Games front. Suzanne Collins' Ballad of Songbirds and Snakes has been a smash success, selling more copies than any other book released in The United States in the first six months of the year. With all of the excitement around the franchise, sales of the Hunger Games titles in our library are experiencing growth beyond expectations, and we're working closely with Suzanne and the rest of the Hunger Games team to get the movie ready for production.
We're also busy preparing scripts for the next two installments of our John Wick action franchise, with John Wick four slated to hit theaters Memorial Day weekend twenty twenty two. We hope to shoot both John Wick four and five back to back when Kiana becomes available early next year. And to reveal one of the worst kept secrets in Hollywood, we're pleased to confirm that Jennifer Gray will both executive produce and star in a new Dirty Dancing movie for Lions Gate from Warm Bodies director, Jonathan Levine. It will be exactly the kind of romantic, nostalgic movie that the franchise's fans have been waiting for and that has made it the biggest selling library title in the company's history. With the appetite for fresh content at an all time high and options for consumers dwindling due to the global shutdown, we made it a strategic priority to be one of the first major studios back into production.
Over the past five months, we put together a thoughtful strategy to restart production with protocols to best ensure the safety of cast and crew. We recently began production on the thriller horror film, The Devil's Light in Eastern Europe, and we're gearing up physical production to begin shooting several other films over the next two months, including The Unbearable Weight of Massive Talent starring Nick Cage. These efforts put us in a strong position to capitalize on a market short on supply. On the distribution front, our slate is well positioned to embrace relief strategies ranging from global theatrical rollouts to P VOD and SVOD launches, giving us new ways to monetize our current pipeline and create new models for the future. This afternoon, we announced that
our
film, Antebellum, will be released on premium video on demand on September 18. An electrifying and urgent movie, our PvOD strategy provides the opportunity to reach the greatest number of people at a moment when its central themes are an important part of the national conversation. Our business model is strong and informed by the learnings from our successful PBOB launches of I Still Believe and The Secret. Turning to television. The most important part of the Mad Men story is yet another reaffirmation of the long tail value of great library content.
Our recent second syndication license of this series is a significant increase in value over its first syndication license eight years ago to Netflix. In a world where people are consuming more content, we believe that this story will be repeated across all the top titles in our library. It was a strong and successful quarter for our television business. Our output was prolific. Our development pipeline is full.
We're continuing to put new shows on the air and continuing to ramp up our highest priority, supplying premium scripted series to stars. And while getting new shows on the air is great, it's really all about renewals. And this quarter, all five of our new series were renewed as Love Life, Zoe's Extraordinary Playlist, Mythic Quest, Pea Valley and Hightown begin what we hope will be long runs building evergreen value. We are already preparing to launch the next wave of premium properties. First Ladies at Showtime, starring Academy Award winner Viola Davis as former First Lady Michelle Obama the Seth RogenSarah Silverman adult comedy, Santa Inc.
For HBO Max and East Wing creator Ali Wentworth's Comedy for Starz about life in the Reagan White House starring Debra Messing. With more and more of our creative focus on Starz, we now have more than 20 Lionsgate television series in development production or ready to launch on the network as we continue to align all of our content businesses where we see the greatest opportunity for growth. During the quarter, our television group was busy establishing protocols to allow us to resume production safely. Though every show represents its own unique set of issues, we will soon have a steady stream of premium scripted series returning production at the right pace, in the right locations and with the right safeguards in place. Meanwhile, Pilgrim has achieved great success producing unscripted series safely in the current environment, developing procedures that have won acceptance from health officials, local communities, talent and the guilds.
They have 21 shows in various stages of production in every part of the country, and they just completed shooting the major competition reality series, The Ultimate Surfer for ABC and Dodgeball for Discovery, while the new Mike Tyson series, Tyson versus Rumble on the Reef, is preparing to Discovery Shark Week. It was also an active quarter for Lions Gate three sixty collaboration with our television and motion picture teams together acquiring the coveted Pulitzer Prize winning 1619 project in partnership with Oprah Winfrey, The New York Times and investigative journalist, Nicole Hannah Jones, which we will adapt into a portfolio of content with some of the greatest African American storytellers. It's an exciting reaffirmation of who we are and what we stand for as a company. In that regard, as we create new paradigms for operating our business, we also named the Chief Diversity Officer and formed an Executive Diversity Council, which I chair, continuing to strengthen our commitment to diversity in our workforce and ensuring that all of our employees have an equal path to success. As we think about where the biggest opportunities for value creation lie, we start by looking at the building blocks that we have carefully put into place over the last twenty years.
First, assembling libraries in the distribution business to monetize it. Second, building a portfolio of dozens of major film and television franchises with renewable evergreen value. Third, harnessing that content engine to a captive premium paid channel at Starz and finally, continuing the transformation of Starz into a premium global streaming platform fueled by our IP and backed by our content library. We've already changed the face of Stars in three point five years. From a domestic channel with almost no over the top subscribers to a direct to consumer offering with over 7,400,000 OTT subscribers today from a network with no international subscribers to a global subscription service with over 5,200,000 subscribers today And from a legacy company generating less than 50% of its revenue from a la carte to a modern platform, generating over 75% today, expected to reach nearly 80% by fiscal year end.
This transformation is still in its early innings, but everything that we've seen so far and everything that we saw this quarter tells us that we're on the right path to creating something with unique and lasting value for our consumers, partners and shareholders. In closing, this was not only a strong quarter, but one that showcased all of our strengths: resilience in the face of the pandemic innovation and creating new business models for a changing world and most importantly, people working together collaboratively to continue to build our company and our brand. Though our environment remains uncertain, our businesses are strong, our balance sheet is healthy, our morale is good and our own path forward is clear. Thank you. Now I'll turn things over to Jimmy.
Thanks, John, and good afternoon, everyone. I'll briefly discuss our fiscal first quarter financial results and provide some color on our outlook. First quarter adjusted OIBDA was $174,000,000 driven by strong Motion Picture Group segment profit performance and record demand for library, with revenue coming in at $814,000,000 Reported fully diluted earnings per share was $0.23 per share, and fully diluted adjusted earnings per share came in at $0.39 a share. Adjusted free cash flow for the quarter was $77,000,000 Now let me briefly discuss the first quarter performance of the underlying segments compared to the prior year quarter. You can follow along in our trending schedules that have been posted to our website and show greater detail around our global Media Networks subscribers.
Media Networks quarterly revenue was $367,000,000 and segment profit came in at $72,000,000 up 19% from last year, driven largely by smaller losses at STARZPLAY International. STARZ domestic generated 30% profit margins while transitioning one of our largest distributors to an a la carte revenue share model. Globally, on a pro form a basis and including STARZPLAY Arabia, the company added 4,500,000 subscribers year over year, up 22%, reaching 25,000,000 global subscribers. Now looking at sequential performance. Total domestic OTT subscribers were up 600,000 pro form a or 9% sequentially, driven by Outlander and new freshman hit series, Hightown.
I'd like to remind you that our sub counts all represent paying subscribers. Turning to our Motion Picture group. Revenue declined to $281,000,000 as a result of no theatrical releases in the quarter, combined with tough comps against last year's strong performance of John Wick Chapter three. Segment profit came in at $101,000,000 driven by lower P and A spend and demand for high margin library and segment two titles, which is indicative of the increasing value of our content. As we mentioned on our last call, we expect some Motion Picture Group revenue to shift to the right as theaters remain largely closed due to the COVID-nineteen pandemic.
And finally, television segment revenue for the quarter came in at $196,000,000 while segment profit was $35,000,000 up 40% year over year. The results in TV significantly benefited from our licensing agreement of Mad Men, and we expect the balance of TV segment profit for the year to be weighted to the second half. On the balance sheet, our leverage ended the quarter at 4.1x adjusted OIBDA or 3.3x excluding our investment in STARZPLAY International. We continue to maintain significant liquidity with $376,000,000 of cash on hand and a $1,500,000,000 undrawn revolver. I would also like to remind you that we have no maturities before the end of fiscal twenty twenty three.
We remain committed to paying down debt with the bulk of our excess free cash flow. Lastly, we remain very comfortable with our maintenance covenants based on our revised forecast and having further stress tested them for longer production and theatrical delays as well as the potential negative impact of a recession. Now I'd like to turn the call over to James for Q and A.
We do have a few people queuing up. We'll go to the first question, Matthew Thornton with Truist. Please go ahead.
Hey, good afternoon, everyone. Thanks for taking the question. Maybe two, if I could. Maybe just to start, I don't know if this is John or Jimmy. Can you just maybe update us on your thinking around the international expansion?
Just how you think you're pacing relative to the multiyear projections that you guys have put out there? And just kind of remind us maybe how many markets you're in now and maybe how many you're targeting? Just a little update there would helpful. And then just secondly, the library number you put in the release there was a pretty stellar number. Just curious if that's a reasonable run rate number or maybe how we can think about that versus what a normalized number would look like?
Great. Thanks, guys.
Jeff, why don't you take the first
one and then Jimmy the second.
Great. Hi there. The international is doing great. We're really excited about the progress we've made since launch. We are in currently 50 countries, and we feel great about those 50 countries right now.
The goal in each of those territories is to get deeper in terms of our distribution relationships. As John mentioned in his remarks, we've done 58 different distributor deals over the last eighteen months. We continue to see distributors coming to us because of the strength of the content that we put on the service. Right now, we've got the grade on outside The U. S, and it's performing really, really well.
So we feel great about the trajectory. We think we're on track to hit the 15,000,000 to 25,000,000 subs that we've talked about publicly by 2025, and we feel great about it.
And
Matt, regarding your question on library, as you've noted, we've actually had two back to back records in recorded library. We posted over 600,000,000 which was a record for us in fiscal 'twenty, and then really a great start to the year with the first quarter a record $219,000,000 So for us, this just underlines the increasing value of content. And in fact, as John mentioned in his prepared remarks, we saw a significant increase in value going from first to second cycle with Mad Men. So that's just reaffirming that. I would tell you that this is a very diversified library driven across both motion picture and TV.
This just continues to, we believe, be an undervalued asset. And to give you a little perspective, right, if you just took last year's revenue of $600,000,000 plus, and as we've said before, the cash margin on this is 50% plus. If you took that and just put a conservative 10 to 12 times multiple, you can easily see you're roughly 3,000,000,000 to $4,000,000,000 in value. There's another way to look at this too. You can look at it in some of the parts, which we just recently had a valuation done on the unsold rights and was independently valued at approximately $1,000,000,000 pretax.
And if you add to that the contracted backlog that we disclosed in the trending schedule is $1,100,000,000 you're at $3,000,000,000 and then you add development projects and sequel rights and spin offs, etcetera, you can see that's very consistent with this multiple approach of 3,000,000,000 to $4,000,000,000 So really, whether you look at it on some of the parts basis or a multiple, you come out somewhere around the 3,000,000,000 to $4,000,000,000 range.
Great. That's helpful, guys. I'll jump back in the queue.
So next we'll go to the line of Ben Weinberg with Morgan Stanley. Please go ahead.
Hey, Ben. Thanks. Hey, how are you? I think Joe is on the call, I believe. I wanted to ask about the Antebellum Pvod decision.
I'm sure you're not surprised. How do you think about the sort of opportunity with that movie in a premium VOD window relative to your box office expectations? And
how do
you think about the returns available to the company? I think a lot of this is happening because of the COVID situation or maybe all of it and the lack of a theatrical option. But I'm just wondering from an analytical finance point of view, how you think about the return on a movie in a Pvod window? And if you think that things have structurally changed in this business over the next couple of years and you'll be doing more rather than less of this or is this truly a temporary phenomenon?
Sure, Ben. Thanks for the question. Listen, I would love to see every one of our movies released theatrically and we certainly made this one with real theatrical aspirations. We have a great movie. It's a movie that is also particularly strong because it speaks to this moment in time.
So just from a movie meeting cultural moment, there's just no better time for it to reach its audience, which factored into our decision a little bit for sure. Also, I would say to you is that with the extraordinary demand for content and the short supply, what I can tell you is that the economics look really strong. It allows us to still speak to a consumer directly. And yet the downstream appetite and pay and beyond is strong.
So what I
would say to you is that it's a really good model for us. We also had a good theatrical model, but we think that in a model like this, you actually accelerate cash and have the same opportunity for upside. So between that and this moving in this moment, it was just the right decision. When you think down the road, what I would tell you is we certainly we believe very much in the theatrical business. And as that opens up, we'll be ready to exploit it aggressively.
And yet what you have seen in this moment is new opportunities be created. And so I just look I look at the environment and although it's a little tough because theaters aren't open, we've got more, I think, optionality and interesting ways to explain our content to the consumer. And so I think that going forward, we'll be looking at all of those things.
If I could just ask a follow-up. Thank you for that answer. One of the things we hear or you read is obviously talent wants their movie, both directors and also I'm sure participants want their movies released theatrically, not only because they want it theatrically, but they also a lot of the economics are tied to box. Do you view that as a headwind to this model working? Or do you think that there's sort of changes in the air and everyone sort of sees the way technology and the consumer are moving?
Yes, would start by saying we feel like talent. We like we want it in theaters too. So we all would like that to happen and we're all working aggressively. We're back in production already with the idea of there's a lot of appetite out there to feed. And so it's something that we're all looking forward to getting back to and at the same time talent wants their stories told and they want to reach an audience and they're partners with us.
We're not making the unilateral decision. We very much bring our creative partners into these conversations to make sure that we're doing the right thing for the movie, both creatively and economically. So it's you end up having a lot more conversations than you maybe had to before. But at the end of the day, creators want their stories to be seen, and they want to have impact. And so we're all kind of in it together dealing with the moment.
Thanks a lot.
And then next, we'll go to the line of Alan Gold with Loop. Please go ahead.
Thanks for taking my question. Hello guys. I have a few questions. First for Jimmy, leverage took a nice step down and that what we've seen with you and all the studios is that there's been a big pushback on cost till later in the year. Should we expect that reverses a little bit as the year goes on?
Yes, Alan. Listen, in terms of the leverage, thanks, you did note that we significantly delevered since last quarter. Look, we generated nice positive free cash flow after fully investing our business, and we plan to continue to do that. I would say that on a net debt basis, we reduced net debt almost $100,000,000 over the quarter, and we've done so over almost $05,000,000,000 over the last eighteen months. So I expect to continue to manage the net debt at this level or down.
And the ultimate leverage will be a context of what the ultimately trailing twelve months are. And as you've noted, we were more front end loaded with this first quarter. So you'd expect that to work a little bit against us over time, but feel very comfortable with where we are and our efforts to continue to delever.
Thanks. And if I could follow-up on Ben's Pvod question. Can you give us any sense of what the pricing is, whether the movie will run-in theaters after the Pvod window if theaters are open and if there's a back end chair to the theaters?
On Antebellum, it is currently planned at $19.99 dollars with the idea of we'll play it all the way through the holidays. There is not currently a plan. There is not currently a theatrical plan. It is to really maximize the opportunity for in this moment for the biggest, the widest possible audience to see it. If things change, we'll certainly take advantage of any opportunity out there.
Okay. And one last one, if I could. Mad Men, did you recognize all of the syndication revenue, second cycle syndication revenue for Mad Men this quarter? Or do you recognize more after Amazon's exclusive window is over?
Yes. There's we recognized a significant portion of it this quarter based on the avails that were available on Amazon. There's some more avails throughout the year back half, but the majority has been recognized in the quarter.
Okay. Thanks so much.
We'll next go to the line of Stephen Cahill with Wells Fargo. Please go ahead.
Thanks. So domestic Starz network revenue has done pretty well. I think it's only down around 6% from where it was before the Comcast reset. So I was just wondering, are there any more fixed distribution deals coming up in fiscal twenty twenty one that we need to think about? And do you think it's possible that you might end fiscal twenty twenty one at a network revenue run rate that's kind of back to where it was before that deal reset?
Hey, it's Jeff. Great question. We continue to see great higher ARPU subs on the digital side coming onto the business, which is replacing some of the lower ARPU subs that we saw in the Comcast deal. We continue to work with Comcast. We saw a little slowing of the growth on the a la carte side during the early stages of the stay at home order because they were giving away a lot of content.
But we have seen acceleration in the July month, and we're looking forward to having the first Power spin off in September for the first time in under this new deal. So we think we'll see growth accelerate there as well. We generally don't talk about our distribution deals, but I would say just normally we have two to three a year on a normal basis.
Great. Then maybe, Jeff, while I've got you, how many originals do you think is the right amount for Starz on a sort of cadence for your subscribers' basis? And do you intend to run those on a like one per week? Or might you do more of like a binge type of approach for the Starz content? And then just last one on the Starz content, how do you think about having a big movie library versus putting more of that cash into original content?
It's a great question. We have a very specific programming strategy as a premium service, which is a non ad supported, very mature, very adult content that we like to say people are willing to pay for. We don't have to be as broad and try to service the home as some of the other newer launch services that we have. So we think the right numbers are on 15 originals. That way, we can have one new piece of content or two new pieces of content on the air every week for our two core demos.
You couple that with our over 4,000 library titles plus our Sony Pay one at $899 we think we have a really good value proposition to be a complementary service to all of the big services, both domestically and then at $4.99 overseas. So we think that's the right kind of the right mix of services. Remember, this is really about moving the customer from week to week and reducing churn to low single digits. And so it's really a portfolio approach where we have a piece of content like Power and we come back with a piece of content like Peabody where we can move the customer from ten weeks to twenty weeks and really accelerate the growth in the business. So we think that's the right mix.
In terms of library versus Payone versus our originals, we've got a lot of first party data off the app. Originals really drive acquisition. Library drives a lot of retention and usage. And so we think there's a really great combination there. The Sony Pay one continues to drive a lot of usage and acquisition for the really big titles.
So we think that's important. So we think we've got the right mix of content at the right price to continue to drive the business and be successful.
Thank you.
Next go to the line of Doug Krueitz with Cowen. Please go ahead.
Hey, thanks. I'm sure you saw NBCU and AMC signed an interesting deal, which allowed for a Peabody window seventeen days from release in return for some revenue sharing. Just wondered what your thought was of that deal, how important you think it is and whether you're looking at any similar deals for your films? Thanks.
Sure. Thanks, Doug. Look, we
there's
some things to really like about that deal. I think one of the things that I think is a real standout in it is that it treats all the parties as partners in the theatrical and TVOD space. And so it's trying to create a partnership model where everybody wins and figure out how it can work for everybody. We like that about it. I think that there's a ton to unpack.
We're, of course, having our own conversations with all exhibitors, as I'm sure you'd hope and expect. What I will tell you is that much like what we're doing with Animbellum, it just creates another opportunity in the marketplace. It creates more optionality for how we can exploit our content. I think for all of us, it's important to make sure that we're working hard to lift the theatrical business back up. And at the same time, it's just a greater reach to audiences who at the moment are incredibly hungry for premium content, and there's just not enough of it out there.
We'll next go to Matthew Thornton with TruWest. Please go ahead.
Yes. Hey, guys. One quick follow-up. Any color you
can give us just on how
to think about linearity this year for Star subscribers? Obviously, we've got the COVID kind of engagement bump in the calendar second quarter, and then we've got an original slate that we don't have great visibility into yet. So that's going to ebb and flow a little bit as well. So maybe any color you can think about how we should think about the linearity of service throughout the year? Any milestones we should be thinking about?
Thank you.
Yes. Hi, it's Jeff. We have the fortunate to be almost a year in advance of production. So we don't expect any interruptions to our slate through the end of the fiscal. And so we have, as we talked about, the first Power Universe franchise coming on September 6, which obviously is a big driver of subscribers for us.
And then we've got the Spanish Princess coming behind that, which again is another great driver of subs sitting against the Outlander audience. And so we feel pretty good that the business will continue to accelerate and grow on digital side. I think as you've seen most of our partners have announced on the traditional side, there is some still weakness there a lot of our big operating partners transition to a digital product. So we expect that business continue to shrink at the normal pace that
it has over the last couple
of quarters. But we do see great acceleration in our OTT service. As John said in his prepared remarks, we do believe that globally we can get to 13,000,000 to 15,000,000 OTT subscribers by the end of the fiscal and we feel pretty good that we're on track to hit that range.
Great. Thanks again, guys.
And at the moment, we do not have anyone in the queue. So I'll turn the call back over to James Marsh. Please go ahead.
Great. Thanks, Deja. Please refer to our 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.
And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.