Investments

The carrying amounts of investments, by category, at March 31, 2016 and March 31, 2015 were as follows:



	March 31, 2016		March 31, 2015
	(Amounts in thousands)
Equity method investments	$	297,546	$	234,202
Available-for-sale securities	123,978		162,024
Cost method investments	42,822		42,072
	$	464,346	$	438,298

Equity Method Investments:

The carrying amounts of equity method investments at March 31, 2016 and March 31, 2015 were as follows:



	March 31, 2016
Equity Method Investee	Ownership Percentage	March 31, 2016		March 31, 2015
		(Amounts in thousands)
EPIX	31.2%	$	171,837	$	119,688
Pop	50.0%	98,719		91,683
Other	Various	26,990		22,831
		$	297,546	$	234,202

Equity interests from equity method investments for the years ended March 31, 2016, 2015 and 2014 were as follows (income (loss)):



	Year Ended March 31,
Equity Method Investee	2016			2015			2014
	(Amounts in thousands)
EPIX	$	52,149		$	48,718		$	32,308
Pop	(1,763		)	(9,615		)	(2,610		)
Other⁽¹⁾	(6,155		)	13,374			(4,974		)
	$	44,231		$	52,477		$	24,724

____________________


(1)	The Company records its share of the net income or loss of other equity method investments on a one quarter lag. Equity interest income from other equity method investments for the year ended March 31, 2015 includes a gain on sale of the Company's investment in FEARnet of $11.4 million.

EPIX. In April 2008, the Company formed a joint venture with Viacom, its Paramount Pictures unit, and Metro-Goldwyn-Mayer Studios to create a premium television channel and subscription video-on-demand service named “EPIX”. The Company invested $80.4 million through September 30, 2010, and no additional amounts have been funded since. During the years ended March 31, 2016, 2015 and 2014, the Company received distributions from EPIX of nil, $7.8 million and $20.2 million, respectively. Since the Company's original investment in April 2008, the Company has received distributions from EPIX of $28.0 million.

EPIX Financial Information:

The following table presents summarized balance sheet data as of March 31, 2016 and March 31, 2015 for EPIX:



	March 31, 2016		March 31, 2015
	(Amounts in thousands)
Current assets	$	355,735	$	285,819
Non-current assets	$	360,441	$	277,887
Current liabilities	$	90,837	$	121,451
Non-current liabilities	$	23,948	$	6,753

The following table presents the summarized statement of operations for the years ended March 31, 2016, 2015 and 2014 for EPIX and a reconciliation of the net income reported by EPIX to equity interest income recorded by the Company:



	Year Ended March 31,
	2016			2015			2014
	(Amounts in thousands)
Revenues	$	413,760		$	442,793		$	353,439
Expenses:
Operating expenses	221,586			252,896			239,933
Selling, general and administrative expenses	24,028			23,305			22,835
Operating income	168,146			166,592			90,671
Interest and other expense	(2,180		)	(1,993		)	(304		)
Net income	$	165,966		$	164,599		$	90,367
Reconciliation of net income reported by EPIX to equity interest income:
Net income reported by EPIX	$	165,966		$	164,599		$	90,367
Ownership interest in EPIX	31.15		%	31.15		%	31.15		%
The Company's share of net income	51,698			51,273			28,149
Eliminations of the Company’s share of profits on licensing sales to EPIX⁽¹⁾	(7,314		)	(10,159		)	(9,638		)
Realization of the Company’s share of profits on licensing sales to EPIX⁽²⁾	7,765			7,604			13,797
Total equity interest income recorded	$	52,149		$	48,718		$	32,308

__________________


(1)	Represents the elimination of the gross profit recognized by the Company on licensing sales to EPIX in proportion to the Company's ownership interest in EPIX.


(2)	Represents the realization of a portion of the profits previously eliminated. This profit remains eliminated until realized by EPIX. EPIX initially records the license fee for the title as inventory on its balance sheet and amortizes the inventory over the license period. Accordingly, the profit is realized as the inventory on EPIX's books is amortized.

Pop. The Company’s investment interest in Pop consists of an equity investment in its common stock units and mandatorily redeemable preferred stock units. The Company's partner in Pop, CBS TVG Inc. ("CBS"), has a call option to purchase a portion of the Company's ownership interest in Pop at fair market value, which would result in CBS owning 80% of Pop, exercisable beginning March 26, 2018 for a period of 30 days. During the year ended March 31, 2016, the Company made contributions to Pop of $8.8 million (2015 - $15.0 million; 2014 - $6.5 million).

The mandatorily redeemable preferred stock units carry a dividend rate of 10% compounded annually and are mandatorily redeemable in May 2019 at the stated value plus the dividend return and any additional capital contributions less previous distributions. The mandatorily redeemable preferred stock units were initially recorded based on their estimated fair value, as determined using an option pricing model. The mandatorily redeemable preferred stock units and the 10% dividend are being accreted up to their redemption amount over the ten-year period to the redemption date, which is recorded as income within equity interest.

Pop Financial Information:

The following table presents summarized balance sheet data as of March 31, 2016 and March 31, 2015 for Pop:



	March 31, 2016		March 31, 2015
	(Amounts in thousands)
Current assets	$	38,278	$	28,612
Non-current assets	$	192,461	$	192,188
Current liabilities	$	29,090	$	26,048
Non-current liabilities	$	8,198	$	7,196
Redeemable preferred stock	$	466,501	$	399,247

The following table presents the summarized statement of operations for the years ended March 31, 2016, 2015 and 2014 for Pop and a reconciliation of the net loss reported by Pop to equity interest loss recorded by the Company:



	Year Ended March 31,
	2016			2015			2014
	(Amounts in thousands)
Revenues	$	86,437		$	79,048		$	78,407
Expenses:
Cost of services	39,683			38,757			36,866
Selling, marketing, and general and administration	42,145			49,524			43,967
Depreciation and amortization	7,777			7,814			8,031
Operating loss	(3,168		)	(17,047		)	(10,457		)
Other expense	14			385			(1,213		)
Interest expense, net	523			683			1,205
Accretion of redeemable preferred stock units⁽¹⁾	57,654			48,546			40,342
Total interest expense, net	58,191			49,614			40,334
Loss from continuing operations	(61,359		)	(66,661		)	(50,791		)
Loss from discontinued operations	—			—			(2,799		)
Net loss	$	(61,359	)	$	(66,661	)	$	(53,590	)
Reconciliation of net loss reported by Pop to equity interest loss:
Net loss reported by Pop	$	(61,359	)	$	(66,661	)	$	(53,590	)
Ownership interest in Pop	50		%	50		%	50		%
The Company's share of net loss	(30,680		)	(33,331		)	(26,795		)
Gain on sale of the Company's 50% share of TVGuide.com⁽²⁾	—			—			3,960
Accretion of dividend and interest income on redeemable preferred stock units⁽¹⁾	28,827			24,273			20,171
Eliminations of the Company’s share of profit on licensing sales to Pop	(813		)	(920		)	—
Realization of the Company’s share of profits on licensing sales to Pop	903			363			54
Total equity interest loss recorded	$	(1,763	)	$	(9,615	)	$	(2,610	)

___________________

(1)

Accretion of mandatorily redeemable preferred stock units represents Pop's 10% dividend and the amortization of discount on its mandatorily redeemable preferred stock units held by the Company and the other interest holder. The Company recorded its share of this expense as income from the accretion of dividend and discount on mandatorily redeemable preferred stock units within equity interest income (loss).


(2)	Represents the gain on the May 31, 2013 sale of the Company's 50% interest in TVGuide.com. As a result of the sale, TVGuide.com is considered a discontinued operation by Pop, and accordingly, the revenues and expenses of TVGuide.com prior to the transaction for all periods presented, are reflected net within the discontinued operations section of the summarized statement of operations for Pop.

Other Equity Method Investments

Defy Media. In June 2007, the Company acquired an interest in Break Media, a multi-platform digital media company and a leader in male-targeted content creation and distribution. In October 2013, Break Media merged with Alloy Digital, a multi-platform digital media company with a strong presence in the youth market, to create Defy Media. The Company's effective economic interest in Defy Media through its investment in Break Media and its direct investment in Defy Media is approximately 15.8%. The Company is accounting for its investment in Defy Media, a limited liability company, under the equity method of accounting due to the Company's board representation that provides significant influence over the investee.

Roadside Attractions. Roadside Attractions is an independent theatrical distribution company. The Company owns a 43.0% interest in Roadside Attractions.

Pantelion Films. Pantelion Films is a joint venture with Videocine, an affiliate of Televisa, which produces, acquires and distributes a slate of English and Spanish language feature films that target Hispanic moviegoers in the U.S. The Company owns a 49.0% interest in Pantelion Films.

Atom Tickets. Atom Tickets is the first-of-its-kind theatrical mobile ticketing platform and app. The Company made initial investments totaling $4.3 million in Atom Tickets during the year ended March 31, 2015. During the year ended March 31, 2016, the Company participated in an equity offering of Atom Tickets and subscribed for an additional $7.9 million. The Company owns an interest of approximately 19.5% in Atom Tickets. The Company is accounting for its investment in Atom Tickets, a limited liability company, under the equity method of accounting due to the Company's board representation that provides significant influence over the investee.

Tribeca Short List. Tribeca Short List is a subscription video-on-demand service. The Company made an initial investment of $2.1 million during the year ended March 31, 2015, and during the year ended March 31, 2016, the Company made capital contributions to Tribeca Short List of $2.4 million, net of cash acquired of $0.4 million (see below). The Company holds a 75.0% economic interest. Through October 17, 2015, the power to direct the activities that most significantly impact the economic performance of Tribeca Short List was shared equally with Tribeca Enterprises, and accordingly through October 17, 2015, the Company's interest in Tribeca Short List was accounted for under the equity method of accounting. Subsequent to October 17, 2015, the terms of the arrangement increased the Company's power to control the board, and the Company now has the power to direct the activities that most significantly impact the economic performance of Tribeca Short List. Accordingly, the Company has consolidated Tribeca Short List beginning in the quarter ended December 31, 2015, with no gain or loss recognized upon consolidation since the carrying value of the net assets approximated the fair value.

Available-for-Sale Securities:

The cost basis, unrealized gains (losses) and fair market value of available-for-sale securities are set forth below:



	March 31, 2016			March 31, 2015
	(Amounts in thousands)
Cost basis	$	158,916		$	158,916
Gross unrealized gain (loss)	(34,938		)	3,108
Fair value	$	123,978		$	162,024

Starz. At March 31, 2016 and March 31, 2015, available-for-sale securities consisted of the Company's minority interest in Starz. On March 27, 2015, pursuant to the terms of a stock exchange agreement entered into on February 10, 2015 (the "Exchange Agreement"), the Company exchanged 4,967,695 of its newly issued common shares for 2,118,038 shares of Series A common stock of Starz and 2,590,597 shares of Series B common stock of Starz held by certain affiliates of Dr. John C. Malone, a Director of the Company. The Exchange Agreement placed certain restrictions on the ability to transfer the shares issued by the Company. The Starz shares acquired by the Company represent approximately 15.0% of the total voting power of the issued and outstanding Starz common stock as of March 31, 2016. However, under the Exchange Agreement, the Company granted an irrevocable proxy to Dr. Malone and the affiliates of Dr. Malone to vote the shares the Company acquired except with respect to proposals related to extraordinary transactions, including any proposals related to any sale or issuance of securities, or any business combination, merger, consolidation, liquidation, reorganization, recapitalization, sale or disposition of all or substantially all of Starz's assets or similar extraordinary transaction, whether or not involving the Company.

The Company classifies the Series A common stock of Starz within Level 1 of the fair value hierarchy as the valuation inputs are based on quoted prices in active markets (see Note 10). The Series B common stock of Starz are considered a Level 2 security because the quoted market prices are based on infrequent transactions. Therefore, the fair value of the Series B common stock, which is convertible, at the holder’s option, into Series A common stock of Starz is based on the quoted market price of the Series A common stock, which is an equivalent security other than for the voting rights.

As of March 31, 2016, the Company's investment in Starz was in an unrealized loss position; however, due to the fluctuation of the security's market price in an active market and the short-term duration of the unrealized loss, the Company has the intent and ability to hold the securities until the fair value recovers. As of May 24, 2016, the fair value of the Company's minority interest in Starz was $124.7 million, compared to the Company's original cost basis of $158.9 million.

Cost Method Investments:

Telltale. Telltale Games ("Telltale") is a creator, developer and publisher of interactive software episodic games based upon popular stories and characters across all major gaming and entertainment platforms. In February 2015, the Company invested $40.0 million in Telltale, which consisted of a cash investment in Telltale of $28.0 million in exchange for 2,628,072 of Series D convertible preferred stock, and 361,229 newly issued common shares of the Company with a fair value of approximately $12.0 million in exchange for approximately 1,126,316 existing common shares of Telltale, representing in the aggregate an approximately 14% economic interest in Telltale.

Next Games. Next Games is a mobile games development company headquartered in Helsinki, Finland, with a focus on crafting visually impressive, highly engaging games. In July 2014, the Company invested $2.0 million in Next Games for a small minority ownership interest, and during the year ended March 31, 2016, the Company invested an additional $0.2 million in Next Games.