- Starz reported revenue of $306.9 million on a net loss of $164.9 million, or 9.83 per share.
- Wall Street expected revenue of $305.7 million on a loss of 81 cents per share, per Yahoo Finance.
- The quarterly results come as the premium cable network and streamer celebrates its one-year anniversary since the Lionsgate separation
Starz posted a net loss of $164.9 million in the first quarter, widening 7% from a loss of $153 million a year ago.
Meanwhile, total revenue declined 7% to $306.9 million, driven by a 5.5% year over year drop in streaming revenue to $211.1 million and a 6.8% drop in linear and other revenue to $95.8 million. The Starz Networks segment saw operating income fall 37.8% to $58 million, while the company’s total operating loss widened 7% to $152.8 million.
The quarter’s results reflected Starz’s restructuring of its Canada business into a licensing revenue stream and its ongoing efforts to rebuild its owned content library. Starz is also no longer disclosing its subscriber figures on a quarterly basis, following in the footsteps of major players Netflix, Disney and Warner Bros. Discovery. The company last disclosed a total of 12.7 million over-the-top subscribers and 5 million linear TV subscribers.
“As we mark the one-year anniversary of our separation today, I’m proud to report that Starz is a structurally stronger company than when we separated. Over the past year, we have executed with discipline against our strategic and financial priorities to position the company for long-term value creation,” Starz CEO Jeff Hirsch said. “Given our progress and one of our strongest content lineups we’ve had in years, we are increasingly confident in our ability to drive OTT revenue growth, reduce leverage, expand margins, and generate sustainable free cash flow in the years ahead.”
Highlights during the quarter included the finale of “Power Book IV: Force” and the premiere of “Outlander” Season 8. The latter achieved a four-year series high in its premiere week. Though “The Housemaid” released after the first quarter, it has already set a record as Starz’s best-performing pay 1 film in both acquisition and streaming viewership.
As for the rest of the year, its content slate includes the return of series “Raising Kanan,” “Outlander: Blood of My Blood” and “P-Valley” and the premiere of its first owned-original series “Fightland” on July 31. It also expects a benefit from Lionsgate’s “Michael” biopic.
Starz is aiming to own 50% of its originals slate by 2027. In addition to “Fightland,” Starz has greenlit its second owned original, an untitled Black rodeo show, with production set to begin this fall. Other projects in development include “Kingmaker” and “Masquerade,” which have opened writers rooms and “All Fours,” which will be produced in parntership with Plan B Entertainment.
“The pipeline has never been more full and more exciting,” Hirsch said. “You couple that with the pay one deal with Lionsgate and we’re going to have a very, very strong content slate for the next one to three years. So we’re right on track to delivering against that 50% goal and I think we’ll actually accelerate past that.”
Starz exits Pay 2 film deal with Universal
During Starz’s earnings call on Thursday, Hirsch said the company has exited a Pay 2 film deal with Universal.
While noting that the Universal titles, which Starz originally planned to air through calendar year 2028, are “incredibly popular” and bring “tremendous box office strength,” he pointed out that they are heavily watched on Amazon, where there is high subscriber overlap with Starz.
“This unique dynamic with Amazon has resulted in lower viewership than we originally projected,” he said. “In order to replace the revenue component of the Pay 2, we will reinvest and acquire high-performing titles at superior economics.”
During the quarter, Starz recorded a $139 million restructuring charge, the majority of which came from the write-off of content with “limited strategic value” for the company’s platforms, Starz Chief Financial Officer Scott MacDonald said.
A restructuring charge from exiting the Universal agreement will be incurred in the second quarter, though it will see a significant reduction in cash content spend beginning in 2027.
Starz spent $113 million in cash content spend in the first quarter, down year over year due to the timing of spend on output movies and originals. For the full year, cash content spend is expected to come in below $650 million.
Starz has also raised prices to $11.99 per month in April, which MacDonald said would flow through the company’s subscriber base starting in the second quarter.
2026 a ‘financial inflection point’
Despite the year over year declines in revenue and widened loss, Hirsch said that 2026 would serve as a “financial inflection point” for the company.
Looking ahead, the company maintained guidance of positive year over year streaming revenue growth and low single-digit adjusted operating income growth for the year. It also expects unlevered free cash flow between $80 million and $120 million and a leverage ratio exiting 2026 of approximately 2.7 times.
Longer-term, Starz is aiming to increase margins to 20%, convert 70% of its adjusted operating income to unlevered free cash flow and to reach a leverage ratio of 2.5 times as quickly as possible. On that front, Hirsch said that the company now expects to reach its 20% margin target in the back half of 2027, a year ahead of previous guidance.
McDonald said 2027 would be a “very significant year for margin expansion and improved free cash flow generation” driven by a restructuring benefit, the continued ramp up of owned originals and continued content cost reductions.
Starz reiterates its open to ‘complementary and additive’ M&A
In addition to its 20% margin target, Hirsch reiterated that the company remains disciplined in its M&A growth strategy.
Executives said they would look for opportunities that are “complementary and additive” to their core audience, fit within an “acceptable leverage parameter,” and create “clear and identifiable value for our shareholders.”
“Given the strength and the profitability of our core business, we do not need
M&A to maximize shareholder value,” Hirsch added.
More to come…
