Starz shares popped 3% on Thursday as the company continued to make progress post-Lionsgate separation, posting a narrowed net loss of $20.7 million despite total revenue falling 5.6% year over year to $322.8 million during its fourth quarter.
The company added 170,000 U.S. subscribers in its fiscal fourth quarter for a total of 17.6 million, driven by interest in scripted originals including “Power Book IV: Force” Season 3 and “Spartacus: House of Ashur.”
Streaming was a bright spot, with the company adding 370,000 over-the-top subscribers in the U.S. for a total of 12.7 million. But revenue for the segment fell to $210.3 million, compared to 236.4 million in the year ago period. Meanwhile, the linear TV business shed 200,000 subscribers for a total of 4.97 million, though linear/other revenue grew to $112.5 million from $105.5 million in the year-ago period.
Average revenue per user fell to $5.74 from $6.32 a year ago. Starz Networks posted an adjusted operating profit of $55.5 million, growing from a profit of $25.6 million a year ago. During the quarter, Starz reported $7.1 million in content write-offers and $2.3 million in “other” costs.
Here are the quarter’s results:
Net loss: $20.7 million, compared to a loss of $31.8 million a year ago.
Earnings Per Share: A loss of $1.24 per share, compared to a loss of 85 cents per share expected by analyst estimates compiled by Yahoo Finance.
Revenue: $322.8 million, down 5.6% year over year, compared to $322.16 million expected by analyst estimates compiled by Yahoo Finance.
Operating loss: $4.7 million, compared to $21.2 million a year ago.
Starz ended 2025 with $204 million of adjusted EBITDA, exceeding its $200 million outlook. It also ended the fourth quarter with $589 million in net debt and $625 million in gross debt.
The latest quarterly results come after Starz restructured its Canada business into a licensing revenue stream. It also completed production on its first wholly-owned series “Fightland.” Sky has joined the series as a co-commissioning partner. In addition to “Fightland,” Starz’s upcoming slate includes the conclusions of “Outlander” and “Power Book III: Raising Kanan” and the returns of “Blood of My Blood” and “P-Valley.”
“The success of our originals proves that our bedrock strategy is working. We deliver edgy, premium content for women and underrepresented audiences that broad-based streamers don’t address,” Starz CEO Jeff Hirsch told analysts on Thursday. “Content remains core to everything we do, and as we look at the rest of 2026, it’s clear we have one of our most compelling lineups of originals.”
Starz has also greenlit “Power: Origins” for 18 episodes, which is currently in production and will focus on the fan-favorite characters Ghost and Tommy as ambitious young entrepreneurs. Hirsch also outed Pay 1 movies from Lionsgate, including “The Housemaid” and “Michael” biopic.
Looking ahead at full year 2026, Starz expects OTT revenue growth in 2026, single-digit adjusted operating income growth, $80 million to $120 million in positive free cash flow, and year-end leverage of 2.7 times. It also will stop disclosing subscribers starting with its next quarter and anticipates content spend will come in at around $650 million.
Longer-term, Starz continues to aim for 20% margins coming out of calendar year 2028, converting 70% of adjusted OIBDA into unlevered free cash flow and delevering to 2.5 times as quickly as possible.
“We remain laser-focused on OTT revenue growth, profitability, converting Adjusted OIBDA to free cash flow, and delevering,” Hirsch added. “We believe this decision is in the best interest of our shareholders, as it puts us on a path to achieving the targets we outlined.”
Hirsch added that the company continues to see an opportunity to scale its business from increased consolidation across the media landscape, reiterating the company’s interest in linear networks “marooned” on the linear TV side without “any kind of tech capability or desire from their larger corporate parent to try to transition them and reconnect them with their consumers that have moved to the digital side.” But he noted a deal would have to allow the company to remain on track to achieve its deleveraging target.
“We don’t really want to operate a business that’s four or five six times leverage,” Hirsch said. “So we’ll be very cautious about what kind of deal we do when it comes to leverage.”
Executives also touted expanding its bundling and distribution relationships as a key focus in the coming years.
“We’ve set up the business to be a complimentary or an add on partner to a broad based streamer, to targeted streamers, and so that’s a real focus for us,” Starz Networks president Alison Hoffman told analysts. “We think, even with the disruption in the industry, that those will come. Our data is showing that it is very good for business. The bundles that we have in place are expanding our [total addressable market]. They’re driving net new additions to the business. The revenue is accretive and ultimately they’re driving better retention for the business.”
As for price increases, Starz executives said they’d make decisions based on developments across the rest of the industry, but that the goal is to remain a complimentary service to the major streamers.
“We’ve always wanted to be underpriced, way underpriced of the broad based streamers out there. So as they continue to raise rates, it gives us room to raise rates,” Hirsch said. “You’ve seen the broad based streamers raise anywhere from one to $3 over the last couple years, so it’s created a lot of room for us to have some pricing power against the broad-based streamers, and we’ll continue to look at that right time, right place, right slate, to determine whether that’s right for our consumers. So we’ll watch the industry, watch the broad based streamers, and we’ll make decisions based on where we think that’s right to drop that in.”
More to come…
