In its first earnings report as a newly independent company following its split from Lionsgate, Starz revealed that revenue for its fiscal fourth quarter of 2025 fell 6% to $331 million as its quarterly operating loss widened to $136 million.
The decline in revenue was driven by lower total subscribers from fewer tentpole original series and continued pressure on linear subscribers from cord-cutting. Starz CEO Jeff Hirsch said 70% of the Starz;’s total revenue came from digital in the quarter.
The results also included a $177.4 million restructuring charge, primarily related to a “strategic reassessment” of the company’s content portfolio, severance and transaction-related costs.
Here is a breakdown of the company’s full results for the quarter and its fiscal year 2025:
Revenue: $330.6 million, up from $352.4 million a year ago. For the full year, total revenue fell 1.6% to $1.37 billion.
Operating loss: $136.3 million, compared to a loss of $30.8 million a year ago. For the full year, its operating loss narrowed 82% to $164.3 million
Adjusted OIBDA: $93.3 million, up from $45.5 million from the year-ago period. For the full fiscal year, adjusted OIBDA (operating income before depreciation and amortization) grew 18% to $201.5 million.
Starz noted it would begin reporting earnings per share starting next quarter. It also changed the end of its fiscal year from March 31 to Dec. 31. Additionally, the company will not be required to file its 10-K for fiscal 2025 until late June and expects to file its 10-Q for the June quarter in August.
Starz expresses confidence in financial trajectory post-split
Starz, whose stock closed at $16.51 apiece at the end of Thursday’s trading session, saw its shares climb 12% in after-hours trading as it expressed confidence in its financial trajectory moving forward, forecasting approximately $200 million in adjusted OIBDA for calendar year 2025.
Executives also said the company would look to expand margins from 15% to 20% by 2028 and convert 70% of its adjusted OIBDA into free cash flow in 2026 to delever to around 2.5 times. Starz ended the fourth quarter with net debt of $615.5 million and a leverage ratio of 3.1 times on a trailing twelve-month basis. As of the split on May 6, net debt was $559.1 million.
As of the end of Thursday’s trading session, Starz had a market capitalization of $3.6 billion.
The company plans to reach these targets by greenlighting more of its own IP to restore ownership economics to the business, giving it more cost control and unlocking a new revenue stream. The company currently has around 40 to 50 projects in development.
When asked about economy uncertainty, Starz executives said they “aren’t seeing anything right now” in terms of impact.
“If consumers start to feel pinched because of the macro issues in the marketplace, that’s always a concern of ours. But what we finally have found historically that when things get tough for consumers, they tend to stay home and watch entertainment at home,” Hirsch said. “Because we are front and center in the home, we feel like we can be the answer to some of that entertainment for the consumer in tough economic times. So while we haven’t seen it, we feel like we’re in a pretty good place.”
‘Raising Kanan’ Season 4 Premiere Boosts U.S. Subscriber Growth
Starz’s networks segment, which includes its U.S. and Canada operations, saw revenue fall 7% to $326.2 million, reflecting the continued impact of 2023’s Hollywood strikes, while adjusted OIBDA grew 86% to $92 million. International revenue grew 91% to $4.4 million, while adjusted OIBDA swung to $1.3 million profit from a loss of $3.9 million in the year-ago period.
The segment ended the quarter with 12.3 million U.S. streaming subscribers, an increase of 530,000, and 5.7 million U.S. linear subscribers, a decrease of 210,000. Total U.S. subscribers grew 320,000 to 18 million, driven by the premiere of “Power Book III: Raising Kanan” Season 4.
In Season 4’s premiere week, new customer sign-ups were 50% and 30% higher than Season 2 and 3, respectively. Hirsch noted that 55% to 60% of its first title streams come from Starz originals, while the remainder comes from bigger titles and movies from third parties.
When including its 1.6 million Canadian subscribers, North American subscribers fell 330,000 to 19.6 million, largely due to a carriage dispute in the country that that resulted in the removal of the STARZ-branded linear channel from a distributor’s programming packages. The currently unresolved issue did not have a material impact on revenue or adjusted OIBDA due to “extremely low” average revenue per user associated with linear Canadian subscribers.
Hirsch told analysts on Thursday that the company expects to see continued streaming subscriber growth in calendar year 2025 and expects to return positive revenue growth in the second and third quarters and year over year revenue growth in 2026.
“With no incremental overhead cost to the business, we will commence on rebuilding our library and reclaim ownership economics, enhance cost efficiency and create new revenue streams,” he added. “We have officially opened writers rooms for several series that Starz will own the IP. I expect this will be a critical and a creative change to our business, with the goal of almost half the calendar 27 slate being owned and controlled by Starz.”
Starz is expected to spend $700 million on content in 2026, with the ultimate goal of lowering that figure to $650 million over the next couple of years. Executives estimated that the company’s current average cost per hour is around $7 million, with an opportunity for $1 million to $2 million of cost savings per hour.
“As you turn the slate over and go from more seasoned series’ seasons to new, you can pull a lot of cost out of the business just by resetting the economics of the season one versus a season four, season five,” Hirsch said. “Also, you can net some of that cost down by selling internationally. That international component, we didn’t get the benefit of it by not having ownership. So those two components really help you take that cost out of the business.”
Hirsch added that they see eight to 10 shows a year required for a consistent flow of content for its two core demographics, but noted that figure would change based on its mix of owned and licensed shows and content acquired at a “very reasonable” cost.
“As we look into the marketplace, we will be very optimistic about acquisitions versus licensed versus our own,” he said.
Charting its own path from Lionsgate
Starz’s split from Lionsgate will give the company autonomy to explore distribution and bundling opportunities. The company touted “great success” from its recent bundle partnership with Max on Prime Video.
“We’ve really been built as a differentiated complementary service to all of the broad based streamers,” Starz President Alison Hoffman said. “So north of 20% retention is what we’re seeing on a bundled customer.”
It also may be able to move more nimbly to consolidate niche streaming players aimed at its core demographics: female and underrepresented audiences. Additionally, it makes both Starz and Lionsgate, which have long felt they were undervalued by Wall Street in their combined form, more attractive to potential buyers.
CEO Hirsch declined to go into detail on its M&A strategy, but said the company has flexibility to build and diversify its revenue around ad-supported content and sees opportunities to partner with networks “marooned on the linear side” who are aimed at women and underrepresented audiences. Starz, currently in 20 million homes, has the potential to reach 80 million.
