EXCLUSIVE: In Starz‘s Q4 earnings report in February, the company called 2026 a “positive financial inflection point,” saying it would focus on profitability and generating positive free cash flow after its separation from Lionsgate. In addition to OTT subscriber growth and increasing content ownership, cost-reduction inevitably is part of the equation. That includes staff cuts. Starz underwent a round of layoffs Friday that impacted 7% of the company’s employees, Deadline has learned. The move, which is b ...

Core Viewpoint - Starz Entertainment Corp. has adopted a limited-duration shareholder protection rights agreement to enhance shareholder value and pursue its long-term strategic plan, effective immediately until March 10, 2027, with potential extensions [1] Summary by Sections Rights Plan Details - The Rights Plan is designed to protect shareholders by reducing the likelihood of any person or group gaining control of the company's shares without proper compensation [1] - Each outstanding common share will receive one right, with rights becoming exercisable if a person or group acquires 17.5% or more of the company's shares [1] - If exercisable, rights holders (excluding the triggering party) can acquire shares at a 50% discount to the market price or exchange rights for one common share [1] Implementation and Governance - The Board of Directors unanimously adopted the Rights Plan, believing it serves the best interests of the company and its shareholders [1] - The plan applies equally to all current and future shareholders and is not intended to deter fair offers [1] Company Overview - Starz is a leading premium entertainment destination targeting women and underrepresented audiences, offering a mix of original programming and blockbuster movies [1] - The company emphasizes its advanced technology, data analytics, and digital infrastructure, positioning itself as a preferred bundling partner across various platforms [1]

Group 1 - Shares of Starz Entertainment Corp. (STRZ) have increased by 64.9% over the past four weeks, closing at $14.91, with a mean price target of $19.38 indicating a potential upside of 30% [1] - The average price targets from analysts range from a low of $11.00 to a high of $39.00, with a standard deviation of $10.01, suggesting variability in estimates [2] - Analysts are optimistic about STRZ's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which have increased by 24.2% over the past month [11][12] Group 2 - STRZ holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While the consensus price target may not be a reliable indicator of the stock's potential gain, it does suggest a positive direction for price movement [14]

Investment Overview - Byron Allen has acquired a 10.7% stake in Starz, paying $25 million for 1.8 million shares in the entertainment company [1] - Allen has been a consistent bidder for various media properties, including interest in Paramount and Disney's linear TV networks [1] Company Background - Starz separated from Lionsgate in May 2023 and now operates independently [3] - The company has shifted its focus towards streaming, with subscriptions now accounting for approximately 75% of its business [3] Strategic Direction - Starz CEO Jeff Hirsch has indicated a strong interest in pursuing M&A opportunities following the company's split from Lionsgate [4] - Hirsch described the potential for Starz to revitalize "marooned linear networks" by leveraging its technology platform to transition these brands into the digital space [4] Allen Media Group - Allen Media Group's portfolio includes the Weather Channel and various digital and linear networks, as well as FAST and AVOD streaming platforms [2] - The group also controls local TV stations, having sold 10 of them to Gray Media for $171 million last year [2]

Market Sentiment - The current mood in the stock markets is bearish, with investors selling off stocks due to fears of escalating geopolitical tensions and uncertainties surrounding tariffs [1] - There is a particular concern regarding the rising threat of AI acting as a net tailwind for the market [1] Analyst Background - Gary Alexander has extensive experience covering technology companies on Wall Street and working in Silicon Valley, providing insights into themes shaping the industry [1] - He has been a contributor on Seeking Alpha since 2017 and has been quoted in various web publications, with his articles syndicated to popular trading apps like Robinhood [1]

Key Takeaways STRZ's Q4 loss widened to 47 cents per share as revenues fell 6.3% year over year.OTT revenues dropped 12%, while linear and other revenues rose 6.6% year over year.STRZ expects 2026 OIBDA growth and $80M-$120M in positive unlevered free cash flow.Starz Entertainment (STRZ) reported a fourth-quarter 2025 loss of 47 cents per share, wider than the Zacks Consensus Estimate of a 20-cent loss.The company reported a net loss of $1.24 per share. This indicates a narrower loss from the year-ago quart ...

Financial Data and Key Metrics Changes - STARZ ended the year with an all-time high of 12.7 million OTT subscribers, growing year-over-year by 7.6% and adding 370,000 in Q4 alone [5][15] - Total revenue for Q4 was $323 million, up 60 basis points sequentially, driven by an increase in distribution revenue [16] - Adjusted OIBDA for the quarter was $56 million, up over 100% sequentially, with total adjusted OIBDA for the year reaching $204 million, exceeding the $200 million outlook [17][18] - The company ended the year with a leverage ratio of 2.9x, better than the previous guidance of 3.1x [18] Business Line Data and Key Metrics Changes - The increase in OTT subscribers was partially offset by a decline in linear customers, with total U.S. subscribers growing to 17.6 million [15] - The growth in subscribers was driven by demand for scripted originals, including "Force" and "Spartacus" [16] Market Data and Key Metrics Changes - The company is focusing on the U.S. market after restructuring its Canadian business into a licensing revenue stream [9] - The company anticipates generating between $80 million to $120 million of positive unlevered free cash flow in 2026, marking a significant improvement year-over-year [18] Company Strategy and Development Direction - STARZ aims to increase margins to 20% by 2028, with a slight improvement expected in 2026 [22] - The company is de-emphasizing the need to manage the business around quarterly subscriber levels, focusing instead on OTT revenue growth and profitability [12] - STARZ is positioned to capitalize on potential M&A opportunities due to increased consolidation across the media landscape [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to 2026, driven by a compelling lineup of originals [7] - The company believes it is uniquely positioned to capitalize on potential M&A opportunities due to its track record of profitably converting from linear to digital [12] - Management noted that 2026 is expected to be an inflection point for cash flow generation [11] Other Important Information - The company will not disclose subscriber numbers starting with the March 2026 quarter, focusing instead on revenue growth and profitability [12] - STARZ has made significant strides in de-aging its content slate while expanding its network-defining franchises [10] Q&A Session Summary Question: Can you walk us through some of the moving pieces regarding OTT revenue and total revenue? - Management indicated that they are on track to exceed the 20% margin target by 2028, with slight improvements expected in 2026 [22][24] Question: What kind of assets would you be interested in for potential M&A? - Management stated they are looking for linear networks with great brands that complement their core demos, while maintaining a leverage constraint of around 2.5x [27] Question: How do you rank order your capital allocation priorities as free cash flow improves? - Management noted that as free cash flow improves, they would consider returning cash to shareholders while continuing to invest in the business [28] Question: Can you discuss the retention patterns for subscribers? - Management highlighted that the programming slate is designed to maintain strong retention throughout the year, supported by longer-term offers [34] Question: How do you view the demand environment for your programming internationally? - Management expressed confidence in the international market, particularly in the U.K. and France, and noted a strong appetite for their content [48] Question: How do you think about relying on spin-offs versus new originals? - Management emphasized the importance of franchising successful shows like "Power" and "Outlander" to drive engagement and acquisition [54]

Financial Data and Key Metrics Changes - STARZ achieved an all-time high of 12.7 million OTT subscribers, growing year-over-year by 7.6% and adding 370,000 subscribers in Q4 alone [5][15] - Total revenue for the quarter was $323 million, up 60 basis points sequentially, driven by an increase in Distribution revenue [16] - Adjusted OIBDA for Q4 was $56 million, up over 100% sequentially, with a total of $204 million for the year, exceeding the $200 million outlook [17][18] - The company ended the year with a leverage ratio of 2.9x, better than the previous guidance of 3.1x [18] Business Line Data and Key Metrics Changes - The increase in OTT subscribers was partially offset by a decline in linear customers, with total U.S. subscribers growing to 17.6 million [15] - The growth in subscribers was driven by demand for scripted originals, including "Force" and "Spartacus" [16] Market Data and Key Metrics Changes - The company restructured its Canadian business into a Licensing revenue stream, focusing on the U.S. market [9] - The transition to a content licensing relationship in Canada impacted revenue recognition, contributing to the sequential revenue growth [16] Company Strategy and Development Direction - STARZ aims to increase margins to 20% by 2028, with a focus on owning more content and expanding its programming slate [10][22] - The company is positioned to capitalize on potential M&A opportunities due to increased consolidation in the media landscape [12] - STARZ plans to de-emphasize quarterly subscriber management and focus on long-term OTT revenue growth and profitability [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to 2026, driven by a compelling lineup of originals and a focus on underrepresented audiences [7][8] - The company expects unlevered free cash flow to range between $80 million and $120 million in 2026, with a continued focus on reducing leverage [18][19] Other Important Information - STARZ will not disclose subscriber numbers starting with the March 2026 quarter, focusing instead on revenue growth and profitability [12] - The company is excited about expanding bundling relationships, which are driving new additions and better retention [34][35] Q&A Session Summary Question: Can you walk us through some of the moving pieces regarding OTT revenue and total revenue? - Management indicated that OTT revenue is expected to grow, with a slight improvement in margins anticipated for 2026, while significant improvements are expected in 2027 and 2028 [21][22] Question: What kind of assets would you be interested in for potential M&A? - Management highlighted the importance of complementary assets that can transition from linear to digital, emphasizing a cautious approach to leverage [25][27] Question: How do you rank order your capital allocation priorities as free cash flow improves? - Management noted that as free cash flow improves, they will consider returning cash to shareholders while continuing to invest in the business [28] Question: Can you discuss the retention patterns for subscribers from recent shows? - Management stated that the programming slate is designed to maintain subscriber retention throughout the year, supported by longer-term offers [32][33] Question: How do you view the demand environment for your programming internationally? - Management expressed optimism about the international market, particularly in the U.K. and France, and highlighted the strong relationship with Sky as a key partnership [48] Question: How do you plan to manage pricing strategy going forward? - Management indicated that they aim to remain underpriced compared to broad-based streamers, allowing room for future price increases [50] Question: How do you weigh starting new shows versus spin-offs of existing successful shows? - Management emphasized the importance of franchising successful shows like "Power" and "Outlander" to drive engagement and launch new IP [53][55]

Financial Data and Key Metrics Changes - Starz Entertainment ended Q4 2025 with 12.7 million OTT subscribers, a year-over-year growth of 7.6% and added 370,000 subscribers in Q4 alone [4][13] - Total revenue for Q4 was $323 million, reflecting a sequential increase of 60 basis points, driven by distribution revenue from the transition of Canadian operations to a licensing model [13][14] - Adjusted OIBDA for Q4 was $56 million, up over 100% sequentially, with a total of $204 million for the year, exceeding the $200 million outlook [14][15] - The company ended 2025 with a leverage ratio of 2.9x, better than the guidance of 3.1x [15] Business Line Data and Key Metrics Changes - The growth in OTT subscribers was partially offset by a decline in linear customers, with total U.S. subscribers reaching 17.6 million [13] - The strong performance in Q4 was attributed to the success of scripted originals like "Spartacus" and "Power Book IV: Force" [5][12] Market Data and Key Metrics Changes - The company is focusing on the U.S. market after restructuring its Canadian operations into a licensing revenue stream [7] - Starz is positioned to capitalize on potential M&A opportunities due to increased consolidation in the media landscape [10] Company Strategy and Development Direction - The company aims to increase margins to 20% by 2028, with a slight improvement expected in 2026 [18] - Starz is focusing on delivering edgy, premium content for women and underrepresented audiences, which broad-based streamers do not address [6] - The company plans to de-emphasize quarterly subscriber management and will not disclose subscriber numbers starting March 2026 [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to 2026, driven by a compelling lineup of originals and a focus on profitability and cash flow generation [6][9] - The company expects unlevered free cash flow to range between $80 million and $120 million in 2026, representing a significant year-over-year improvement [15][16] Other Important Information - Starz has announced a co-commission partnership with Sky for the series "Fightland," which is expected to improve unit economics [7][10] - The company is also focusing on bundling partnerships to expand its distribution relationships and drive new additions to the business [30][31] Q&A Session Summary Question: Can you walk us through some of the moving pieces regarding OTT revenue and total revenue? - Management indicated that there will be slight improvements in margins in 2026, with significant improvements expected in 2027 and 2028 as original content becomes a larger part of the slate [18][19] Question: What kind of assets would you be interested in for potential M&A? - Management stated they are looking for linear networks with strong brands that complement their core demos, while maintaining a leverage constraint of around 2.5x [21][23] Question: How do you rank order your capital allocation priorities as free cash flow improves? - Management noted that as free cash flow improves, they will consider returning cash to shareholders while continuing to invest in the business [24] Question: Can you discuss the retention patterns for subscribers from recent successful shows? - Management highlighted that the programming slate is designed to maintain subscriber retention throughout the year, with longer-term offers helping to reduce churn [28][29] Question: How do you view the demand environment for your programming internationally? - Management expressed optimism about the appetite for their content in international markets, particularly in the U.K. and France, and emphasized the importance of their relationship with Sky [43][44] Question: How do you plan to manage pricing strategy going forward? - Management indicated they will monitor the pricing strategies of broad-based streamers and adjust their pricing accordingly to maintain competitiveness [45] Question: How do you weigh starting new shows versus spin-offs of reliable franchises? - Management emphasized the importance of franchising and how successful franchises like "Power" and "Outlander" serve as platforms to launch new IP [48][50]

Financial Performance - Fourth quarter revenue increased sequentially to $322.8 million, with an operating loss improved to $(4.7) million[1]. - Adjusted OIBDA for the fourth quarter reached $55.5 million, while the annual trailing-twelve month Adjusted OIBDA was $204.0 million[1][3]. - The net loss for the quarter was $(20.7) million, translating to a net loss per share of $(1.24)[3][11]. - For the three months ended December 31, 2025, the net loss from continuing operations was $20.7 million, a decrease from a net loss of $31.8 million in the same period of 2024[13]. - The total cash used in operating activities for continuing operations was $21.4 million for the three months ended December 31, 2025, compared to cash provided of $41.9 million in the same period of 2024[13]. - The adjusted OIBDA for the trailing twelve months ended December 31, 2025, was $55.5 million, reflecting a decrease from $204 million in the previous year[15]. - The company experienced a significant restructuring cost of $183.4 million for the three months ended March 31, 2025, impacting overall financial performance[17]. Subscriber Growth - Domestic OTT subscribers grew to an all-time high of 12.7 million, up 890,000 or 7.6% year-over-year, with total U.S. subscribers increasing by 170,000[1][3]. - As of December 31, 2025, the total number of subscribers in the United States was 17.63 million, a slight increase from 17.46 million as of September 30, 2025[24]. - The OTT subscribers in the United States increased to 12.66 million as of December 31, 2025, up from 12.29 million as of September 30, 2025[24]. Revenue and Cash Flow - STARZ's OTT revenue for the quarter was $210.3 million, while total revenue was $322.8 million, reflecting a decrease from $344.5 million in the prior year[11]. - Management expects to grow Adjusted OIBDA and OTT revenue in 2026, aiming to delever to approximately 2.7x and significantly improve free cash flow[1][2]. - The company ended the quarter with total net debt of $589.4 million and an Adjusted OIBDA leverage ratio of 2.9x[3][5]. - STARZ's cash and cash equivalents at the end of the quarter were $35.7 million, an increase from $17.8 million in the previous quarter[9]. - The total cash and cash equivalents at the end of the period were $35.7 million, compared to $14.2 million at the end of the previous year[13]. - The company reported a net cash used in investing activities of $3.9 million for the three months ended December 31, 2025, compared to $57.7 million in the same period of 2024[13]. Programming Strategy - STARZ's programming strategy, including popular originals, is expected to drive sustainable OTT revenue growth and profitability[2]. - Programming amortization for the nine months ended December 31, 2025, was $451.3 million, a decrease from $520.4 million in the same period of 2024[13]. Non-GAAP Financial Measures - Starz Entertainment Corp. utilizes non-GAAP financial measures to evaluate its operating performance, including Adjusted OIBDA, Adjusted OIBDA Leverage Ratio, and Free Cash Flow[26]. - Adjusted OIBDA is defined as operating income before depreciation and amortization, adjusted for share-based compensation, restructuring costs, and unusual gains or losses[27]. - The Adjusted OIBDA Leverage Ratio provides insight into the company's capital structure, calculated as Net Corporate Debt divided by Adjusted OIBDA for the trailing twelve months[28]. - Free Cash Flow is defined as net cash provided by operating activities minus capital expenditures, indicating the company's liquidity and ability to reduce net corporate debt[28]. - These non-GAAP measures are commonly used in the entertainment industry to assess operating performance, but may not be comparable across different companies due to varying calculation methods[31]. - The company believes these measures provide useful information regarding results of operations before non-operating items and cash flows[30]. - Adjusted OIBDA is considered an important measure as it eliminates amounts that do not reflect the fundamental performance of the company's businesses[30]. - The company emphasizes that these non-GAAP measures should be reviewed alongside relevant GAAP financial measures[32]. - Limitations of non-GAAP measures include that they are not prepared in accordance with GAAP and should not be seen as alternatives to GAAP measures[32]. - The company includes adjustments for depreciation, amortization, and restructuring costs in its financial reporting[33].