Starz Entertainment (NasdaqGS:STRZ) Q4 2026 Earnings call February 26, 2026 05:00 PM ET Company ParticipantsAlison Hoffman - President of STARZ NetworksDoug Wardlaw - Media and Entertainment Equity Research AssociateJeffrey Hirsch - President and CEONilay Shah - Investor Relations ContactScott Macdonald - CFOConference Call ParticipantsBrent Penter - Equity Research AnalystDavid Joyce - Senior Equity AnalystMatthew Harrigan - Equity Research AnalystThomas Yeh - Executive Director and Equity Research Analyst ...

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]

Starz Entertainment (NasdaqGS:STRZ) Q4 2026 Earnings call February 26, 2026 05:00 PM ET Speaker4I would now like to hand the conference over to your speaker today, Nilay from Investor Relations.Speaker6Good afternoon. Thank you for joining us for Starz Entertainment's fiscal 2025 fourth quarter earnings call. We'll begin with opening remarks from our President and CEO, Jeffrey Hirsch, followed by remarks from our CFO, Scott Macdonald. Also joining us on the call today is Alison Hoffman, President of STARZ N ...