Core Insights - Starz Entertainment reported a fourth-quarter 2025 loss of 47 cents per share, which is wider than the Zacks Consensus Estimate of a 20-cent loss, but shows improvement from a loss of $1.90 per share in the same quarter last year [1][9] Revenue Performance - Fourth-quarter 2025 revenues declined 6.3% year over year to $322.8 million, slightly surpassing the consensus estimate by 0.35%. However, revenues increased 60 basis points sequentially, driven by higher distribution revenues related to the transition of Canadian operations to a content licensing model [2] - OTT revenues totaled $210.3 million, accounting for 65.1% of total revenues, down 12% from the prior year's $239 million. Linear and other revenues were $112.5 million, up 6.6% year over year from $105.5 million [4][9] Subscriber Metrics - Starz Entertainment ended the quarter with 12.7 million U.S. OTT subscribers, a sequential increase of 370,000. Total U.S. subscribers rose to 17.6 million, up 170,000 from the prior quarter, driven by demand for scripted originals [3] Operating Performance - Operating loss improved to $4.7 million from a loss of $21.2 million in the year-ago quarter. Adjusted OIBDA increased to $55.5 million from $24.7 million in the prior-year quarter, representing growth of more than 100% quarter over quarter [5] Balance Sheet & Cash Flow - As of December 31, 2025, Starz Entertainment had $35.7 million in cash and cash equivalents, down from $37 million as of September 30, 2025. Total net debt stood at $589.4 million with an adjusted OIBDA leverage ratio of 2.9x on a trailing 12-month basis [6] - Net cash used in operating activities was $21.4 million in the fourth quarter, with a free cash outflow of $25.9 million [7] 2026 Outlook - For 2026, Starz Entertainment expects low single-digit percentage growth in adjusted OIBDA compared to 2025, supported by continued momentum in OTT revenue. The company anticipates generating between $80 million and $120 million in positive unlevered free cash flow [8][10]

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 Data and Key Metrics Changes - Total revenue for the quarter was $319.7 million, down 2% sequentially and 7.4% year over year [12] - Adjusted OIBDA was $33.4 million, down from $92 million in the previous quarter, primarily due to higher content amortization [13] - The company ended the quarter with $573.5 million in total net debt, down $42.1 million sequentially, with a leverage ratio of 3.2 times [14] Business Line Data and Key Metrics Changes - The company had 12.18 million U.S. OTT subscribers, a sequential decline of 120,000, and a total of 19.08 million North American subscribers, down 520,000 sequentially [12] - OTT revenue was $221.1 million, while linear and other revenue was $98.6 million, reflecting declines due to lower OTT subscriber additions [13] Market Data and Key Metrics Changes - The linear subscriber base declined to 6.22 million, reflecting continued declines in Pay TV households [12] - The company expects sequential revenue and OTT subscriber growth in the next two quarters due to the successful premiere of "Blood of My Blood" [13] Company Strategy and Development Direction - The company aims for higher adjusted OIBDA margins, higher free cash flow, and lower leverage, with a target of reaching a 20% margin by the end of calendar 2028 [6][10] - The content slate includes high-performing returning series and new premieres, which are expected to drive subscriber growth and revenue [9][10] Management's Comments on Operating Environment and Future Outlook - Management views 2025 as a transition year for cash flow management, with a focus on deleveraging in 2026 and 2027 [14] - The company believes it is undervalued compared to peers and expects valuation disconnect to become more apparent as large media companies spin off their linear networks [6] Other Important Information - The company is excited about its content slate, including the return of "Spartacus" and the launch of "Fightland," which is expected to have a lower cost structure compared to previous productions [10][46] - The passage of the One Big Beautiful Bill Act allows the company to reduce federal tax liabilities, leading to no significant cash tax payments anticipated for the foreseeable future [14] Q&A Session Summary Question: What defines scale in this business and prerequisites for M&A? - Management has a clear plan for deleveraging and achieving a 20% margin, focusing on delivering that plan regardless of M&A participation [18] Question: What caused the underperformance of BMF and adjustments going forward? - BMF was still a large show but did not meet growth expectations due to gross adds issues; management is analyzing the situation and has new content in development [28] Question: Insights on ARPU and distribution relationships? - ARPU was slightly down due to more customers on multi-month offers, which helps reduce churn; no rate increases are planned for the next year [30][32] Question: Audience transition for "Blood of My Blood"? - The company has a strong track record of franchising, with spin-offs typically retaining over 85% of the original audience [38] Question: Confidence in the return of "Spartacus"? - There is significant demand for "Spartacus" to return, and the company has incorporated diverse characters to appeal to a broader audience [46]