STRZ — Starz Entertainment Corp.

Summary of Starz Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• OTT Subscribers: Reached an all-time high of 12.7 million, growing by 7.6% year-over-year, with an addition of 370,000 in Q4.
• Total Revenue: Reported at $323 million for Q4, up 60 basis points sequentially. Total revenue for 2025 was $204 million, exceeding the $200 million guidance.
• Adjusted OIBDA: Q4 adjusted OIBDA was $56 million, up over 100% sequentially, with a total of $204 million for 2025.
• Leverage: Ended 2025 with a leverage ratio of 2.9x, better than the 3.1x guidance.
• Cash Position: Cash at the end of the quarter was $36 million, with $589 million in net debt.

2. Strategic Updates and Business Highlights

• Content Strategy: Continued focus on producing original content targeted at women and underrepresented audiences. Key titles include "Spartacus," "Power Book IV: Force," and upcoming series like "Fightland" and "P-Valley."
• Operational Milestones: Transitioned Canadian operations to a licensing model, allowing a stronger focus on the U.S. market. The company is also working on increasing its content ownership.
• Bundling and Partnerships: Strengthened distribution partnerships, particularly with Sky, which will co-commission "Fightland," enhancing unit economics.
• M&A Readiness: Positioned to capitalize on potential mergers and acquisitions in the media landscape, focusing on assets that complement their core demographics.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipates OTT revenue growth and low single-digit percentage growth in adjusted OIBDA. Expected unlevered free cash flow between $80 million to $120 million, with a target leverage of approximately 2.7x by year-end.
• Content Slate: A robust lineup of originals is planned for 2026, aimed at maintaining subscriber engagement and retention.

4. Bad News, Challenges, or Points of Concern

• Declining Linear Subscribers: While OTT subscribers grew, there was a decline in linear customers, indicating a shift in viewing habits.
• Industry Pressures: The company faces ongoing challenges from traditional linear declines and competitive pressures from broader streaming services.
• Subscriber Reporting Change: Starting in 2026, Starz will no longer disclose subscriber numbers quarterly, which may raise concerns about transparency.

5. Notable Q&A Insights

• Subscriber Retention: The company is implementing longer-term offers to improve retention and reduce churn, supported by a strong content slate throughout the year.
• Capital Allocation: As free cash flow improves, Starz plans to prioritize deleveraging while considering potential returns to shareholders once leverage targets are met.
• AI Utilization: Starz is exploring AI to enhance content development and operational efficiencies, indicating a forward-thinking approach to technology integration.
• Franchise Strategy: The success of established franchises like "Power" and "Outlander" is leveraged to launch new IP, showcasing a strategic approach to content development.

Overall, Starz reported a strong quarter with solid financial performance and strategic initiatives aimed at sustaining growth and profitability, while also navigating industry challenges and evolving its operational focus post-separation from Lionsgate.